FamilyBoost payment increased, income limit raised

The Finance Minister says thousand of families will benefit from the changes to FamilyBoost revealed on Monday.

Nicola Willis has announced that from the start of this month, the proportion of early childhood fees people can claim back under the flagship policy will increase from 25 percent to 40 percent.

That means a family paying $100 a week in fees will be now eligible for an additional $15 every week, she said.

The amount families can earn per year to be eligible will also be increased, from $180,000 per year to $229,000.

"IRD estimate around 16,000 more families will take it up at these different income levels," Willis said.

IRD would also continue work to see if a direct fee refund model is possible, Willis said.

Under the current system, families have to send their childcare invoices to the IRD to get tax refunds.

A review of the early childhood funding system was under way "to ensure we are making things as simple, straight forward and effective as possible", Willis said.

Ahead of the announcement, Willis told Morning Report as the amount of money in the scheme was not on track to all be used, there was an opportunity to spread it further.

She urged people who were eligible for Family Boost to put claims in.

"We note that only eligible families who make a claim will receive the rebate. To date, around 60,000 families have successfully claimed the FamilyBoost tax credit which is less than the number of families estimated to be eligible."

The Finance Minister had promised to review the scheme which provides rebates for early childhood education, after government figures showed just 249 families had consistently claimed the full amount - well short of the 21,000 families initially estimated.

Previously, to qualify for the full amount, families had to be paying more than $300 a week in childcare costs, but also earning under $140,000 a year. Families earning up to $180,000 a year could get smaller amounts, while those earning above that could not claim the rebate.

'Met every commitment'

Speaking to reporters from an early childhood centre in Johnsonville, Willis said the government didn't get it wrong, the challenge was estimating the cost of annual fees, and the incomes of those families.

She said she now had a lot more information about uptake and the fee levels by those on different income levels, which meant the government could tweak the scheme and "allow more money to go out the door to more people."

"The good news is that we don't need to use more money in our budget to do this. We just need to make better use of the money that's already there.

"And IRD advises that with these changes, not only will more Kiwis be better off, but we'll also be able to do it within our budget."

Willis said the Family Boost scheme was "really about" helping the "squeezed middle."

"It's about the battler who's earning too much to qualify for an MSD subsidy, but really is finding it tough every fortnight to pay the bills, and this is a big way to help them with those bills."

Asked whether she regretted the execution of the policy, she said there'd been some "unhelpful commentary" based on those families with $300 a week in fees.

It was pointed out that the government had emphasised this maximum entitlement, but Willis said a lot of families didn't pay that much in weekly fees.

"And actually, I'm pleased about that, because $300 a week in early childhood fees is a heck of a lot."

She said the government wanted to make sure those paying lower levels of fees still qualified for the scheme. She also pointed out many families on "very low incomes" already get "quite a lot of support through the MSD childcare subsidy."

"So those families who on very, very low incomes already qualify for that scheme, and so this family boost scheme is less relevant for them."

She said she'd learnt through the process of making changes to one of the government's key policies that the "early childhood education system is hugely variable."

Circumstances of families vary from one part of the country or one ECE service to another and their needs changed throughout the year, Willis said, given annual fees might change or someone's annual income.

"People add to their families, they take on more hours, they reduce their hours, and all of that complexity does make it hard for our officials to give us really accurate estimates of what will happen because they're trying to predict the future."

She said IRD had now moderated its assumptions on who would take up the scheme, but the estimation was around "92,000 people will probably take it up."

She maintained the government had kept its commitment.

"We've met every commitment we made in terms of what the scheme actually is eligible for.

"I'm really pleased that we have met our promise to ensure that middle income families can get rebates for their early childhood education fees."

Willis said she was expecting an update from IRD through the year on whether its possible to set up a "direct fee refund" model so fees can be directly claimed by early childhood providers, rather than parents having to claim through IRD.

'Tinkering'

The Greens said the changes did little to "boost families" and was little more than "tinkering around the edges" while real issues in the ECE system were ignored.

Green Party spokesperson for Māori Education and Early Childhood Education Benjamin Doyle said a "whole system reset" was required. "Fifteen dollars more a week for a small number of families who can jump through the hoops to apply is a pittance in this cost-of-living nightmare."

Doyle said the scheme "entirely fails" to address the fundamental issue of the profit-driven ECE sector passing on huge costs to parents and the government with little transparency about how the funding was used.

"Every child in Aotearoa deserves an education that sets them up for success. That demands an ECE system that places tamariki at the heart."

Doyle said Family Boost was complex for families and administratively expensive.

"Tens of millions of dollars are taken in profits by ECE owners, with no benefit for tamariki. We don't need for-profit companies running schools - why do we need them in ECE?"

Labour said the changes were "too little, too late" for families.

Labour's acting finance spokesperson Megan Woods said too many famlies had missed out on promised cost of living support by the government.

"Today's attempt to fix the flagship FamilyBoost programme is a desperate attempt to cover up National's broken promises to lower the cost of living."

More than halfway through its term, Woods said, the government was only now "scrambling to tweak a scheme that's barely reached a fraction of the families they promised to help."

"Even worse, families won't see a cent of this so-called relief until October.

"If Nicola Willis truly understood the cost-of-living crisis then she'd have acted a long time ago."

Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.