Budget falls short of child poverty targets

This year’s budget was promoted as a Wellbeing Budget, but it has been criticised for not moving far enough towards addressing things that will improve the well being of the less well off, especially children.

Newsroom:  Budget moves not nearly enough to meet child poverty targets

This is the first Budget under the new Child Poverty Reduction Act rules. The Act is perhaps one of the most concrete and far-reaching changes the Government has introduced. From 2019 on, the Minister of Finance must report each year on progress towards preannounced three-year and ten-year child poverty reduction targets.

So how did Grant Robertson go first time out? How much progress towards cutting poverty was there actually in the Budget? The short answer is a bit, but almost certainly not enough to meet all three short-term targets by the deadline of June 2021.

The big Budget announcement was to index main benefit rates to changes in average wages rather than just the Consumer Price Index. It’s a great move, one which the Welfare Experts Advisory Group, and many other commentators in the field have called for. It means that part of the welfare system will keep pace with growth in wages instead of slipping further and further behind.

Approximately 55 percent of children in poverty live in households reliant on benefit as their main source of income. Indexation of the benefit to wages is an important long-term change, but indexation to inadequate basic rates is not enough. It will simply not be feasible to address child poverty without either (or both) raising benefit rates or the Working for Families tax credits paid to parents on benefit. We did not see either of these in this first Wellbeing Budget.

A budget is a budget, not an open chequebook as some seem to want it to be, Minister of Finance Grant Robertson has done a pretty good job of balancing economic prudence with the pressures to spend more on a wide range of things.

The last government was already nudging things towards more ‘social conscience’ spending. The current government has nudged things a bit more. Perhaps they will push things further towards wellbeing in the next budget, which is in election year.

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9 Comments

  1. Gezza

     /  5th June 2019

    I’m expecting a good old splurge next year.

    Reply
    • alloytoo

       /  5th June 2019

      That will be interesting because they’ve spent all the dosh this year.

      Reply
      • Gezza

         /  5th June 2019

        Isn’t it traditional for creative accounting & targeting to be a feature of election year budgets?

        Reply
  2. Blazer

     /  5th June 2019

    2 more terms at least are needed to address issues neglected by the former administration.

    This is a wealthy country with enough for everyone.

    We do not need to sell the place to foreigners and worship the uber rich.

    Reply
    • Kitty Catkin

       /  5th June 2019

      Sour grapes. I am not rich either, but don’t sneer at those I know who are because they got off their arses and did something while I faffed around reading Anglo-Saxon and Latin.

      Reply
  3. Geoffrey

     /  5th June 2019

    I rather thought the whole point of the CPI was to give the semblance of parity whilst those at the bottom end drop further behind actual inflation

    Reply
    • Duker

       /  5th June 2019

      CPI is an ‘index’ . Not really a good measure of living costs. Those on benefits would have higher costs based on rents, food prices, petrol etc.

      Strangely the CPI for some sectors prices go down as ‘enhancements’ are added to products. For new cars I looked up and example : they look at the price of a new Corolla ( as if a beneficiary would ever have one). When a recent new model year came out , the tyres were slightly wider , the engine went from 1.6 to 1.8 litres and transmission went from 4 speed to 5. Under their criteria this was a ‘price fall’ when included in CPI under the betterment provisions. Not as if you could even get the old spec model.
      Home appliances , computers etc are the same, CPI counts these as price falls or price stable if the price increases.

      The Consumers price index is weighted to all the things consumers buy /spend money on, beneficiaries have a very limited part of that. Not having holidays , new cars, restaurants, latest in season clothing and so on.

      Reply
      • Blazer

         /  5th June 2019

        As far as inflation /CPI conveniently exempts rent/mortgage costs from the equation

        Reply
      • Geoffrey

         /  5th June 2019

        Goodoh, so what is the CPI actually FOR? Is there someone, somewhere who, having mastered all of the inclusions and exceptions, can take the CPI and apply it to some useful end?

        Reply

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