Baby Budgets: The Types of Financial Assistance Offered in NZ

There are a number of types of financial assistance offered to new parents in New Zealand - from paid parental leave to free healthcare for children under 12, there are ways to make your financial burden lighter.

You want to have a child but the information around the financial assistance from the government is unclear and a bit overwhelming. Here, you’ll find a breakdown of what benefits are available to you.

Paid parental leave (PPL)

Parental leave is an entitlement that the NZ Government pays to parents who take time off work to care for their child. The primary carer- which can be Mother, Father, Grandparent or adoptive parent- can stay at home while being paid a percentage of their income. This is usually for a new-born but also covers any child six years or younger who has been transferred into their care.

To qualify, you should have worked at least ten hours per week over the past 26 weeks of the year. This is somewhat lenient in order to accommodate people who have changed employers or taken a short break in employment.

On PPL, parents are eligible for up to $538.55 (gross) a week. It is calculated to match your existing income, up to that amount. The IRD pays this into your bank once a fortnight with tax, student loans and KiwiSaver deducted. If at the same time you’re in receipt of another income stream, one of them will have to be processed as a secondary tax.

This payment continues for 22 weeks. If your child is born after 1 July 2020, the PPL will be paid for up to 26 weeks.

Parental tax credits

If you aren’t eligible for PPL, parental tax credits are available. While it is less than the paid leave, it still gives your household more income.

Once the baby arrives…

There are more support options available to you once your child arrives.

Best Start tax credit

The Best Start tax credit is a $60 a week payment for all new babies. It is designed to give your finances a helping hand for the first year, which is typically when only one person will be working. If your household income is less than $79,000 then the Best Start credit lasts until the child turns three.

Working for Families

The Working for Families tax credit is a complex calculation comprising f In-work tax credit, Family tax credit, Minimum family tax credit, and Parental tax credit. If you have a dependent child 15 or younger, it is likely you will be eligible for some level of financial assistance from Working for Families. For instance, the maximum available on a Family tax credit for a child between 0-15 is $113 a week and each additional child up to $91 a week. This is pro-rated based on the income of the household.

It is a complex system and will vary depending on the family scenario.

Twins and multiples

There are further grants and subsidies available for parents of multiples. This is to provide home help if required.

Childcare subsidies

Much has been spoken of the ECE 20-hour childcare subsidy. There is a range of limitations on it though. The 20-hour subsidy is for children aged 3-5 years old. The subsidy is only for a certain hourly rate, so if your local centre charges a higher rate, you will be required to top up the difference.

The subsidy can only be used for a maximum of six hours a day. If you need fewer hours, you forgo the subsidy and if you need more then you must top up. Some centres also require you use only eight hour days, so you will always be forced to pay two hours extra.

An average centre charges $6 to $10 an hour. If you work 40 hours a week and place your four-year-old in care, you’ll pay 20 hours as well as topping up the hourly rate. This may mean you’ll end up paying between $120 to $240 extra a week.

If you place your child in care at one year old, it will cost you between $240 to $400 a week.

This affects affordability and the financial viability of working. Even if one child is affordable, then two children will likely not be.

Some rural centres offer up to 30 free hours of childcare a week if you commit to keeping your child in attendance there until they go to school.

There is also a childcare subsidy for income-limited families. This is for under-fives to attend kindergarten, preschool, kohanga reo, or approved home-based care for up to 50 hours a week.

Once your child attends school, there are OSCAR subsidies for pre-and-post school care.

There are many financial supports for Kiwi families, make sure you speak to the IRD/ WINZ and claim all that you are entitled to.

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