Wellbeing Budget 2020

Child Poverty Report

How is the Government responding?

The Government has taken immediate action to support families with children, including:

  • Changes to income support settings to help beneficiaries and the most vulnerable, including permanently increasing benefits and, for this year, doubling the Winter Energy Payment.
  • Changes to support businesses to retain workers, including a comprehensive wage subsidy and a leave scheme for essential workers.
  • Changes to support people to remain safe and well in their homes, including a mortgage holiday, 6-month freeze on rents, protection from evictions, and increased support for social services.
  • A range of other changes to support the economy, ease the pressures faced by families, and support child wellbeing.

Further detail is outlined in Appendix A.

Since coming into office, the Government has implemented a number of policies to reduce child poverty. Some of these initiatives were designed to directly help children living in poverty by putting more money in the pockets of parents or caregivers. Others had a more indirect impact and were designed to ease the financial pressures faced by families - such as changes to health, housing and education settings.

Were it not for these changes, low-income households would have been under even greater pressure from COVID-19. Its impact has also been significantly reduced by the immediate actions the Government has since taken in response, including the investment in Budget 2020, which will act to keep many families in work, and mitigate the impact on low-income households. At the end of March 2020 the Government announced support for businesses and workers affected by COVID-19 to help keep people in the labour market, so that as many New Zealanders as possible could continue to provide for their families and contribute to their local communities. We established a Wage Subsidy Scheme for affected businesses in all sectors and regions, leave and self-isolation support, and funding to support worker redeployment and training. This will help to keep people attached to their workplaces, or in training to smooth the return to work. We also delivered on our commitment to increase the minimum hourly wage to $18.90, which took effect on 1 April.

We have also:

  • provided income support for those families who were out-of-work or in vulnerable circumstances, including an increase to main benefits by $25 per week from 1 April
  • doubled the rate of the Winter Energy Payment for 2020
  • removed the need to satisfy the hours test for the In Work Tax Credit from 1 July 2020 (where people needed to work a set number of hours each week to receive the credit)
  • introduced an immediate rent freeze and made change to ensure tenancies will not be terminated during the lock-down period
  • worked with the major retail banks on mortgage deferrals for homeowners.

The Ministry of Social Development (MSD) has also temporarily removed benefit income stand-downs, and made changes to assist people to remain at home to reduce the risk of community transmission and ease uncertainty for its clients.

Income support policies will be supported by active labour market policies and identifying opportunities for re-training and re-deployment. The Government will be considering options for expanding active labour market policies to transition unemployed people back into the labour market where possible, and ensure that those who continue to be unemployed do not move further away from the labour market.

A list of the COVID-19 response measures and Budget 2020 initiatives that may affect child poverty is attached at Appendix A.

There are also likely to be additional initiatives that may have a positive impact on child poverty that are funded through the COVID-19 Relief and Recovery Fund (CRRF) as the Government continues to support low-income households. These are not included in the main Appropriation Bill for Budget 2020, so have not been included in the body of this report.

These changes build on our investments since we formed our Coalition Government (see Appendix B for details).

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