Budget 2015: Gap between benefits and low waged workers too large - English

The government's benefits boost for beneficiaries with children occurred because the gap between benefit levels and the lowest income wage earners had become "a bit too wide," Finance Minister Bill English said at a post-Budget breakfast meeting in Wellington.

"The gap between wages and benefits is as wide as it's ever been," Mr English told a large business audience. "We felt it had got a bit too wide" because the pace of wage increases had picked up, compared to inflation-adjusted benefit payments.

However, Mr English made plain that the 2015 budget's $240 million-a-year child support package is not the end of the government's efforts in the area.

"The next step will be to look at a couple of different population groups that aren't hard to guess, in children and youth, (to) work with the people who know all the services intimately to restructure it, to do a better job," he told reporters after the event, where he outlined the government's increasing ability to identify a small group of children whose poor start in life could lead to extremely high costs, including benefit payments and imprisonment, over the course of their lives.

"It's worth taking an individualised approach and worth spending the money to deal, if that's what's required, with problems with severe long-lasting effects," said English.

This year's budget boost to benefit and Working for Families levels had been about dealing with "some short-term issues day to day of hardship, of whether children are getting enough to eat or getting the clothes they need, and we've decided we should relieve some of the pressure there."

"That sits alongside the investment approach where some of those families are families the government can work with much more closely to deal with the long-term problems that lock them into those benefits for generations."

This approach would not require "more cash across the board" but was "likely to have some pretty targeted resource going into hard cases where we can see a payoff," English said.

(BusinessDesk)