New research: Australia supports children in families on benefits better than New Zealand
When it comes to child tax credits, Australia does much better than New Zealand for the poorest families – that’s the finding of a new Child Poverty Action Group report comparing the level of Working for Families tax credits in New Zealand with the equivalent payments in Australia.
“Income support for the most disadvantaged children in New Zealand, in the form of tax credits, falls far short of that provided in Australia,” says CPAG researcher Susan St John. “Australia’s system is more generous and inclusive – and this contributes to their lower child poverty statistics. Across the Tasman, the full package for children goes to the worst-off families with no deductions for those on benefits, unlike in New Zealand.”
Next year for example – whether or not they receive a benefit – a low-income family in Australia with four children aged 5-19 will receive around $2,600 more in tax credits than the same family in New Zealand. But if the family in New Zealand receives a benefit, the gap is even wider: around $7170.
International comparisons show New Zealand’s rate of poverty for children is 30%-40% greater than Australia’s. “And the depth of poverty is likely to be much worse in New Zealand. Even before Covid hit, around 160,000 children were under the very lowest poverty line,” says St John.
The research takes into account the overdue inflation adjustment scheduled for next year and the Government’s recently-revealed plan to increase the Family Tax Credit by $5 per child at the same time. The gap between support of children in families on benefits and those not on benefits under the abatement threshold in New Zealand is not affected by this change. For the four-child family this deficit remains at $4550 for the year ($87.50 a week).
”The use of a child-related tax credit in an attempt to incentivise behaviour of adults contributes significantly to child poverty in New Zealand,” says St John. “The approach is out of step with Australia and even the US, where proposed reforms to the US child tax credit make sure that those without paid work do not get less.”
CPAG urges the Government to reduce the disproportionate stress of the Covid pandemic on desperate families and immediately make the full Working for Families package available to all low-income families.
Australia and NZ tax credits for children. A 5-year comparison: July 2018- July 2023 - Part 2 of the Rethinking Income Support for Children series (Nov, 2021) by Susan St John and Caitlin Neuwelt-Kearns.
 Unicef international comparisons show that the percentage of children under the 60% after housing costs poverty line in Australia in 2017/18 was around 17.5% (holding steady for at least a decade), whereas in New Zealand, it was much higher, at around 24%, having increased over the decade from around 20%.  (StatsNZ, 40% median income after housing costs)