Key Points:

Marriage breakdown could be costing taxpayers $1 billion a year.

A new study by the Institute of Economic Research for the Family First lobby group says taxpayers end up footing the bill for broken families through welfare benefits, family tax credits and higher costs for healthcare, housing and law and order.

Family First director Bob McCoskrie said the study showed the need for policies to help couples to stay together.

"This report comes out during an election period when the issue of family breakdown and decreasing marriage rates is barely registering a mention," he said.

"I'd just like to hear the word 'marriage' in the policies of either of the main parties - being ready to admit that it's the best environment in which to bring up children."

But Auckland University economist Susan St John, a founder of the Child Poverty Action Group, said the study was "pious" and "logically inconsistent".

The report says New Zealand has the second-highest proportion of sole parents in the developed world at 28 per cent of all households with children, compared with a median across the OECD of 13 to 14 per cent. Only the US has more sole parents: 33 per cent.

It notes that families are much poorer where there is only one parent. An official report this year found that 49 per cent of children in sole-parent households lived in families with less than 60 per cent of the median income after allowing for housing costs and the number of mouths to feed.

By contrast, only 9 per cent ofchildren in two-parent households were "poor" by the same definition.

The study's author, Dr Patrick Nolan, said some of that 40 per cent gap in poverty rates between the sole parents and two-parent families would persist even if the sole parents married.

"For a lot of them, partnering up is not going to solve their problems because they partner with someone on a low income."

But, based on similar overseas studies, he assumed that the gap would narrow by 60 per cent of that 40 per cent, or 24 per cent.

Allowing for the fact that two-parent families have more children on average than sole parents, that would reduce the total number of children in poverty by 20 per cent.

The report then calculates potential savings by cutting 20 per cent off a range of social costs, assuming that child poverty accounts for all the costs of the domestic purposes benefit, between 10 and 100 per cent of certain other benefits, 60 per cent of the cost of family tax credits, 20 per cent of the costs of police, justice and corrections and 6 per cent of health costs.

On these assumptions, "partnering up" all sole parents would save taxpayers $464 million in welfare benefits, $331 million in family tax credits and $275 million on the costs of health, housing and law and order - a total of $1.07 billion.

"It's a study where you dip your toe in the water without any real New Zealand-based data, so you have to pluck assumptions from left, right and centre and be a bit creative," Dr Nolan said. "I'm sure it's about right."

The report says politicians should look at any policies that might be encouraging marriage breakdown, such as the domestic purposes benefit and the in-work tax credit, which is paid to sole parents who work at least 20 hours a week but to couples only if they work at least 30 hours between them.

Mr McCoskrie said the Government could help to "change the mindset" by allowing married couples to split their combined income for tax purposes, giving them a tax break not available to two single individuals.

Dr Nolan said he personally opposed that policy because it would favour well-off couples. He said it would be better to support marriage through non-financial programmes such as teaching schoolchildren about relationships.

But Dr St John said it was "logically inconsistent" to claim that current policies were encouraging marriage breakdown and at the same time that separation led to poverty.

"If the economics of sole parenthood are so bad, how can you claim there are significant financial incentives to divorce or separate just because sole parents appear to get more transfers from the state?" she asked.

"Isn't poverty the issue? Let's not let the conservative family values party sidetrack away from the issue that children in families on benefits, whether in one- or two-parent households, are the poorest, most marginalised and excluded group in society.

"They need more financial assistance immediately, not pious words about getting married and a policy subtext that reads they are getting too much and that that is causing them to choose not to marry."