Budget 2021: Government delivering major benefit boost in line with recommendations

On the 30th anniversary of the Budget that slashed benefits, the Government is delivering a major boost for Kiwis that it says will lift tens of thousands of children out of poverty.

From July this year, all benefit rates will increase by $20 a week, with a second increase in April next year bringing main benefits in line with recommendations from the 2019 Welfare Expert Advisory Group (WEAG). 

Families with children will also receive a further $15 per adult per week, while student allowance and student loan for living costs jump by $25 per week.

That means that weekly benefit rates will increase by between $32 and $55 per adult by April 2022.

For example, in 2019 the WEAG recommended the sole parent support benefit be lifted to $374. The Government’s actually going further, taking it to $434. 

The Jobseeker Support payment for a single person aged over 25 will increase to $315 per week, the WEAG recommended amount. 

The Government says between 19,000 and 33,000 children are projected to be lifted out of poverty on the after-housing-costs measure in 2022/23 as a result of the $3.3 billion changes announced on Thursday.

2021 marks the 30th anniversary of the so-called ‘Mother of All Budgets’ that saw benefits slashed and other social programmes cut.

Finance Minister Grant Robertson says Budget 2021 repairs "some of that damage".

"Not only will this give a sense of dignity and hope to those who receive that boost in income, it will also help reduce inequality and provide ongoing stimulus to the economy."

Since being elected, the Government says 109,000 families with children are on average $175 a week better off as a result of changes it has made to income support. That includes its implementation of the families package, as well as the $25 lift to benefits it made in the early days of COVID-19.

Budget 2021: Government delivering major benefit boost in line with recommendations
Photo credit: Newshub.

Prime Minister Jacinda Ardern says Thursday’s announcement closes "a chapter on our past and take a big step towards our goal of making Aotearoa New Zealand the best place in the world to be a child".

"Increasing incomes for our most vulnerable both secures our recovery by adding targeted stimulus to the economy while also addressing one of our most pressing long term challenges - child poverty," Jacinda Ardern says.

The Prime Minister says these changes are not only "the right thing to do", but it’s also good for the economy.

"In the short term, these changes will help stimulate growth and in the longer term they’ll help break the cycle of poverty."


From April next year, the Government is indexing Child Assistance income thresholds to increases in the average wage, a move it expects will benefit 1000 families or around 1500 children.

This will be funded through a $13.3 million investment over four years from the Budget 2021 operation allowance.

Social Development Minister Carmel Sepuloni says this is in line with recommendations of the WEAG and also complements recent increases to the main benefit abatement thresholds.

The Budget also invests $9 million to create an additional 3300 places in the Out of School Care and Recreation Service (OSCAR), helping 900 low-income parents to remain or transition into employment, training and education.

"OSCAR plays a vital role in supporting parents to gain and maintain employment and engage in further training and education through providing access to low-cost childcare services out of school hours," Sepuloni says.

"Some OSCAR programmes provide breakfast and afternoon meals and supervise homework, helping support children’s development and education.

"The new funding will be targeted to communities with high levels of socio-economic deprivation to help combat material hardship and child poverty."

She says by targeting the funding, it will address a shortage of places for Maori, Pasifika and migrant communities. 


The Training Incentive Allowance is also being brought back. It supports sole parents, carers and disabled people on eligible benefits with the costs of studying, such as with fees, books and transport.

"The impacts of COVID-19 means reinstating the Training Incentive Allowance for higher-skill courses is more important than ever," Sepuloni says.

"We need to grow the skills of New Zealanders to fill the needs of employers and this allowance will be a vital tool we can use to do just that."

It’s expected to support 16,000 people to retain, gain higher skills and transition into new careers over the next four years. That includes about 5750 Maori and 1400 Pacific people.

The $127 million investment over four years is coming from the COVID-19 Recovery and Response Fund.