New payments and a special fund are being introduced for extended family members who are caring for other people's children.
Social Development Minister Paula Bennett said the funding is in recognition of the difficult job people such as grandparents do when they take over the care of children.
Paula Bennett. Photo: RNZ
Mrs Bennett said about 12,400 children in New Zealand are cared for by extended family and other carers.
Caregivers entitled to the Unsupported Child's Benefit or Orphan's Benefit will be able to receive the payments.
A one-off establishment grant of $350 will be available when a child first comes into their care.
Caregivers will be eligible for help to pay for school uniforms, school fees and stationery. In 2014, the transitional year, this will range from $250-$400 depending on the age of the child, and when the full funding is available payments will rise to $400-$550.
From July next year, funding of up to $2000 a year will be available to provide help with the costs for children who are either experiencing difficulties that affect their development or who are showing promise.
Mrs Bennett said money from the Extraordinary Care Fund could be used for anything from violin lessons for a talented young person to extensive counselling that may not be covered through the normal means.
"It is quite broad, but when I think about my own children and what I can afford to give them I think these Kiwi kids deserve the same opportunities."
Diane Vivian, founder of the group Grandparents raising Grandchildren, said the payments have come after 14 years of campaigning and will be a tremendous boost to family carers but are just a first step.
"We've still got to go on and fight the battle for full parity with the same exact rates. These children need to be treated the same as children in foster care."
Mrs Bennett said there is a difference between a kin carer and a foster carer and the differential funding reflects that.
