New Zealand has made “significant” progress on key social issues in the last 12 months, including improved treatment of those on welfare, boosting employment and household incomes and reducing teen pregnancy, according to a new report.

However, the Salvation Army report urged New Zealand’s centre-left government, led by Jacinda Ardern – who has made reducing child poverty her personal mission while in office, and exhorted a politics of kindness and compassion – to do more to address what they called “normalised, entrenched” poverty in the country.

Housing affordability, spiking youth suicide rates, the destruction wrought by methamphetamine, and the number of children in deepest poverty were not improving, said the Salvation Army, the organisation publishing its 13th annual State of the Nation report. But the picture was not entirely gloomy.

“What we do notice on the frontline is that there’s been a huge effort to make Work and Income much more user friendly,” said Ian Hutson, the Army’s social policy director, referring to the country’s social welfare agency.

There had been “a kind of punitive approach” to poverty in the country in the past, he said. “But it seems like they’ve put the emphasis on really trying to help people rather than penalise people, for all different possible reasons, by taking them off all or part of the benefit.”

There had been a small dip in the number of people requesting food parcels in 2019, the Salvation Army report said. But Hutson added that while beneficiaries were being treated more kindly in their dealings with the social welfare agency, they weren’t receiving enough money from the government to live on.

“We think the benefit’s too low and that’s one of the key causes of child poverty in this country,” he said. “Many of the people we work with at the frontline have been able to access welfare and hardship support for beneficiaries, but the core benefit level is still too low.”

Ardern’s government had taken notice of the issue, commissioning a working group on social welfare that had in 2019 recommended a boost to social welfare payments, he said, but had failed to act on it. The prime minister had also not proceeded with a capital gains tax urged by another working group.

“Sometimes when government have bold ideas, if they feel like the people of the nation won’t back them, they won’t do it,” Hutson said.

Before Ardern’s government came to power following the 2017 election she had pledged to tackle New Zealand’s housing crisis if she became prime minister, after outrage generated across the country by news reports of families sleeping in cars. But the waiting list for social housing had hit new highs, Hutson said, and low-income families could not afford rents – including in smaller cities that had previously been feasible alternatives to the escalating prices of Auckland and Wellington.

Rotorua, Palmerston North, Dunedin and Invercargill were among the cities which had seen house price increases of at least 10%, the report said.

“The social housing waiting list is not going down,” Hutson said. “More emergency and social housing has been built, which is encouraging, but it doesn’t feel like we’ve turned the tide at all.”

He added that the government “needs to significantly invest in housing at the bottom end”.

The government’s so-called “wellbeing budget”, introduced in 2019 – which requires all new spending to be measured against wellbeing measures rather than GDP – had made him “hopeful” lawmakers could move the needle on social problems, Hutson said.

“But you can’t expect that in one year they’ll be able to show that a whole lot of things have gotten better.”