Investments through Budget 2023 will support families and whānau living in poverty with the cost of living
For this year’s Budget, we have focused on making significant investments that will support families and whānau with children living in poverty by reducing household costs in a range of areas and helping with the cost of living.
We know that low and middle-income families spend a large proportion of their incomes on fixed costs, such as food and transport. Childcare can also be a significant cost to families, and can affect workforce participation for parents. In Budget 2023 we are supporting families and whānau with the cost of living by investing over $2.5 billion to reduce household costs. We are:
extending 20 hours Early Childhood Education (ECE) to two-year-olds, supporting families and whānau with the cost of childcare. Based on average costs in 2023, families who were not previously receiving childcare subsidies would save an estimated $133.20 a week in childcare costs if a 2 year-old child attended ECE for at least 20 hours a week.
improving accessibility and take up of Ministry of Social Development (MSD) Childcare Assistance by making it easier to apply for childcare subsidies. This is in addition to increasing income thresholds for MSD Childcare Assistance as announced in November 2022 as a pre‑commitment against Budget 2023. This makes over 10,000 additional children eligible for MSD childcare support. This has benefitted eligible two-parent families by an additional $252 per week, and sole parent families by an additional $92 per week.
continuing to provide approximately 220,000 children experiencing the greatest socio-economic barriers to education with daily healthy lunches, which can save families up to $30 a week per child. This has been estimated to save a family with two students, on average, approximately $60 per week.
providing additional support to those on main benefits by lifting main benefits by 7.22 percent (in line with inflation) through the Annual General Adjustment, meaning a family on a benefit with children will receive an extra $40.86 a week and a sole parent will receive an extra $31.83 a week.
removing $5 prescription co-payments for all New Zealanders to ease the impacts of the cost of medication. Last year more than 29 million items were dispensed that attracted a co‑payment. An estimated 135,000 adults did not collect their prescriptions because of cost in 2021/22. This is particularly the case for low-income families and whanau.
extending Community Connect by providing half price public transport to everyone aged 13 to 24 and Total Mobility Passengers, and free public transport for children aged 5 to 12, making approximately 770,000 additional people eligible for half price or free fares. This is in addition to half price public transport being made permanent to around one million Community Service Card holders, including eligible tertiary students, from 1 July 2023. Ministry of Transport data suggests that students make 9.5 trips per week on public transport. Free fares for children under 13 could save an average household of two children who are day-to-day users of public transport over $30 per week, based on typical fares in urban centres.
providing further funding for Whānau Ora Commissioning Agencies to expand their services, improve quality, and meet demand increases. Our investment will expand service delivery to rural communities, service options for whānau, and opportunities to further address emergency needs including temporary housing, kai sovereignty, and meeting essential living costs.
- extending and expanding the Warmer Kiwi Homes programme to reduce household electricity consumption, helping households with the cost of living by lowering energy bills.
In combination, these initiatives mean families and whānau will have more of their income to spend on essential items, and they will help to lift families out of poverty.
-  These scenarios are based on 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, and a sole parent in the same situation.