Government's multibillion-dollar Working for Families package set for 'upcoming review'

The Government's multibillion-dollar Working for Families package is set for an "upcoming review", a Ministry of Social Development and Inland Revenue document shows. 

The Working for Families package was first introduced in 2004 by Helen Clark's Labour Government. It included family tax credits for families with dependent children and 'Best Start' payments to assist with the costs of a new baby. 

Jacinda Ardern's Government in 2017 announced $5.53 billion over four years for its new Working for Families package, which included 'Best Start', a winter energy payment, family tax credits and higher accommodation supplements. 

The package was projected to lift 88,000 children out of poverty and benefit 384,000 families with children by an average of $75 a week. The more generous package was paid for by cancelling National's tax cuts, freeing up about $8.4 billion.

Recently released advice to Social Development Minister Carmel Sepuloni and Revenue Minister David Parker shows officials discussing an "upcoming review" of the scheme in late-2020. 

But the document shows officials were concerned the review might be restricted by recent benefit changes, particularly the increase in the 'abatement threshold' which may "increase the cost of options" in the scheme's review. 

From April this year, beneficiaries will be able to earn more from work or other income each week before their benefit is affected. This is called the income abatement threshold. They'll be able to earn up to $160 before tax each week before their benefit reduces.

Officials said increasing main benefit abatement thresholds has "flow-on implications".

They said it wasn't adjusted to reflect the $25 benefit increase made in April last year in response to COVID-19. The officials said it "may increase the cost of options" in the upcoming review of the package. But those "options" have been redacted in the document. 

The Welfare Expert Advisory Group's 2019 report recommended sweeping changes to the Working for Families package. It suggested replacing the family tax credit with a new one that would be available to all except high-income families. 

The Greens welcome the idea of making Working for Families more universal and offering it to families without children. They say it needs to recognise that people caring for elderly relatives deserve enough income. 

"Working for Families has been effective at raising some family incomes, but not others. We welcome steps to reform it and we encourage the Government to move towards greater universality of income support," said Green MP Ricardo Menéndez March.

The review also recommended making the 'Best Start' payment universal up to three years, and suggested large increases to the abatement rates. 

The Government is yet to confirm if these suggestions will be taken into account. A spokesperson for Parker told Stuff details of the review will be announced in "due course". 

Prime Minister Jacinda Ardern was urged by more than 60 charities late last year to increase benefits levels, as suggested by the Welfare Expert Advisory Group. It recommended increasing Jobseeker Support from $179 per week to $315 per week. 

Ardern rejected the call from charities at the time. She said the Government "already started making a range of changes over the last term", and that it will continue to try and help families.  

She highlighted how the Government indexed benefits to average wage growth which will see benefits steadily rise. The winter energy payment was also doubled to $40 a week for eligible singles and $63 for couples and those with dependent children, paid out from May to October. 

Recent data shows the Government is making progress on stamping out poverty, with "all measures of child poverty trending downwards" across the last two years since June 2018 - an improvement on last year's update. 

But the data doesn't reflect the impact of COVID-19. The lockdown in March 2020 affected Stats NZ's ability to collect data from households for child poverty statistics. Therefore, the data only covers nine months, to March 2020. 

It found that the number of children experiencing severe material hardship also decreased, from 64,600 in 2019 to 53,000 in 2020.