The Government will remove a benefit sanction which saw solo mothers who did not name their child's father penalised up to $28 per week and increase the amount that beneficiaries can earn through employment before their benefit is cut.
Minister for Social Development Carmel Sepuloni announced the changes on Friday in response to a report from the Welfare Expert Advisory Group.
The report warned urgent and fundamental change was needed to redress a level of financial support so low in New Zealand that too many were living in desperate situations. It stated the current system no longer met the needs of the more than 600,000 Kiwis it was supposed to support.
However, Sepuloni said the Government had decided against a recommended move to increase benefit levels by up to 47 per cent immediately so Kiwis could "live in dignity", and was instead "looking at a staged implementation" of change.
It would also allocate $76.3 million for 263 new frontline staff with the sole "focus of helping more people into meaningful and sustainable work".
The report said restoring trust in the system would lift outcomes for Māori and Pacific people, who were particularly adversely affected by the current system.
Māori make up 36 per cent of all working-age people receiving a benefit as the primary recipient.
It made 42 key recommendations, but the Government would only be acting on three of them immediately.
Sepuloni said there were a "range of ways" to reduce the number of beneficiaries living in poverty, and the Government would be looking at those over the coming years.
"The Government can't deliver on every recommendation at once. We are taking a balanced approach and are committed to delivering change over the longer term and prioritising areas like housing and mental health which impact on all New Zealanders but especially those in the welfare system."
The plans would result in fewer children growing up in extreme poverty and see more people moving off benefits and into decent long-term work, she said.
The overhaul of the system was promised as part of Labour's Confidence and Supply agreement with the Green Party, and had support from NZ First.
Sepuloni said the sanction on solo mothers, which saw those who didn't name their child's father on their birth certificate penalised up to $28 per week, "cruelly singled out 24,000 children raised by sole parents.
"The Government supports parental freedom, and ensuring sole parents and their children are not pushed into poverty because of a private parenting decision that the Government has no need to be involved in."
Removing the sanction would cost $113.4 million over four years and would come into effect on April 1, 2020.
Also coming into effect on April 1, 2020 would be an increase to the abatement thresholds for jobseeker support by $150 a week, and sole parent support and supported living payment to $150 a week and $250 a week.
The increased support could benefit about 73,000 low income individuals and families, at a cost of $97.1 million over four years.
"This is about ensuring wage fairness and making sure low income beneficiaries can take home more of what they earn," Sepuloni said.
"This change is about catching up with the times. Abatement thresholds for Jobseeker Support haven't changed in over 20 years and many people find they are no better off for working, after travel and childcare costs."
Green Party co-leader Marama Davidson said the report created a road map for significant change.
"We are committed to an inclusive society where everyone is treated with dignity and respect, and supported to participate fully in the community," she said.
National's spokeswoman for social development, Louise Upston, said her party disagreed with the bulk of the report, "which would see fewer obligations imposed on beneficiaries and fewer incentives to get back into work".
"Increasing the abatement threshold for people on benefits means people can keep more of what they earn. This is a welcome incentive to encourage more people into work.
"National believes that New Zealanders should be given a hand up, not a hand out and those who can work, should."
ACT leader David Seymour said removing sanctions on women who don't name the father of their child is a complete reversal of position for Labour.
"In 2004, Social Development Minister Steve Maharey said: 'It is a rort, and I have said time and time again in this Parliament that fathers must front up to their obligations, and we will make sure they do ... It is not unreasonable to penalise financially those who do not.'
"This change will mean taxpayers will assume greater responsibility for supporting children, rather than their fathers.
"Lifting the abatement threshold at which beneficiaries' payments are reduced will mean it is less likely people move off welfare and into full-time work, further entrenching dependency."
Auckland Action Against Poverty said it was glad to see the Government "finally taking action to stop punishing sole parents and children".
It urged the Government to also ensure that every woman who had been penalised by the sanction received back pay, however the Minister told media this would not happen.
Ricardo Menendez March, the advocacy group's co-ordnator, said he was disappointed the Government was only adopting three changes despite the report showcasing the need for urgency.
"The Government needs to be clear about its timeline of when it introduces the other recommendations," he said.
"The main thing missing is the increase in core benefit levels. That is something the report was very clear that needs to happen.
'We know that people are going to Work and Income to get food grants because their benefit levels are far too low."
SOME KEY RECOMMENDATIONS FROM THE REPORT
* Reform Working for Families and other tax credits by increasing the Family Tax Credit to $170 a week for the eldest child and to $120 a week for subsequent children.
* Increase the abatement threshold for the Family Tax Credit and change the abatement rate to:
– 10 per cent on family annual incomes between $48,000 and $65,000
– 15 per cent on family annual incomes between $65,000 and $160,000
– 50 per cent on family annual incomes in excess of $160,000.
* Replace the In-Work Tax Credit, Minimum Family Tax Credit and Independent Earner Tax Credit with a new Earned Income Tax Credit.
* Introduce an Earned Income Tax Credit of up to $50 a week for people with and without children and with a couple-based income test
* Make the Best Start Tax Credit universal for all children aged under 3 years.
* Endorse the Ministry of Social Development's three-tiered approach to responding to fraud allegation: intervene, facilitate and, as a last resort, investigate.
* Increase the range of home ownership and tenure options for people on low and low–middle incomes.
* Assist recipients of Sole Parent Support to return to part-time work when their youngest child is 6 years old (subject to supports being available, such as good quality childcare) instead of the current 3 years. Support but not require all sole parents to return to work when their youngest child is under 6 years old.
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