The Government has announced wider access to childcare support as part of a cost of living package unveiled by Prime Minister Jacinda Ardern on Sunday.
Ardern also announced increases to the Working for Families tax credits that almost 60 percent of New Zealand families receive.
The latest policy in the Government's package of cost of living measures reverses a freeze on the income threshold for childcare eligibility that National put in place in 2010, the Prime Minister said. By "playing catch-up" and indexing the income threshold to wage growth, over 10,000 additional children are estimated to receive support.
"We're targeting one of the most significant costs for working families by making childcare and before and after school care more affordable to a greater number of low and middle-income families," Ardern said.
"At a time when families are feeling the cost-of-living spike, we're investing in what matters most by making sure childcare is within reach for parents and they have more support to cover other costs."
Ardern said this policy means a family with two parents both working 40 hours per week on $26 per hour with two children under five who will not have been eligible for childcare assistance, now will be eligible for $252 per week from April 1, 2023.
"Research shows nearly 23 percent of mothers report difficulties getting childcare while working or wanting to work. This policy helps remove that barrier and enables parents to enter the workforce to help fill labour shortages, so it's a win-win for families and the economy," the Prime Minister said.
"It's also about restoring opportunities for children to get the best start in life. Evidence shows that participation in high quality childcare can reduce the impact of socio-economic disadvantage."
Ardern said the inflation adjustment of the family tax credit will also provide a little extra relief for the majority of working families.
"Along with previous increases to the family tax credit, a family with two children on a median family income for Working for Families recipients are now receiving over $1300 more a year since we took office. That climbs to over $3600 for families receiving the Best Start payment," she added.
"Supporting New Zealand families with the cost of living is the top priority for the Government. This kind of targeted support not only reaches those who need it most but it won’t have a significant impact on inflation and make the problem worse."
Minister for Social Development and Employment Carmel Sepuloni said making childcare more affordable will help remove financial barriers to work, particularly for sole parents and those on low to middle-incomes.
"Childcare assistance has been underinvested in for more than a decade since income thresholds were frozen by National in 2010. In Budget 2021, we started to reverse that by indexing childcare assistance to average wage growth going forward, but today's policy plays catch-up and reverses the freeze of the past 12 years," she said.
"The policy will also help to address disparities in for Māori and Pacific mothers who are more likely to experience issues accessing childcare.
"For our tamariki, they'll also get the best start in life by participating in high quality early childhood education. This will help set them up on pathways into further education and create positive opportunities for them to engage in their communities in the long-term."
Sepuloni reiterated what Ardern said in that this policy will help more parents, especially women, to have the opportunity to take up work.
"We're continuing to make significant progress on our welfare overhaul. This has included lifting core benefits to historic levels, reinstating the training incentive allowance to support the likes of sole parents into work, allowing child support to be passed on to sole parents as well as investments made through the families package and our year-on-year increases to the minimum wage," Sepuloni said.
"There is still more work to do however, and that's why we've prioritised our Working for Families Review with a focus on how our system of tax credits can better support families on the lowest incomes, particularly working families.
"Making childcare more affordable is only one step along the journey, with our Review of Childcare Assistance currently ongoing."
Sepuloni added the Government is "not shying away" from putting families first and "focusing on what matters most" to New Zealanders.