The new Children's Department unveiled by the Government today has been earmarked to spend $1.3 billion a year by 2019-20 to support up to 230,000 children.

Cabinet papers and the report by an expert panel led by Dame Paula Rebstock show that the department's budget will be about $524 million a year higher than the current $783 million budget of Child, Youth and Family (CYF).

The panel recommends that most of the extra cost ($421 million) should be taken from the existing budgets for Health, Education, Corrections and Work and Income.

That would leave a net increase in total spending of $103 million a year, a 13 per cent increase on CYF's current budget.


Cabinet papers say the new department's target group has not yet been worked out exactly, but could be up to one in every five children.

"We do know that around 230,000 of the current population of children (or around one-fifth of children) have had, or will have, contact with Child, Youth and Family under the current system settings before their 18th birthday," one paper says.

"Around one in two of these children are Maori."

The radical upheaval, announced by Social Development Minister Anne Tolley, has been generally welcomed by sector groups.

Children's Commissioner Dr Russell Wills, who wrote a damning report on CYF's current operation last year, described the new plan as "visionary".

"If all the recommendations are accepted and implemented and resourced well, we would have a system that is world-leading," he said.

Otago University associate professor Nicola Atwool, who wrote a 2010 report on children in care for previous Children's Commissioner John Angus, said the Government had adopted everything on her "wish list".

"There are no glaring holes from my perspective," she said.

She said a plan to fund the new department to buy services for vulnerable children from other state and non-state agencies, in the same way that ACC now buys health services for accident victims from public and private hospitals, would ensure that needy children got help much faster than many did now.

"In theory, that means they could pay for counselling and therapeutic interventions. I think that is amazing," Dr Atwool said.

But the reallocation of funding from already-stretched health and education services is shaping up as the main battleground for the reform.

"Talk of funding reallocation in the future raises some major flags - taking from other areas, such as health where there is already significant underfunding, is playing with fire," warned Labour children's spokeswoman Jacinda Ardern.

Labour and the Greens both welcomed other elements of the new plan, including creating a new agency to advocate for children in care and raising the age of leaving state care from 17 to 18, with an option to stay in care to age 21 and with some support continuing to age 25.

Cabinet papers show that the new, as yet unnamed Children's Department will take over six parts of the existing Ministry of Social Development:

• Child, Youth and Family;
• The Children's Action Plan, including children's teams;
• The ministry's High and Complex Needs Unit;
• The ministry's Community Investment arm, which funds non-government social services;
• Policy, research and analysis on "community, family, care and protection and youth issues"; and
• CYF-focussed legal, communications and ministerial services.

It may also take over parts of the Education Ministry's Special Education service. A further report on this issue is due by October.

The papers say the proposed reform "tilts the system towards prevention and remediation ... and away from short-term and reactive responses designed to just minimise harm".

"Intensive intervention", the investigative and crisis intervention work which currently dominates CYF's workload, will be only one of five new services in the new department.

Early preventive work with families, supporting children in care, support for young people leaving care, and youth justice will all be separate services within the department with their own ringfenced staff and budgets.

The papers say the aim will be to reduce the number of vulnerable children going into state care.

"The investment approach aims to reduce the extent to which these children and families are engaged with child protection and/or youth services," one paper says.

"While statutory care and protection will always be there for those who need it, better targeted and more intensive early support will also be provided at the first point of contact, with the aim of reducing the future level of contact with the child protection and/or youth justice system."

New national care standards will be drawn up, foster parents will get "intensive financial and other support", judges will be asked to reduce the number of young offenders being remanded to youth justice residences, and the four youth care and protection residences at Weymouth, Lower Hutt, Christchurch and Dunedin look set to close.

"The property strategy in the new operating model will include consideration of the potential transfer of the future management of the property portfolio and the phased closure of care and protection residences over time," one Cabinet paper says.