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Support for Children in Hardship Bill Government Bill Explanatory note General policy statement This Bill is an omnibus Bill introduced under Standing Order 263(a) (dealing with an interrelated topic that can be regarded as implementing a single broad policy).

The Government believes all New Zealand families and children should have the op- portunity to live fulfilling lives.

While most families do well, some struggle and their children may face a higher risk of poor outcomes.
In Budget 2015, the Government introduced a package of initiatives to further assist children in more severe material hardship.

The package encourages employment by strengthening work expectations for parents on a benefit, provides more childcare support for low-income working families, and increases financial support for both beneficiary parents and working parents on low incomes.
The amendments in this omnibus Bill are required to deliver several key components of that package, while others, such as childcare assistance, are addressed through regulations or by Order in Council.
Amendments to Social Security Act 1964 The Bill strengthens work expectations and increases assistance for parents on a bene- fit and who have dependent children from 1 April 2016 by— • • • requiring part-time work-tested parents on a benefit to seek and be available for work that averages not less than 20 hours a week, rather than 15 hours, as now: requiring parents on a benefit who are able to work, to seek and be available for work, and be subject to work test obligations, once their youngest child turns 3 years of age, rather than 5, as now: providing for full-time work test obligations for spouses and partners of emer- gency benefit recipients to begin once their youngest child turns 14 years of age as for other work-tested beneficiaries: 23—1 2 • • • Support for Children in Hardship Bill Explanatory note increasing benefit rates for beneficiary families with dependent children by $25 a week: establishing that any increase to benefit rates through this Bill is not subject to the annual New Zealand Consumers Price Index adjustment on 1 April 2016, but is in addition to it: empowering the provision of financial assistance to any persons who are finan- cially disadvantaged as an unintended consequence of the net effects of this Bill and by any related regulations or other instruments.
Amendments to Education Act 1989 The package includes a matching $25 increase, achieved through regulations, to stu- dent allowance rates for students with dependent children.

This increase ensures an incentive is not created to move from study to benefit status.

The Bill amends the Education Act 1989 to ensure, as with benefits, this increase to student allowance rates is not subject to the annual New Zealand Consumers Price Index adjustment on 1 April 2016, but is in addition to it.
Amendments to Inland Revenue Acts To increase financial support for working families, the Bill amends the Income Tax Act 2007, increasing the base rate of the in-work tax credit for low-income working families with children by $12.50 per week from 1 April 2016.

At the same time, the Working for Families abatement rate is increased by 1.25% to ensure the increase is well targeted to low income families.
The Taxation (Annual Rates and Budget Measures) Act 2011 (the 2011 Act) contains provisions making successive future incremental changes, timed by successive Orders in Council, to the abatement rate and the abatement threshold.

Those provisions are amended by this Bill to advance the timing of the increases by which the abatement rate incrementally approaches a rate of 25%.

This better targets assistance.


The 2011 Act is also amended so that the successive changes to the abatement threshold are re- flected in Schedule 31 of the Income Tax Act 2007, which gives the annualised equivalent amounts of income that are used in determining a person’s entitlement to tax credits under the scheme.

Departmental disclosure statement The Ministry of Social Development is required to prepare a disclosure statement to assist with the scrutiny of this Bill.
The disclosure statement provides access to infor- mation about the policy development of the Bill and identifies any significant or un- usual legislative features of the Bill.

A copy of the statement can be found at http://legislation.govt.nz/disclosure.aspx?

type=bill&subtype=government&year=2015&no=23.


Explanatory note Support for Children in Hardship Bill 3 Regulatory impact statement The Department of Prime Minister and Cabinet, the Treasury, and the Ministry of So- cial Development produced a regulatory impact statement on 9 April 2015 to help in- form the main policy decisions taken by the Government relating to the contents of this Bill.
A copy of this regulatory impact statement can be found at— • • http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/regu- latory-impact-statements/index.html http://www.treasury.govt.nz/publications/informationreleases/ris Clause by clause analysis Clause 1 is the Title clause.
It is intended that the Bill will be divided into the follow- ing 3 separate Bills at the committee of the whole House stage: • • • Social Security Amendment Bill: Education Amendment Bill: Taxation (Support for Children in Hardship) Bill.

Clause 2 is the commencement clause.
It provides different commencement dates for each of the 3 Parts of the Bill, as follows: • • • Part 1 (which amends the Social Security Act 1964) comes into force on 1 April 2016, immediately before any regulations made under section 61HA(2) of the Social Security Act 1964 that adjust the rates of certain benefits as at the same date: Part 2 (which amends the Education Act 1989) comes into force on the day af- ter the Act receives the Royal assent: Part 3 (which amends the Income Tax Act 2007 and the Taxation (Annual Rates and Budget Measures) Act 2011), except clauses 14 and 15, comes into force on the day after the Act receives the Royal assent.
Clauses 14 and 15 come into force on 1 April 2016.

Part 1 Amendments to Social Security Act 1964 Clause 3 states that this Part amends the Social Security Act 1964 (the principal Act).

Clause 4 amends section 3, which is the interpretation provision.
The definition of part-time work is changed from work that averages not less than 15 hours a week to work that averages not less than 20 hours a week, which is to be calculated over a 3- month period of employment or, if that is shorter than 3 months, the period of em- ployment.
The definitions of part-time work-tested beneficiary, work-tested sole pa- rent support beneficiary, and work-tested spouse or partner are amended to replace references to a youngest dependent child aged 5 with references to a youngest de- 4 Support for Children in Hardship Bill Explanatory note pendent child aged 3.

The effect of those amendments is that part-time work test obli- gations will take effect when the youngest dependent child of a beneficiary turns 3, rather than the present age of 5.
Clause 5 amends section 3C to refer to the transitional provision inserted in new Part 4 of Schedule 32 (see clause 10 and the Schedule).

Clauses 6 and 7 amend, respectively, sections 60GAE and 60Q to replace references to dependent children aged under 5 with references to dependent children aged under 3.
The amendments align the provisions relating to the exclusion of additional de- pendent children from assessment of benefit eligibility, and when work preparation obligations are imposed, with the amendments in clause 4 relating to when part-time work test obligations take effect.

Clause 8 amends section 61A, which sets out when the spouse or partner of a person granted an emergency benefit may be required to comply with the work test obliga- tions.
Part-time work test obligations may be imposed when the person’s youngest de- pendent child is aged 3 (rather than the present age of 5) and full-time work test obli- gations may be imposed when the person’s youngest dependent child is aged 14 (rath- er than the present age of 18).

Clause 9 amends section 61HA.


A new section 61HA(2A) is inserted to provide that any increase to a rate of benefit provided in this Bill is not subject to an annual New Zealand Consumers Price Index adjustment on 1 April 2016, but is additional to that adjustment.

This new subsection is repealed on 30 April 2016, when it will be a spent provision.

Clause 10 amends Schedules 3, 3A, 6, 9, 16, 26, and 32 of the principal Act.
The amendments to Schedules 3, 3A, 6, 9, 16, and 26 increase by $25 a week the benefit rates for those beneficiaries with dependent children.

The amendment to Schedule 32 is to provide a transitional regulation-making power enabling regulations to be made to provide financial assistance to any persons who are financially disadvantaged as an unintended consequence of the net effects of the amendments made by this Bill and by any other related regulations or other instruments.
Part 2 Amendments to Education Act 1989 Clause 11 states that this Part amends the Education Act 1989.

Clause 12 amends section 303, which provides for the making of regulations relating to student allowances.
A new subsection (3BA) is inserted to clarify what is to happen if regulations are made that increase the rates of student allowances on 1 April 2016 and on that date the same rates are increased by regulations made under subsection (3B) (the annual adjustment to reflect the movement in the New Zealand Consumers Price Index).
In that event, the increases effected by the first-mentioned regulations are not subject to the CPI adjustment, but are applied after that adjustment has been made to the rates of student allowances by the latter regulations.

This new subsection is repealed on 30 April 2016, when it will be a spent provision.

Explanatory note Support for Children in Hardship Bill 5 Part 3 Amendments to Inland Revenue Acts Amendments to Income Tax Act 2007 Clause 13 gives the clauses amending the Income Tax Act 2007.
Clause 14 amends section MD 10 by increasing the base amount used for the calcula- tion of the in-work tax credit from $3,120 to $3,770.

Clause 15 amends section MD 13(3)(a) by increasing the abatement rate for a family credit, from 21.25 cents for each complete dollar of family scheme income above the threshold to 22.5 cents for each such dollar.
Amendments to Taxation (Annual Rates and Budget Measures) Act 2011 Clause 16 gives the clauses amending the Taxation (Annual Rates and Budget Meas- ures) Act 2011.

Clause 17 amends section 2, to give the commencement dates for the subsections of new section 14B, which makes successive changes to Schedule 31 of the Income Tax Act 2007.

Clause 18 amends section 4, which gives the sections amending the Income Tax Act 2007, to include new section 14B.
Clause 19 amends section 5, to change the successive values for abatement threshold and abatement rate that are substituted by that section in section MD 13(3)(a) of the Income Tax Act 2007 upon the making of successive Orders in Council.

Clause 20 inserts new section 14B.

The new section makes successive changes to Schedule 31 of the Income Tax Act 2007, which gives the annualised equivalent amounts of income that are used in determining a person’s entitlement to tax credits under the family scheme.
The timing of the changes is synchronised with the timing of the successive changes made by section 5.
Hon Anne Tolley Support for Children in Hardship Bill Government Bill Contents Page Title Commencement Part 1 Amendments to Social Security Act 1964 Principal Act Section 3 amended (Interpretation) Section 3C amended (Transitional and savings provisions relating to amendments to this Act) Section 60GAE amended (Beneficiaries having additional dependent child: general) Section 60Q amended (Certain obligations may be placed on beneficiaries and their spouses and partners) Section 61A amended (Obligations of spouse or partner of person granted emergency benefit) Section 61HA amended (Annual CPI adjustment of rates of certain benefits) Amendments to various schedules Part 2 Amendment to Education Act 1989 Principal Act Section 303 amended (Student allowances) 23—1 2 2 2 2 3 3 3 3 3 4 4 4 1 cl 1 Support for Children in Hardship Bill Part 3 Amendments to Inland Revenue Acts Amendments to Income Tax Act 2007 Income Tax Act 2007 Section MD 10 amended (Calculation of in-work tax credit) Section MD 13 amended (Calculation of family credit abatement) Amendments to Taxation (Annual Rates and Budget Measures) Act 2011 Taxation (Annual Rates and Budget Measures) Act 2011 Section 2 amended (Commencement) Section 4 amended (Income Tax Act 2007) Section 5 amended (Calculation of family credit abatement) New section 14B inserted (Schedule 31 amended) 14B Schedule 31 amended Schedule Amendments to Schedules 3, 3A, 6, 9, 16, 26, and 32 of Social Security Act 1964 4 5 5 5 5 5 5 6 6
 7 The Parliament of New Zealand enacts as follows: 1 Title This Act is the Support for Children in Hardship Act 2015.
2 (1) (2) (3) Commencement Part 1 comes into force on 1 April 2016, and, if any Order in Council made under section 61HA(2) of the Social Security Act 1964 comes into force on the same date, Part 1 comes into force immediately before that order.

Part 2 comes into force on the day after the day on which this Act receives the Royal assent.

5 Part 3, other than sections 14 and 15, comes into force on the day after the day on which this Act receives the Royal assent.
10 (4) Sections 14 and 15 come into force on 1 April 2016.

Part 1 Amendments to Social Security Act 1964 3 Principal Act 15 This Part amends the Social Security Act 1964 (the principal Act).
Section 3 amended (Interpretation) In section 3(1), replace the definition of part-time work with: 4 (1) 2 Support for Children in Hardship Bill Part 1 cl 9 part-time work means employment that is not full-time employment, but is— (a) (b) employment under a contract of service, whether on time or piece rates, that averages not less than 20 hours each week calculated over a 3- month period of employment or, if that period is shorter than 3 months, over the period of the employment; or 5 employment as a self-employed person in any business, profession, trade, manufacture, or undertaking that averages not less than 20 hours each week calculated over a 3-month period of employment or, if that period is shorter than 3 months, over the period of the employment In section 3(1), definition of part-time work-tested beneficiary, paragraph (a), replace “5” with “3”.
10 In section 3(1), definition of work-tested sole parent support beneficiary, paragraph (b), replace “5” with “3”.

In section 3(1), definition of work-tested spouse or partner, paragraph (a)(i), replace “5” with “3”.
15 Section 3C amended (Transitional and savings provisions relating to amendments to this Act) In section 3C(2), table, after the last item, insert: Part 1 of the Support for Chil- dren in Hardship Act 2015 Part 4 Section 60GAE amended (Beneficiaries having additional dependent child: general) 20 In section 60GAE(2)(b), replace “5” with “3”.

Section 60Q amended (Certain obligations may be placed on beneficiaries and their spouses and partners) In section 60Q(1)(a), replace “5” with “3”.
In section 60Q(1)(c)(ii), replace “5” with “3”.

25 Section 61A amended (Obligations of spouse or partner of person granted emergency benefit) In section 61A(1A)(a), replace “aged 5 or older but under 18 years” with “aged 3 or older but under 14 years”.
(2) (3) (4) 5 6 7 (1) (2) 8 9 Section 61HA amended (Annual CPI adjustment of rates of certain bene- fits) 30 (1) After section 61HA(2), insert: (2A) Despite subsection (2), if any rate of benefit referred to in that subsection is in- creased on 1 April 2016 by Part 1 of the Support for Children in Hard- ship Act 2015,— 35 3 Part 1 cl 10 Support for Children in Hardship Bill (a) (b) the adjustment to that rate of benefit as at 1 April 2016 required by sub- section (2) is to that rate as at 31 March 2016; and the amount by which the rate was increased by Part 1 of the Support for Children in Hardship Act 2015 on 1 April 2016 is additional to the adjustment referred to in paragraph (a).
5 (2) After section 61HA(6), insert: (7) Subsection (2A) is repealed on 30 April 2016, and this subsection is repealed immediately after.

10 Amendments to various schedules Schedules 3, 3A, 6, 9, 16, 26, and 32 are amended in the manner set out in the Schedule of this Act.

10 Part 2 Amendment to Education Act 1989 11 Principal Act This Part amends the Education Act 1989 (the principal Act).
12 Section 303 amended (Student allowances) (1) After section 303(3B), insert: (3BA) Despite subsection (3B), if any rate of student allowance is increased on 1 April 2016 by regulations (regulations A), not being the regulations required to be made under subsection (3B) that come into force on 1 April 2016 (regu- lations B), then— 15 20 (a) (b) (c) regulations A come into force immediately before regulations B; and the adjustment to the rate of the allowance required to be made by regu- lations B is to the rate as at 31 March 2016; and the amount by which the rate of allowance is increased by regulations A 25 is added to the adjustment made by regulations B.
(2) After section 303(5), insert: (6) Subsection (3BA) is repealed on 30 April 2016, and this subsection is re- pealed immediately after.

Part 3 Amendments to Inland Revenue Acts Amendments to Income Tax Act 2007 30 13 Income Tax Act 2007 Sections 14 and 15 amend the Income Tax Act 2007.

4 Support for Children in Hardship Bill Part 3 cl 19 14 Section MD 10 amended (Calculation of in-work tax credit) In section MD 10(3)(a), replace “$3,120” with “$3,770”.
15 Section MD 13 amended (Calculation of family credit abatement) In section MD 13(3)(a),— (a) (b) in subparagraph (i), replace “21.25 cents” with “22.5 cents”: 5 in subparagraph (ii), replace “21.25 cents” with “22.5 cents”.

Amendments to Taxation (Annual Rates and Budget Measures) Act 2011 16 Taxation (Annual Rates and Budget Measures) Act 2011 Sections 17 to 20 amend the Taxation (Annual Rates and Budget Measures) Act 2011.
10 17 (1) (2) (3) Section 2 amended (Commencement) In section 2(3), replace “Section 5(2) comes” with “Sections 5(2) and 14B(1) come”.

In section 2(4), replace “Section 5(3) comes” with “Sections 5(3) and 14B(2) come”.

In section 2(5), replace “Section 5(4) comes” with “Sections 5(4) and 14B(3) come”.

18 Section 4 amended (Income Tax Act 2007) In section 4, replace “Sections 5 to 14” with “Sections 5 to 14B”.
19 Section 5 amended (Calculation of family credit abatement) Replace section 5(2) to (4) with: (2) In section MD 13(3)(a),— 15 20 (a) (b) in subparagraph (i), replace “$36,350, 22.5 cents” with “$35,900, 23.75 cents”: in subparagraph (ii), replace “$36,350, 22.5 cents” with “$35,900, 23.75 cents”.

25 (3) In section MD 13(3)(a),— (a) (b) in subparagraph (i), replace “$35,900, 23.75 cents” with “$35,450, 25 cents”: in subparagraph (ii), replace “$35,900, 23.75 cents” with “$35,450, 25 cents”.
30 (4) In section MD 13(3)(a),— (a) in subparagraph (i), replace “$35,450, 25 cents” with “$35,000, 25 cents”: 5 Part 3 cl 20 Support for Children in Hardship Bill (b) in subparagraph (ii), replace “$35,450, 25 cents” with “$35,000, 25 cents”.
20 New section 14B inserted (Schedule 31 amended) After section 14, insert: 14B Schedule 31 amended 5 (1) In Schedule 31, replace the first and second rows after the heading row with: Amount does not exceed $35,900 Amount exceeds $35,900 but does not exceed $36,500 Amount exceeds $36,500 but does not exceed $38,000 $35,900 $36,500 $38,000 (2) In Schedule 31, replace the first and second rows after the heading row with: Amount does not exceed $35,450 Amount exceeds $35,450 but does not exceed $36,500 $35,450 $36,500 (3) In Schedule 31, replace the first and second rows after the heading row with: Amount does not exceed $35,000 Amount exceeds $35,000 but does not exceed $36,500 $35,000 $36,500 6 Support for Children in Hardship Bill Schedule Schedule Amendments to Schedules 3, 3A, 6, 9, 16, 26, and 32 of Social Security Act 1964 Schedule 3 In clause 1, replace “$300.98” with “$325.98”.
Schedule 3A In clause 1, replace “$300.98” with “$325.98”.
Schedule 6 Replace clause 1(c) to (h) with: (c) (d) To a single beneficiary with 1 or more de- pendent children To a beneficiary who is married, in a civil union, or in a de facto relationship, whose spouse or partner is granted, in his or her own right, a benefit other than a veteran’s pension (e) (f) (g) To a beneficiary who is married, in a civil union, or in a de facto relationship, whose spouse or partner is granted, in his or her own right, a veteran’s pension To a beneficiary receiving a supported liv- ing payment under section 40B on the ground of sickness, injury, disability, or total blindness who is married, in a civil union, or in a de facto relationship, whose spouse or partner is not granted a benefit in his or her own right To a beneficiary receiving a supported liv- ing payment under section 40D on the ground of caring for a patient requiring care, if the beneficiary is married, in a civ- il union, or in a de facto relationship and the beneficiary’s spouse or partner is not granted a benefit in his or her own right cl 10 5 10 $370.02 a week, subject to Income Test 1 $218.86 a week, increased by— (i) (ii) $25 a week if the beneficiary and his or her spouse or partner have 1 or more dependent children and the beneficiary’s spouse or partner has not been granted a supported living payment or jobseeker sup- port, the total rate to be subject to Income Test 2; or $12.50 a week if the beneficiary and his or her spouse or partner have 1 or more dependent children and the beneficiary’s spouse or partner
 has been granted a suppor- ted living payment or jobseeker support, the total rate to be subject to Income Test 2 $218.86 a week, increased by $25 a week if the beneficiary and his or her spouse or partner have 1 or more dependent chil- dren, the total rate to be subject to Income Test 1 $218.86 a week, increased by $218.86 a week in respect of his or her spouse or partner and a further $25 a week if the beneficiary and his or her spouse or part- ner have 1 or more dependent children, the total rate to be
 subject to Income Test 1 $218.86 a week, increased by $25 a week if the beneficiary and his or her spouse or partner have 1 or more dependent chil- dren, the total rate to be subject to Income Test 1 7 Schedule Support for Children in Hardship Bill Schedule 9 Replace clause 1(d) to (g) with: (d) To a beneficiary who is married, in a civil union, or in a de facto relationship, whose spouse or partner is granted, in his or her own right, a benefit other than a veteran’s pension (e) (f) To a beneficiary who is married, in a civil union, or in a de facto relationship, whose spouse or partner is granted, in his or her own right, a veteran’s pension To a beneficiary who is married, in a civil union, or in a de facto relationship, whose spouse or partner is not granted a benefit in his or her own right Schedule 16 In clause 1, replace “$300.98” with “$325.98”.
Schedule 26 In clause 2, replace “140.08” with “165.08”.

In clause 3, replace “300.98” with “325.98”.
Replace clause 5 with: $175.10 a week, increased by— (i) (ii) $25 a week if the beneficiary and his or her spouse or partner have 1 or more dependent children and the beneficiary’s spouse or partner has not been granted a supported living payment or jobseeker sup- port, the total rate to be subject to Income Test 4; or $12.50 a week if the beneficiary and his or her spouse or partner have 1 or more dependent children and the beneficiary’s spouse or partner has been granted a suppor- ted living payment or jobseeker support, the total rate to be subject to Income Test 4 $175.10 a week, increased by $25 a week if the beneficiary and his or her spouse or partner have 1 or more dependent chil- dren, the total rate to be subject to Income Test 3 $175.10 a week, increased by $175.10 a week in respect of his or her spouse or partner and a further $25 a week if the beneficiary and his or her spouse or part- ner have 1 or more dependent children, the total rate to be subject to Income Test 3 5 8 Support for Children in Hardship Bill Schedule Schedule 26—continued 5 For a young person who is married, in a civil union, or in a de facto relation- ship and has a dependent child or de- pendent children Schedule 32 After Schedule 32, Part 3, insert: 175.10 a week, increased by— (i) (ii) 25 a week if the young person’s spouse or partner is not receiv- ing a young parent payment, the total rate to be subject to clause 11; or 12.50 a week if the young per- son’s spouse or partner is re- ceiving a young parent pay- ment, the total
 rate to be sub- ject to clause 11 21 (1) Part 4 Social Security Amendment Act 2015 Regulations for provision of financial assistance to financially disadvan- taged persons 5 The purpose of this clause is to enable the making of regulations authorising the provision of financial assistance to any persons who are financially disad- vantaged as an unintended consequence of the net effects of the amendments made by Part 1 of the Support for Children in Hardship Act 2015, Part 2 of the Support for Children in Hardship Act 2015, Part 3 of the Sup- port for Children in Hardship Act 2015, and any related regulations or other instruments.
(2) The chief executive may from time to time grant to a person referred to in sub- clause (1) financial assistance— (a) of the prescribed kind and in the prescribed amount; and (b) (c) (d) for the prescribed period; and in accordance with the prescribed criteria; and in accordance with any other requirements set out in the regulations made under subclause (3).

20 (3) (4) The Governor-General may from time to time, by Order in Council, make regulations for the purposes of this clause.
Regulations made under subclause (3) must state the date on and after which they are to have effect (which may be a date earlier than the date on which they were made).

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