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RNZ News
17-07-2025
- Business
- RNZ News
Do people earning $200,000 need help with childcare?
High-earners were previously not eligible for Family Boost payments at all. (File photo) Photo: 123RF Government "choices" mean some of the families now receiving Family Boost payments for their early childhood education are among the 10 percent wealthiest in the country, an economist says. A revamp to the Family Boost programme means those with household incomes up to $229,100 a year are now eligible for support with their childcare fees. The available rebate is also increasing to 40 percent of fees paid, or a maximum of $1560 a quarter. The change applies to fees paid in the September quarter, and from then on. But Craig Renney, policy director of the Council of Trade Unions and an economist who was previously a senior economic adviser to then-Finance Minister Grant Robertson, said there were "choices" being made. He said those on the highest incomes, in the top 10 percent according to the Stats NZ Household Expenditure Survey, were benefiting the most from the change. "If your household earns $60,000 a year, you can get up to an extra $2340 annually in new support. If your household earns three times that, $180,000 - you will get an extra $3440 annually. That's 47 percent more. For exactly the same thing - having children in early childhood education." The difference was because the higher earners were previously not eligible at all. Renney said data also showed higher-earning households tended to spend more on early childhood education anyway, which meant they would have larger fees to claim rebates on. Most were already spending the money without the government's assistance, he said. It could have been better used to help make early childhood education more affordable or accessible to low or middle-income earners, he said. "Instead of having a 40 percent cap across the piece that could be claimed, you could have said for very low income households we'll make it 50, 60 or 100 percent. "Because this is a rebate scheme, those on low incomes don't have the money to be able to afford it in the first place to then get the rebate. "I'm not saying these families don't need the money but I'm saying if you were making choices about where to spend, for a government that's focused on value for money - you may get better outcomes for your dollar if you were actually spending it on expanding ECE provision in low-income communities." Asked whether the adjustment would affect the number of families who could receive the full $250-a-fortnight relief that National campaigned on before the last election, as a combination of the Family Boost package and tax cuts, Finance Minister Nicola Willis said that data was not available. Finance Minister Nicola Willis said about 60,000 families had received the full FamilyBoost payment they were entitled to. Photo: RNZ / Mark Papalii "The National Party campaigned on a tax relief plan that included multiple elements - shifting tax brackets to compensate for inflation, expanding tax credits to reach more modest income earners, increasing Working for Families tax credits and introducing the FamilyBoost childcare tax credit. "We delivered on these policies in our first Budget. We made clear that the impact of these policies would vary according to family circumstances and encouraged people to use our tax calculator so they could find out what it would mean for them." She said the $250 example was a family with a household income of $120,000 split across two earners spending at least $300 a week on childcare. "We did not model how many families would match that scenario. "Inland Revenue is not geared up to calculate how many people would have matched that scenario in the past 12 months or will match it in the coming years. This is because some elements of the tax plan are calculated on an individual basis while others, including FamilyBoost, are calculated according to household income. Inland Revenue does not routinely collect information on household incomes." She said about 60,000 families had received the full FamilyBoost payment they were entitled to. With the scheme expansion, she said, about 16,000 more families would probably benefit. "The amount of rebate they receive will vary according to the fees they pay and the income they earn each quarter. The maximum a family can now receive from FamilyBoost is $240, an increase on the $150 that National campaigned on. "To receive that amount, a family would have to be spending at least $300 a week on childcare and have a combined family income of less than $140,000 a year. Inland Revenue does not calculate how many families find themselves in that circumstance." Child Poverty Action Group spokesperson Isaac Gunson said his organisation's position was that the rebate was the most flawed part of the Family Boost programme because it relied on families having the money in the first place to pay the fee then wait to claim it back. "The direct fee refund model, which IRD is looking into, is where we see the real solution being. Placing the responsibility on the profit-driven providers to claim the money back lifts the burden off low-income families who need the support the most. "While larger rebates would deepen the support available to low income families, it doesn't really address the accessibility of the support, whereas a direct fee refund model would solve the issue the rebate presents to many families: they don't have the money and can't wait that long to see any of that money come back in." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Yahoo
22-05-2025
- Business
- Yahoo
NAB's radical mortgage change to give homebuyers $30,000 power boost
NAB is changing the way it assesses your mortgage application, which could massively boost your borrowing power. Banks across Australia use what's called the Household Expenditure Measure (HEM) when assessing someone's mortgage application. It gives lenders a rough guide on the amount of money that someone in your situation would be spending every month. Mortgage broker David Pelligra said NAB's small tweak arriving on Friday will be a big win for certain buyers. "It's so common now that first-time buyers are buying townhouses, units, apartments, and there are always body corporate and strata fees, which wildly impact their serviceability," he said. RELATED Controversial mortgage practice costs homebuyer $30,000 after tiny pay increase: 'Unfair' $500 ATO cash boost that Aussies have weeks to claim: 'Hard to beat' Aussies given fresh $100 energy bill rebate in $50 million cost-of-living promise From Friday, May 23, NAB will include body corporate and strata fees for owner-occupied properties in its HEM calculations. The bank said changing those fees from additional living expenses to general living expenses creates a more accurate representation of regular household costs. It also ensures mortgage serviceability assessments reflect the true nature of ongoing property a bank is assessing how much to lend you, it will combine your measure with your additional living expenses. The type of spending that's included in HEM is things like your bills and utilities, groceries, fuel, whether you have kids, and how old they are like. They are costs you basically can't avoid. HEM can also include certain discretionary spending, but that is up to each lender. Additional living expenses are things like life insurance, private school fees, or health insurance (even though the government can penalise you if you don't have this). Under the bank's eyes, those are technically optional costs. Up until now, NAB viewed body corporate and strata fees as something that was optional, even though you couldn't avoid them if you owned an apartment. Pelligra told Yahoo Finance he had a recent client who was applying for a loan who was paying body corporate fees. It was $3,000 a year in fees, which is $250 per month. The mortgage broker explained that if those fees were considered additional living expenses, then she would be able to borrow around $380,000 from the bank. However, with those expenses listed under HEM, she was able to borrow $410,000. That's a $30,000 increase in borrowing power with this simple change. Pelligra said he's had to coach many clients about how body corporate or strata fees could affect the amount they will borrow depending on the bank they choose. HEM is based on the Australian Bureau of Statistics' (ABS) Household Expenditure Survey, which is updated every six years and provides a snapshot of the typical spending behaviour of Australians. The measure is also adjusted every quarter to keep pace with inflation. NAB updated its figure twice a year. When you submit your mortgage application, you will also have to outline your general and additional living expenses. Once a lender is able to create a HEM guide for you as an applicant, it will take whichever is highest out of the HEM number and your expenses while retrieving data Sign in to access your portfolio Error while retrieving data
