Can the ambitious goal of halving child poverty be achieved? Jonathan Boston looks at the issue.
In New York in September last year, 193 governments, including our own, endorsed the United Nations sustainable development goals. The first of the 17 ambitious goals is to end poverty everywhere in all its forms. This goal includes a specific target, namely to "reduce by at least half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions'' by 2030.
Is this target that the National-led Government has endorsed achievable? In particular, can child poverty be halved, and, if so, how?
To answer such questions, we must understand how poverty, including child poverty, is measured. There are two main approaches.
The first involves setting a threshold based on median family incomes - that is the mid-point in the overall income distribution, not the average. The thresholds commonly used are either 50% or 60% of the median, adjusted for family size, and either including or excluding housing costs. Families with incomes below such thresholds are classified as living in poverty.
These thresholds are widely used internationally. They have been chosen because most families with incomes below 50%-60% of the median struggle to meet their most basic needs.
In recent years, depending on the income threshold, about 15%-30% of New Zealand children lived in such families.
The second way of measuring poverty is to ascertain the proportion of people who lack essential items because they cannot afford them. Different thresholds can be set, based on the number of items a family lacks, to assess the severity of material hardship.
In recent years, depending on the threshold, about 15% of New Zealand children lived in hardship, with close to half this number in severe hardship. These hardship rates are above the median rate in Western Europe.
The child hardship package announced in the 2015 Budget, although welcome, will make little difference to rates of child poverty, however measured. This is because the additional financial assistance is not enough to bring many families above the various poverty thresholds. Moreover, the package constitutes a one-off adjustment. It is not part of a comprehensive, multi-year poverty-reduction strategy.
But there is good news: halving child poverty in New Zealand is not a utopian dream.
First, some Western European countries have much lower rates of child poverty, including material hardship, than in New Zealand. We can learn from their experience.
Second, poverty rates among those aged 65 years and older in New Zealand are typically under half those of our children. This is because successive governments have been committed to minimising hardship among our elderly citizens. New Zealand Superannuation, for instance, is tied to average wages, not merely prices. We could readily give our children the same priority. And we should.
Third, New Zealand had much lower rates of child poverty in the past. In the mid-to-late 1980s, the child poverty rate based on a 60% threshold (after adjusting for housing costs) was around 11-15%, half the current rate. What was possible in the past is also possible in the future.
In short, the Government's goal of halving child poverty is feasible. Indeed, meeting this target would be easier than halving the poverty rates for some other groups, especially the elderly.
But let us not underestimate the challenge.
Many poor families fall short of the 60% poverty threshold by $150-$300 per week, depending on the number of children and their housing costs. This is a large gap. It is no wonder, therefore, that many parents struggle to feed their children, heat their homes, buy sufficient clothes or cover their travel costs, let alone pay for school trips, birthday parties or sporting activities.
Bridging this gap will require a concerted effort and major policy reforms. Some of these will be costly. We would need a complete revamp of benefit rates, more generous financial assistance to low-income families, significant changes to housing policies including a large investment in social housing, a reformed system of child support, and stronger employment incentives and supports.
Additionally, all forms of social assistance would need to be fully indexed to prices, with a direct linkage of family assistance to average wages - as we do for pensions.
But should we support the Government's poverty-reduction targets and invest more in our poorest children?
As a society we have choices. To a significant degree we can choose how many of our children - and other citizens - live in poverty. Many better-off people might prefer another tax cut rather than investing more in our least-advantaged citizens. What is your choice? And what is its moral basis?
- Jonathan Boston is professor of public policy at Victoria University of Wellington. He co-chaired the expert advisory group on solutions to child poverty established by the Children's Commissioner. He will give a talk about the issue at the University of Otago on Friday (noon-12.50pm, Castle C seminar room).
