The FamilyBoost credit will allow families to collect up to 25 per cent of ECE fees after the 20 Hours Free and on top of the Ministry of Social Development’s Childcare Subsidy. Video / Mark Mitchell
Government says the estimate of the number of families that would be eligible for the full FamilyBoost payment was incorrect despite officials’ “best efforts”.
Uptake figures as of April 9 show 249 households have received the full payment.
IRD found modelling challenging because it did not have reliable data.
The Government admits the number of families it said would be eligible for the full $75 a week benefit of its flagship childcare tax policy was wrong.
The admission comes as new data shows that as of April 9, some 249 families had received the maximum amount available under the FamilyBoost scheme since it came into effect last year.
This is 1.2% of the 21,000 families the Government said were eligible for the full FamilyBoost payment of $975 a quarter or $3900 a year – a figure IRD now admits was wrong, although the actual number of eligible families remains unclear.
Those 249 families had claimed the sum for each of the three quarters the scheme has been open and, therefore, got the maximum benefit of the tax credit.
A higher number have claimed the full amount in one or two quarters, but not in all three. The number of families receiving the full amount is expected to rise as families have up to four years to claim a rebate.
FamilyBoost is a 25% rebate on families’ weekly childcare costs. The more a family spends on childcare, the higher the rebate – up to a limit of $300.
While launching the policy last year, Finance Minister Nicola Willis presented IRD modelling that reckoned 21,000 families would be eligible for the full $975 a quarter – or $75 a week.
But Willis told the Herald that IRD now thinks this number was wrong because fewer people spend $300 a week or more on childcare than officials originally thought.
Prime Minister Christopher Luxon and Finance Minister Nicola Willis, who admits IRD modelling on FamilyBoost was wrong. Photo / Mark Mitchell
“IRD’s advice was based on its best estimates at the time and – despite best efforts – they got these wrong.”
IRD had found the modelling for FamilyBoost challenging because it did not have reliable data on how much parents were paying for early childhood education, she said.
“Essentially, IRD assumed more families were paying higher childcare costs than turned out to be the case. This meant fewer families than they estimated are in fact paying more than $300 per week for childcare.”
She said the FamilyBoost scheme gave IRD better information about the fees parents were paying, which would help inform future policy work in this area.
“I am advised that 56,433 households have now received FamilyBoost payments and that 74,000 households have registered for the scheme.
“The feedback I and other ministers are getting is that the scheme is making a big difference to family budgets.”
FamilyBoost rebate amounts based on household incomes.
Before the general election, National campaigned on a series of policies aimed at tackling the cost of living (and helping the squeezed middle), including FamilyBoost, a tax credit for childcare costs for families earning up to $180,000.
It was introduced as Government policy in March 2024 and started in July that year. Families had to keep copies of their early childcare invoices to submit for a payment, which raised questions about how many eligible families would end up receiving the payment.
IRD acknowledged the uptake of FamilyBoost had been lower than its initial estimates, which tended to be conservative to ensure there was enough money to pay families throughout the year.
It said the degree to which its initial forecasts were wrong had not been established as a full year of claims had not occurred. IRD had also not produced any new estimates of the number of families eligible for FamilyBoost or the full entitlement.
“Revised take-up assumptions will be reviewed after the scheme has been in place long enough to settle into a regular seasonal pattern and actual application numbers across quarters can be considered.”
The data was released in answers to written Parliamentary questions from the Labour Party. Those answers show as of April 9 that 249 households had received the full $975 for the first three quarters the scheme has been running (Q3 and Q4 2024, and Q1 2025).
Labour’s finance spokeswoman Barbara Edmonds lambasted the Government about the low uptake, saying costs were piling up on families under the coalition and “the one thing they promised to do to help is failing”.
Labour finance spokeswoman Barbara Edmonds says costs are piling up on families under the coalition Government. Photo / Mark Mitchell
“They promised 100,000 families would get FamilyBoost, but barely half that are actually getting childcare support and just 249 families are getting the full amount over the whole period.”
In answers to the Labour Party, officials said 152,698 claims had been received and $42,300,065 had been paid out in FamilyBoost rebates as of April 9.
IRD said the key missing data for its forecasts was the use of early childhood education broken down by the distribution of family income combined with how much families paid in early childhood education fees after other subsidies have been considered.
IRD expected some seasonality with lagged claims waiting certainty of family incomes before a household’s entitlement could be calculated.
Other factors to consider were that annual incomes for the tax year were due to be filed by early July, or later if the family had a tax agent, and that people had up to four years to make a claim.
“It is also possible that some families who would only receive a small amount of FamilyBoost decide not to apply.
“They would qualify for a small amount if, for example, their remaining unsubsidised fees were very low, or their income was close to $45,000 a quarter with FamilyBoost mostly abated away.”
IRD said it would report options for improvements to FamilyBoost to ministers.
Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.
