Income Adequacy Pt2

Theme

Detail

Main benefits

• Remove youth rates of main benefits. Increase Jobseeker Support for under 24 years living away from home (and the rate of Youth Payment) to match the rate for people 25 and older, and increase Supported Living Payment for 16–17 year-olds to the rate for people aged 18 and over.

• Remove initial income stand-down periods.

• Remove the 13-week non-entitlement period for voluntary unemployment.

• Remove the 30-hour rule.

• Introduce individual entitlement to Jobseeker Support while retaining a couple-based income test.

• Keep sole parents on Sole Parent Support until their youngest child turns 18 (rather than switching them to Jobseeker Support once their youngest child turns 14).

• Consider changing the name of Jobseeker Support – Health Condition or Disability to better reflect people’s needs (for example, Health Support).

Hardship assistance

• Increase income and asset limits to allow a larger proportion of low-income working people to access payments.

• Review and increase grant limits so they cover current costs, including for emergency dental treatment.

• Make a larger proportion of payments non-recoverable (for example, those for the costs of school uniforms).

• Review the Temporary Additional Support formula, including the accommodation loading and maximum amount, so it adequately covers costs.

Income definition

• Align definitions of income and assets with those established by Inland Revenue, unless there are clear and robust reasons for a different definition.

• Treat earnings-related compensation from ACC the same as other income from work in the benefit system.

• Review how income is measured and allocated to people, including assessment periods – especially in the treatment of lump-sum payments, retrospective payments, joint investments and annual business income.

Theme

Detail

Family Tax Credit

• Align shared care rules for the Family Tax Credit with child support – 35% of care.

• Extend the 4 weeks ‘terminal payment’ to the Family Tax Credit.

• Consider how increases in the Family Tax Credit should impact on the rates of Unsupported Child’s Benefit and Orphan’s Benefit.

Best Start Tax Credit

• Consider changing the interaction between Best Start and Paid Parental Leave to avoid overpayments.

Child Tax Credit

• Repeal the Child Tax Credit.

Childcare Assistance

• Change the definition of income to remove other non-taxable transfer payments (for example, Accommodation Supplement, Disability Allowance and Temporary Additional Support).

• Improve take-up by promoting greater awareness to working families, alongside Inland Revenue (given its role in administering Working for Families).

• Review subsidy rates (and their interaction with minimum session times in childcare and Out of School Care and Recreation (OSCAR) services), to determine if they are adequately subsidising costs, and increase the rates if they are inadequate.

• Consider increasing income thresholds to provide greater subsidisation of childcare costs for low- and middle-income working families, so that effective marginal tax rates for these families are not too high.

Child support

• Treat child support received as income for benefit abatement (already income for the Family Tax Credit).

• Treat child support paid as a reduction in income for benefit abatement (already a reduction in income for the Family Tax Credit).

• Remove compulsory application for child support (except for recipients of Unsupported Child’s Benefit).

• Shorten the application form and make more application options available (for example, online).

• Review the expenditure table to reflect changes in Family Tax Credit payments.

Shared care

• Align shared and split care rules for main and supplementary payments with the Family Tax Credit and child support.

Theme

Detail

Ensuring benefit settings have less impact on partnering decisions

• Allow a 6-month period (rather than the current 6 weeks) after people move in together as a couple before a relationship is deemed to exist for the purposes of determining benefit eligibility.

• Do not deem two people who do not live together as being in a relationship for the purposes of welfare support.

• Investigate other moves towards greater neutrality in respect of relationship status, including increased individualisation of benefit entitlement, bringing the couple rate of benefit closer to two times the single rate, and improving alignment between the approach taken by MSD and in other legislation.

• Consider introducing a short-term entitlement (for example, 6 months) to a main benefit for partnered people who lose their jobs or incomes (due to redundancy, a health condition or disability, or a health condition or disability of a dependent child) through an earnings disregard of their partner’s income (up to a cap of around $48,000 a year) for this period.