In the NZH editorial (Tuesday 27th Feb) , titled: ”New Zealand is failing our most vulnerable – our children” it was stated:
On Thursday, Stats NZ released its latest child poverty measures, showing in the year to June 2023, 202,100 children were deemed to be living in poverty in this country. That’s an increase of 3.1 per cent on the previous year.
Oops. The editorial is incorrect to say there is an increase of 3.1%. It should have said 3.1 percentage points. The actual increase in numbers of children is a whopping 35,900 or 20% and is described by Stats NZ as statistically significant.
This 50% AHC fixed line measure is expected to show a downward trend when real incomes (incomes after adjusting for inflation) rise as is normally the case and is the trend until recently as can be seen from the figure.
The measure used here is the canary in the mine as it indicates changes in absolute poverty. It counts children under the 50% 2018 after housing costs median household income maintained in real value by a simple CPI adjustment.
By year ended June 2023 it is clearly going in the wrong direction. More, not fewer children live in families who can’t sustain even the meagre 2018 standard of living of the 50% fixed line. Corroborating the conclusion that child poverty got worse, there is also a 2.5 percentage change in hardship, the third primary measure in the Act. This shows 143,700 children were going without basic needs, such as fresh fruit and vegetables and doctor visits, and had to put up with being sick and cold. These figures must be taken as, or more, seriously as in these fraught times.
Of course there are other reasons to be even more alarmed. The official figures are so far out of date by the time they arrive and fail to cover the worst-off children whose families do not have a secure household address. Much more attention should have been paid to the consistent reports from the NGO sector such as foodbanks, budgeting services, ACM, Salvation Army, KidsCan and Variety. Charities report food insecurity is the number one reason so many are seeking help. The situation for the 2023/24 year, not reported until 2025, will doubtless show further deterioration as there are no policy changes in the past year to suggest otherwise and the voices from the NGOS are louder than ever.
Victoria University of Wellington professor of public policy Jonathan Boston is quoted in the editorial saying:
…The data show how difficult it is to reduce poverty. We remain a country with significant child poverty and particularly high rates of poverty among Māori and Pasifika communities, which is very concerning.
Another interpretation would be that rather than it being ‘difficult’ there has just been no effective policies, especially in the last two years. We can expect now that merely increasing incomes will be even less likely to show an impact. One reason is that balance sheets of the poorest families have become seriously eroded as year after year the deficits have been filled with borrowing and a run down in assets. Debt servicing makes any deficits even worse.
Another reason is that to improve our stats in a cost effective way, means ways of pushing more support to the lowest income groups will have to be found.
Just because child poverty is now more intractable is no reason not to try serious policies to turn the trends around. Indeed it is absolutely imperative that these trends are rapidly reversed for all our futures. Fortunately, there are things that can be done and done quickly given the political will.
Here is a meaningful start.
Immediately pay the full Working for Families tax credits to all low income families instead of leaving the poorest out, to fall further behind. The value of the IWTC in July will be almost $100 per week per family and 222,400 children would benefit. To join this onto the family tax credit so all get the same access would cost roughly $600m. The fact it is so expensive gives some indication of the amount that has been denied every year to the worst-off over the last 18 years.
Immediately adjust the WFF threshold from the fixed 2028 figure of $42,700 to $53,700 and reduce the rate of abatement to 20% to take the pressure off families in full time low paid work. This would give them up to $3400 pa more and could cost another $680m.
Annually adjust all aspects of benefits and Working for Families, including thresholds, for wages (or prices if prices rise more rapidly).
Of course other policies should be also used to reinforce income improvements. Bed in a decent lunch in schools programme with secure funding, improve child care subsidies and subsidise public transport for the young for example. Find ways to rebuild shattered balance sheets, especially in housing. Reduce the impact of debt including student loans with debt forgiveness programme.
So how can this be paid for? Here is one suggestion that would not increase poverty. Clawback 10% of NZ Super ($2 billion a year) from the wealthiest Superannuitants who would hardly notice with a modified surcharge as set out here: New Zealand Super as a basic income.
