FamilyBoost — childcare rebate that fell far short of its targets

The Policy: National FamilyBoost Policy — 2023 →

FamilyBoost was National's flagship cost-of-living promise to families with children in early childhood education (ECE). Announced ahead of the 2023 election, it offered a quarterly tax rebate on ECE fees — originally 25% of weekly costs up to $75 a week ($3,900 a year) — pitched at the "squeezed middle" earning too much for existing subsidies but still struggling with childcare bills. The scheme launched in July 2024, with the first payments flowing in October 2024.

What it does:

• How to claim: families gather compliant tax invoices from their ECE provider each quarter and submit them to Inland Revenue to receive a rebate payment
• Original amount: 25% of weekly ECE fees, capped at $75/week ($975/quarter), for households earning under $140,000 (tapering to zero at $180,000)
• Revised amount (July 2025): rebate lifted to 40% of fees, maximum raised to $240/fortnight, income ceiling expanded to $229,000 — changes the government said would benefit around 16,000 additional families
• Who misses out: households above the income cap; families whose ECE provider cannot or does not supply compliant invoices; and in practice, almost everyone who could theoretically claim the full amount — only 249 families were receiving the maximum $75/week by April 2025, just 1.2% of the 21,000 IRD originally estimated

Where things stand:

When FamilyBoost launched, IRD estimated up to 100,000 families could receive some payment, with 21,000 entitled to the full amount. The reality has been starkly different. By early 2025, around 60,000 families had received at least some payment — but the April 2025 data showed only 249 households consistently claiming the full rebate. Finance Minister Nicola Willis acknowledged publicly that "they got it wrong in terms of how many people would be eligible," and that IRD had found the original modelling difficult due to a lack of reliable data on ECE fee distributions.

A further embarrassment emerged in May 2025 when it was revealed that of the $62 million spent on FamilyBoost, $14 million — about 23% — had gone to administration costs, including the cost of setting up the scheme. Only $48 million reached families directly. Labour's Barbara Edmonds called it "quickly becoming an embarrassment" and a "bureaucratic nightmare," pointing to the invoice-collection process as a barrier for many families. ECE providers themselves have been criticised for failing to issue compliant invoices, meaning some eligible families cannot claim even if they want to.

The government responded in July 2025 by raising the rebate rate from 25% to 40%, lifting the income threshold to $229,000, and increasing the maximum payment to $240/fortnight. Willis framed this as making better use of unspent budget allocation rather than requiring new funding. But critics were unimpressed: Labour called it "too little, too late" and noted families would not see any change until October 2025. The Greens dismissed it as "tinkering around the edges," and the Early Childhood Council noted the expanded income threshold now allows households earning up to $229,000 to claim — prompting debate about whether the scheme still targets those who genuinely need help with childcare costs.

What to watch:

• Uptake after the July 2025 changes — whether raising the rebate rate and income ceiling translates into meaningfully more families claiming, or whether the invoice-compliance barrier remains the core bottleneck
• Invoice compliance fix — the government has not yet addressed the underlying problem that many ECE providers do not issue invoices that meet IRD's requirements; any fix here would likely do more for uptake than the rate increase
• Equity debate — with eligibility now extending to $229,000 household income, scrutiny will intensify over whether FamilyBoost is cost-of-living relief or a middle-to-upper-income benefit