Tolley Anne: Support for Children in Hardship Bill — First ReadingText is incorporated into the Bound VolumeTolley Anne: Support for Children in Hardship Bill — First Reading[Sitting date: 21 May 2015. Volume:705;Page:3531. Text is incorporated into the Bound Volume.]Hon ANNE TOLLEY (Minister for Social Development): I move That the Support for Children in Hardship Bill be now read a first time. I nominate the Social Services Committee to consider the bill. At the appropriate time I intend to move that the bill be reported by 3 November 2015.The Support for Children in Hardship Bill and the Budget package it supports represent the next step in this Government’s strong and continuing programme to tackle material hardship for children in low-income families. Introducing this omnibus bill under urgency will allow the greatest possible time in select committee while ensuring the bill can be passed into law by the end of the year to be implemented from 1 April 2016. The bill amends the Social Security Act inland revenue Acts and the Education Act delivering key components of this Government’s $790 million Budget package. The provisions in the bill build on the firm foundations this Government has laid down by creating a strong economy that supports more jobs and higher incomes for working families by setting clear targets for public services to address root causes of material hardship for children and by continuing our welfare reform’s unrelenting focus on work ensuring those who are able do all they can to find work helping themselves and their children get ahead.Welfare reform is working. In 2010 we introduced part-time work obligations for parents on a benefit with a youngest child aged 6 or over. As sound management saw the economy strengthen and job opportunities grow we extended this obligation to include beneficiaries with a child over 5 years of age. The results are clear. Since 2010 there has been a 19 percent drop in the number of people on sole parent support benefit. That means there are 16500 fewer people on sole parent support resulting in the lowest sole parent benefit numbers since the 1980s. This bill seeks to extend and accelerate those gains. It mirrors the growing and strengthening economy and labour market by expanding work obligations for beneficiary parents. From 1 April 2016 they will be required to start looking for part-time work when their youngest child is 3 and 4 years of age. This is a time in which both parents in the majority of two-parent families are in part or full-time work. Our expectation and aspiration for those on benefits should be the same. This will see another 18000 beneficiary parents brought into the part-time work obligations group. This is where case management focused on work is the strongest and where additional resources have been provided through the Budget package.We also know that there are important benefits for children attending high-quality early childhood education by 3 years of age which is why this Government provides for 20 hours of early childhood education. Research shows us that children in more vulnerable families including beneficiary households have the most to gain. Alongside this change the bill amends the definition of part-time work within the Social Security Act. Currently part-time work is defined in the benefits system as being work that averages 15 hours per week. From 1 April 2016 this bill increases that to 20 hours per week. At 20 hours’ part-time work most beneficiary parents will be better off and off benefits thanks to a combination of earned income and increased tax credits. Increasing the part-time work obligation to 20 hours a week means a greater attachment to the workforce. In addition most sole parents working 20 hours or more a week will be better off with a mixture of wages and Working for Families tax credits than they are on benefits. This is a strong incentive to leave the benefit altogether.Flexibility will be maintained regarding the exact hours of work to take account of individual factors and particular job opportunities. We know however that the costs of childcare can lessen the rewards of employment for many low-income working parents including beneficiaries moving into work. With this in mind the Budget package introduces a new higher rate of assistance for up to 50 hours a week of childcare or out-of-school care focused on helping the lowest-income working families. The significance of this change should not be underestimated. It is delivering an average gain of over $23 a week for each family. The childcare increase in the Budget package will be delivered by amendments to regulations rather than requiring amendments through this bill.Turning now to benefit rates on 1 April 2016 core benefit rates for each beneficiary household with dependent children will increase by $25 per week on top of the CPI increase that year. This is the first lift in core benefit rates since 1972 for beneficiaries with dependent children. This will deliver some of the rewards of a strong economy directly to New Zealand’s lowest-income households and the 194000 children within them. The bill amends the schedules of the Social Security Act that set out benefit rates enacting the increase to core benefit rates for families with children on 1 April 2016 and where necessary creating specific rates for households with one or more children where none exist now. A similar increase will be made to allowances for students with dependent children both to ensure that the children of low-income students share these gains and to reward students’ efforts through study rather than creating an incentive to move back on to a benefit. This increase to student allowances will also occur through regulations and will also be in addition to the consumer price increase.The core of the package and the bill is balancing more assistance and expectations for families with children while out of work with increased financial support to enter and stay in employment. We know that working families with children can struggle often as they enter work and their combined incomes are low. That is why with our childcare and tax credit changes over $300 million within the package is focused on ensuring that work pays for low-income families with children and that their incomes lift helping to ensure they can meet the needs of their children in a way we all expect to.Tax credit increases from 1 April 2016 for working families with children will provide $12.50 a week more in the base rate of the in-work tax credit delivering that full gain to families earning $36350 or less a year. It will also provide families earning more than $36350 a year with an increase in their in-work tax credit which could be less than $12.50 depending on their exact income and provide an extra $12 a week to working families who earn less than $27000 a year and are receiving the minimum family tax credit so that combined with the in-work tax credit these families’ weekly incomes are increased by $24.50. Together these changes will benefit over 203000 low-income working families and their 383000 children.To ensure that taxpayers’ investment is well targeted to lower-income families the bill at the same time increases the abatement rate for Working for Families payments by 1.25 percentage points and advances the timing of future changes to abatement rates and thresholds. A final provision in the bill as with every other major benefit and tax credit change provides a backstop that can cover exceptional circumstances and any unintended consequences due to the complexity of the tax and benefit system. Taken together this bill and the Budget package it supports will mean that almost every low-income New Zealand family with children will be better off.I commend the Support for Children in Hardship Bill to the House.