$150-a-week cash boost to help families

By JOHN ARMSTRONG and KEVIN TAYLOR

Some working families with three or four children will be getting $150 or more extra a week by April 2007 in income top-ups from tomorrow's Budget.

But extra income assistance in the "Working for Families" package could be even higher in some cases, although the increases are thought unlikely to go above $200 a week even when the package is fully implemented in 2007.

The full range of extra payments and the entitlements of individual households remain a closely guarded secret.

But the package, which will be phased in over three years starting from October, will give increasing amounts of cash to low- and middle-income households where one or both partners are working.

This will be done through increases in family-support payments, tax credits and the accommodation supplement.

Labour's "social dividend" will also boost childcare subsidies, ensuring more families qualify for such help so it will be worthwhile for non-working partners - and beneficiaries - to take paid employment.

The package, which has also gone under the name of "Future Directions", is thought to be intended mainly for households in the $25,000 to $60,000-a-year range. Payments will largely depend on the number of children and housing costs.

Finance Minister Michael Cullen would not divulge details in advance of his reading the Budget in Parliament tomorrow afternoon.

But he told the Herald yesterday that the upper annual income limit for assistance was as high as $80,000, depending on family circumstances.

"It will depend a lot on family size and a little bit on other costs a family has. But there will be families on $80,000 a year getting gains."

Some families would start getting modest gains from October this year.

A large number of families would get significant gains from next April.

Those families, and others, would get more help in April the following year and more again from April 2007.

Part of the extra income assistance will come from a big lift in the accommodation supplement.

A major thrust of the package will be incentives to get beneficiaries into work, probably through a weekly payment to top up wages and ensure they do not suffer financially from going off the benefit and into low-paid jobs.

But the Budget will largely leave untouched the unwieldy structure under which welfare benefits are paid. Labour wants to rationalise the system and the Budget will flag further work on that.

The full cost of the "Working for Families" package will be $1.1 billion a year - $200 million more than the Government expected when detailed work began on the changes last year.

Dr Cullen said the figure reflected the Government's wish to deliver a social dividend "reasonably well up into the middlish range of family incomes", although it was "not as high as perhaps we would like to go".

Because of the number of people who are missing out on existing family support payments and tax credits, the Government will mount a public relations blitz to ensure people are aware of their new entitlements.

Dr Cullen envisaged the publicity campaign would include television advertising.

That will anger Opposition parties such as National, which is already castigating the Budget as a huge vote-buying exercise.

But Dr Cullen denied the package had been designed as a political circuit-breaker.

The second big chunk of assistance would not flow into households until after next year's election, he said. "If it was an election-buying Budget, it would be a much bigger spend-up up front, with less concern about the fiscal position going into the medium term."

The Budget

What's expected

A phased-in package worth $1.1 billion a year to overhaul and boost family assistance and tax credit payments for low- to middle-income families - believed to be those making between $25,000 and $60,000 a year. But even families on $80,000 will get help.

* Help for about 300,000 households - about 48,000 more than now.

* Start of reforms to welfare benefits and a boost to accommodation supplement payments. But the income gap between welfare and work will be widened.

* Childcare subsidies for beneficiaries and those in work.

* Extra money for education and public health, including cash to cut waiting times for hip and knee operations.

What won't be included

* Company or personal tax rate cuts.

* Any lift in income thresholds at which higher tax rates apply.