Fact Sheet – Families PackageFinance
The Families Package will provide targeted assistance to improve incomes for low- and middle-income families with children. It is part of the Government’s focus on reducing child poverty, and ensuring children get the best start in life.
The Families Package will:
- boost the incomes of low- and middle-income families with children by increasing the Family Tax Credit and raising the Working for Families abatement threshold
- introduce a Best Start tax credit to help families with costs in a child’s early years
- introduce a Winter Energy Payment to help older New Zealanders and many of our poorest families heat their homes over winter
- increase the rate of Orphan’s Benefit, Unsupported Child’s Benefit and Foster Care Allowance by $20.31 per week
- increase paid parental leave to 26 weeks
- reinstate the Independent Earner Tax Credit
- implement the Accommodation Supplement and Accommodation Benefit increases announced in Budget 2017
- repeal the tax cuts and changes to Working for Families announced in Budget 2017.
Relative to the status quo (i.e., without Budget 2017 changes), an estimated 385,000 families with children will be made better off by an average of $75 a week in 2020/21 when the Package is fully implemented.
Compared to what they would have received from the Budget 2017 settings 365,000 families with children will be better off by an average of $39 per week in 2020/21.
By 2020/21, around 650,000 families without children will gain approximately $14 per week (averaged over the year) due to increases in the Accommodation Supplement and the Winter Energy Payment.
The Families Package will help reduce child poverty. In 2020/21, the Package is projected to reduce the number of children living in households earning below 50% of the equivalised (moving line) median household income by around 88,000, or a reduction of around 48% relative to the status quo. This reduction is 39,000 more than was projected to have occurred under Budget 2017 settings.
Superannuitants and students will also benefit. Approximately 710,000 superannuitants will benefit from the introduction of the Winter Energy Payment (WEP) in 2018. Approximately 41,000 students are expected to benefit from increases in the Accommodation Benefit.
By reversing the previous Government’s income tax cuts, the Families Package will raise revenue by $8.36 billion over the five-year forecast period (including $0.49 billion in 2017/18). This additional revenue is used to fund the costs of the Package, estimated at $5.53 billion over the forecast period (including delivering $80 million in additional revenue in 2017/18). This means that over the forecast period, the Families Package is estimated to have a positive impact on the Government’s operating balance of $2.84 billion compared with Budget 2017 (including $0.57 billion in 2017/18).
These net savings free up funding to support other priority areas for the Government, including housing, health and education.
See full fact sheet attached in related documents.