David Shearer is right. The rise in inequality under National, shown by the latest Household Incomes report from MSD, is a bloody disgrace.
It’s the effect on kids that’s got him going. Shearer says:
And what’s even worse, the number of children living in hardship has increased from 15 per cent in 2007 to 21 per cent last year.
This figure uses an index of material hardship, different from standard poverty measures. The report’s summary says:
Hardship rates for children rose from 15% in the 2007 HES to 21% in HES 2011 using the ELSI measure. In part, this reflects the falling incomes of those in deciles 3-6, some of whom may already have been in a precarious financial position – the loss of income has been enough to tip them into hardship even though their incomes are still above the poverty threshold we use.
So more children in families with “precarious” employment are feeling the pinch.
Good on Shearer for his robust and instinctive response. Now we look forward to seeing it reflected in the outcomes from the policy work that is going on behind the scenes.
One feature of this will be careful work on how to assist children in beneficiary families. Ruth Richardson’s “Mother of All Budgets” lives on, as the report notes:
Poverty rates for children in beneficiary families are consistently around 65-75%, much higher than for children in families with at least one adult in full-time employment (9% in 2011).
Since the benefit cuts in 1991, 65-75% of children in beneficiary families have been identified as ‘poor’ in each HES. The figure was close to 70% for 2004 to 2009, and 65% in 2011.
For beneficiary families with children, AHC incomes from main benefits, the Family Tax Credit and the Accommodation Supplement are almost always below the AHC 60% fixed line threshold.
Why is the reported poverty rate for beneficiary children not therefore 100%? There are typically 20 to 30% of beneficiary children living in households in which over the 12 months before the HES interview there is market income as well, either from their parent(s) or from other employed adults. This extra income is enough to take total household income ‘over the line’.
In June 2011 there were 234,000 children in beneficiary families (22% of all dependent children). Around 25% of children live in households in which there is no adult in full-time employment.
It’s way over time for that to change.