An increase to 'inadequate' Working for Families payments is absolutely critical to support low-income families, an advocate says.
Finance Minister Steven Joyce Photo: RNZ / Alexander Robertson
Child Action Poverty Group's economics and welfare spokesperson Susan St John said Working for Families had been subtly cut back over the years.
She said it was inadequate to support the living standards of low-income working families.
"It's the low-income working families that are being really squeezed ... what we've seen since 2010 is a huge reduction in the real value of Working for Families."
"It needs about another $700m per annum just to put it back to its real value."
She said the Budget 2015 increases - $25 a week for families on benefits and $12.50 a week for in-work tax credits - were not as good as they looked on paper, because they were a one-off.
She hoped Budget 2017, due on May 25, would deliver more.
"It's absolutely critical because we've got a very disastrous picture of struggling low income families and as that goes on those families end up using up all of their assets and that becomes a very difficult situation to come back from."
Lower Hutt mother of four Wendy receives Working for Families and uses it mostly to pay for food.
She said the cost of living had skyrocketed over the past ten years and the tax credits had helped her family make ends meet.
"It's important to pay all your bills ... and feed the kids. We just manage."
The government distributes $2.5 billion a year though Working for Families tax credits and spends $1.2bn on the accommodation supplement.
That supplement is paid weekly to about 300,000 people to help with the costs of rent, board or owning a home. It has not been raised since it was set in 2007.
Finance Minister Steven Joyce said familes were struggling and one way of helping them would be to increase Working for Families.
"Looking at thresholds, looking at the incomes that families get ... there's a difference between what you'd like to do and what you get to do and I'll be able to talk about what, if anything, we can do on budget day."
An increase in the income tax threshold for low- and middle-income families has also been flagged as a priority in election year, with the government having talked of such a change since the last election.
Labour Party finance spokesperson Grant Robertson said any changes needed to be meaningful, and not just a $7 or $8-a-week tax cut for families.
"For a lot of New Zealanders, they look at that and say seven or eight dollars a week versus are we funding health properly? Are we funding education properly?"
"It's a very difficult thing to do so the government is going to have to come with a pretty sophisticated package if it wants to target to a particular group of income earners."
Mr Joyce said National already had a big spend planned for schools, transport, housing and hospitals, but at the heart would be the families package.
It is likely that package would not take effect until 1 April next year, after the general election in September.
Mr Joyce said increasing the accomodation supplement was one of a number of the options being looked at.
"We look at a whole range of things because they're all different ways of supporting families. To a degree it's not so much, the individual method or the programme you use, it's how you do that."