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We must get on the same page about child poverty numbers

In great Christmas news, Prime Minister John Key has declared that lifting New Zealand children out of poverty is one of the government’s main goals for next year.  There is a lot to do in this regard: through no fault of their own thousands of children live in households with incomes that scarcely cover the basics, least of all luxuries such as a bed of their own or new shoes every winter.

Recently we also learned that New Zealand and Mexico have been star performers among OECD countries in lost economic growth due to inequality. In New Zealand the biggest losers in the Great National Income shuffle that has occurred in the last 30 years have been children. For many years, poverty rates among children have been, and remain, well above those for older New Zealanders. And despite many years of empty rhetoric, child poverty levels remain high compared to the 1980s – a time when incomes were a great deal more equal than they are now.

It would be reasonable to conclude that the government could kill two birds with one stone, and start to reverse inequality by lifting our poorest children out of poverty. Unfortunately, it is far from obvious what exactly the PM means when he talks about child poverty. He is quoted as saying he wants to lift children “off the National Deprivation Index”. He states this would mean alleviating the poverty of “an estimated 60,000 to 100,000 children on the index, from 30,000 to 50,000 families regarded as materially poor.”

It would do no such thing. The problem is that the PM appears to have confused his metrics. There is no National Deprivation Index, but there is the University of Otago’s Index of Deprivation. This is based on variables from the census data and applies a number from one (least deprived) to ten (most deprived) to geographic areas. The report’s authors note that “deprivation scores apply to areas rather than individual people.” While the Deprivation Index includes income as one of the variables, it otherwise tells us nothing about who may or may not be “materially poor.” Similarly, it does not estimate the number of children in poverty.

Calculating people’s incomes and the number who are materially poor is the job of the Ministry of Social Development (MSD). Drawing on information from a variety of Statistics New Zealand surveys as well as their own data, MSD calculates the number of people living below a range of poverty lines, as well as an index of material hardship. This is divided into broad demographic groups, including children under 17 years, those over 65, household types, and ethnicity. There is some room for argument as many of the surveys are small so the margin for error is large (for example, MSD’s reports are cautious about definitively stating the percentage of Maori and Pacific children in poverty).

However, in 2014 we now have a good dataset going back many years and they are all broadly consistent. That consistency tells us that Mr Key continues to underestimate the number of children in serious hardship. The table below sets out what we know from the government’s own data. None of the figures support Mr Key’s claim of an “absolute base” of 60,000 to 100,000 children in poverty. It would appear Mr Key and his advisors have misunderstood the figures, in which case they need to become better informed.

 

Child poverty figures in NZ

No. of children

% of children

Total number of children 0-17 yrs

1,060,000

100%

 Income-poverty (<60% median after housing costs)

260,000

24%

 Severe income poverty (<50% median after housing costs)

205,000

19%

 Material hardship (Material Wellbeing Index)

180,000

17%

Severe income poverty AND material hardship

95,400

9%

(Source: Perry B. Ministry of Social Development, 2014, pp33-34, p135 Table F.5, p137 Table F.7. p217 Table L.3. Table compiled by Professor Innes Asher, University of Auckland)

There is a second possibility, and that is that the government knows something that we, the public, do not. If so, we need to know the where Mr Key’s figures come from and why they are not available for public scrutiny.

All this may seem like nitpicking over numbers that only matter to nerds. But these numbers represent real children, and it matters very much to those children whether the government decides to lift 60,000 or 180,000 out of poverty. It also matters how they choose to do it. Lifting those in greatest need by reprioritising spending from those deemed somehow in less need is a zero-sum game, and will do nothing to reduce inequality. While the government’s commitment to reducing child poverty is welcome news at Christmas, this needs to be done in a way that lifts ALL of New Zealand’s poorest children out of poverty, and in a way that does not disadvantage others.