Saturday, September 1, 2012
Mike Butler: Child poverty not destitution
This nebulous report that was produced by some of the self-described “finest minds” in New Zealand, says “children living in poverty are those who experience deprivation of the material resources and income that is required for them to develop and thrive, leaving such children unable to enjoy their rights, achieve their full potential and participate as full and equal members of New Zealand society”.
Approximately 25 percent, or 270,000, of our children live in poverty, the report says, adding that half of all New Zealand children living in poverty are in sole-parent families, with children in a sole parent family about three times more likely to be poor than children in a two-parent family.
However, you have to comb through the report and the 20 appended working papers to find that a measurement of child poverty is yet to be formulated, that the poverty line is at 60 percent of the annual median equalized household disposable income, and that there is no clear statement as to what that level of income is.
Unlike numerous poverty commentators, I will provide numbers to illustrate my point, and my point is that the problem will be made worse, not better, by throwing more welfare money at it, because the problem is to do with the people, not their income.
OECD figures show that median household income for New Zealand was $24,414 in 2007, or 17th on the list with the United Kingdom eighth, Australia fifth, and the United States second. Sixty percent of a median household income of $24,414 would be $14,648.
How much does a sole-parent family live on? A sole parent, with two dependent children, paying $300 a week in rent in Manukau, South Auckland, could receive each week approximately $293.58 basic benefit, plus up to $143 in an accommodation supplement, and $157.17 tax credit, giving a total net amount of $593.75 per week, or $30,875 a year, according to Work and Income. This sole-parent family would not be technically living in poverty.
How much do the working poor get? The full-time minimum wage of $13.50 an hour would bring in $28,080 a year before tax or $23,668 net for one worker. That is also above the relative poverty level, but disposable income for the working poor dips well under the poverty line if $300-a-week rent is deducted.
If the poverty line refers to disposable income after rent, the Manukau solo Mum or Dad with two children would have to buy food, electricity, clothing and everything else out of $293.75, or $15,275 a year. The moderate-level cost of food, according to the Otago University Food Cost Survey, for a woman and two children under five in Auckland, is $172 a week. She would have $121 a week to pay for everything else.
If the solo parent is a smoker, a 30g packet of tobacco costs $31. If she prepares all meals at home and shops according to a budget and menu, she could still do OK. If the family goes to KFC on benefit day, she will have a bigger hole in her disposable cash, as she would by buying booze, helping out a sponging boyfriend, or playing the pokies.
Another insight on the indicators of material deprivation is detailed in Working Paper 1, titled “Defining and Measuring Child Poverty”, which shows that New Zealand’s so-called poor are in fact not materially deprived of very much, and what they go without could be resemble what numerous small business owners routinely go without.
The “haves” category in this working paper shows that 99 percent have a phone, which is at the top of New Zealand’s list of material needs, 98 percent have a washing machine, 92 percent have two pairs of shoes in a good condition and suitable for daily activities, 91 percent have the ability to keep main rooms adequately warm, 90 percent have suitable clothes for important or special occasions, 93 have a meal with meat, fish or chicken (or vegetable equivalent) at least each second day, and 83 percent have home computer. (2)
In the “enforced lack” categories, the highest-rating hardship is that 39 percent are unable to have a overseas holiday at least once every three years, 30 percent put off buying new clothes as long as possible, 27 percent bought cheaper cuts of meat or bought less meat than they would like, 26 percent postponed or put off visits to the dentist, and 24 percent were unable to have a holiday away from home at least once every year.
The wicked colonizer got the blame for low-income rates that were higher in Maori respondents, with the assertion that “It is important to recognise the impact of the experience of colonisation on Maori. The alienation of land and resources has seen the loss of a cultural and spiritual base and the loss of an economic base . Any analysis of the financial and material deprivation of whanau today is incomplete without understanding this context.” (3)
The child poverty expert advisory group recommends:
1. Passing-on child support payments presently retained by the government to custodial parents who receive benefit support to encourage more non-custodial parents to pay.
2. Changing family tax credit rates to give more money to families with young children or more than one child.
3. Establishing a new child payment of $125-$150 per week that will be universal for the first five years and then targeted.
4. Reviewing all child-related benefit rates including the in-work tax credit.
5. Encouraging more parents to enter paid employment while ensuring high-quality early childhood education and out-of-school care is accessible and affordable.
6. Special measures for Maori and Pasifika families.
7. Imposing a warrant of fitness for all rental property, paid for by landlords, and extending home insulation programmes and heating subsidies for poor families.
8. Improving the accommodation supplement that makes housing more affordable for low-income families.
9. Increasing the number and quality of subsidised rental housing for low-income families.
10. Supporting home ownership for low-income families, especially Maori and Pasifika.
Prime Minister John Key on Tuesday rejected the universal child payment as “dopey” and said the targeted system through Working for Families was better. The Republic of Ireland has had a universal child payment of about $216 a month for a while and are currently struggling to find ways of taxing it, means testing it, and letting the rich opt out by choice.
The idea of paying beneficiaries more while encouraging them into work is self-defeating, because aside from the value of a working-parent role model, it makes more financial sense to earn $30,875 a year on a benefit and have the whole day to do very little instead of working fulltime for $23,668. The relative generosity of this benefit creates the demand for it, which is reflected in anecdotes in which teen girls say they feel they have “made it” when they get pregnant and can get on the DPB.
A Salvation Army representative is one of the experts. The Salvation Army regularly complains that they do not have enough food for their food banks, which are all very worthy, but the Salvationists seem oblivious to the reality that the drinkers and smokers on the dole plan to live out of the food bank while spending their cash income on cigarettes, booze, and other stuff. A similar pattern exists for parents of children at schools where free breakfast is provided.
I wonder if any of these child poverty experts have had any direct experience with either the poor or with poverty. I wonder if these people who make a comfortable living pontificating on poverty feel a whiff of hypocrisy as they set moral standards and obligations for others to which they have no intention to conform themselves.
The solution to poverty occurs when the poor themselves get sick and tired of being poor and decide to become rich, which is possible in New Zealand. For this reason people flood here from the Indian subcontinent and China to set up business empires while starting out on less than the minimum wage.
Meanwhile, the children who will slip through the numerous gaps in this report will remain victims, not of child poverty, but child neglect.
1. Solutions to Child Poverty in NZ, http://www.occ.org.nz/__data/assets/pdf_file/0010/9892/FINAL_Issues_and_Options_Paper.pdf
2. Defining and measuring child poverty, http://www.occ.org.nz/__data/assets/pdf_file/0009/9837/No_1_-_Measuring_child_poverty.pdf
at 4:24 PM