How effective are 2018 policy settings for the worst-off children?

Abstract

This report analyses the policy settings in mid-2018 for their potential to improve the position of the worst-off children in New Zealand. The Labour-led government, elected at the end of 2017, seeks to place child well-being at the heart of their policies. As a first step, legislation setting out four primary measures and six supplementary measures of child poverty has been introduced. The purpose of this bill is to…encourage a focus on child poverty reduction, facilitate political accountability against published targets, require transparent reporting on child poverty levels, and create a greater commitment by Government to address child well-being. (New Zealand Parliament, 2018) Over ten years ago, the Ministry of Social Development (MSD) identified “pockets of significant hardship” where some families were falling below the “very stringent 40% after housing costs poverty line where there is nothing in reserve”(Ministry of Social Development, 2007). For our purposes here, children in families which fall under the 40% poverty line – that is, 40% of median, equivalised, disposable household income, after housing costs, also known as the 40% AHC line – are taken as ‘the worst-off’ children. In 2016, ten years after the Ministry first voiced concern that any children fell below this line, there were at least 140,000 children in this group. Child advocacy groups have argued that the 40% AHC line needs to become one of the primary measures in the Child Poverty Reduction Bill and that no child should fall below it (Child Poverty Action Group, 2018b). This working paper provides a technical analysis to show how much is needed to address the poverty of these 140,000 children in a significant way. The finding is that current policy settings in the Families Package to be implemented from 1 July 2018 are seriously inadequate for the task. This report was written in mid-2018 as very low income families wait for relief from the Families Package, with a long winter to follow if there are no immediate and significant further policy changes. The figures in this report are indicative only, but suggest that while the Families Package should reduce measured child poverty overall, it will be insufficient to stem the rising tide of very low income family distress. A range of specific measures focused primarily on this group are recommended for immediate implementation.