Family millions left unclaimed

The Government is sitting on $86 million that was budgeted for family assistance last year but has not been claimed.

The Treasury's pre-election fiscal update, issued on Thursday, discloses that the Government budgeted $932 million for family support in the financial year to June 30, but spent just $846 million.

Only 200,000 families were receiving family assistance by June, 60,000 fewer than the number who are said to be eligible for assistance in this financial year.

Those who have not claimed it yet are entitled to claim backpay.

Labour says the number of eligible families would have risen from 260,000 this year to 290,000 in 2006-07 under last year's Working for Families package, and will now rise to 350,000 because of the party's pledge this week to raise the maximum income levels.

Families will now be eligible for some family support on annual incomes of up to $69,320 with one child, $81,540 with two children, or as much as $109,880 a year with four children.

But economist Susan St John, of the Child Poverty Action Group, said yesterday that the big underspend last year suggested problems in getting people to take up their entitlements. She said Britain paid all families a universal child benefit of 17 ($43.75) a week for the first child and 11.40 ($29.35) for every subsequent child to make sure everyone was in the system.

In New Zealand, family support is a tax credit and families need to apply to Inland Revenue for it unless they are welfare beneficiaries.

Inland Revenue spokeswoman Sharon Cuzens said most wage and salary earners had not had to file tax returns since the tax system was simplified in 2000.

This meant their family support entitlements would not be picked up automatically at the end of the tax year.

But families could apply for a "personal tax summary", which was based on information from their employers.

"People will need a personal tax summary to apply for family assistance," she said.

The Government is spending $15 million on a publicity campaign urging people to apply for their entitlements.

A spokesman for Social Development Minister Steve Maharey said the number of families claiming family support rose by only 10,000 in the past year, from 190,000 in June 2004 to 200,000 this June.

The number of working families paid through the tax system jumped from 69,500 to 88,000.

But the number paid through the welfare system dropped from 120,500 to 112,000 because of a big drop in unemployment.

The Treasury projections show the cost of family support rising to $1.3 billion in the current financial year and $1.7 billion by 2007-08.

Labour estimates that its proposed lift in the eligible income levels will raise this cost by a further $438 million by 2007-08.

In separated families, family support is normally paid to the principal caregiver.

In shared custody cases, support payments can be made to both parents in proportion to the amount of time that each one has with the child.