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Reports on the income support system, take-up of payments, and incomes and income adequacy for income support recipients

The New Zealand income support system as at 1 July 2022

This report describes the different payments that make up the income support system, payment rates, and eligibility requirements as at 1 July 2022. It is an update to The Income Support System report prepared by the Welfare Expert Advisory Group in 2018.

Incomes and costs for example families in 2022

An update to the 2019 ‘Example Families and Budgets’ analysis prepared by the Welfare Expert Advisory Group using costs, wages, and payment rates as of April 2022. Incomes and costs were compared across six example families of different types. Several different work and housing scenarios were considered for each family.

Results showed that income adequacy improved from 2018 to 2022 for all example families. However, incomes remain below the level needed to meet essential costs for most example families when on benefit. Results also showed that benefit incomes after housing costs continue to be below after-housing-cost poverty lines.

Estimates of Working for Families eligibility and take-up rates 2007 – 2020

As part of our work to monitor and evaluate income support reforms, we are estimating rates of eligibility for and take-up of different payments in the income support system.

This study found that most eligible families take up Working for Families tax credits. The estimated proportion has remained relatively stable from 2010 to 2020, with 83-90 percent taking up payments. The rate is lower for families not supported by benefits at 75 - 85 percent. The overall proportion of families eligible for Working for Families payments has decreased from 72 percent in 2010 to 49 percent in 2020. This fall occurred as Working for Families payments became more targeted to families on lower incomes.

Estimates of take-up of the Best Start tax credit

All families with children born or due on or after 1 July 2018 who meet residence requirements can receive Best Start. This study found that almost all eligible families take up the Best Start tax credit. An estimated 97 percent of children born in the first 15 months of Best Start were eligible, and the payment was taken up for an estimated 97 percent of those children.

Financial Incentives to Work: The gap between benefit and work 2003 to 2022

We compared the incomes of people on benefit with those in low-wage work between 2003 and 2022.

Results show that the gap between benefit and in-work incomes increased from 2003 to 2022, particularly for single people without children. A larger gap creates more financial incentive to move off benefit and into work.

However, there are reasonably poor financial incentives to increase the level of hours worked for many low-income families. This is due to higher pay from increased hours being partially offset by a reduction in their income support payments.

Changes to financial incentives and income for model families

We used model families to look at how incomes and financial incentives to work changed immediately after the Families Package was implemented. Model families with children had the largest income gains. Model single people without children also had gains in income, but consistent with the policy design these were smaller.

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