Social Development and Employment Minister, Carmel Sepuloni says up to 14,000 Kiwi kids could be lifted out of poverty as the Government delivers on its promise to change child support rules this week.
The Government is introducing a Bill today that will see child support collected by Inland Revenue passed on directly to parents on a sole parent rate of main benefit from 1 July 2023.
Currently child support payments are collected and used to offset the cost of the benefit paid to these parents. The Welfare Expert Advisory Group recommended abolishing this cost-recovery approach in 2019, saying “money intended for children should not be withheld by the Government.
“These changes will make the system less discriminatory, while also giving parents on a sole parent rate of main benefit a bit extra to help with the cost of raising their children,” Minister Sepuloni said.
“We know that right now, every little bit counts.”
The child support pass-on changes are intended to be implemented in two phases. Phase one will deliver most of the changes, resulting in extra cash in hand for the vast majority of families on a sole parent rate of main benefit.
Phase two is intended to roll out policy features that apply in a small number of more complex payment situations.
“Amending the rules will support parents to lift an estimated up to 14,000 children out of poverty,” Ms Sepuloni said.
“Today’s changes continue to build on the progress we have been making to improve people’s lives through our Families package and welfare reforms.”
Revenue Minister, David Parker said the changes will have a flow-on effect, but overall, sole parents will be better off.
“These payments will be treated as income for calculating a benefit or other assistance. It is estimated that 41,550 sole-parent families will be better off, with a median gain of $24 per week, or $20 after reduction of their benefit or other assistance,” Mr Parker said.
“The proposal will strengthen the child support scheme. If parents know that the child support they pay will get to their own children, it will also encourage more parents to pay.”
Once passed by Parliament, most sole parents on a benefit will get the full advantage of the pass-on from August 2023, when child support from the July period is paid.