Finance Minister Nicola Willis says the $14m cost to run the FamilyBoost scheme included its establishment cost. Photo: RNZ / Samuel Rillstone
Nearly a quarter of the money spent on National's flagship FamilyBoost policy has gone towards running the scheme, instead of helping families.
Of the $62 million spent so far, just $48m has been paid out to parents, while $14m has gone towards administration costs.
Claims began being accepted by Inland Revenue (IRD) for the early childhood education rebate in October last year.
Families can claim 25 percent of their weekly cost of childcare, up to a maximum of $75. Payments for those earning between $140,000 and $180,000 are gradually reduced and those earning more than $180,000 are not eligible.
When National first announced its FamilyBoost policy ahead of the 2023 election, both Christopher Luxon and Nicola Willis downplayed any administration burden.
"Our view is it doesn't cost much more to administer at all because we already have these existing mechanisms. It's very similar to how working for families payments are made essentially. So the processes are well established in the IRD," Luxon said in March of that year.
Willis agreed, adding at the time: "Last time I checked [IRD's] already got 4000 staff and budget of around $750m. I reckon they can make this work."
The finance minister told RNZ on Tuesday the $14m cost to run the scheme included its establishment cost.
"I have told Inland Revenue I expect the costs to fall in coming years," said Willis.
"To date 58,422 households have received $48.6 million through Family Boost. When we introduced the scheme we anticipated it would deliver more assistance to more people and I expect to be in a position to make an announcement about that in June," she said.
Willis told Morning Report IRD's modelling was faulty.
"They got it wrong in terms of how many people would be eligible for the scheme."
She was now getting the department to work on changes.
"My goal is to have this scheme reaching more people."
Willis said only "tweaks" would be needed to ensure more families became eligible.
The income eligibility thresholds, the circumstances that people could get the rebate and the way this was being assessed were the areas being reviewed, she said.
All the money put aside for the scheme remains available for it at the Budget, and policy changes to widen the eligibility will be announced next month.
It comes after the minister confirmed last month that initial estimates from Inland Revenue that 21,000 families would be eligible to claim the full amount from the scheme were, despite best efforts, "wrong".
Willis said the modelling had been challenging because Inland Revenue had not had reliable data about how much parents were paying for early childhood education.
At that time just 249 families were consistently claiming the full amount.
Labour's finance spokesperson Barbara Edmonds Photo: RNZ / Samuel Rillstone
Labour's finance spokesperson Barbara Edmonds told RNZ the scheme was quickly becoming an "embarrassment for the finance minister".
"That is taxpayer money that isn't helping families with childcare, rather going to the administration costs of a scheme that is quickly becoming a farce for parents.
"Nicola Willis catastrophically botched the numbers, recently being forced to admit only a few hundred families are getting the full amount for childcare," she said.
"Of the 130,000 families she claimed would receive some support, a figure she revised to 100,000 upon coming into government, only half are getting any money at all."
It was "highly likely" Labour would get rid of the scheme if it became the government, she told Morning Report.
Edmonds also criticised National for the scheme being "unnecessarily complicated for time-poor parents, who have to keep invoices for childcare and submit them for a rebate".
Responding to that, Willis told RNZ that Inland Revenue was looking at ways to improve the application process, "but the feedback I and IRD have had from parents is that the tax credit is easy to apply for".
"Creating a simpler rebate system would have required delaying the scheme for a couple of years while it was developed.
"The government was not prepared to do that," she said.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
