Child poverty more than just a party political issue

03 April 2013

Former TelstraClear chief executive Allan Freeth, in a New Zealand Herald opinion piece on 6 March, challenged business leaders in this country to look at how they view child poverty and what they can do to lead public campaigns to eradicate poverty. 270,000 Kiwi children are currently known to live without basics like shoes, food, medical care and warm housing. Here, Associate Professor Susan St John from the Department of Economics, co-director of the Retirement Policy and Research Centre and spokesperson for the Child Poverty Action Group discusses the matter further.

Allan Freeth is justifiably outraged at the “sad business of child poverty”. He challenges business leaders to realise that “their behaviour suggests that they do not care enough about our youth and children”.

Surely it is time for such leaders to ask the government why current policies that are actually supposed to address child poverty are failing us so badly. Let’s take one example- Working for Families. This was introduced in 2006 to reduce child poverty, but instead of focusing on the core objective it got side-tracked into being a sop for business and ”making work pay”.

The idea that child payments could be used to incentivise work appealed to the business world, where a convenient mantra has been ”work is the way out of poverty”. So a significant part of Working for Families was ring-fenced and given only to the caregiver of the children when the family met certain work criteria. This peculiar approach to recognising the costs of raising children has meant that some children in low income families have been helped while others have been left to languish. It also makes us quite different to the Australian policy of treating all low income children the same (an, it should be noted, much more generously).

New Zealand’s approach locked in the notion that low income children’s weekly needs could only be properly met by government support if parents met two tests.

The first test requires 20 hours of paid work a week for a sole parent and 30 hours a week for a couple. This anachronistic rule has never been reviewed in light of the nature of the modern, just-in-time, casualisation of the low end of the labour market. Business leaders ought to be raising questions here about the design of policy. Families that don’t meet the hours of work in any period can be chased for any over-payment, making many families very nervous. In a recession or an earthquake there is no recognition that the needs of the child don’t change when parents lose hours of work.

The second test is having no parent on any kind of benefit, or student allowance, even if working part-time. No matter what work incentive is offered, most parents cannot leave the benefit system for work because they are either sick, terminally ill, have caregiving roles, or there is no work available.

By denying these families this payment (misleadingly named the “In Work Tax Credit”) worth $60 a week for 1-3 children with an extra $15 per child for larger families, the government has saved $3 billion since 2006.

Yes, Working for Families did reduce child poverty for some low income families who report using the extra payments well for their children. The Ministry of Social Development 2012 household incomes report says the fall in child poverty rates in two parent ‘”working”’ households from 28% in 2004 to 9% in 2007 “was very large… reflecting the Working for Families impact, especially through the In-work Tax Credit”.

So what of those left out of this payment that others got? As the Expert Group on Poverty said, of the 270,000 poor children who still fall below the 60% median income poverty line, 170,000 children fall below the very low 50% line. These are the ones driving the appalling statistics that Alan Freeth is upset about. The policy left them out. We denied them a child payment to alleviate their poverty, against the UN Convention on the Rights of the Child that states all children have a right to social security and the government has an obligation to implement measures necessary to achieve full realisation of that right.

Child poverty is not a party political issue; it is a moral and ethical issue. As Bryan Bruce says in his award winning documentary, “Inside New Zealand Child Poverty", “We are good people. We can fix this. If we want to”.

The outrage of business leaders should be harnessed to support practical and just steps to make a difference for these children. New Zealand has much work to do in housing, health and education as well as income support to restore a semblance of egalitarianism to New Zealand society. But a vital first step is to require government to use poverty alleviation measures properly by not excluding the poorest children.

Child Poverty Action Group has been pursuing this issue in the courts since 2008, arguing that the In Work Tax Credit discriminates against children on the basis of their parents’ work status, which is prohibited under the Human Rights Act. The case has reached the Court of Appeal and will be heard in May this year.

If you would like to follow up with Susan about this article please contact her directly.

Susan St John