The Government has agreed to develop a warrant of fitness scheme to require rental housing to be warm, dry and safe.
The scheme, recommended by an expert group appointed by Children's Commissioner Dr Russell Wills, will be tried out on Housing New Zealand properties and may later be extended to private rentals.
The Budget has also adopted another of the expert group's priorities for tackling child poverty, providing $1.2 million to deliver social services at community hubs such as schools, marae and churches.
It also includes a promise to explore low-interest or interest-free loans for poor families to reduce borrowing from loan sharks.
But a full response to Dr Wills' report, including a possible food programme in low-decile schools, has been deferred until a Government statement in the next few weeks.
There was no mention in the Budget of more money for teen parent schools, and the Government is believed to have rejected a proposal to pass on child support to beneficiaries. At present child support for beneficiaries goes to the state to offset the cost of their benefits.
Dr Wills welcomed the warrant of fitness scheme but urged the Government to extend it to private rentals.
"Given that two-thirds of children in poverty living in rented housing are in private rental homes, I look forward to hearing Government's plans to improve the standard of private rental accommodation," he said.
Housing Minister Nick Smith said he was starting with Housing NZ because the Government "needs to get its own house in order" first.
"It is also intended that the Housing WoF will then be extended to other social housing providers," he said.
"The WoF may be further extended to other rental property where the Government is providing a housing subsidy."
The scheme will complement insulation subsidies which have helped to insulate 215,000 homes since 2009.
The Budget extends that scheme past its current expiry in September, but with funding cut from $70 million to $33 million a year for the next two years and $27.5 million in the last year until the scheme expires in June 2016.
The reduced scheme will be limited to homes where at least one person has a community services card and is at "high health risk" - including children, the elderly and people at risk of cold-related illness.
The Government will pay 60 per cent of insulation costs and wants trusts, primary health organisations and iwi to pay the rest.
Green Party co-leader Metiria Turei, who negotiated a $100 million-a-year scheme with the former Labour Government, welcomed the decision to keep the scheme but said the reduced funding would throw 1000 people out of work in the insulation industry.
"That's terrible at a time of high unemployment," she said.
Professor Jonathan Boston, who co-chaired Dr Wills' expert group on child poverty, said that overall this year's Budget made "a modest contribution to solving the challenge of child poverty".
"A great deal more needs to be done over the coming years, and that includes having a very clear strategic focus," he said.
"Plainly, we have to raise the incomes of families on low incomes very substantially."
Children's Commissioner's Top 6
• Rental housing warrant of fitness.
• Community social service hubs.
• Low-interest loans for poor families.
• Announcement pending
• Food in schools.
• Passing on child support to beneficiaries.
• More teen parent schools.