Maharey Steve: Future Directions (Working for Families) Bill — First Reading 
Maharey Steve: Future Directions (Working for Families) Bill — First Reading 
[Volume:617;Page:13424] 
Hon STEVE MAHAREY (Minister for Social Development and Employment) 
: 
 I move  
That the Future Directions (Working for Families) Bill be now read a first time. 
 This bill contains the Working for Families package the biggest change to New Zealand’s social assistance system in over a decade. It is the culmination of research and planning. By 2007 it will invest $1.1 billion a year in around 290000 New Zealand families. This bill is further evidence of this Government’s commitment to improving the lives of low and middle income families with children. It provides more support to working families will make people better off in work and ensures that families have enough income for an adequate standard of living. 
The bill increases the rates of family support substantially. Next year family support rates for the first child increase by $25 a week and by $15 a week for other children. Two years later these rates will increase by a further $10. The orphans benefit the unsupported child’s benefit and the foster care allowance rates also increase next year by $15 a week—and as a quick aside can I say that I hope it is at least something for those grandparents who are raising children and who have been raising this issue with us. 
Family income assistance will have a simpler more generous abatement system letting working families keep more assistance for longer. Family tax credit will increase to ensure that families do not have less income when moving off benefits into full-time work. It will provide a higher guaranteed minimum level of income than currently—up to $17 from the current $15 and those figures are net. 
A key factor contributing to inadequate family income has been a declining real value of family income assistance. This bill ensures that family support is regularly adjusted to maintain its worth for families. A new in-work payment for parents not on benefit will replace the child tax credit. The in-work payment is more generous than the child tax credit. It will be worth up to $60 a week for many families and be worth even more for large families. Sole parents must work at least 20 hours a week and couples at least 30 hours a week jointly to qualify. 
The in-work payment will have wider eligibility than the current child tax credit including people receiving New Zealand superannuation with dependent children working the required hours like many grandparents raising grandchildren. Families currently getting the child tax credit who are ineligible for the in-work payment will still get the child tax credit; but as family entitlements change the child tax credit will gradually be phased out. The in-work payment will have the clarity and the work incentive effect that the child tax credit lacks. 
Housing costs can be and are a major burden. To make housing more affordable this bill increases the accommodation supplement. It lets people keep more assistance and updates accommodation supplement areas from three to four. Auckland will be divided into two areas with a higher maximum rate for central and North Auckland. Other areas are grouped into areas with a higher maximum rate. For example Nelson and Queenstown are now recognised as needing a higher accommodation supplement. 
These changes will improve housing affordability for people on low and middle incomes living in locations where housing costs have risen sharply. Beneficiaries in work will keep their entire supplement no longer losing up to $20 a week. The amount of housing costs low-income workers must pay before they get help will be reduced and for low-income earners the level where their supplement begins to abate will be raised. These changes will help families and assist couples and single people. 
Working for Families makes quality childcare for low and middle income families more affordable. For many families the cost of childcare is a significant barrier to employment yet eligibility rules have not changed since 1992 and the cost of childcare has outstripped annual adjustments in rates. Working for Families raises childcare rates and increases the income limits so that more families qualify. It aligns out-of-school care rates with those for preschool care increasing them by a further 10 percent this October and a further 10 percent again in October 2005. This bill puts childcare assistance in legislation recognising its importance to many families. Childcare coordinators will help families access childcare assistance and other assistance. Higher family support and accommodation supplement rates will help families who have difficulty meeting their essential costs. Changes to special benefit next year will reflect this but no family will lose more special benefit than they gain in family support. In fact absolutely no one will be financially disadvantaged as a result of Working for Families. 
Complex rules in delivery systems work against parents moving off benefit into work. We need a simpler system that supports people into work. The changes in this bill form part of ongoing reform of the social assistance system. The child component of main benefits and student allowances will become part of the family support system. All support for children will be paid primarily through one payment—family support. This makes the assistance readily transferable between benefit and work. The removal of the child component will coincide with family support increases early next year providing a significant boost for families with children. 
A temporary additional support benefit that is easier to administer and understand replaces the special benefit for people who are unable to meet essential costs from their regular income and resources. The invalids benefit rules also change. People receiving the invalids benefit will with their case manager’s agreement be able to work 15 hours or more a week for up to 6 months to see whether they can sustain employment. They will not lose their benefit entitlement—though of course their benefit might reduce depending on their earnings and if they leave the benefit but need to reapply later they will not face a stand-down unless they have higher earnings meaning that they can switch on and off work and back to the benefit without any penalty. 
The evidence speaks for itself. A couple with three children living in Auckland on the North Shore earning $52000 a year and paying a mortgage of $385 a week will be about $170 better off in April 2007 than they are now. 
 A domestic purposes benefit recipient with two children living in Christchurch will be better off by about $36 a week. An equivalent sole parent working earning $30000 per year will be $128 better off in April 2007 than now. The message is very clear: this Government wants to ensure that adequate income goes into households so that children have the kind of environment they need in which to grow up and flourish and we want to ensure that work pays. At the heart of everything we are doing here is to advantage people as they move into the workplace retain earnings and get on with their lives. I cannot imagine anyone in this House wanting to oppose this bill but I am looking forward to hearing the debate and alternatives put forward as people move smoothly towards what I think will be overwhelming support for what we are trying to achieve. I commend this bill to the House.