Christopher Luxon holds post-Cabinet press conference
It was either wait years until a childcare tax credit could be implemented or have the first payments go out in October - but make parents wear the “administrative burden”.
That’s how Finance Minister Nicola Willis described the dilemma as she announced the FamilyBoost rebate yesterday, which will give $75 a week to households that earn up to $140,000 a year, and less to those who earn up to $180,000 - as long as they send in their Early Childhood Education (ECE) invoices and state their income.
Willis said more than 100,000 families would be eligible, while an estimated 21,000 could receive the maximum amount, to be paid three-monthly.
FamilyBoost rebate amounts, to be paid three-monthly
It’s the fulfilment of a pre-election policy, though National had wanted to reimburse families directly every fortnight. Inland Revenue officials said no such system existed to enable this because it required fees information to be linked to ECE centres and household incomes.
Building that system would take two to three years, so the Government has instead opted to have parents provide invoices, while officials will provide advice later this year on how parents’ administrative burden can be eased.
The Government’s decision risks some eligible households missing out because of “compliance costs on parents, integrity risks associated with invoices or disclosed personal incomes”, and increasing the workload burden on Inland Revenue (IRD) at a time the department is already under peak workload, IRD officials said in a regulatory impact statement.
Labour’s education spokeswoman Jan Tinetti said that the policy wouldn’t increase the number of families who could afford ECE centres because it did nothing to help with the upfront costs.
She described the paperwork as a “bureaucratic nightmare”, adding that Labour’s policy of extending 20 hours’ free ECE to 2-year-olds would have made childcare available to more families, saving them more money if they had 2-year-olds (while costing the Government more money), and been implemented already.
Tinetti acknowledged the pushback from the ECE sector, saying that Labour’s plan could have led to higher fees for parents for any extra hours beyond the initial 20 free hours, but she said those issues would have been resolved before the rollout this month.
Under the Government’s FamilyBoost plan, families will be able to collect up to 25 per cent of the fees incurred with a licensed ECE provider, after the 20 hours’ free allowance and the Ministry of Social Development’s Childcare Subsidy are taken into account.
Parents and caregivers will submit ECE invoices every three months - which can be done via myIR - with FamilyBoost refunded as a lump sum. Parents should start collecting invoices from July 1 so they can begin to apply and be refunded in October.
Prime Minister Christopher Luxon (right) and Finance Minister Nicola Willis head into the Beehive theatrette to announce their FamilyBoost rollout. Photo / Mark Mitchell
The cost of FamilyBoost over four years (assuming 100 per cent uptake) was estimated to be $723 million, $273m less than what National had estimated for the policy in its pre-election fiscal plan.
Asked if this was further evidence of National’s inability to use the right numbers for its costings, Willis said there would always be “under and overs” in the numbers as the party in Opposition didn’t have access to information it can now see.
Prime Minister Christopher Luxon said FamilyBoost was important because childcare costs in New Zealand were relatively high.
According to the OECD, couples pay 37 per cent of their income towards childcare in New Zealand. The OECD average is 13 per cent of a couple’s income, while in Australia it is 22 per cent of a couple’s income and in the UK it is 25 per cent of a couple’s income.
FamilyBoost was only one part of the Government’s plan to help with cost-of-living pressures, with tax relief coming in May’s Budget, Luxon said.
Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery team and is a former deputy political editor.
