Families on benefit in for short rations

By RUTH BERRY political reporter

The Budget has delivered more money to beneficiary families, but the amount will in many cases be less than half that given to low- and middle-income working families.

It reflects the Government's promise to reduce child poverty levels but increase the incentive for beneficiaries to move into work by "making work pay".

Finance Minister Michael Cullen said yesterday that about one-third of the "Working For Families" spending - which will reach $1.1 billion a year in 2007 - was on beneficiaries.

Most beneficiaries without children stand to get nothing, apart from higher accommodation supplements.

But a carrot has been offered to invalid beneficiaries by encouraging them into work.

The number of people on this benefit has risen by more than 20,000 since 1999, to 75,500 this year.

The figure is roughly equal to those on the unemployment benefit, which in contrast has been declining.

From December, invalid beneficiaries will be able to work more than 15 hours a week for up to six months without losing their benefit - although it may be abated.

Automatic stand-downs will be removed for those who relinquish invalid benefits but are forced back onto them by the same disability.

Under changes designed to simplify the system, beneficiaries with children will have the child component of their payments wiped. That money will be channelled through family support payments.

Higher support payments for beneficiary families will begin kicking in next April, with further increases in April 2007.

A couple with one child will gain an extra $7.86 a week in the hand next year, rising to nearly $18 in 2007.

A sole parent with one child will be $25 and finally $35 better off.

But a working couple on $30,000 a year with one child will gain $104 more in family assistance by 2007.

At the other end of the scale, beneficiary couples with four children will get $52 more a week in assistance next year, rising to $92 in 2007.

A working family on $30,000 with four children will get $150 more in family assistance by 2007.

Dr Cullen told Parliament yesterday that he expected a 30 per cent reduction in child poverty by 2008, using a threshold of families on 60 per cent or less of the median disposable income.

For many beneficiaries with children, the income increases would "easily exceed" the size of the benefit cuts in 1991.

Simpler benefit system on the way

The Government did not announce details yesterday of its plan to simplify the benefit system, but has indicated it will do so soon.

Under the plan the 13 benefits will be reduced to one core benefit with add-ons.

Labour has long wanting to simplify the benefit system believing it would enable free case managers to concentrate on finding people jobs.

It also believes too many people missing out on payments to which they are entitled because of the complexity of the present system.

Yesterday's moving of child component payments of benefits into family support - which would enable an easier transition for those moving into work - was a first step.