FAQ: End Child Poverty

Q: How many children in New Zealand are living in poverty?

There are different ways to measure poverty, which means there are different estimates of how many children live in poverty in New Zealand. But even taking into account those variations, we know that somewhere between 200,000 and 260,000 of New Zealand children (between 20-24% of all children) are living under the poverty line (60 percent of median income after housing costs) reported by the Ministry of Social Development. 10 percent of children live in severe poverty.

Children are the population group most likely to live in poverty and it is highly concerning that those most likely to be in poverty are children 0-4 years of age, when the most important physical, mental and emotional development is taking place. As a result, many of these children have their lifelong health and education compromised. For three out of five of those children, poverty persists over at least seven years, for most of their early formative years. And, all the evidence shows that the longer the period on low income, the greater the harm.

Ten years after the launch of the Working for Families family assistance package, research sadly shows that the poorest children in New Zealand have continued to be left behind and likely to suffer harmful consequences. This is not only a breach of children’s rights, but also brings with it an economic cost of an estimated $6-8 billion per annum in downstream costs associated with child poverty. That cost is made up of the high health needs of children in poverty, remedial education, justice costs, and lower productivity downstream when children don’t get the best start in life.

In 2014, despite claims of economic recovery after the protracted recession, reports from frontline social services suggest child poverty has continued to worsen. These reports were corroborated by revised figures released in February.

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Q: Why launch this campaign now?

The announcement of the Government Budget on 21 May 2015 provides an opportunity for the ActionStation community to add the power of a people’s movement to the tireless work of child poverty researchers and advocates, and dozens of NGOs who have been lobbying for action on child poverty for years.

The government has been tinkering around the edges of child poverty for years - and the recent vote against the Feed the Kids Bill shows that without public pressure, they may continue to do so. Only a massive mobilisation of New Zealanders, standing with the experts and advocates who have been fighting for our poorest children for many years, will move them to take real action for our kids now.

Q: What evidence is there that providing more income to poor families is more effective than other approaches to improving outcomes for children?

Some people think providing more income to poorer families won't work, because it just gets wasted. They suggest spending that money on education and boosting opportunities instead. In fact, thanks to Britain's Joseph Rowntree Foundation, we now know that providing an extra £1000 (equivalent to NZ$2000) of income to poor families produces the same educational benefit to their children as spending that $2000 on the school system. Not surprisingly, kids who are well housed, fed and clothed do better at school. Not only that, but the extra $2000 in income produces all sorts of other benefits that school spending doesn't.

Reference:

Q: What evidence is there that parents will spend this additional money to improve the lives of their children?

All the available data shows that, with few exceptions, parents in low income households prioritise the needs of their children. When they have additional income it is the needs of children which are given first priority. Moreover, New Zealand expenditure data (Household Expenditure Survey) shows that low income and beneficiary households spend less on alcohol, drugs, tobacco and gambling and a greater percentage of their income on food than high income households.

The Household Expenditure Survey provides a range of data on patterns of expenditure in different households. It provides data on income groups, expenditure for recipients of benefits and wages and for different types of households with children. Households with the lowest incomes spend 18.4% of their income on food compared with 15.3% for the highest income group. They spend 1.8% of their income on alcohol ($8.20) compared with 1.9% ($42.9) for the highest income group.

Sole parent households spend the smallest percentage of their income on alcohol ($6.00 or 0.80%).  A similar pattern emerges for overall expenditure on alcohol, cigarettes and drugs with sole parent households spending the least both as a total expenditure and as a proportion of their weekly spending.

More generally, research published by Superu (formerly the Families Commission) found that parents in poor households prioritise spending on accommodation, power, food and transport in order to do the best for their children. The same research revealed that some parents are missing out on meals to be able to meet the needs of their children.

Previous Families Commission research also showed, for example, that poor families are just as likely as anyone else to budget a set amount for food each week, and make a shopping list before going to the supermarket.

References:

  • Perceptions of income adequacy in low income families

  • Household Expenditure Survey, NZ Statistics

  • Claire Smith, Winsome Parnell and Rachel Brown, Family Food Environment: Barriers to Acquiring Affordable and Nutritious Food in New Zealand Households, Families Commission, 2010, p.5.

Q: What are the benefits that the poorest children are not currently getting, which other children get?

Over 230,000 children in low income families do not benefit from the full Working for Families package. Some are in families supported by wage income but their parents don’t get enough hours every week to qualify for important payments.

The child payment (called the IWTC) of at least $60 a week per family can disappear when the family falls on hard times or just can’t work enough hours or need a benefit.  Other benefits such as the parental tax credit and the minimum family tax credit compound the unfairness. The Human Rights Tribunal has confirmed that these policies discriminate against children but has affirmed the right of the Government to discriminate.

After we fix this problem and begin to treat all low income children the same for tax-funded support, we then need to begin to improve the overall incomes for those families who still struggle even though they are in full time work. Good policy should prevent family poverty as well as deal with the symptoms. Child poverty requires a long-term, sustained set of policies and programmes; let’s begin with the most disadvantaged and then move forward.

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Q: How much will it cost to do this? Where would the money come from?

Projections vary, with the highest estimates being around $1billion. The economic case for getting serious about the root causes of child poverty are well documented and unequivocal. A $1billion investment now in family incomes and support will help save the government the $6-8billion it spends dealing with the downstream costs of poverty-related problems such as high health needs, remedial education, justice, and other social issues. So it makes not only moral, but economic sense, to spend a fraction of that amount to fix the problem at the source.

It seems obvious, but the place where resources are most needed is helping parents meet the need of their kids in early childhood. Good nutrition, warm homes, early learning, parents' education, and adequate income are all proven key ingredients in enabling kids to get a decent start in life. Yet, successive governments have favoured other investments over what is in the best interests of children. Many children continue to live in cold homes unable to buy nutritious food and other basics needed for their health and development.

The options for raising $1billion would need to be carefully considered but they could include taxing high income earners or introducing housing taxes.  It’s also worth noting that the 2010 tax cuts stripped $1billion out of Government coffers, which could have been targeted towards the children in most need.


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