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Hon Steven Joyce

Minister of Finance

25 May 2017

Fact Sheet 4 - Housing Costs and the Family Incomes Package

Summary

From 1 April 2018:

  • The Accommodation Supplement maximum payments will be increased to better reflect the increasing housing costs that lower income families face.
  • The maximum Accommodation Supplement rates for a two person household will increase between $25 and $75 a week, while the maximum rates for larger households will increase between $40 and $80 a week, depending on where they live. In addition, changes to the Accommodation Supplement areas will provide further gains to some families.
  • These increases to the Accommodation Supplement are expected to directly benefit around 136,000 households around New Zealand by an average of $36 per week.
  • The Accommodation Benefit rate (for Student Allowance recipients) will increase by up to $20 a week to better reflect increases in housing costs for students.
  • The changes to the Accommodation Benefit are expected to directly benefit around 41,000 students around New Zealand, including 26,000 students in Auckland, Wellington or Christchurch who will receive a $20 per week increase.

What is changing?

From 1 April 2018, changes to the Accommodation Supplement and Accommodation Benefit (for Student Allowance recipients) will be made:

  • Accommodation Supplement maximum amounts will increase to better reflect the cost of housing across NewZealand.
  • The Accommodation Supplement assists many beneficiaries and lower- income working families to meet their rental, board or mortgage payments. This package will increase the Accommodation Supplement maximum amounts for the first time since 2005.
  • The maximum amount of Accommodation Supplement available depends on where people live. Communities throughout New Zealand are allocated across four Accommodation Supplement areas that reflect local housing costs, with those with higher accommodation costs in area one and the lowest accommodation costs in area four. The make-up of the four Accommodation Supplement areas will be updated so people in areas where housing costs have increased the most will be eligible for a higher maximum amount of Accommodation Supplement.
  • Please see the maps of the new Accommodation Supplement areas for more detail (www.msd.govt.nz/about-msd-and-our-work/newsroom/2017/budget-2017.html .
  • Accommodation Benefit rates (for students) will increase by up to $20 a week. The Accommodation Benefit supports Student Allowance recipients with their housing costs. The amount of Accommodation Benefit available depends on the region in which the student lives. The Family Incomes Package will increase the amounts of Accommodation Benefit in some regions to assist those students experiencing hardship as a result of housing costs.

Accommodation Supplement

From 1 April 2018, around 136,000 households receiving the maximum amount ofthe Accommodation Supplement will benefit by an average of $36 a week. This is approximately 47 per cent of those receiving the Accommodation Supplement. The table below shows the increase in the maximum weekly amounts from current levels.

Area Family Size Current New Difference
Area 1 1 person $145 $165 $20
2 person $160 $235 $75
3+ person $225 $305 $80
Area 2 1 person $100 $105 $5
2 person $125 $155 $30
3+ person $165 $220 $55
Area 3 1 person $65 $80 $15
2 person $75 $105 $30
3+ person $120 $160 $40
Area 4 1 person $45 $70 $25
2 person $55 $80 $25
3+ person $75 $120 $45

Of the 136,000 households that will benefit from the changes to the Accommodation Supplement:

  • 75,000 households receiving a benefit will see an average increase of $30 aweek.
  • 46,000 low income working people and families not receiving a main benefit will see an average increase of $48 aweek.
  • 15,000 superannuitants will see an average increase of $29 a week.
  • These changes to the Accommodation Supplement will mean that 14,000 households will no longer be in severe housing stress (considered to be households having less than $180 a week adjusted for inflation and household size and type, after paying their housing costs). The Family Incomes Package as a whole will mean that around 20,000 households in total will no longer be in severe housing stress.

    The Accommodation Supplement and Childcare Assistance calculator (http://www.workingforfamilies.govt.nz/calculators/ ) on the Working for Families website has been updated to give people an estimate of how their payments may change from 1 April 2018.

    Who will benefit most from the Accommodation Supplement changes?

    Those who live in areas that are being reallocated into an area with a higher maximum payment will see the biggest increase in the maximum amount payable.

    For example, a single person receiving a main benefit, paying $290 a week in rent and receiving the maximum weekly Accommodation Supplement payment of $100 in South Auckland, Tauranga or Queenstown would see a $65 increase in their weekly Accommodation Supplement payment.

    A sole parent with two children receiving the Sole Parent Support benefit, paying $545 a week in rent and receiving the maximum Accommodation Supplement payment of $165 in these locations would see a $140 increase in their weekly Accommodation Supplement payment.

    The changes will also benefit low-income working families facing high accommodation costs. For example, a couple with two young children with one partner working on minimum wage and paying $435 a week in rent in Ashburton could expect to see a $145 increase to their weekly Accommodation Supplement payment. They would also get increases in their after-tax income and their Family Tax Credit from other parts of the Family Incomes Package.

    Individuals and families who do not gain from the changes

    Some households will not gain from the Accommodation Supplement changes. This may be because they are receiving their maximum entitlement already based on their circumstances, or because the increase in Accommodation Supplement is offset by a decrease in Temporary Additional Support. These households may benefit from other changes being made as part of the Family Incomes Package.

    A small number of households (around 2,000) receiving Accommodation Supplement may see a decrease of up to $3 a week.

    $2.2 million over the next four years has been set aside to provide transitional financial assistance to the small number of households who may see overall losses of more than $3 a week as a result of the changes across the Family Incomes Package.

    Accommodation Benefit for students

    From 1 April 2018, around 41,000 Student Allowance recipients will benefit from the increases to the Accommodation Benefit. Around 26,000 students who live in Auckland, Wellington or Christchurch will receive a $20 per week increase.

    The current and estimated future maximum rates of Accommodation Benefit from 1 April 2018 in the six university cities are shown in the table below as examples of the increases:

    Example locations Current rates Estimated future rates
    Auckland $40 $60
    Wellington $40 $60
    Christchurch $40 $60
    Dunedin $40 $51
    Hamilton $40 $49.50
    Palmerston North $40 $40.50

    The amount of Accommodation Benefit received depends on the region in which the student lives. In areas with relatively lower accommodation costs, such as Hamilton and Palmerston North, the increase to the rate will be lower than in areas with higher accommodation costs such as Auckland.

    Students should visit the StudyLink website for an estimate of how their Accommodation Benefit may change from 1 April 2018 (https://www.studylink.govt.nz/about-studylink/news/2017/budget-changes.html ).

    Sole parent students receive different levels of assistance for their accommodation costs compared to other students as their Accommodation Benefit is linked to the sole parent rate of Accommodation Supplement. The Accommodation Benefit for sole parent students will rise in line with the increases to the Accommodation Supplement rate for sole parents.

    These increases are in addition to the usual change to Student Allowance rates as part of the annual general adjustment which occurs on 1 April every year.

    More information

    These changes will occur in April 2018. Until then payments are unaffected.

    For an estimate of how clients' payments may change from 1 April 2018, the updated Accommodation Supplement and Childcare Assistance calculator (http://www.workingforfamilies.govt.nz/calculators/ ) on the Working for Families website should be used.

    Students should visit the StudyLink website for an estimate of how their Accommodation Benefit may change from 1 April 2018 (https://www.studylink.govt.nz/about-studylink/news/2017/budget-changes.html .

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