Poverty Watch 28

Last week Poverty Watch took a brief detour with a special issue on fuel poverty. This week were’e back with our series on the Office of the Children’s Commissioner (OCCC) 2012 report “Child Poverty in New Zealand evidence for action“.

Chapter 3 Our Approach

This chapter sets out the goals, principles and methods of the report. Initially I didn’t think it would be of particular interest, but I was wrong. Politics is all about choices and decisions that affect people. This chapter sets out a very clear alternative to the and caring and punitive attitudes of the political right. The chapter begins…

As highlighted in Chapter 1, there is a wealth of evidence, both from New Zealand and overseas, that child poverty can be reduced. There is also robust evidence that many of the negative impacts of child poverty can be mitigated. The fact that well-designed policies can make a positive difference raises two questions:
• What should be the specific goals of public policy with respect to child poverty in New Zealand?
• How can child poverty in New Zealand be reduced, and its effects mitigated, in the most efficient, effective, fair and fiscally responsible manner?

Our Report attempts to answer these questions. It is the view of the EAG that New Zealand should embrace ambitious, yet realistic, goals. Every child in New Zealand has the right, and should have the opportunity, to grow up without experiencing severe or persistent material deprivation.

The actions recommended by the EAG to achieve better outcomes for poor children are described in more detail in Chapter 5. They recognise that child poverty is complex and has many elements, so to be effective an anti-poverty strategy must incorporate a range of responses. There is no one ‘silver bullet’. Such a strategy will require sustained effort and strong, committed political leadership for the long haul.

We must acknowledge that large reductions in child poverty rates cannot be achieved without a substantial investment, or at the very least, some careful reprioritisation of public funds. This poses undeniable challenges for policy makers, all the more so in a time of global economic uncertainty and fiscal restraint. However, the good news is that rather than starting from scratch, we can build on existing policy initiatives, programmes and service that are known to be effective or have shown potential. At the same time, given the magnitude of the challenge, we must be willing to innovate and experiment with new approaches. We must be open to new possibilities, without losing focus on effectiveness.

The following section sets out the principles that shaped the report’s recommendations. I won’t quote details for all of them, but the principles discussed are:
• Children at the centre
• The Treaty of Waitangi
• An investment approach
• A ‘social contract’ approach

So what is an “investment approach”?

Such an approach involves giving preference to those policies which generate the largest long-term returns, both for children and our wider society. There is considerable evidence, for example, that investments in the early years of a child’s life generate the greatest marginal benefits. To quote the Nobel laureate James Heckman (2006, p3), ‘It is a rare public policy initiative that promotes fairness and social justice and at the same time promotes productivity in the economy and in society at large. Investing in disadvantaged young children is such a policy’. This investment strategy is consistent with the capability approach recommended by another Nobel laureate Amartya Sen – adequate financial resources enhance the capability of children and families to function well and lead lives that they have reason to value.

It continually astounds me that right-wing governments are allowed to get away with portraying investment only in financial terms. People are our greatest strength and resource, why are we not investing in them?

The next section considers policy choices, trade-offs and costs. Once again in brief the topics discussed are:
• Government policy choices matter
• There are a range of policy levers and trade-offs to consider
• Cash transfers spaces in-kind assistance
• Welfare transfers versus employment income
• Universal versus targeted debate
• Costs, savings and costings

Picking just one of these to expand on (and of course it is self evident but it still needs repeating), government choices matter. Kids are living in poverty because we collectively chose to allow it to happen.

Both New Zealand and overseas evidence demonstrates that there are policies available that can reduce and/or mitigate the effects of child poverty. But not all policies are equally effective. A UNICEF analysis highlights the differential effectiveness of various approaches by contrasting the relative child poverty rate before, and then after, taxes and transfers (UNICEF, 2012). The more effective policies contribute to significantly lower poverty rates after taxes and transfers. To illustrate, Canada and the US have similar rates of child poverty at market-incomes; after taxes and transfers are taken into account, the Canadian rate is nearly halved, but the US rate is barely changed. This indicates that Canadian policy settings are much more effective in reducing child poverty than their US counterparts. The UNICEF analysis indicates New Zealand has high market-income child poverty, and that our tax and transfer policies are reasonably effective in reducing the rate. We can, however, do better.

Finally, from the conclusion to the chapter:

As highlighted above, our recommendations are designed to achieve multiple goals. These include simultaneously alleviating childhood poverty, reducing the negative impacts of poverty during childhood and breaking the intergenerational transmission of family poverty. For the reasons discussed, reducing poverty during early childhood is an absolute imperative. A strong focus on alleviating severe and persistent poverty is also critical.

Achieving these objectives will require a comprehensive strategy – one that is implemented in a concerted manner over an extended period of time. Accordingly, strong and committed political leadership will be essential. To be effective such a strategy will require a combination of mutually reinforcing initiatives across a range of policy domains. This includes extra cash transfers and improved in-kind provision, a mix of universal and targeted forms of assistance, and a balanced approach to welfare support and employment incentives, based on the age and best interests of the child.

We fully acknowledge that the implementation of our recommendations will entail fiscal costs, and in some cases significant costs. These need to be set against both the moral imperative to relieve suffering and hardship and the realisation of significant long-term economic and social benefits. For such reasons, the costs represent a sound investment and will contribute to a better future for all our citizens.

Next week, Chapter 4 Priority Recommendations…

In recent news – there’s too much, I really can’t keep up. Here’s just two examples.

Welfare Reforms Impacting on Young People and Families

Press Release: NZ Council of Christian Social Services

“Since the introduction of the youth focused Welfare Reforms our members are reporting an upswing in young people requesting food parcels and emergency accommodation’, says Trevor McGlinchey, Executive Officer of the New Zealand Council of Christian Social Services (NZCCSS). “It appears as though there has been a slight increase in the numbers of young people sleeping rough, in doorways or under bridges. And a large increase in teenagers who are dependent on sleeping on their friends’ couches – until the generosity runs out and they have to find another couch to surf on”.

“As part of the Welfare Reforms a Youth Payment and a Youth Parent Payment were introduced in July 2012”, said McGlinchey. “These increases in demands from our members have all happened after this. We need to have a very close look at the reasons for the increased needs of our young people. These policies, or how they are being applied, may need to be amended.”

The 15th Vulnerability Report shows that more people are unemployed, yet the number of people receiving an unemployment benefit has decreased. While many of those who are unemployed may be in families who have dropped from having two income earners to only one, it appears others are just struggling to meet the harder benefit rules being imposed by Work and Income. …

Rheumatic fever on rise

Rheumatic fever rates in one of New Zealand’s most vulnerable communities is worsening, a new report reveals.

Study findings published yesterday in the New Zealand Medical Journal show the number of Acute Rheumatic Fever cases in Northland rose in the past 10 years.

The disease, which is associated with poverty, poor access to healthcare and overcrowding, has unusually high rates in New Zealand’s poorest communities, especially among Maori and Pacific children. …

It happens because we allow it to happen. The day that we as a society reject both right-wing governments, and their dog whistling and scaremongering about beneficiaries, is the day that we can start to put it right.

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.