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New Child Poverty statistics will provide a sound baseline for reduction targets

Child Poverty Action Group (CPAG) is pleased to see Statistics New Zealand (SNZ) has been able to produce some sound baselines against which the Government can measure its progress in reducing Child Poverty.  ‚Äč

As CPAG has noted previously, the 2018 Household Economic Survey (HES) data was too limited a sample, and had other problems which has meant the Ministry of Social Development has not had confidence in the reported Child Poverty figures for the past two years. The new data has been compiled from a combination of the Household Economic Survey (HES) and administrative data (Integrated Data Infrastructure - IDI).

While this overcomes some of the problems it still needs to be recognised that the data is likely to underestimate the problem.

“The data based on the Household Economic Survey only captures those households who have a fixed address,” [1] says Associate Professor Susan St John, CPAG’s Economics spokesperson.

“The depth of the problem may be better understood if it incorporated more information about transient families who have been without a secure home.”

The first primary measure in the Child Poverty Reduction Act is the number of children living in households that have 50% of the equivalised median household income before housing costs (BHC). The new data show that 183,000 or 16.5% of all children live in households under this poverty line.

The second primary measure in the Act is the 50% After Housing Costs (AHC) fixed line measure which takes into consideration the huge impact housing costs have on low-income households. Using this measure, 254,000 children - nearly one-fifth of all children in Aotearoa - live in poverty.

Using the supplementary measures in the Act, 30% of all children lived in households that have less than 60% of the AHC equivalised median income, a total of 341,000 children. “Most worrying is that over half of these children - 174,000 - are living in very low-income situations, with household income falling below the 40% AHC line,” says St John.

The new statistics will provide the baseline for measuring changes over the next ten years that will test whether the Government’s Child Poverty Reduction targets are met. The targets include reducing the proportion of children in low income households (using the 50% BHC measure) from 16% of all children to 5%, reducing the number of children living with income under the 50% AHC measure from 23% to 10%, and those living in material hardship from 13% to 7%.

“The baseline poverty data does not include the impact of the Families Package implemented last year, as it is based on data collected from July 2017 to June 2018. The survey now in the field for 2018-19 will pick up some of the effects of increased spending on families and that will be reported on early next year. The full impact of the package won’t be clear until 2021,” says St John.  

“We urge the Government not to wait but to look more broadly at what the data is telling us now. Children living under the 40% AHC poverty line are likely to be living in families earning very low incomes from paid work or whose primary income is from a welfare benefit. These children are not helped nearly enough by the Families Package.”

CPAG reported on the impact of the Families Package and whether it would be sufficient to lift the worst-off children out of poverty in a 2018 paper.

“Because we know that the Families Package won’t lift the children under the 40% line up far enough, a broad range of other welfare changes is needed to help them, and we are looking to the Welfare Expert Advisory Group for their recommendations to improve these children’s lives,” says St John.

“We need an urgent response for these children and the opportunity to make their lives better is now.”

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[1]  The target population for the HES is New Zealand resident private households living in permanent dwellings. This means, for example, that those in institutions and those in non-permanent dwellings are not included. (https://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/monitoring/household-income-report/2018/2018-household-incomes-in-new-zealand-report.doc)