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Poverty Watch 18

Written By: - Date published: 6:59 am, February 9th, 2013 - 3 comments
Categories: national, poverty - Tags:

Last week we started on, the Children’s Social Health Monitor 2012 Update Report, see the the full report (pdf) here.  Today we’ll carry on to the next part of the report, Economic Indicators, and summarise two of the sections:

Income Inequality

There has been much debate regarding the influence of income inequality on population health. While it is widely acknowledged that poverty plays a crucial role in shaping health disparities, authors such as Wilkinson and Marmot [19] argue that income inequality itself also plays a role, via its links to psychosocial pathways associated with relative disadvantage. …

Others such as Lynch [20] however, would argue that it is not the psychological effects of income inequality which play the greatest role, but rather the lack of material resources (e.g. differentials in access to adequate nutrition, housing and healthcare), coupled with a systematic underinvestment in human, physical, health and social infrastructure (e.g. the types and quality of education, health services, transportation, recreational facilities and public housing available). …

The report then explores income inequalities in New Zealand since 1982 using two different measures, the P80/P20 Ratio…

During 2004–2007, income inequality fell, a decline which Perry attributes to the Working for Families package. During 2009–2011 however, the impact of the economic downturn and global financial crisis led to volatility in the index, with Perry noting that it may take one or two further surveys before the post-crisis inequality level becomes clear…

and the Gini Coefficient…

Using both the before and after housing cost measures, the Gini Coefficient declined between 2001 and 2007, a decline which Perry attributes to improving employment and the impact of the Working for Families package. During 2009–2011 however, there was considerable volatility in the Gini coefficient, which Perry attributes to the differing size and timing of the impact of the global financial crisis and associated economic downturn on different parts of the income distribution.


Child Poverty and Living Standards

A big section of the introduction needs to be quoted in full:

High rates of child poverty are a cause for concern, as low family income has been associated with a range of negative outcomes including low birth weight, infant mortality, poorer mental health and cognitive development, and hospital admissions from a variety of causes [25]. Further, longitudinal studies suggest that exposure to low family income during childhood and early adolescence may increase the risk of leaving school without qualifications, economic inactivity, early parenthood and contact with the justice system. While adjusting for potentially mediating factors (e.g. parental education, maternal age, and sole parent status) reduces the magnitude of these associations somewhat, they do not disappear completely. This suggests that the pathways linking low family income to long term outcomes are complex, and in part may be mediated by other socioeconomic factors [3]. While there is much debate about the precise pathways involved, there is a general consensus that the relationship between poverty and adverse outcomes is non- linear, with the effects increasing most rapidly across the range from partial to severe deprivation [4].

This is the underlying reason for the lower educational achievement of our most disadvantaged communities (National Standards isn’t going to fix anything).

The report then looks at child poverty trends using different measures. The damage caused by the neoliberal reforms of the late 80’s / early 90’s is staggering:

Relative Poverty (<60% Contemporary Median): In New Zealand, relative child poverty rose rapidly during 1990–1992, with Perry [22] attributing this to rising unemployment and the 1991 Benefit Cuts (which disproportionately reduced incomes for beneficiaries). During 1992–1998, relative child poverty then declined, as a result of falling unemployment and the incomes of those around the poverty line rising more quickly than the median. After 1998 however, as economic conditions improved, median incomes again rose, while incomes for many low-income households with children did not, resulting in a rise in child poverty up until 2004. From 2004 to 2007 relative poverty rates again declined as a result of the Working for Families package. Child poverty rates however remained relatively static between 2009 and 2011. Before housing costs, relative child poverty rates in 2011 were similar to those in the 1980s [22]

But after housing costs…


There follows a breakdown of these statistics by age of children, and a discussion of the significance of income from paid work in reducing poverty. Here’s a disturbing trend:

Perry notes that during the 1980s, children in workless households were around twice as likely to be in poor households; during 1992–2004 four times more likely; and during 2007– 2011 six to seven times more likely [22]

The section concludes with a brief discussion of data from three national Living Standards Surveys (administered by the Ministry of Social Development). The results once again highlight the starkly racial nature of poverty in NZ – and the inadequate level of benefits:


That’ll do for today – more of the economic indicators next week.

Here’s the standard footnote. Poverty (and inequality) were falling (albeit too slowly) under the last Labour government.   Now they are on the rise again, in fact a Waikato University professor says that poverty is our biggest growth industry.

Before the last election Labour called for a cross party working group on poverty. Key turned the offer down.  Report after report after report has condemned the rate of poverty in this country, and called on the government to act. Meanwhile 40,000 kids are fed by charities and up to 80,000 are going to school hungry. National has responded with complete denial of the issues, saying that the government is already doing enough to help families feed their kids. Organisations working with the poor say that Key is in poverty ‘la la land’.

The Nats refuse to even measure the problem (though they certainly believe in measurement and goals when it suits them to bash beneficiaries). In a 2012 summary of the government’s targets and goals John Armstrong wrote: “Glaringly absent is a target for reducing child poverty”…

The costs of child poverty are in the range of $6-8 Billion per year, but the Nats refuse to spend the $2 Billion that would be needed to really make a difference. Even in purely economic terms National’s attitude makes no sense.

3 comments on “Poverty Watch 18”

  1. marsman 1

    Rodger Douglas has a lot to answer for.

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