Wider access to childcare support and an increase to Working for Families tax credits is on the way, as part of a new cost of living package unveiled earlier by the Government.
Unveiling the policy on Sunday at the 2022 Labour Party conference, Prime Minister Jacinda Ardern said the measures reverse a freeze on the income threshold for childcare eligibility that National put in place in 2010.
About 54 percent of all New Zealand families with children will now be eligible for subsidised childcare assistance and over 10,000 additional children are eligible for support. Also, nearly every sole parent in New Zealand will be eligible for childcare assistance.
The increase in income thresholds means there's a boost in both the number of families eligible and the amount for many already getting it.
Additionally, from April 2023, the family tax credit will increase by $9 a week for the eldest child to $136 a week, and by $7 a week for subsequent children to $111 a week. Best Start too will lift by $4 a week to $69 a week.
But how will this affect New Zealanders? A range of scenarios shows just how different families will benefit.
For example, a sole parent working 40 hours a week earning $26 per hour with two children aged two and four years old is now eligible for $452 a week, an increase of $92.
A couple in the same situation but instead working 80 hours total a week on minimum wage ($21.20 an hour) is now eligible for $360 per week, an increase of $261.
There are also some situations where families who weren't eligible for childcare assistance in the past will now receive support.
A couple working 80 hours total a week earning $26 an hour with one three-year-old child would receive $52 a week. Also, a couple with two children aged two and four years old working 80 hours a week on the same wage would get $252 a week.
For families with school-aged children, they will also get money to go towards school holiday care.
A sole parent earning $30 per hour who needs full-time care for two children and 17.5 hours a week during school holidays for their third child will now get $558 a week during term time and $739 a week during school holidays.
A couple working 80 hours a week earning $26 per hour needing 17.5 hours of childcare per week during the school term and 47.5 hours a week in the holidays is now eligible for $118 per week during the term and $319 per week during the holidays.
Families who only need part-time childcare will also benefit from the policy.
A couple working 60 hours a week for $30 per hour who needs 27.5 hours per week for two children and a third during school holidays will get $168 a week during term time and $300 a week during the holidays.
Minister for Social Development and Employment Carmel Sepuloni said making childcare more affordable will help remove financial barriers to work, particularly for sole parents and those on low to middle incomes.
"Childcare assistance has been underinvested in for more than a decade since income thresholds were frozen by National in 2010. In Budget 2021, we started to reverse that by indexing childcare assistance to average wage growth going forward, but today's policy plays catch-up and reverses the freeze of the past 12 years," she said.
"The policy will also help to address disparities in for Māori and Pacific mothers who are more likely to experience issues accessing childcare.
"For our tamariki, they'll also get the best start in life by participating in high-quality early childhood education. This will help set them up on pathways into further education and create positive opportunities for them to engage in their communities in the long-term."
Sepuloni added that this policy will help more parents, especially women, to have the opportunity to take up work.
"We're continuing to make significant progress on our welfare overhaul. This has included lifting core benefits to historic levels, reinstating the training incentive allowance to support the likes of sole parents into work, allowing child support to be passed on to sole parents as well as investments made through the families package and our year-on-year increases to the minimum wage," Sepuloni said.
"There is still more work to do however, and that's why we've prioritised our Working for Families Review with a focus on how our system of tax credits can better support families on the lowest incomes, particularly working families.
"Making childcare more affordable is only one step along the journey, with our Review of Childcare Assistance currently ongoing."
