Tax credit change sees $20 a week boost for 346,000 families

Anna Whyte
Source: 1News

More than 340,000 families will get an extra $20 a week, after a Government support package was announced on Saturday in light of the strain Covid has put on families. 

WELLINGTON, NEW ZEALAND - MAY 20: Prime Minister Jacinda Ardern and Finance Minister Grant Robertson make their way to the house during budget day 2021 at Parliament on May 20, 2021 in Wellington, New Zealand. Budget 2021 is the third budget handed down by Finance Minister Grant Robertson, with a focus on economy, housing affordability, climate change and children. $1.4b dollars has been allocated to the rollout of the COVID-19 vaccine, along with $118.6m for women's health, $67.4m to make the Government carbon-neutral by 2025 and $170m to boost the pay of early childhood teachers. (Photo by Hagen Hopkins/Getty Images)

It would see the Family Tax Credit (a payment for dependent children based on income) increase by $15 a week for one child and $13 for subsequent children, while the Best Start payment goes up $5 a week.

It would cost $272 million on top of inflation changes. 

Announcing it at the Labour Party conference, Prime Minister Jacinda Ardern said it would pull about 6000 children out of poverty. 

"Covid-19 has been tough on families and has contributed to the increase in the cost of living. Increasing support for low and middle income families to help cover the basics is the fair thing to do," she said. 

The change kicks in from April next year, with the Government estimating 346,000 families get on average an extra $20 a week. 

It comes after the Government's May benefit boosts - where it pledged to lift all main benefits by $20 a week on July 1 in order to help vulnerable New Zealanders put food on the table and pay their power bills. It would increase again in April 2022. 

However, 1News revealed that 193,000 individuals and families were estimated to receive less than $20 per week, because the additional financial assistance they received would fall as a result of their main benefit rising.

The Family Tax Credit was already rising due to inflation, but Ardern said on Saturday they "topped that up so struggling families get the extra help they need". 

“The changes are targeted towards the lowest income families.

"Those with family income less than $40,000 benefit the most with an average increase of $26 per week," Ardern said. 

"This change is also on top of our significant boost to benefit rates by between $32 and $55 per adult earlier this year and is just one extra thing we can do for families in these tough times."

Green Party social development and employment spokesperson, Ricardo Menéndez March, welcomed the announcement, but said the Government needs to go further and faster to ease the hardship many families are currently experiencing.

“Labour should have gone further and increased income support more quickly, and enough to ensure every family has enough to put food on the table, pay their rent, and keep their home warm,” Menéndez March said in a statement.

“These changes fall far short of what the Welfare Expert Advisory Group recommended, and show a lack of urgency when it comes to lifting families out of poverty.”

Menéndez March said the Government appeared to be “window dressing” while “behind the front door are tens of thousands of families struggling to make ends meet”.

“If the Government is serious about reducing how much people need to make ends meet, then it needs to significantly increase benefits and stop tinkering at the edges.”