Income support rises welcome, but not liveable or transformational - CPAG's Budget 2021 Analysis Summary

Each year, shortly after the Government’s Budget is published, Child Poverty Action Group provides its analysis of some of the details contained in various budget papers. This analysis seeks to do two things – to critically examine budget figures in order to gain an appreciation of the Budget’s implications for children and to publish this analysis as an alternative interpretation to that offered by mainstream media. 


Child Poverty Action Group welcomes the income support increases announced in the Budget. The rises will be a step towards income adequacy for many children in need, especially in those families where a couple receives a benefit.

However, few families receiving benefits will be lifted over poverty lines. The Government has put its child poverty targets in jeopardy. Māori and Pacific children are more commonly affected by poverty, so ongoing inadequacy of benefit incomes is discriminatory. Disabled children, and those in households with disabled members, are more likely to live in material hardship than others, yet have not received extra catch-up.

Actions to rectify Working For Families (WFF) are missing. The Welfare Expert Advisory Group (WEAG) recommended that all children supported by benefits should have access to all tax credits in WFF, and they should be indexed to wages.

If Government forecasting is correct and 19,000 to 33,000 children are lifted out of poverty by these changes, that will still leave 180,000 to 190,000 children in poverty. With the changes announced in the Budget, Treasury forecasts child poverty will reduce from 18.4% to only 17.0% by 2023. This is not yet the transformation that WEAG hoped for 3 years ago.

Children cannot wait. Their health and wellbeing are very sensitive to income shortages; financial stress and having to go without all the time are detrimental to children’s development. Brain development is greatest in the first 1000 days, so changes which don’t come fast enough or go far enough mean that children won’t reach their full potential. Why aren’t all the benefit increases being introduced on 1 July this year?

 READ CPAG'S PRESS RELEASE: Income Support Rises Welcome If Not Yet Enough