What the new Family Boost policy means for parents

Wednesday, 27 March 2024

Prime Minister Christopher Luxon and Finance Minister Nicola Willis announce a cost of living support plan targeting rising childcare costs.

The Government’s Family Boost rebate scheme has been welcomed in some quarters as much-needed financial relief for families, while others are concerned the administration involved with accessing the funds will create problems. Emily Brookes reports.

Finance Minister Nicola Willis released this week full details of the ECE repayment scheme, which involves parents invoicing IRD in order to receive a refund of up to 25% on their fees, up to a $75-per-week maximum.

While Jasmine, who asked that she not be identified due to the sensitive nature of her job as a support worker, and her partner’s combined income would make them eligible for maximum repayments, the Christchurch mum of a 5-month-old said even $75 a week wouldn’t change much, particularly as they would have to wait several months to receive it.

Under the Family Boost scheme, “you’ve still got to have a plan in place to pay for the daycare to get them in anyway. You’ve still got to do all that admin work to get it.”

Kathy Wolfe, chief executive at Te Rito Maioha Early Childhood New Zealand, said confirmation of the policy’s implementation was a “relief” but called the rebate process “complicated”.

“Families with limited access to computers and limited knowledge of the Inland Revenue Department, could well struggle to access the rebates which is a real equity concern,” she said.

“A further worry is that those families that are already struggling and not participating in ECE will be unable to pay the upfront costs of ECE, given the rebate requires three months of fees before a claim can be made. That could mean families trying to find thousands of dollars in upfront costs, and then waiting for the IRD to process the claim. That could be a real barrier that excludes families on lower incomes.”

While Jasmine would apply for the rebate scheme, “I’m sceptical about how long it’s going to take to get the money back after I do all the work. I’m definitely not relying on it.”

Family Boost will return low to middle income families up to 25% of their ECE fees, but there are few hurdles.

So what exactly is Family Boost, and how does it work? Here’s what you need to know.

What exactly is it?

Family Boost is a rebate scheme designed to return up to 25% of the childcare bill to households with children in early childhood education (ECE).

Families with a combined household income of under $140,000 per annum will be able to receive the maximum of $75 per week, if that is 25% or less of their total spend, or $3,900 over the course of a year. That goes down by $18.75 per week for every $10,000 of income up to the household cap of $179,999, after which no rebates are available.

Finance minister Nicola Willis said the Government hoped to reduce the administration on parents, eventually.

The Government claims 100,000 households around Aotearoa will be eligible for some form of rebate, with 21,000 in line for the full $3900.

When does it start?

The system kicks off on July 1, so start saving your invoices then. Registrations open in September, with the first round of rebates paid in October.

How do I get it?

In order to receive the rebate, caregivers must their send their ECE invoices to IRD via the myIR portal.

IRD has advised that users “make sure that the name on your ECE invoice matches your details in your myIR account, and that all your other details are up to date in myIR”.

This wasn’t the Government’s original plan; it wanted IRD to put the cash straight into families’ bank accounts every fortnight, no compliance involved. But in the intervening months IRD has informed the Government it doesn’t have the systems in place to do so.

Finance minister Nicola Willis said the Government hoped to reduce the administration involved, but wouldn’t be receiving advice on options for doing so until the end of the year.

How is it paid?

The rebates will be paid every three months into nominated bank accounts. Families who qualify for the maximum reimbursement will receive the first refund of $975 in October and then every three months thereafter.

Do 3- and 4-year-olds still get 20 hours free?

Yes.

Any catches?

The rebates are calculated per household, not per child. A single parent with an income of $139,000 and one child in ECE will receive the maximum amount, and so will a two-parent household on the same combined income with three children in ECE.

You can only receive Family Boost payments if the child you pay for is in your household. So a grandparent, for example, who pays their grandchild’s ECE fees but lives elsewhere will not be eligible regardless of their income.

I already receive a benefit, am I eligible?

Most beneficiaries can also obtain Family Boost rebates, including those who receive the Childcare Subsidy, as long as ECE costs are over and above the benefit payments. But if ECE costs are directly covered by the Childcare Subsidy, that beneficiary is ineligible.