About one in eight, or 12%, of New Zealand’s children are in poverty, a problem that has been festering for 30 years.



As housing costs have soared, lack of affordable housing for low-income families has been a key driver of poverty. A “work first” ideology has kept benefits painfully low and stopped the worst-off families on benefits accessing full tax credits for their children as a carrot to get into work.

But New Zealand now has a prime minister who came into politics expressly to reduce child poverty. She made herself the minister of child poverty reduction and has a bill in the house to spell out a suite of measures to hold the government of the day accountable. Her coalition government has set a target of halving child poverty within 10 years, and aims to reduce the proportion of children in low-income households by six percentage points – or 70,000 children – by 2020/21.

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Thursday’s budget was an enthusiastic endorsement of the vision but it failed to earmark the investment required to ensure the worst-off children and families get the help they urgently need.

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Labour is relying on a “families package” of targeted family payment increases and top-ups, such as accommodation supplements, and new payments for newborns announced well before the budget. A lot of this spending was a catch-up for the past nine years of loss of real value in family assistance, and does not take effect until July.

The large-scale state house-building program announced, and other housing investments, will eventually make a real difference to our most vulnerable families. Specifically, the budget included: NZ$3.8bn to build 6,400 more state houses by 2022; $170m for emergency housing; and insulation subsidies for low-income families.

But much more is needed, much sooner. Our analysis shows the families package itself is simply not enough for very low-income families and is coming in far too late.

These families waste precious time at welfare offices arguing for top-ups and queuing at foodbanks (which report alarming increases in demand). When they try to earn, they end up very little better off due to steep clawbacks on benefits, and many struggle with mounting debt, with inadequate safeguards against predatory loan sharks. The welfare bureaucracy is eye-wateringly complex and laborious to navigate. It can be gruelling and dehumanising; and families do not necessarily get all the assistance they are entitled to. Punitive features include married couples getting significantly less than two singles; stand-downs and harsh sanctions such as benefit reductions for sole mothers who fail to name the father of their child.

Research by advocacy group the Child Action Poverty Group (CPAG) shows that in Auckland, a sole parent with one child would need an extra $185 a week on top of current welfare benefits to get over the after-housing costs poverty line; a couple with two children would need an extra $334. But the families package will deliver a maximum of only $47 a week extra to the two-child family. Who will pick up the $287 shortfall?

CPAG has identified steps the government could take that could immediately improve the lives of families in poverty:

Ensure all families get their full entitlements immediately

Stop all sanctions in the benefit system for families with children

Raise core benefits for all beneficiaries by 20%

Index benefits and tax breaks for families to average wages and prices

Allow beneficiaries to work at least 10 hours at the minimum wage before any abatement

Align single and married benefit rates

Remove penalties for receiving gifts and loans from family

Toughen policy on loan sharks

Reform the taxation of housing to reduce speculation in housing and rent and house prices

This week’s budget speech insisted: “Our economy must be more inclusive, too. This means a society where everyone has an equal chance to fulfil their potential, to contribute, and to live meaningful, connected, healthy and fulfilling lives.”

The 140,000 children who live in families under the very lowest of poverty lines need inclusion, too. They will be helped only marginally in July’s families package. These families can’t wait for tax and welfare working groups to report next year.

• Susan St John is an associate professor in the economics department of the University of Auckland and a founding member of Child Poverty Action Group