A Budget for the kids - and for their parents' votes

By HELEN TUNNAH, deputy political editor

Families making $25,000 to $45,000 a year will be an average of $100 a week better off after the Labour-led Government made the largest redistribution of wealth affecting the lower paid since National slashed welfare benefits in 1991.

Yesterday's Budget - planned well before Labour's slide in the polls - will benefit 300,000 households out of the country's 1.5 million.

More critically, the Working for Families package will give income boosts to up to 60 per cent of households with children through increases in family support payments, tax credits and the accommodation supplement.

But the targeted families will not reap the full benefit of Finance Minister Michael Cullen's largesse for three years.

Dr Cullen and Prime Minister Helen Clark said Working for Families would target child poverty but was not an election bribe.

The Prime Minister said New Zealanders should be ashamed at how many poor children it had.

She blamed that on National's former finance minister Ruth Richardson and the benefit cuts in her 1991 "Mother of All Budgets".

Even though the package will cost almost $3 billion over four years, Dr Cullen insists it is affordable and the Budget is fiscally responsible.

He said yesterday that his fifth Budget meant a great deal to him personally, and giving more money to low and middle-income families met his "role in life".

The Budget will give families making between $25,000 and $45,000 a year another $100 a week when the package is fully operational by April 2007.

Many families will have some extra money this year, as changes to accommodation and childcare subsidies take effect from October.

Dr Cullen rejected criticisms that the package was an early bid to buy votes or would entrench a culture of dependency on state assistance.

Instead he said the Government had the guts to implement far-reaching change to support families trying to make ends meet and encourage beneficiaries into jobs.

As promised, the package delivers most of its financial support through a reshaping of state-funded help.

Those who benefit the most will be working people on low wages and with children.

On average, working families will be better off by $66 a week through increased family support payments and a new "in-work" payment.

Some, especially those in central and north Auckland where rents are high, will also receive more cash through a boost to the accommodation supplement.

Dr Cullen said the cost of the package could be met because operating surpluses were forecast to be more than $5 billion a year.

But Treasury forecasts show growth dropping to 2.8 per cent next financial year and 2.5 per cent in the year to March 2006, before improving to more than 3 per cent.

Support for working families will cost $2.9 billion by 2007-2008, but Labour will spend even more - $7.2 billion - shoring up the public sector, mainly in education and health.

Overall, Dr Cullen announced new spending of $2.4 billion over the coming year, taking total core Crown spending to $44.5 billion.

But he warned that this year's bonanza would mean less new spending from next year.

"Working for Families is an expensive package because, unlike the efforts of the Government in the early 1990s, it does not seek to make those on modest incomes better off by pushing those below them further into poverty," he said.

"There are extreme ideologues who ... need to see most people made miserable. This Government was not elected to slash the incomes of the poor."

National Party leader Don Brash said the Budget promoted a debilitating culture of dependency and not independence.

It included a series of "cynically timed bribes" to try to win Labour a third term in government.

"There is no strong pressure for people to get off their backsides and get a job."

Dr Brash did not say if National would eliminate or reverse any of the package's elements.