New Zealand faces ongoing challenges in reducing child poverty, with official targets for 2028 appearing increasingly out of reach as key indicators continue to move in an unfavorable direction. Experts and advocacy groups are calling for comprehensive policy reforms to address the root causes of hardship experienced by children in low-income families.
Honorary Associate Professor Susan St John, an economist at the University of Auckland Business School and co-founder of the Child Poverty Action Group (CPAG), highlights the limitations of current government assistance programs. She argues that the prevailing approach, which links income support to parental employment status, often exacerbates poverty rather than alleviating it.
Central to this critique is the “Working for Families” tax credit system, which provides additional income to families with children but incorporates clawbacks and strict eligibility criteria that penalize those on welfare or earning low wages. For example, parents receiving benefits can lose nearly $100 per week in tax credits—termed the “In Work Tax Credit”—if they are not in paid employment. A 2013 Court of Appeal ruling identified this as discriminatory against children in beneficiary households. Currently, approximately 260,000 children are affected by this policy, which has not demonstrated effectiveness in incentivizing work.
St John and CPAG propose replacing the current “Working for Families” framework with a simplified, non-discriminatory Child Tax Credit. The suggested model would provide uniform payments regardless of parental work or benefit status, starting at $250 per week for the first child, $130 for subsequent children, and a $77 supplement for children under three years old. This credit would be indexed annually to wage growth or inflation to maintain its value.
Beyond payment structures, CPAG also emphasizes the need to reform benefit abatement thresholds and income tests. Presently, benefit recipients lose entitlement rapidly when earning just $160 weekly, discouraging stable, part-time or intermittent work. A proposed adjustment would raise the abatement threshold to 15 hours at minimum wage (about $359 weekly) with an annual income test to smooth fluctuations.
St John further underscores the complexity of poverty in working families, noting that over half of children living in poverty reside in households with at least one employed adult. The current income threshold for maximum tax credit support is set at a joint income of $44,900, close to the minimum wage but insufficient for many families. Increasing earnings beyond this level often triggers a combination of tax credit reductions, student loan repayments, and the loss of housing assistance, resulting in minimal net gain despite additional work hours. In a hypothetical example cited, a family earning an extra $10,000 with one working parent saw effectively only $390 remain after deductions.
CPAG’s manifesto calls for lifting the income threshold for “Working for Families” support to at least $53,500 and reducing the rate at which assistance phases out from 27.5% to 20%. It also advocates raising the student loan repayment threshold from $24,100 to over $60,000 to reduce financial pressure on low-income families.
The collective message from researchers and child welfare advocates stresses that work alone does not guarantee escape from poverty under current policies. They urge government action to introduce more realistic and equitable support measures, enabling all children, regardless of their family circumstances, to have access to secure housing, sufficient income, healthcare, and education. Without such reforms, achieving meaningful reductions in child poverty will remain elusive.