Lower-income families will get a greater slice of Working for Families (WFF) funding, while those on high incomes may lose it, as the Government tries to maintain the increasingly expensive scheme.
Alterations to the scheme announced yesterday were a reduction in the benefit threshold from $36,827 to $35,000, an increase in the abatement rate from 20c to 25c in the dollar, and the family tax credit (FTC) payment for a 16-year-old will be brought into line with payments for 13- to 15-year-olds.
The changes will take place from April 1 next year over four stages as FTC payments are adjusted for inflation, which is expected to happen every two years.
Finance Minister Bill English said the changes were targeted at helping lower-income families and ensuring the scheme was sustainable as its cost had doubled to $2.8 billion this year.
About 280,000 families earning less than $70,000 a year are expected to receive an increase in payments. About 110,000, mostly earning more than $60,000 a year, will receive less, and 7000 of this group will lose eligibility next year.
Dunedin Methodist Mission chief executive Laura Black said the Budget lacked vision and failed to allocate resources to support families through hard times.
"There is a lot of trimming of the Government budget - most of it to be borne by low- and middle-income families - in order to keep last year's tax cut in place," she said.
Salvation Army social policy spokesman Major Campbell Roberts doubted the Budget would provide significant help to low-income and beneficiary families. The entitlements of higher-income families was "necessary and desirable", he said.
However, the savings of about $100 million annually would have been better used to improve the situations of those families on the lowest incomes. WFF recipients will be contacted in February to inform them of their entitlements for the coming year.
Family money
• Abatement threshold lowered from $36,827 to $35,000.
• Abatement rate raised from 20c to 25c in the dollar.
• Family Tax Credit payments for children aged 16 aligned with those aged between 13 and 15.
• Changes will save $448 million over four years.
