Families Package benefits go to more than half of families with children, but housing costs and Covid-19 income disruption have eroded some of the gains, a government report shows.
Photo: RNZ / Samuel Rillstone
A report by Motu policy institute has also found increases in accommodation support did not lead to notable rent increases.
The Families Package has included increases to the Family Tax Credit and the Working for Families abatement threshold; the Winter Energy Payment which was doubled in 2020; the new Best Start Payment which replaced the Parental Tax Credit; an eight-week increase in paid parental leave; increases to the Accommodation Supplement and Accommodation Benefit; and increases to the Orphan's Benefit, Unsupported Child's Benefit, and Foster Care Allowance.
The government has released annual reports in the past three years to gauge the effects of those changes and the latest, released today, showed an average increase of $55 per week in the 2018-19 year compared to 2017-18.
It also showed the Families Package payments went to 330,000 families in its first year, which was more than half of families with children, and more then two-thirds of Māori and Pacific whānau with children.
Winter Energy Payments also went to about 1.2 million adults. The total number of individual Winter Energy Payment recipients increased from 775,498 at the end of June 2018 to 903,771 at the end of June 2021.
Changes to criteria for families with infants and toddlers also had a major effect, with mothers and first parents in same-sex couples gaining an average 10 percent increase to income in the first six months after their baby was born from that change alone.
The report also said all the government's measures of child poverty had trended down between 2017-18 and 2019-20, with 43,000 fewer children in low-income households on after-housing-costs child poverty measures; 26,000 fewer on the before-housing-cost measure and 18,000 fewer experiencing material hardship.
However, the report also noted that rising housing costs and disruption to families' income caused by the Covid-19 pandemic had since eroded some of the gains from when the Families Package was first introduced.
The report said the number of people receiving a main benefit increased from 286,225 in June 2017 to 363,497 in June 2021, with most of that increase occuring since March 2020 and largely associated with the Covid-19 pandemic.
The number of Accommodation Supplement recipients also increased in line with the increased uptake of main benefits, corresponding with the impacts of Covid-19, the report said.
Social Development Minister Carmel Sepuloni said the latest reporting showed the payments were successful.
"The government is committed to making Aotearoa New Zealand the best place in the world to be a child. The latest reporting by MSD on the Families Package released today shows that it's a successful package that has delivered for New Zealanders," she said.
"As of July 2021, three years after it was introduced, around 78,000 parents and caregivers with children under three years old were receiving a regular Best Start payment. The first six-months of a baby's life is a really important period and we know that through Best Start, our government is committed to making Aotearoa New Zealand a great place to raise a family."
A further increase in main benefit rates of $15 after tax is scheduled for 1 April 2022, bringing main benefit rates for individuals and couples without children into line with the recommendations of the 2019 Welfare Expert Advisory Group. Solo parents were already getting a bigger increase than the group recommended, and their rates will also increase in April.
The final government report on the effects of the Families Package is expected to be presented to the minister in December this year, for wider publication in early 2023.
Accommodation payments had minimal effect on rents - Motu research
The Ministry of Social Development also contracted Motu Economic and Public Policy Research to analyse the effects of the increases to the Accommodation Supplement on rent prices.
The supplement provides non-taxable payments to low-income families in private-sector housing, and is designed so that eligible families are expected to spend 25 percent to 30 percent of their income on housing before receiving any support.
The changes in 2018 saw various locations reclassified, with more areas eligible for the maximum payment, and payment maximums were also increased to adjust for rent changes.
The Motu report looked at long-term trends and found that policy changes boosted beneficiaries' incomes by $16.50 on average in the first year, adding $2.10 in the second year.
It found about 15 percent to 25 percent of the increase was soaked up by relative rent increases, but when controlling for "constant unobserved client effects" the effect of rental cost increases were statistically insignificant while supplement effects remained sizeable.
"The increased accommodation support associated with the 2018 AS-area policy changes did not lead to substantial strong landlord capture via an increase in rents," the report said.
"In the worst case, the raw changes suggest the average rent increase was at most half of the average increase in support. However, as discussed above, the vast majority of this effect is attributable to changes in the composition of AS recipients over the period that are correlated with the policy changes. Controlling for such changing composition, we conclude the policy effect on rent increases was negligible."
The report also noted that rent increases were much more likely to be higher when tenants moved than when they stayed.
Sepuloni said the results were pleasing.
"At the heart of our government's Families Package, has been our relentless focus on making a difference to, and investing in the lives, of our children. Not for the sake of it but because it's the right thing to do," she said.