Do people earning $200,000 need help with childcare?
Government “choices” mean some of the families now receiving Family Boost payments for their early childhood education are among the 10% wealthiest in the country, an economist says.
A revamp to the Family Boost programme means those with household incomes up to $229,100 a year are now eligible for support with their childcare fees.
The available rebate is also increasing to 40% of fees paid, or a maximum of $1560 a quarter.
The change applies to fees paid in the September quarter, and from then on.
But Craig Renney, policy director of the Council of Trade Unions and an economist who was previously a senior economic adviser to then-Finance Minister Grant Robertson, said there were “choices” being made.
He said those on the highest incomes, in the top 10% according to the Stats NZ Household Expenditure Survey, were benefiting the most from the change.
“If your household earns $60,000 a year, you can get up to an extra $2340 annually in new support. If your household earns three times that, $180,000 – you will get an extra $3440 annually. That’s 47% more. For exactly the same thing – having children in early childhood education.”
The difference was because the higher earners were previously not eligible at all.
Renney said data also showed higher-earning households tended to spend more on early childhood education anyway, which meant they would have larger fees to claim rebates on.
Most were already spending the money without the Government’s assistance, he said.
It could have been better used to help make early childhood education more affordable or accessible to low or middle-income earners, he said.
“Instead of having a 40% cap across the piece that could be claimed, you could have said for very-low-income households we’ll make it 50, 60 or 100%.
“Because this is a rebate scheme, those on low incomes don’t have the money to be able to afford it in the first place to then get the rebate.
“I’m not saying these families don’t need the money but I’m saying if you were making choices about where to spend, for a Government that’s focused on value for money – you may get better outcomes for your dollar if you were actually spending it on expanding ECE provision in low-income communities.”
Asked whether the adjustment would affect the number of families who could receive the full $250-a-fortnight relief that National campaigned on before the last election, as a combination of the Family Boost package and tax cuts, Finance Minister Nicola Willis said that data was not available.
“The National Party campaigned on a tax relief plan that included multiple elements – shifting tax brackets to compensate for inflation, expanding tax credits to reach more modest income earners, increasing Working for Families tax credits and introducing the FamilyBoost childcare tax credit.
“We delivered on these policies in our first Budget. We made clear that the impact of these policies would vary according to family circumstances and encouraged people to use our tax calculator so they could find out what it would mean for them.”
She said the $250 example was a family with a household income of $120,000 split across two earners spending at least $300 a week on childcare.
“We did not model how many families would match that scenario.
“Inland Revenue is not geared up to calculate how many people would have matched that scenario in the past 12 months or will match it in the coming years. This is because some elements of the tax plan are calculated on an individual basis while others, including FamilyBoost, are calculated according to household income. Inland Revenue does not routinely collect information on household incomes.”
She said about 60,000 families had received the full FamilyBoost payment they were entitled to.
With the scheme expansion, she said, about 16,000 more families would probably benefit.
“The amount of rebate they receive will vary according to the fees they pay and the income they earn each quarter. The maximum a family can now receive from FamilyBoost is $240, an increase on the $150 that National campaigned on.
“To receive that amount, a family would have to be spending at least $300 a week on childcare and have a combined family income of less than $140,000 a year. Inland Revenue does not calculate how many families find themselves in that circumstance.”
===================================================
Secure your homes over summer
Police are reminding people to keep their homes secure during the summer months.
Inspector Glenda Barnaby, Christchurch Area Prevention manager, says daytime burglaries are just as common as nightime burglaries.
“Burglaries can be committed at any time of the day, and coming into warmer months there is more opportunity for thieves."
"Although a majority of burglaries involve forced entry through windows and doors, we are starting to see more incidents at insecure premises. Police deal with cases where burglaries are committed in broad daylight, sometimes even while the victim is at home. Good weather means open doors and windows, which makes homes more vulnerable to burglars.”
Inspector Barnaby says there’s a few things people can do to reduce their changes of a burglary being committed.
⚠️ If you’re going outside for gardening, relaxing in the sun, or working in the garage, take a moment to lock your doors and secure your windows first.
⚠️ Do the same at night when you go to bed - keep your doors and windows secure and close your curtains. Fitting window stays means you can get a breeze coming through, while keeping your windows secure.
⚠️ Get to know your neighbours - let them know if you’re going away and look out for one another.”
If you see any suspicious activity, people or vehicles in your neighbourhood, don't hesitate to contact Police.
If you witness or suspect any illegal activity, please call 111 if it is happening now, or make a report through 105 either online or over the phone, if it is after the fact.
What sectors are barely paying more than minimum wage?
While New Zealand might have about a dozen sectors paying at least a median $100,000 a year, there are almost as many paying barely more than the minimum wage.
Data compiled by Infometrics showed the median and mean salaries across industries throughout the country.
The data does not adjust for hours worked, and some of the workers may not be working a 40-hour week.
But it shows that on an annual basis, many sectors were not delivering incomes that were equal to the minimum wage.
The minimum wage of $23.50 an hour works out to just under $49,000 a year for a full-time, 40-hour a week worker.
Fuel retailing was paying a median of almost exactly the same amount.
Food retailing was paying less, at $45,030. Accommodation was slightly more, at $49,240, and food and beverage services was significantly less at $40,170.
Also within $10,000 of minimum wage were "other store-based retailing" at $53,220, sport and recreation services at $53,350 and personal and other services at $54,170.
Ministry of Business, Innovation and Employment data last year showed that about 141,900 people would be directly affected by the minimum wage rising to $23.50, indicating they were at that point being paid less than that amount per hour.
Infometrics principal economist Nick Brunsdon said skills and experience explained a lot of the variation in incomes.
"Industries that need a more skilled workforce generally pay more - because they can get a lot of value out of their workers, and workers need a good incentive to gain those skills - for example, medicine. Industries that take in a lot of lower qualified staff, like hospitality, can get away with paying a lot less, and still get plenty of job applicants.
"There are other factors like desirability - some jobs might not have a high skill requirement but are somewhat undesirable - say underground coal mining - so higher pay is necessary to find workers."
CTU policy director and economist Craig Enney said "hours adequacy" was a big problem in many sectors.
"You've got someone who's working 20 hours a week or 25 hours, on $25 an hour, so you're earning $500 a week. Is that enough? No.
"The challenge is often about the structure of employment in some of those sectors…In hospo, in retail, in catering, in a range of other sort of service-based industries, it's wanting more hours and not getting it."
The latest labour market statistics showed the the number of underutilised people in the country had risen to 403,000.
"These are people who want more hours, want more work and can't get it. And that may be a key reason why, you know, total incomes are so inadequate for some people. And that's also partially helping to explain why the headline unemployment rate is not rising as quickly as some people had predicted."
Jake Lilley, a spokesperson for financial mentor network Fincap, said it was something mentors dealt with.
"They also help people work out what is realistic in terms of taking on hours while balancing additional childcare costs. Our latest Voices reporting recorded 31 percent of those supported by a financial mentor as having a mix of income from salary or wages as well as income support.
"It is a real juggle to navigate finances when unpredictable sporadic hours of work need reporting to Work and Income in what can be impractical timeframes. An example might be someone being asked to stay on for a longer shift by their manager and being unable to contact Work and Income when that day is the deadline to report other income.
"Someone might also not know exactly what their pay will be until a payslip is provided after the reporting date. Such situations can often result in overpayment debts from Work and Income compounding the difficulty of administering already tight finances."
=======================================================
Build Wealth Through Commercial Property
The First Light Property Fund Limited provides wholesale investors with exposure to six premium industrial and commercial assets located across Auckland and Hamilton.
As a tax efficient PIE-structured vehicle, the Fund is designed to deliver stable monthly returns and long-term capital appreciation. All of the commercial assets in the portfolio are NABERSNZ-accredited, enabling access to ESG-linked lending benefits.
This is an opportunity to invest in an established and high-performing commercial property Fund and participate in collective ownership alongside other experienced investors.
Loading…
