NZ Herald Business Editor-at-large, Liam Dann breaks down all you need to know about the upcoming budget. Video / NZ Herald
Young families are concerned the Best Start payment changes will hit their pockets hard while they already grapple with the cost of raising a new family.
The weekly Best Start payment will now be means-tested across all three years it is offered to new parents, Finance Minister Nicola Willis said in yesterday’s Budget announcement.
Currently, all parents get the payment in the first year after having a child – the payment will now be means-tested for all three years, saving $211m.
Best Start payments start to diminish above a family income of $79,000 and cut off entirely when a family earns just over $97,000 a year, Social Development and Employment Minister Louise Upston said.
A recent mother told the Herald, “This will mean more babies in daycare full time from 6 months and less babies born.
“It might seem like a small amount to get, but it’s a big help.
Young families are concerned the Best Start payment changes will hit their pockets hard while they already grapple with the cost of raising a new family. Photo / 123RF
“The threshold for it to start decreasing is less than what two parents working 40hrs on minimum wage would earn. Working for families, yeah right,” she said.
The mother who had a baby at the start of this year said, “This is the only thing we’re entitled to because it currently isn’t means tested, but as you know we aren’t big earners really.
“With the cost of living, we only really break even.”
She said her family was lucky that their daughter was born at the start of the year, so they will still get the payments after paid parental leave ends until their daughter’s first birthday.
“If it had impacted, it is the difference in me being able to ask my workplace if I can do 32 hours instead of 40 (so 4 days instead of 5) when returning at 6 months,” she said.
The weekly Best Start payment will now be means-tested across all three years it is offered to new parents. Photo / File
The mother said she thought it would impact families who are median earners or where the mum or the primary carer earns the most.
“It’s too much of a financial hit in this current climate to have them be the stay-at-home parent,” she said.
The Herald hit the streets of Central Auckland on Thursday afternoon to see how people were reacting to the Government’s changes to Best Start.
“It’s kind of sad for people who don’t really have much income,” two young parents said.
“It would probably be a lot harder to look after the baby [if we did not have the Best Start payment], and just not being able to get him all the things he needs.
“It makes it harder for people who want to just live, really, I think it’s a lot harder on the future generation.
“For younger people growing up, and especially younger families, buying a house and all that kind of stuff, it’s just going to be a lot harder for everyone.”
Families of children born before April 1 next year won’t have their Best Start payments income-tested and would continue to receive the maximum amount until their child turned 1.
Means-testing had been expanded to help fund changes to the abatement threshold for Working for Families.
The current threshold has been unchanged since 2018, despite inflation and wage growth, Upston said.
“This means the scheme has become less effective at supporting low- and middle-income families.”
“Accordingly, the Government is lifting the Working for Families abatement threshold from $42,700 to $44,900 and raising the abatement rate from 27% to 27.5%.”
Families with incomes close to the new threshold will get greater additional payments – up to $23 a fortnight, she said.
Do you have questions about the Budget? Ask our experts - business editor at large Liam Dann, senior political correspondent Audrey Young and Wellington business editor Jenee Tibshraeny - in a Herald Premium online Q&A here at nzherald.co.nz at 9.30am, Friday, May 23.
