Nearly every sole parent in New Zealand will be eligible for childcare assistance from next year, Prime Minister Jacinda Ardern has announced, with over 10,000 additional children eligible under a significant new $190 million support package.
The "cost of living package" would represent additional support for 54% of all New Zealand families. The PM announced the new package in Manukau today during her keynote address at Labour's annual party conference.
Alongside changes to childcare assistance thresholds, the Government has also announced small increases to the Family Tax Credit and Best Start payments.
"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.
She said the change in thresholds would help remove barriers to childcare "and enables parents to enter the workforce to help fill labour shortages - so it’s a win-win for families and the economy."
"The 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."
Social Development and Employment Minister Carmel Sepuloni said childcare assistance was 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 changes will expand eligibility for the Childcare Subsidy (for pre-schoolers) and Out of School Care and Recreation Subsidy (for school-aged children).
Sepuloni said, "making childcare more affordable will help to remove financial barriers to work, particularly for sole parents and those on low-to-middle incomes."
Small boost to family payments
From April, the Family Tax Credit will also increase by $9 a week for the eldest child to $136 a week, and by $7 a week for subsequent children to $111 a week. Meanwhile, Best Start payments will increase to $69 a week from $65.
Sepuloni said the increases would be "a little extra relief" for the almost 60% of New Zealand families that receive family tax credits.
“The inflation adjustment of the Family Tax Credit will also provide a little extra relief for the majority of working families," she said.
"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."
No major impact on inflation - PM
The PM said the support was a "top priority" for the Government, and that it wouldn't have a "significant impact on inflation."
The PM discussed the Hamilton West by-election, climate change, and the economy - ahead of new measures to relieve the cost of living.
"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," she 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. 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."
Sepuloni added that the Government had "more work to do" ahead on the issue.
“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," the minister said.
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