Increase in paid parental leave comes into force tomorrow

Women will get an extra two weeks' paid parental leave from tomorrow. Photo / iStock

Women having babies from tomorrow will get an extra two weeks' paid leave, as the final stage of an increase from 14 weeks to 18 weeks' leave comes into force.

It's one of a raft of changes taking effect tomorrow, including a $25 weekly pay rise for beneficiaries with children, a $12.50 increase in tax credits for low-income working families, a minimum wage increase from $14.75 to $15.25 an hour, a 2.7 per cent increase in NZ superannuation, higher childcare subsidies and lower ACC levies.

But the sting in the tail is that beneficiaries will now have to look for part-time work of at least 20 hours a week as soon as their youngest children turn 3, down from age 5.

Karen Pattie of the Beneficiaries Advocacy and Information Service on Auckland's North Shore said families would also miss out on the $25 benefit increase if they already receive Temporary Additional Support (TAS) or special benefit, which will be reduced dollar-for-dollar when the basic benefit rate rises.

"For my agency, I would say 95 per cent of sole parents receive TAS or special benefit," she said.

However the North Shore is unusual with the country's highest average housing costs. Nationally, 64,149 (21 per cent) of the 301,349 people on benefits at the end of December were getting TAS or special benefit -- 28 per cent of Auckland beneficiaries and 19 per cent of those elsewhere.

"Housing NZ tenants don't get TAS," Ms Pattie said. So most of them should get the full $25 benefit increase, but their rents are based on 25 per cent of their incomes so the net increase for most will be $18.75.

Social Development Minister Anne Tolley said on Budget night last May that "around 110,000 families with 190,000 children" would get higher benefits.

Yesterday Finance Minister Bill English said "100,000 families with 180,000 children" will get all or part of the $25 income boost.

A further 200,000 lower-income working families will gain from an increase in the in-work tax credit from $60 to $72.50 a week. About 53,000 earning below $36,350 a year will get the full increase of $12.50 a week, and the rest earning above $36,350 will get partial increases depending on their incomes.

Childcare subsidies will increase from $4 to $5 an hour for a new category of parents earning below $800 a week with one child or $920 with two children. The subsidies will not change for families on higher incomes.

NZ superannuation rates will increase by 2.7 per cent, or $10.23 a week from $374.53 to $384.76 for a single person living alone, because super rates are pegged to 66 per cent of the average wage.

However there will be no change in other benefit rates for people without dependent children, because other benefits are pegged to the consumers price index which rose by only 0.1 per cent last year.

The ACC earners' levy, paid by all employees and self-employed people, will drop from $1.26 to $1.21 for every $100 in earnings, an effective tax cut of 50c a week for someone earning $1000 a week.

Levies on vehicles, which are paid through vehicle registration, will drop by a third from an average of $194.25 to $130.26, saving $1.23 a week for every vehicle.

Levies on employers will also drop by 11 per cent.