The Budget 2004 Releases

The press releases issued to coincide with the delivery of the Budget on 27 May 2004

A new approach to social assistance

The Working for Families package shifts the focus of New Zealand's social assistance system from passive welfare entitlements to active support to move into employment, Social Development and Employment Minister Steve Maharey said today.

Central to the package is the new In-Work payment that will be available to over 100,000 low-and-middle income working families. While beneficiary families will see their incomes rise, those who move into, or remain in, the workforce will receive the most gains from the changes.

Steve Maharey said the package also makes major changes to family income assistance benefiting nearly 300,000 families, to childcare assistance and to accommodation assistance, by investing over a billion dollars a year once fully in place.

"The package is designed to:

• ensure people who work are better off as a result of their effort
• ensure families have incomes sufficient to provide their children with a decent standard of living
• ensure people receive their full entitlements
• simplify the benefit and tax based family income assistance structure.

"Working for Families will deliver an average increase of around $100 a week in direct income assistance to families with children in the $25,000 to $45,000 band by 2007. Many families with higher earnings will also benefit from this package.

"The package steps up in stages over the next four years:

• From October 2004 pre-school and after-school childcare subsidies increase and are extended to families on higher incomes. Beneficiaries will no longer have their Accommodation Supplement reduced if they earn additional income and working families can earn more before their Accommodation Supplement is reduced.
• From 1 December 2004 many people receiving the Invalid's Benefit will be able to trial working more than 15 hours per week without losing their benefit eligibility to see if they can sustain employment.
• From 1 April 2005 Family Support rates increase. Higher maximum rates apply to the Accomodation Supplement to help people living in places that have high accommodation costs, particularly in Auckland. The child component of benefits and student allowances move into Family Support. This means that support for children will be available primarily in one payment, Family Support, and this will be readily transferable between benefit and work.
• From 3 October 2005 Childcare Assistance increases again.
• From 1 April 2006 a new In-Work payment is introduced to ensure movement into employment is rewarded.
• From 1 April 2007 Family Support rates increase further.

"As we signalled in the Speech from the Throne, the government will also legislate to have the rates and thresholds of Family Support regularly adjusted for inflation in the future.

"This package will reduce the need for large numbers of people to have to apply separately for, and rely on, hardship assistance. This will make the benefit system easier to understand and administer.

"To ensure that families receive their family income assistance entitlements, publicity campaigns will be run in advance of each new element becoming available. Work and Income and Inland Revenue will provide their clients with a seamless service and ensure they receive the assistance they become entitled to.

"The Working for Families package builds on the government's earlier achievements to improve the lives of ordinary New Zealand families - including Paid Parental Leave, more accessible early childhood education and increases in the minimum wage and superannuation - and the strides we have already taken to give more New Zealanders the security of paid employment, such as the Jobs Jolt and enhanced case management for sole parent beneficiaries".

Steve Maharey said the government's focus in the next stage of reform will focus on the structure of working age benefits, more support for people on the Invalids and Sickness benefits who want to work or increase their work hours, and changing rules and processes to make the benefit system easier to understand and deliver, freeing up Case Managers' time to provide more employment assistance.