Child poverty rose in 2023
A shameful end to Labour's time in office
Stats NZ has released the year-to-June 2023 data on child poverty. On two important indicators, child poverty rates saw statistically significant rises (not falls) from the year before. I’ve summarised the stats below, for those who like to see the numbers. But there were officially 143,700 kids living in material hardship in 2023.
This newly reported survey was done under Labour’s watch. Prime minister Ardern had set up official child poverty indicators and had asked us to hold them to account for results. So let’s do that – but all political parties are accountable here.
National’s Louise Upston, as the new minister responsible for child poverty reduction, used the release of these disappointing data to reinforce the new government’s focus on work.
“Supporting parents into paid work and breaking the shackles of welfare dependency will be the cornerstone of this Government’s strategy for lifting families out of hardship and reducing child poverty rates”, she said.
But the Child Poverty Action Group have rightly pointed out that, according to the Ministry of Social Development’s reports, “around half of children in poverty in New Zealand are in households where parents work”.
Pushing people from welfare into work won’t solve the child poverty problem on its own. Market incomes are too often inadequate. Increasing the Working for Families In-Work Tax Credit from next year (up to $25 more per week) will help many families on low and middle incomes – but not beneficiaries.
I see no statements on the Labour and Green Party websites about the 2023 rise in child poverty stats. Maybe they’ll say something in a while. I do understand that the tragic death of Efeso Collins has been a terrible shock for MPs over this time. My deepest condolences go to his family and community. I believe, though, that Efeso would not want us to take our eyes off this problem. Material hardship for Pacific children was estimated to be 28.9%.
There’s nothing about this matter on ACT and NZ First press release websites.
At the third reading of the Child Poverty Reduction Bill in 2018, Labour’s then minister for social development Carmel Sepuloni said, “this legislation will establish an enduring legislative framework for Government action on child poverty and ensure transparency and accountability for progress in reducing it. This really is a transformational piece of legislation that solidifies our commitment to a better future for our children.”
The stats show that there were reductions in the child poverty rates under Labour since 2018. But, in their final two years in office, things started to go wrong. Post-lockdown rises in prices and rents, and stagnant wages, could all be part of the explanation.
It took far too long for child poverty to get on the political agenda in New Zealand. The 2017 election was the first in which the Labour and National leaders openly debated who had the best policies to reduce child poverty. Ms Ardern can at least take credit for building child poverty targets into the annual Budget.
But I published a paper in 2005 with the title “Child Poverty and Family Assistance in New Zealand”. At that time, Working for Families was a new thing. This was my conclusion:
Working for Families (WFF) “treats those reliant on welfare, including children, as ‘residual’ – persons to be maintained in poverty, while ‘participation in society’ is reserved for those with jobs. WFF is an administratively complex response to the underlying problem of inequality of income distribution created by free-market policies. It is a cumbersome ‘band-aid’ means of trying to compensate for inadequate wages, but does nothing to address the problem of inequality of incomes prior to state intervention. Economic growth has not been evenly distributed in New Zealand, and present policies are not addressing the basic causes of this. Undoubtedly, many families will see rising incomes as a result of WFF entitlements. But, in the event of another economic recession and rising unemployment in future, those working parents who lose their jobs and require social assistance will be further penalised by the loss of most of their WFF family assistance. The hard times will fall hardest again on the children.”
This still rings true, two decades later. Unemployment rose after the 2008 Crash, and the recent pandemic lockdowns hit the poor hard through another rise in unemployment as well as higher rents and prices. It’s not that governments have done nothing. There’s a fundamentally unjust system of income distribution in markets as well as in transfers. Remember that children’s development is vital, and they have no control over household incomes.
By the numbers, those two indicators were:
Children who lived in households that had less than 50 percent of the baseline median equivalised disposable household income after housing costs.
This after-housing-cost income indicator is important because rent/mortgage is a major and unavoidable cost, and it’s the remainder that goes on food, power etc. The percentage here jumped from 14.4 to 17.5% in one year. The baseline median income was set in the year ended June 2018, but was adjusted for inflation. The rate was 22.8% in 2018, so, although there was a rise in 2023, it was still lower than in 2018.
Material hardship, or the proportion of children who lived in households that cannot afford six or more out of 17 items that most people regard as essential.
This indicator also rose significantly in 2023. Material hardship is a consumption indicator, so it’s an important supplement to the relative income measure above. In the year ended June 2023, 12.5% of children lived in a household experiencing material hardship, up from 10.5% in 2022. The 2023 result was not significantly different from the 2018 result (13.3%).