Poverty falls, more to be done

Written By: - Date published: 11:59 am, July 4th, 2008 - 34 comments
Categories: labour, Social issues - Tags: ,

13% of people are living in poverty in New Zealand (defined as less than 60% of the median income, less than $40K a year for a household, $16K for an individual) compared with 17% in 2004 and 23% in 1994.

Child poverty dropped 7% between 2004 and 2007. Since the Government came to power it has reduced the percentage of children living in poverty fell from nearly 36% in 1994 to 16%.

Working for Families is the main reason for the decrease since 2004 because it significantly increases after-tax incomes for low-income families with children where the parents work. Now, virtually the only children living in poverty are the children of beneficiaries. Labour must act to lift incomes for those families if it is to eliminate child poverty in New Zealand, which is this Government’s laudable goal.

Unquestionably, Labour has done well on poverty and incomes, restoring poverty to the low levels that existed before the disaster of the rightwing revolution in the 1980s and 1990s. A full employment policy, higher minimum wage, and Working for Families have made a real difference to hundreds of thousands of our poorer families. The worry is that all this progress will be undone, as it was in the 1990s, if National wins the election.

[Update: thanks to the alert reader helped raise the standard of The Standard by emailing us after noticing I’d accidently used the BHC numbers for the child poverty graph but quoted the AHC numbers in the text. I’ve fixed the graph.]

34 comments on “Poverty falls, more to be done”

  1. Hmm, a positive post but no congratulations from the righties who have been begging us all week to post some positive stuff on the Govt rather than critique John Key.

    It’s, it’s almost like they don’t want to discuss positive stuff, they just want us to stop exposing Key…

  2. bill brown 2

    Look at that big truck Steve!

  3. ants 3

    I always take graphs and stats with a few grains of salt, but if this is in fact true – it is a good thing, and well done. When you’re not living in real poverty yourself its often easy to forget that some people are really struggling.

    I’d much rather Labour concentrated on this kind’ve stuff instead of the muck raking and petty stuff – I’m sure it would sway a few voters back their way.

  4. Wow. I knew 1991 was bad, but didn’t realise quite how so. National managed to double the population in poverty in only two years, and push child poverty up to 35%.

    Buckle up everybody, we’re headed Back to the Future!

  5. ants. the big news is that this is what labour concerntrates on. I know when you read the news you wouldn’t know it but that’s because sensalationalism is easy. National’s tactic is to whip up mini-scandals on tiny issues and not engage on this big stuff.

    Like bill brown says ‘look at that big truck’ our news is dominated by silly issues like that rather than discussions of major issues like poverty levels and how to reduce them.

  6. George. Ruthansia is a cute term but it literally killed people, these stats show just how bad National were for poverty.

  7. lonelyavenger 7

    That’s some interesting spin, Steve, I wasn’t aware that New Zealand was under Labour between 1994 and 1999.

    If we take your cherry-picked starting point of 1994 your graphs tell us the “poverty” rate decreased from 36% in 1994 to 20% in 1998 under National (a dip of 16 percentage points over 4 years) and under Labour has decreased to 16% (a decrease of 4 percentage points over 8 years).

  8. loneavenger, I haven’t spelt out the changes from year to year look at the graphs and you’ll see major rises under National and major drops since 1999.

    And, that’s not in the least bit surprising – National really did slash benefits, allow the minimum wage to fall in real terms, and allow unemployment to increase to 10% – when you do that you get poverty, simple.

  9. LA. It only fell from 35% because National had forced it that high in the first place.

    Poverty was higher when National left office than when it entered. That is a basic failure of a government. Poverty is lower under Labour than it was when it gained power.

    Do you think you fool anyone? everyone can read a graph.

  10. higherstandard 10

    Poverty now is higher than under Muldoon.

    Bring back Muldoon oh for those glory days of low poverty (overall and child).

    On a somewhat more serious note it’s great that poverty is declining but surely it will always exist as by definition there will always be a percentage of the population that earns at a certain level as compared to the mean levels.

    This is a similar issue with things such as the deprivation index where there’s always going to a rating of most deprived areas and people will be living there hence will be termed as deprived.

    captcha force plunkett (no way take off the t and they’re one of the best organistaions in NZ)

  11. lonelyavenger 11

    Steve,

    I’m not trying to fool anyone. I was merely pointing out your disingenuous attempt to give Labour credit for the drop in poverty from 1994-1998.

  12. Steve- “if National wins the election.” Is that a typo ? Surely that is ‘when’.

  13. Pascal's bookie 13

    mawg, jftr, Are you Bryan? It gets confusing.

  14. roger nome 14

    hs:

    That was a pretty dumb straw-man. Who here is calling for a return to think-big and price freezes?

  15. “Working for Families have made a real difference to hundreds of thousands of our poorer families.”

    Really ? Simply giving people money does nothing to deal with the reasons why they are poor. Poverty is a result of a poor choices and giving people money doesn’t encourage them to make better choices, in fact it enables them to carry on making poor choices at the expense of those who make good choices.

  16. Pascal’s bookie: Yes I am. Sorry about that, I work with multiple web browsers to maximise my browsing speed.

  17. Pascal's bookie 17

    No prob’s, I figured it was something like that.

  18. higherstandard 18

    A joke Mr Nome ….. to point out that many graphs are open to varied interpretation much of which is fatuous

  19. Steve – “It only fell from 35% because National had forced it that high in the first place.”

    You know that there is always a lag between a government taking action and the consequences of that action. Child poverty increased in the early 1990’s under National as a consequence of the very necessary reforms undertaken by Labour in second half of the 1980’s.

    [when National cut benefits in 1991, there was no lag. Overnight, families’ incomes decreased 25% and more. Not raising the minimum wage, no lag there either, just every day your buying power being eaten by inflation. I don’t get why you’re involved with a site called interest.co.nz when you don’t understand such basic economics. SP]

  20. Daveo 20

    Simply giving people money does nothing to deal with the reasons why they are poor. Poverty is a result of a poor choices and giving people money doesn’t encourage them to make better choices, in fact it enables them to carry on making poor choices at the expense of those who make good choices.

    You’re right Bryan. If the working class just chose not to be poor then we’d all be better off. Imagine if we were all business owners and managers and lawyers and doctors – hospitals would clean themselves and our rubbish might even start taking itself to the tip!

    To be blunt you’re a moron and you don’t understand capitalism.

  21. Pascal's bookie 21

    Bryan, Certainly some things have lags.

    Cutting Benefits don’t though, that’s immediate. So is increasing rents for state housing tenants. The money is no longer available straight away for the people affected. This has lag effects in terms of economic growth as that money stops being spent on groceries and shoes etc, but the effect on poverty is immediate surely?

  22. Draco TB 22

    Child poverty increased in the early 1990’s under National as a consequence of the very necessary reforms undertaken by Labour in second half of the 1980’s.

    We’re getting somewhere – Bryan is now admitting that the increase in poverty was due to the right-wing policies carried out in the 1980s and 1990s.

    Poverty is a result of a poor choices and giving people money doesn’t encourage them to make better choices,

    Unfortunately, he still thinks that those living in poverty have choices.

  23. bill brown 23

    Poverty is a result of a poor choice

    Did you choose your parents Bryan? How the f did you pull that off?

  24. Edosan 24

    Higherstandard is right, to get rid of poverty we merely need a leader who simply denies that poverty exists. What a golden age.

    Actually, I’m interested, we don’t officially measure a poverty line in New Zealand do we? Is MSD defining the poverty line as less than 60% of median income now?

  25. Edosan. Not precisely, there is a section in the report on definitions of poverty and it provides several – I’ve taken the one that has ben used in other reporting – 60% of median.. which is more of less the international standard, although there are several variants on how you measure and base years and stuff, it seems.

  26. “surely it will always exist as by definition there will always be a percentage of the population that earns at a certain level as compared to the mean levels.”

    That’s not mathematically true but more importantly, poverty is measured as a percentage of the median, not the mean. If you raise the incomes of people at the bottom, the mean income moves away from them, but that doesn’t happen with a median.

  27. Draco TB: “Unfortunately, he still thinks that those living in poverty have choices.”

    Indeed they do Draco, the choice to waste their money on cigarettes,alcohol & gambling or not; the choice to get additional training/education to improve their earning potential or not; the choice to have more children than they can afford or not.

    Daveo: “hospitals would clean themselves and our rubbish might even start taking itself to the tip!”

    Student Job Search can always fill vacancies.

  28. Steve: “Not raising the minimum wage” and how exactly does legislating an increase in the minimum wage improve our countries wealth ? Surely that makes as much sense as printing more bank notes to increase wealth.

  29. Lew 29

    Strictly speaking, entrenched adult poverty is a result of poor choices, though this is a glib and fallacious argument since those in poverty often get to choose only between bad choices. Even where good choices are available, there might appear to only be bad choices, due to imperfect information, or cynicism about society brought about by poverty.

    Those on incomes below the subsistence line have the following broad choices: do without, or seek alternative income.

    Given that the definition of `subsistence line’ necessarily means `not enough money to live on’ this first choice of `do without’ often results in malnutrition, poor health, poor education and other negative outcomes which, in addition to being generally bad form for a first-world country, carry additional long-term costs to the health system and other social services, and similar downsides of entrenched poverty.

    As for the second choice, `seek alternative income’: in a strong employment market with relatively high wages, as we have at present, working is almost always the best choice and represents a `good’ choice. Alternatives to regular work which will result in more money are almost always illegal, which is one of the reasons poverty drives property crime. However for an individual, the decision to choose crime over malnutrition, poor health and the other outcomes of `doing without’ is a calculation of risk. Dealing drugs, stealing cars, shoplifting or fencing stolen property might well pay off in the short term; in rare cases it might even pay off in the medium or long term, in terms of avoiding those outcomes of poverty. However it too has negative effects upon society: in education, health, law enforcement, etc. But if there’s no work to be had, and not enough money coming in to survive, what other choice is left?

    The point is that poverty in and of itself is deleterious to civilised society, and it is in the long-term best interest of those not afflicted by it to alleviate it as much as possible. This should occur alongside programmes to ensure that the poor can make better choices – education, budgeting advice, crime prevention, help beating addiction, etc.

    L

  30. Im curious Steve, do you think its possible to completely eliminate poverty? To me it seems to an integral part of Capitalism.

  31. Lew: “first choice of `do without’ often results in malnutrition, poor health, poor education ”

    Given we have a free education system , a generous public health system and a generous social welfare system including state funded housing why would anyone in this country need to experience any of these apart from by choice? Sure the poor aren’t going to have access to luxuries like brand new cars,overseas holidays and the latest consumer toys but they are the reward for working hard and thrift.

  32. Lew 32

    BS: We do now. We didn’t in the 90s – and particularly the benefit cuts in the MOAB (which still haven’t been reversed) put the lie to your claim of `generous benefits’.

    L

  33. Pascal's bookie 33

    Bryan, what do you think about death duties?

    I for one think they are a great idea. Corpses should be taxed hard. Let’s say 95% of every dollar over 250k. As you say wealth is something that should be a reward for hard work and thrift.

    But we can quibble about the rate later, what do you think of the principle? Are you a real people-make-their-own-way, meritocracy kind of guy, or can you see some fairness in aristocratic systems?

  34. Ari 34

    Bryan- Have you tried living off the same amount of money beneficiaries get? I dare you to go for it for a week. In your case, you’ll have several sunk costs that they are unlikely to benefit from- ie. a well-maintained home and general good health and education- but I don’t think that’s likely to stop you from having to cut back a lot, probably in a way that’s not very good for you in the long term, in order to live off that sort of income.

    Even what we have now isn’t exactly generous- although it has been positive in the sense that it has given people a huge incentive to get into work.

    I’d also like to point out that while education might be free to secondary level, firstly, dropouts from secondary school are disproportionately likely to be beneficiaries, and secondly, most jobs a beneficiary are likely to move to are ones on the minimum wage- hence why raising the minimum wage whenever it won’t hurt the number of people employed has such a large impact on poverty.

    The things you mention are certainly steps to take to get off the benefit, but a lot of the people left on the benefit now are people who really do have trouble taking those steps on their own- or even people who are physically unable to take some or most of them.

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