The provincial government came to its decision to increase social assistance rates after working closely with frontline community agencies. (CBC)

The provincial government is increasing benefits for those on welfare by seven per cent over the coming year in an attempt to reduce poverty in New Brunswick.

Most social assistance clients will see a four per cent increase in October, and another three per cent next spring.

A single mother with one child who receives a maximum of $827 per month in welfare now, could receive $885 by this time next year.

Recipients will also be able to earn more money before their benefits are clawed back.

The current policy is set at $150 per month before clients' benefits are reduced by $1 for every $1 in earnings. Next October, the amount clawed back will be lowered to $0.70 for every additional $1 earned, allowing people to keep more of their benefits.

Social Development Minister Madeleine Dubé said her government came to its decision after working with frontline community agencies on social assistance reform.

"We're committed to reduce poverty here in New Brunswick and I guess with this budget, it's a huge step," said Dubé.

Barry Galloway, the coordinator of the advocacy group Vibrant Communities Saint John, said the reforms will help more people climb out of poverty — in part because they can work while collecting a social assistance cheque.

"The wage exemption piece that's been introduced will allow people to work and receive a portion of their assistance while they're working, and they can work towards a complete reduction in the long term," he said.

Advocates for the poor say changes won't amount to much money

Aurea Cormier, a member of the Common Front for Social Justice, said the news is welcome after five years without any welfare increase.

However, she questions how far the change will go to actually help those in need.

"The people receiving, for example, $537 a month, will be getting about $21 more a week on Oct. 1. That's about $5 a week," said Cormier. "And we know how much inflation there has been in all of the basic necessities."

Cormier said those on social assistance will still be living below the poverty line when the benefits are increased.

And single people deemed to be employable won't be getting any extra money.

Their social assistance cheque will remain at $537 per month.

Shelly McCready works with the poor and homeless for the Salvation Army in Saint John, and said the province still doesn't understand that the vast majority of singles collecting welfare are not doing so by choice.

"[Receiving] $537 a month, you're lucky if you can pay your rent," she said. "You aren't going to have enough money to properly feed yourself for the month, and therefore it's falling onto the food bank."

McCready said it remains especially difficult in parts of the province where unemployment rates are already high.