Poor children with working parents will miss out on the winter energy payment (WEP), a new benefit aiming to help the elderly and those on benefits meet increased energy costs in winter.
Meanwhile, high-income pensioners will be able to claim the payment.
Treasury advice provided to the Government late last year said 40 percent of children living in hardship will not be eligible for the payment.
Those are children whose parents are not on a main benefit, but who are low-income earners.
It's not just the children of the low-income working parents who will miss out.
In a section advising on the Treaty of Waitangi, Treasury advised Māori are disproportionately represented in low-income groups not on a benefit, "and therefore will not be eligible to receive the WEP."
The Winter Energy Payment is a payment for people receiving superannuation or a main benefit. It will pay about $450 a year to a single person or $700 a year for a couple or person with dependent children.
The advice is included in a document dump released on the Treasury website last week.
"Because WEP eligibility is restricted to recipients of a main benefit, New Zealand Superannuation or a Veteran's Pension, some low income families with children will not benefit from WEP. MSD estimates that approximately 40 percent of children in hardship will not be eligible for this payment," the advice says.
The lack of access to the payment is an anomaly among benefits. All other supplements, such as accommodation, can be accessed by low-income earners.
Cold, damp houses are linked to increased illness, especially in children. That can lead to decreased school attendance. Families bunking down in fewer rooms for warmth can also contribute to the spread of disease.
Labour promised to introduce the payment in response to the 1600 New Zealanders who die of illness caused by cold housing and the thousands more who are hospitalised.
The Winter Payment is part of a wider Government package that includes increases to Working For Families tax credits, an increase to the accomodation supplement and the Best Start baby payment.
Payment reduces incentive to work - Treasury
The advice warns the Winter Energy Payment reduces the work incentive for Jobseekers without children - though it says the impact is "reasonably minor".
The Jobseekers benefit currently abates completely at about 23 hours of work on the minimum wage. A Jobseeker would be $13 a week worse off in winter if they were to work an additional hour and lose the Winter Payment.
However, the advice says most people pick up extra work in larger chunks.
"For example, increasing from 20 to 30 hours of work during winter, which... without the Winter Energy Payment, would increase a person's income by $93 a week, but with the Winter Energy Payment would only increase a person's income by $73 a week," the advice says.
Treasury said it would be possible to continue the WEP for beneficiaries who take up work, but ultimately advised against it. It said there would be "significant administrative complexities" to making such a change in time.