BUDGET 2004: Families’ package a huge step forward

Prime Minister Helen Clark said today that Working for Families is one of the government’s most important achievements and, when fully in place, will deliver an average increase of around $100 a week in direct income assistance to families in the $25,000 to $45,000 band.

“Working for Families reflects the government’s strong commitment to fairness and to opportunity. It is designed to improve New Zealand’s economic performance by addressing the barriers to full participation in the workforce.

“In the last four years, New Zealand has achieved an annual growth rate of 3.6 per cent and job creation – especially in full time employment – has been strong. As a result, unemployment is at low levels by both historical and international comparisons.

“Many New Zealanders, however, still receive social assistance for all or part of their income while, at the same time, many employers are experiencing skill and labour shortages.

“We need to reform our welfare system so that it can respond to people’s changing needs and to remove any disincentives to work, while simultaneously ensuring that families are able to provide their children with a good start in life.

“Working for Families delivers on all these objectives and will dramatically improve the lives and life opportunities of hundreds and thousands of New Zealanders,” Helen Clark said.

“The impact of the changes will be substantial and widespread: by 2007 an estimated 61 per cent of all families with dependent children will benefit from the cumulative increases to Family Income Assistance, gaining an average $66 net a week, while households in the lower - $25,000 to $45,000 - income range net an average of between $95 and $100 extra a week.”

In addition: around 28,000 families and 33,000 children would benefit from increases to childcare assistance with average gains of $23 a week per child from 2005 and; around 95,000 households would receive increases averaging $19 a week to their Accommodation Supplement in 2005-06. Helen Clark said the increases represented the biggest offensive in the war against child poverty in decades.

Using two internationally recognised income poverty measures, with thresholds set at 50 per cent and 60 per cent of median household income; the package had the capacity to reduce child poverty by about 70 per cent at the lower threshold and about 30 per cent at the higher threshold.

“The New Zealand economy has performed strongly since the Labour-led government was elected, and we have been careful handling of the nation’s finances. As a consequence, Labour and the Progressives are now in a position to deliver this growth dividend to the people who deserve it most and where it will have the greatest and most useful effect.

“Low to middle income families paid a price for the reforms of the 1980s and 1990s and received relatively little in return. We have been steadily reducing that imbalance through such initiatives as the restoration of income related rentals, stronger worker protections, including Paid Parental Leave, and through heavy investment programmes in health, education from pre-school through to tertiary level, and in industry training.

“I am delighted in this budget to be able to build on this work and to take it forward,” Helen Clark said.

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