Child Poverty in New Zealand -Out of sight, out of mind?

Should we accept poverty rates double that of the 1980s? A quarter of children in poverty?

Moving houses, always moving – stressful. Having to move in the middle of the night – unable to pay rent, scary. – From a young persons’ group, Paeroa

Cold – got hardly any clothes, looking for some. Wonder if there’s any money in here [clothing bin]. No money, no clothes! Desperate. – Anonymous, Paeroa

Not getting proper opportunities like going on school trips, hard to take part in things like sports and other activities. – From a young persons’ group, Dunedin

It’s a tough night’s sleep. It’s normal. It’s better than listening to my parents fighting and drinking all the time… I’m hungry, I’m cold, and I don’t want to go home. It’s no use going back to no food in the cupboards. I’m alright here! – Mere, Paeroa [wrapped in a mat and sleeping under a bridge]

Teachers were causing shame to students in front of their peers because they have no stationery, uniform etc. Schools should deal with parents and not punish the kids for not having shoes, books, etc. – From a young persons’ group, Whanganui

The quotes above from an excellent article on the subject by Dr Renee Liang, consultation paediatrician- initially published in North and South Jan 2020, conveys the reality of poverty, better than any statistics. https://www.noted.co.nz/currently/currently-currently/poverty-new-zealand-kete-half-empty

Poverty rates in New Zealand (after housing costs) are double that of 1982. Almost a quarter of children live in poverty (in households earning less than 50% of median income). In the words of Dr Liang – “If we had a rock star economy, we forgot to invite a lot of people to the party”.

Economic reforms in the late 1980s have been particularly harsh on the poor. We changed from a society where one could leave our doors open for the neighbours to pop in and borrow sugar, to a community where we install alarm systems to stave off burglars. Gang memberships have soared in poverty-ridden parts of the country.

“History is written by the rich, and so the poor get blamed for everything.”  — Jeffrey D. Sachs, economist

Many of us have little or no connection with the poor and attribute poverty to lack of will or effort. We judge them from our armchairs without any evidence as spongers, living on our tax dollars, spending their money on drinking and gambling. The reality of poverty is very different; budgeting services will tell you that a vast majority of those on low incomes are conscientious about their spending. Poverty is a lack of cash, a lack of opportunity, not a lack of will.

Deprivations from a very young age leave lasting scars. If you start a race fifty metres behind the rest and face more obstacles along the way, only a few fastest and fittest will catch up with the rest of the pack?

We are an affluent country in the developed world, is poverty a lack of resources or how we are using them?

Economics of poverty

As well as a terrible human cost, there is an economic cost for poverty. An investment to lift people out of poverty is one that will be paid back in full, with interest.

Higher healthcare cost from diabetes, asthma and other poverty-related diseases. Higher labour cost due to low productivity, higher spend for a prison population at an estimated $100K per person, and higher social housing cost can be reduced significantly.

There are also issues which can be solved without spending a dime, where the government refuses to act because there is a political cost. A sugar tax and restrictions on the sale of food and drinks with high sugar content to curb diabetes and obesity. Limits and restrictions on the promotion of payday loans, curbs on gambling and pokie machines.  Should we in the 21^st century accept cash trucks driving around poor neighbourhoods enticing vulnerable people with easy cash and charging over 500% interest?

Reducing poverty and helping them to become more productive members of society is a saving, not a cost, money well spent. Economists estimate the cost of poverty at 3 to 4% of GDP, which in the case of New Zealand is $6 to 8bn every single year.

What causes poverty and how does it affect the poor

‘I believe that every American should have stable, dignified housing; health care; education – that the very basic needs to sustain modern life should be guaranteed in a moral society’- Alexandria Ocasio-Cortez

The causes of poverty are closely related, an interwoven web feeding each other, compounding and causing lifelong, even intergenerational impacts. A lack of cash impacts on everything – food, housing, health and education. Poor houses cause health problems. Hunger and obesity adversely impact education and health. A lack of a good education means a lack of cash, later in life.

Cash

Part of any successful strategy to reduce child poverty must involve increasing the level of assistance to families on benefits. – Michael Fletcher, Senior Research Fellow, University of Victoria, Wellington

Increases in Families Package will have a significant impact and expected to lift 64,000 children out of poverty by 2021. Taxes are certainly part of the answer. Introduction of GST in the late 1980s and subsequent increases have impacted harshly on the poor; decreases in Income Tax and the abolition of wealth taxes have mainly helped the well off.

Housing

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The single largest cause of poverty in New Zealand today is housing, there are 70,000 more children in poverty after housing cost (compared to before housing cost). A sell-off of public housing and rising rents due to long neglect of housing issues, especially by the National governments has led to a severe deterioration of housing affordability, for the young and the poor.  We have started increasing social housing, on the flip side, the signature affordable housing program hasn’t got off the ground, which has meant rising rents. Over 30% of our housing is too cold in the winter. Crowded houses often meant there is no quiet space for studying, no internet or a computer.

The number of social housing units built by the current labour government, mandatory insulation standards for rental housing, winter energy subsidy are all steps in the right direction. We need more social housing units, many more.

Health

The poor children are poor in health as well, the hospitalisation rate for children in the lowest income segment is double that of the wealthiest 20%. The cost to the health system is high; just the cost of diabetes estimate is 5 to 10% of the total health budget. Impacts of poor health can be lifelong. The cold and draughty homes and high cost of heating lead to poor health, high rates of respiratory illnesses and asthma/wheezing. The new insulation standards and winter energy allowance will make a difference.

Obesity and closely related diabetes and heart diseases are the single largest cause of death in New Zealand. Child mortality rates of all New Zealanders decreased significantly in recent years due to medical advances. However, the poorest are still dying at three times the rates of the wealthiest. Our child death rate is much higher than in Australia, twice as high as Ireland and Finland.

Food Insecurity

“Poverty is a very complicated issue, but feeding a child isn’t.”  — Jeff Bridges, actor

An excerpt below from Dr Liang’s article.

In 2010, different research suggested the problem had increased. In a survey of Dunedin and Wellington families, 47% of low-income families reported they often ran out of food due to a lack of money. This group could also afford fewer vegetables per week, highlighting that many families may need to choose between quantity and quality when it comes to food.

Yes, we’re back to the issue of “poor lifestyle”. It is a sad irony of our globalised world that the cheapest items in our supermarkets are the most processed items from the furthest away. These are often high in processed fats and carbohydrates, resulting in higher cholesterol intake and increased risk for obesity. And yet, we still judge people at the checkout counter for the “choices” they make.

Education

Education is perhaps the success story of the recent past; we have significantly narrowed the rich-poor gap.

Poverty by Ethnicity

Nearly one in four Maori children (23%) live in households with material hardship, the rates are even higher for Pacific (28%). Material hardship for Maori and Pacific is approximately two and a half times that of European. These inequities transfer in later life to unemployment, earnings, health issues and higher imprisonment rates.

International Comparison

New Zealand’s poverty rate has been improving but still below the OECD average, and worse than Australia while Nordic countries do much better.

Progress

The previous National government refused to even agree on how to measure poverty, let alone set a target. Prime Minister Jacinda Ardern made reduced child poverty a central plank of her economic program and set 3 and 10-year poverty reduction targets. Child poverty rate (children in households earning less than 50% of median income) has declined by 2% points for the year 2019, lifted 18,000 out of poverty. Children in material hardship, however, has gone up marginally. We begin 2020 with 151,000 children in households with material hardship and 235,000 children in poverty

Lifting children out of poverty

The two things that can make the most impacts on improving poverty in New Zealand are increasing the benefit and building more social housing. Budget 2020 promises 8,000 more houses, more money for winter heating and free school lunches, but not a great deal of extra cash, considering the massive $ 50bn in additional spending. Perhaps more could have been done. At least we are moving in the right direction. Let’s hope this government is serious in its efforts to reach the targets set for reductions in child poverty; succeeding governments will not move the needle backwards.

• Poverty rate compared to 1982 – double
• Number of children in poverty – 235,000 (21%)
• Number of children in material hardship – 151,000 (13%)
• Increase in hospitalisation for under 15s since 1991 – 56%
• Hospitalisations for the poorest 20% of population vs the wealthiest – 2 times
• Respiratory hospitalisations- poorest 20% vs the wealthiest – 3 times, asthma – 2 times
• Infant deaths compared to Finland and Ireland – 2 times