The total will be NZ$US774 million ($A714 million).
A public inquiry in 2024 found some 200,000 children and vulnerable adults in state and faith-based care experienced some form of abuse from 1950 to 2019, forcing Prime Minister Christopher Luxon in November to offer an historic national apology to victims and their families.
"We know there is nothing we can do to take away the pain of survivors," Erica Stanford, the lead co-ordination minister for the government's response to the inquiry, said in a statement.
"But the government has committed a significant investment ... to improve the redress system and strengthen the care system to prevent, identify, and respond to abuse in the future."
The average compensation payment for new claims will be raised to NZ$US30,000 ($A47,000) from NZ$US19,180 ($A30,000), and more money will be provided for survivors who suffered extreme abuse, while processing of claims will be sped up from 2027 to cut wait times, the statement said.
The redress does not include claims that sit with school boards, faith-based organisations, or other non-state providers, it said, adding the government will be receiving further advice on those later in the year.
Those from the Indigenous Maori community in state and foster care institutions were especially vulnerable to abuse, findings in the 2024 public inquiry noted.
The inquiry commissioned in 2018 was expanded to include churches and other faith-based institutions, following calls from victims and others.
