Child poverty persists

Reducing New Zealand’s grim child poverty statistics is a cornerstone policy of the current Labour-led Government’s social platform. The Child Poverty Reduction Act 2018 introduced annual reporting on four primary and six supplementary measures of child poverty, although one of the primary measures (poverty persistence) comes into force in 2025. The Act also requires three-year and ten-year targets for the primary measures.

Statistics New Zealand defines the three current primary measures as:

• Relative poverty, before housing costs - The proportion of children living in households whose equivalised disposable income before housing costs is less than 50 percent of the median. This measure compares a household’s income for the previous 12 months to the current median for all households. The median will move from year to year due to inflation and economic changes. A low-income household will improve its situation if its income moves by more than the median.
• Constant value (fixed line) poverty, after housing costs - The proportion of children living in households whose equivalised disposable income after housing costs is less than 50 percent of the base-year median. This measure gives an indication of the spending power households have after paying either rent or mortgage repayments, rates and insurance.
• Material hardship - The proportion of children living in households that are experiencing material hardship, defined as having a score of six or more on the DEP-17 deprivation index.

Since 2013, these poverty measures have been trending slowly downwards, particularly in significant year-on-year reductions in the number of children living in material hardship.

Material hardship measures access to basic essentials, such as visits to the doctor and dentist, meals with meat (or vegetarian equivalent), fresh fruit and vegetables, or paying the electricity bill on time. Children in Māori and Pacific households are still more likely to experience material hardship – 19 percent and 25.4 percent respectively, compared to 11 percent of all children. Disabled children were also twice as likely to experience material hardship (19.9 percent vs 9.8 percent).

While the number of children experiencing relative poverty has decreased a little over the past few years, as a percentage of all children, the relative poverty measure has been fairly constant.

Supporting policy changes among households experiencing poverty have been slow to take effect. Minimum wage increases (on their own) have had limited effect on households experiencing material hardship, as many of these households receive benefit incomes which have not risen significantly. Housing policies addressing both rising rental costs and the shortage of state and social housing, will take time to show impact on households experiencing after-housing-cost poverty. Making real change to the rising inequality between those experiencing poverty and households on median incomes will require more than tinkering around the edges.

Next year, the Government will report on its official targets for the year ending June 2021. The targets are:

• Relative poverty – 10.5 percent of children
• Constant value poverty – 18.8 percent of children
• Material hardship – 10.3 percent of children.

Note: Due to COVID-19 containment measures starting 25 March 2020, all face-to-face interviewing for the Household Economic Survey ceased. Consequently, the data for the year ending June 2020 only covers up to this date. This means the data release is from a smaller number of households, and does not show how COVID-19 affected child poverty.