Sole parent families on the benefit are likely to see a median gain of $20 from July this year if a bill introduced by the Government today is passed.
The bill could see weekly child support payments collected by Inland Revenue passed on directly to eligible sole parents from July 1, 2023, if it's passed by Parliament.
Currently child support payments are collected and used to offset the cost of the benefit paid to parents on the sole parent rate.
Parents will also no longer be required to apply for child support to receive their benefits.
"These changes will make the system less discriminatory, while also giving parents on a sole parent rate of main benefit a bit extra to help with the cost of raising their children," Social Development and Employment Minister Carmel Sepuloni said today in a statement.
"We know that right now, every little bit counts."
It comes after the Welfare Expert Advisory Group recommended abolishing the cost-recovery approach in 2019.
The Government said the change would be carried out in two phases, with the first phase seeing the "vast majority of families" on a sole parent rate receive extra cash.
Phase two "is intended to roll out policy features that apply in a small number of more complex payment situations", Sepuloni said.
"Amending the rules will support parents to lift an estimated up to 14,000 children out of poverty," she said.
"Today's changes continue to build on the progress we have been making to improve people’s lives through our Families package and welfare reforms."
Revenue Minister David Parker said the payments "will be treated as income for calculating a benefit or other assistance".
"It is estimated that 41,550 sole-parent families will be better off, with a median gain of $24 per week, or $20 after reduction of their benefit or other assistance," Parker said.
"The proposal will strengthen the child support scheme. If parents know that the child support they pay will get to their own children, it will also encourage more parents to pay."
Once passed by Parliament, most sole parents on a benefit will see the full effect of the pass-on from August 2023, when child support from the July period is paid.
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