A fairer welfare system
The Wellbeing Budget will lift the incomes of 339,000 individuals and families as part of the next step of the Government's overhaul of the welfare system.
The Government is delivering on a key recommendation of the Welfare Expert Advisory Group's (WEAG's) report, Whakamana Tāngata – Restoring Dignity to Social Security in New Zealand.
From 1 April 2020, main benefits will be indexed to average wage increases, to ensure the incomes of people needing to access main benefits do not fall further behind.
This means main benefit rates will progressively rise as a result of this change, and are forecast to increase by $26-$46 per week by 1 April 2023 (an additional increase of $10-$17 per week over and above CPI indexation), helping to reduce rates of poverty for those living on benefits.
"By doing this, we are reversing a decades-long policy that has meant those on benefits have fallen further and further behind. In 1991 the National Government significantly cut benefits, including scrapping the Universal Family Benefit," Social Development Minister Carmel Sepuloni says.
"Since then, main benefit levels have been adjusted using the Consumers Price Index (CPI). We are now indexing main benefits to wages for the first time in New Zealand's history."
"Pressures on low income families were already being felt through cuts to housing, health and education support from the reforms of the late 1980s and early 1990s. These cuts resulted in poverty traps for many low income New Zealanders. Many have never really recovered.
"It's time for change."
Indexation is the latest part of our response to the WEAG report. The cost of indexing main benefits to average wage increases is forecast to be $320.2 million over four years.
The WEAG's final report contained 42 key recommendations and will help inform how we make our welfare system fairer and more accessible for all New Zealanders. This Government has already started work on 15 of the recommendations and made pre-Budget announcements to address some of these, including:
- up to 263 new frontline staff to focus on helping more people into meaningful and sustainable work
- scrapping the discriminatory sanction that cuts income to women and their children if the name of the child's father is not declared to the government, so that around 12,000 sole parents will be better able to support their families
- abatement thresholds for those on benefits who work will be lifted in line with minimum wage increases.
"This Government knows that targeting child poverty, addressing family violence, housing, and the mental health needs of all New Zealanders will have the most impact on those in the welfare system and requires a cross-government approach. The Wellbeing Budget provides a plan to help us do that and ensures the changes are effective and enduring," Carmel Sepuloni says.