‘Eliminating’ (reducing) child poverty

There has pretty much always been poverty and child poverty throughout recorded human civilisation. It is significantly less of a problem in New Zealand than it was 100 years ago, and even 50 years ago, but is still a significant cause for concern.

Prime Minister Jacinda Ardern has virtually staked her political career on reducing poverty.

Simon Collins (NZH):  Reducing child poverty: How will Jacinda Ardern do it?

We have always had ­people who struggle to cope because of physical or mental impairments, a rough ­upbringing, illness and mishaps.

In pre-industrial times, and still in much of the world today, helping them was left to the wider family or hapū. Industrialisation and its aftermath have splintered those ­extended families geographically.

Gradually, over a century or so up to 1984, governments built a ­welfare safety net to fill the gap – ­often pushed by unions and other ­social movements, but also ­reflecting a ­realisation by ­businesses they ­needed workers who could afford to live and customers who could ­afford to buy their products.

As well as welfare benefits, the safety net included free or cheap healthcare and education, state-backed wage-fixing and arbitration, state rental housing and subsidised loans for first-home buyers. The state financed more than half of all new housing from 1936 until the late 1960s.

That safety net was dismantled after 1984 in a backlash against the “nanny state”.

Ruth Richardson’s 1991 Budget imposed part-charges in public hospitals and cut benefit rates to strengthen incentives to work.

I think it’s fair to argue that some adjustments were necessary, but it’s also fair to argue that measures may have been too tough.

The Government stopped lending for housing from 1992. State-house rents were raised to market rates and tenants were only partly compensated by an accommodation supplement.

Not all the reforms persisted. Hospital charges were abandoned quickly and Helen Clark’s Labour Government restored subsidised state-house rents from 1999.

Clark’s Working for Families package increased tax credits for children from 2005.

Bill English’s National Government raised benefits for families with children by $25 a week from April last year.

Further adjustments to try to achieve a sustainable balance between assistance and affordability have continued.

The MSD report shows housing cost a quarter of the net incomes of the poorest fifth of working-age households in 1990, but now eats up half of their net incomes.

A Cabinet paper prepared for this year’s Budget in May said net incomes after housing costs had fallen by 8 per cent since 2006 for beneficiaries, and by 2 per cent for all households on accommodation supplements.

Housing costs escalated after property values doubled under the last Labour led government and then after flattening out they nearly doubled again under the recent National led government.

I bought a house in 2001 for $108k, and sold it in 2007 for $245k with virtually no improvements done. It’s rateable value (July 2016) is $275k, but it’s market value estimate is about $335k.

The proportion of children in households earning below half of median household incomes is now only moderately higher than in the mid-1980s before housing costs – but is still roughly twice as high as it was 30 years ago after paying for housing.

By last year 140,00 children were in households earning below half the median income before housing costs – 210,000 (19 per cent of ­children) after housing costs.

National’s Budget had ­already signalled dramatic ­changes to take effect from next April.

In a pre-election debate with ­Ardern, English boasted if he could reduce child poverty by 50,000 once, he could do it again. “We said we’d reduce that number by another 50,000 within two or three years, because under good fiscal management the country could do it,” he told Parliament this week.

“So there’s the benchmark. Can they reduce it by 100,000 from ­today? Because there was a plan in place to do that.”

Labour has said it will scrap National’s tax cuts. Instead, it will match ­National’s changes to accommodation ­supplements and raise family tax ­credits even more – by $47 a week for our sole parent with two children, plus $700 a year ($13.46 a week) for ­energy, lifting the ­weekly income in constant 2013 dollars to $528, higher than at any time since at least 1980.

Labour will also lift the incomes of the “working poor”, who ­account for almost half the children below the poverty line, by raising the ­income threshold for reducing ­family tax credits from $35,000 a year to $42,700.

Beyond the welfare field, ­other Labour policies should reduce child poverty.

National planned to extend very-low-cost doctors’ fees to 600,000 people with community service cards, accommodation supplement or income-related social housing.

Labour has promised to match that and cut $10 off all ­doctors’ fees.

Labour’s coalition deal with NZ First promises to lift the minimum wage to $16.50 an hour next April and to $20 by 2021 and Labour has promised legislation enabling ­unions and employers to negotiate industry-wide “fair pay agreements”.

This risks initiating wage/price inflation that will impact on poorer households the most.

Wills’ expert group in 2012 proposed six “immediate priorities”, including ­subsidising food in schools, a low-interest loan scheme and more support for teen parents.

All of these have either been ­enacted by National or endorsed by Labour, except for a proposal to pass on to custodial parents $159 million in child support payments that are taken by the state to offset the cost of sole-parent benefits.

Current Children’s Commis­sioner Judge Andrew Becroft is still pushing for this last change.

“It would increase compliance by fathers and it would be good for the children,” he says.

The experts then proposed four “priorities over the longer term” to cut the numbers of children in ­poverty by 30-40 per cent.

Their first item, “review all child-related benefits”, is under way and the changes are due to take ­effect next April.

Labour’s Best Start policy goes halfway towards the experts’ ­second item, a universal family benefit for all children under 6.

Twyford’s promise of at least 1000 extra state houses a year also goes halfway towards the ­experts’ third item, increasing social ­housing by at least 2000 a year.

So moves in directions that will help alleviate financial pressures but not eliminate them.

Wills’ expert group in 2012 proposed six “immediate priorities”, including ­subsidising food in schools, a low-interest loan scheme and more support for teen parents.

All of these have either been ­enacted by National or endorsed by Labour, except for a proposal to pass on to custodial parents $159 million in child support payments that are taken by the state to offset the cost of sole-parent benefits.

Current Children’s Commis­sioner Judge Andrew Becroft is still pushing for this last change.

“It would increase compliance by fathers and it would be good for the children,” he says.

But Greens are pushing for a ‘no questions asked’ benefit system that would presumably make it easier for fathers to avoid financial responsibility for their children.

The experts then proposed four “priorities over the longer term” to cut the numbers of children in ­poverty by 30-40 per cent.

Their first item, “review all child-related benefits”, is under way and the changes are due to take ­effect next April.

Labour’s Best Start policy goes halfway towards the experts’ ­second item, a universal family benefit for all children under 6.

Twyford’s promise of at least 1000 extra state houses a year also goes halfway towards the ­experts’ third item, increasing social ­housing by at least 2000 a year.

Housing is going to be one of the biggest challenges for the Government.

Wills also believes benefits and taxes need to be reviewed, ­especially to guarantee adequate incomes for families with children.

“I look forward to the day when we see fewer poor Māori and ­Pasifika infants in our ­children’s ward with chest infections, when we see fewer children with ­permanent lung scarring and ­stunted growth,” he says.

“New Zealand is a wealthy country. We love our children. We do a good job of looking after our old people already and we can do the same for our children.”

As a country we already do a lot to assist children and families. More is obviously required, but healthy children require a healthy state with a healthy economy. as always it is a difficult balancing act.

44 Comments

  1. Tipene

     /  November 12, 2017

    More required? Yes, more personal responsibility not to get into a situation that puts you or your children at risk of extreme deficit.

    Mind you, Jacinda et al seem to ignore the evidence on just how far poverty (in the true sense of the word) has reduced over time:

    https://fee.org/articles/the-worlds-poorest-people-are-getting-richer-faster-than-anyone-else/

    • David

       /  November 12, 2017

      Of course she ignores it, it directly contradicts her ideology.

  2. Gezza

     /  November 12, 2017

    I’m ok with any measures taken to reduce or eliminate child poverdy that don’t simply encourage the production of even more children the parents simply don’t really care about & expect other people – taxpayers – to pay to feed, clothe, educate & house.

  3. Corky

     /  November 12, 2017

    It’s a catch 22 situation. The welfare system and governments encourage dependence on the state. Take away the welfare state and genuine hardship is not addressed.

    I believe major reform is needed to our welfare system. There is no chance of that happpening under Labour.

  4. david in aus

     /  November 12, 2017

    Being a cynic, the easiest way to reduce ‘child poverty’ is to redefine it. Lets face it, it is really a political construct anyway. Not to say there aren’t differences in wealth.
    But why child poverty and not just poverty or Maori poverty? It’s because it is easier to make political hay with children. Everybody is for children, right? When you have that image, the logical part of one’s brain is being bypassed. It is the emotional cudgel that is such an effective political weapon of the left.
    Redefine the problem? How may you ask.
    A significant proportion of wealth is actually ‘free’ or state provided. In NZ you don’t pay for it but if you were in the US you would (health insurance for example)
    Imagine if you include that to the income of a family. Schooling $8000 per student, health $3000 per capita etc.
    If you include these into to household income, the relativities of being within 60% of the median income becomes much easier.
    E.g a family with two kids- add $20000 as compared to single wage earner going up of $3000.
    Child poverty sorted.
    Ofcourse all this is a charade. Giving more money to families which have shown little regard how it is spent will not decrease child neglect and deprivation.. The child who does not go to school because of family violence; the child that has nothing to eat, as the parents spent on alcohol and drugs.

    • Pickled Possum

       /  November 12, 2017

      Oh dear, you again! The one that lives in Oz, but Knows everything that happens here. Is an eggspurt on things wrong with NZ. With a hint of WO ferrymoans. With huge lashing of blame … on the side … of course. All dressed up as ‘concern’.
      The child poverty is of course a product of public schooling, we all know that. 😨

      • Corky

         /  November 12, 2017

        ”The child poverty is of course a product of public schooling, we all know that. ”

        It’s a major factor..but not the only one.

      • Alan Wilkinson

         /  November 12, 2017

        How do you help everyone make good decisions and choices, from beneficiaries to politicians? That seems to be the big question, Possum.

        The “Right” says make them responsible. The “Left” says give them money.

        What do you think?

  5. Blazer

     /  November 12, 2017

    hey David in…aus,can I buy an…n?

    • david in aus

       /  November 12, 2017

      Blazer you can get your P and Qs for free. If you buy a O for Awesome, you get two letters for the price of one.

      But seriously:
      Inequality is unfortunately intergenerational. Even in Sweden, the paragon of social welfarism, the future occupation of a child is most likely influenced by the occupations of the parents.
      Those who actually care try to break these intergenerational cycles and look into behaviours and mindsets that locks in these ingrained social structures. And not use trite class welfarism and vacuous ‘virtual signalling’ for political advantage. The child-proverty trope, I predict will wane during the term of this Labour government, as it no longer serves its purpose.

      • Blazer

         /  November 12, 2017

        do you realise that…’you can’t have rich people…without a whole lot of…poor..people’!

        • david in aus

           /  November 12, 2017

          Blazer, in NZ we are all rich. It just depends on the comparison. Compared to people in Venezuela we are mega wealthy. We have access to health care, education and if we are able to manage our finances have food in our bellies.
          Would you rather be ‘rich’ in Somalia than ‘poor’ in NZ. The best things in NZ are ‘free’: environment, law and order, health and education. Most importantly, the ability of your children, if they put in the effort, to surpass their parent’s achievements.
          We don’t become more wealthy by making others poorer. NZ is not wealthy because it made other countries poorer (here comes the guilt). It is emblematic of the zero-sum mindset of the left.

          It’s relativities you are talking about. Yes there will be always be some with more resources than others, even if you give out the same amount of resources at the beginning. Some people save and invest, others spend and splurge. Some are social, others are not etc.
          Communists tried to change human nature but failed.

          • Blazer

             /  November 12, 2017

            Venezuela has very rich people too.You are correct about resources.Who controls and acquires resources is reflected in the wealth of nations.A question for you..is Capitalism ..human nature?

            • david in aus

               /  November 12, 2017

              I will give you that Blazer. There are rich people amongst the dire socialist-made tragedy that is Venezuela. Once the wealthiest country in South America.
              The rich people are the ones connected to the corrupt socialist government. The props to the leader are fed well.

            • david in aus

               /  November 12, 2017

              Capitalism is human nature to an extent.
              Operant conditioning, you get rewarded for positive behaviour. Like productive work, we want to reward it. If you don’t reward effort or work, why do it? Even mice and monkeys know this.
              But smart societies know that capitalism isn’t everything and can’t solve every problems but is essential in producing more stuff and services. Dumb societies are communists and that’s why not many of them survive.

            • Blazer

               /  November 12, 2017

              human nature is co operative,communities in its natural state I would say.Competition developed, for resources amongst rivals.Pure capitalism does not exist anymore than pure communism.Socialists accept that some people are due greater rewards by dint of ..merit…not class society,thats what the right can’t understand.

            • Gezza

               /  November 12, 2017

              human nature is co operative,communities in its natural state I would say.
              I don’t human nature is so simple it can be accurately reduced to that statement. There are always individuals who don’t conform, natural leaders, followers, innovators, plodders, harder workers, etc. Once societies get beyond small settlement size things get much more complex. Capitalism is pretty hard to define but to me it’s basically just a step up from simple trading of goods, and trading via merchants who borrow in order to finance their operations, and end up getting wealthy doing it, has been happening for millenia.

            • Gezza

               /  November 12, 2017

              Drat: * I don’t THINK human nature is so simple … that should’ve said. And the blimmin italics should’ve ended after the first sentence quote. 😡

  6. Blazer

     /  November 12, 2017

    the rich oppose the socialist govt.As you know they conspired with the C.I.A to overthrow..Chavez.Manduros govt is being sanctioned to…death.

    • david in aus

       /  November 12, 2017

      Sanctions? Hardly.
      Venezuela can’t use the capitalist system in New York to borrow money, that they probably never pay back. For a socialist/communist state, its odd that it relies on capitalist systems to stay afloat.
      Even in the halycon days of $150 barrell crude oil, Venezuela was in budget deficits and borrowing money from mainly capitalist economies.

      • Blazer

         /  November 12, 2017

        the U.S produces money at will and distributes it,because it has the military might to back it.

        • david in aus

           /  November 12, 2017

          US prints money, yes correct. But it also produces stuff that you can buy with money. Venezuela’s inflation rate is $1000, you have to line up to use your printed money to buy what? The paper the money is printed on is more useful for wiping your bottom, because you can’t buy toilet paper.

  7. Some people I knew had their house bought by the state because it was on unstable ground.

    Did they buy a new house ? They did not. They went on overseas trips and spent the money on other things…their business, but they will be renting forever when their contemporaries are living mortgage free.Thus they will be much poorer than people who own their houses.

    I was told that when there were a lot of miners laid off in the 80s (?), that some spent their money on buying houses and others frittered it away and had nothing to show for it.

    It’s people’s own business what they do with their money, but there will always be those who are the grasshoppers and expect the ants to look after them.

  8. Hollyfield

     /  November 12, 2017

    …..a proposal to pass on to custodial parents $159 million in child support payments that are taken by the state to offset the cost of sole-parent benefits.
    Current Children’s Commis­sioner Judge Andrew Becroft is still pushing for this last change.
    “It would increase compliance by fathers and it would be good for the children,” he says.

    I think this view is very naive. A deadbeat dad is a deadbeat dad.

    I have never been on a benefit (I worked part time while a married mother then increased to full time when my marriage broke up), so IRD passes all child support paid by my ex-husband to me. My ex-husband is $40,000 behind in payments (not including any penalties) and I don’t see IRD making any effort to chase it up. I have struggled for 15 years on an average salary while he has had sufficient income to take extended holidays around North and South America, Asia and Europe, not paid child support and not participated in any of the practical aspects of child rearing. (Although I must say my daughter is a far more adjusted young adult through his choice of non-involvement!)

    I have heard other mothers suggest that IRD don’t bother to chase payments for working custodial parents, because IRD don’t get to keep the money; they only chase payments for beneficiary custodial parents.

    • Alan Wilkinson

       /  November 12, 2017

      Why did you choose him?

      • Hollyfield

         /  November 12, 2017

        Something I have asked myself many times…..

        • Alan Wilkinson

           /  November 12, 2017

          Maybe if we find an answer we can stop other women making the same mistake?

          • Gezza

             /  November 12, 2017

            You can’t always tell what somebody is going to turn out like Alan.
            People change.

            • Alan Wilkinson

               /  November 12, 2017

              I don’t think their values change, G. I’ve not seen that happen in anyone I can think of from my youth.

            • Gezza

               /  November 12, 2017

              I’ve certainly seen people go from sharing and caring in their youth to selfish and uncaring as they’ve gone thru the Douglas era.

            • Alan Wilkinson

               /  November 12, 2017

              I haven’t. But then I’m not thinking about people who talked about caring in their youth, just people who walked their talk. I knew plenty of selfish young people and I’m guessing they haven’t changed. Neither have the other kind.

          • Hollyfield

             /  November 12, 2017

            Actually I do know why, and if I knew then what I know now…. My mother was excited to be the centre of attention as mother of the bride, she started talking to me about getting engaged when I was 16. My father had made it clear to me that I would leave school at 16, work in an office for a year and then get married, and I wouldn’t to go to university (I wanted to be a doctor) as I would have a husband to take care of me. My parents were so proud that I had been proposed to. I was very young (17 when we met, 18 when we got engaged, married at 20). Then once I’d got myself into that situation I didn’t know how to get out of it. So I went through with it. I went straight from my father’s home to my husband’s home. My father was horrified at the long engagement (I recall him saying people would wonder why it was so long, should be 6 months maximum) but I know now the only reason I insisted on a long engagement was because I didn’t want to get married, and I was delaying.
            I had been conditioned all my life that it was an honour to be asked on a date, to be proposed to etc.
            I’ve made sure my daughter knows that she is under no obligation to go out with anyone just because he asks, and if she does go out with someone she doesn’t have to keep going out with him – although she should always treat the boy respectfully. I think this is an issue similar to consent that young people need to be know.
            My 17yo daughter recently broke up with her boyfriend – I was pleased with the way it ended because she has now had the experience of breaking up and knowing that life goes on, and although she was sad it had ended she was not devastated – a good life lesson for first love with no lingering negativity. However I have witnessed my mother’s recent comments to my daughter that this breakup is a great disaster, and that there is something wrong with my daughter that she was unable to keep the relationship going.
            I suspect my situation is a similar mindset why many teenagers get pregnant (although I didn’t do that until 27). They get themselves into a situation and they don’t have the maturity, life experience or family support to get themselves out of it again. So they continue the example set by their parents.
            And I read the above and I think “why was I so stupid”, but the reality is I was a dutiful daughter doing as my parents expected.

            • Gezza

               /  November 12, 2017

              Awesome, Holly.

            • Gezza

               /  November 12, 2017

              Re dating – yeah I got my heart broken and I broke a few. It hurts to get turned down by a girl. It takes so much courage for some of us to ask. But it was good experience.

  9. Alan Wilkinson

     /  November 12, 2017

    Thanks for that, Hollyfield. That is one of the most important things anyone has said here for some time. It should be taught in schools. It is a lesson for everyone to learn and to take strength from.

  1. ‘Eliminating’ (reducing) child poverty — Your NZ – NZ Conservative Coalition