Analysis: There’s at least one big problem with the Government’s approach to benefit levels when paired with its child poverty goals, writes Q+A presenter Jack Tame.

Reducing child poverty can be added to the list of areas in which Labour’s achievements in government ultimately fell short of their aspirations.

Despite the previous government’s tough talk, the key numbers are still heading in the wrong direction.

For the year ending June 2023, after nearly a full term with an unprecedented majority government, New Zealand had more children in material hardship and more children growing up in low income houses than the previous year.

One in eight kids now falls below the material hardship standard, a mere 0.2% improvement from when Jacinda Ardern took office in 2017.

Although the sample size for the survey was much lower than Statistics New Zealand initially desired, there is little evidence to suggest yesterday’s numbers overstate our levels of child poverty.

Vitally, the statistics do not include the roughly 3500 children living in emergency housing over the same period – a cohort very likely to meet many of the income and hardship measures constituting poverty.

Although the new government says it is committed to the child poverty reduction targets introduced by its predeccesor, its strategy for achieving the targets predominantly focuses on employment and a stricter approach to what it calls “welfare dependency”.

The in-work tax credit will be increased next year for working families and a childcare tax rebate is likely to mostly assist working parents.

At the same time, the Government is changing the indexing measure used to calculate benefit increases, meaning benefit rates are forecast to increase significantly less than they would have under the previous government.

Social Development Minister Louise Upston has signalled the number of beneficiaries facing sanctions is likely to increase on her watch.

Unemployment set to rise

In principle, few would dispute that employment is a better path out of poverty than welfare.

A Ministry of Social Development analysis from 2022 found material hardship rates for children of beneficiaries are between four and five times higher than the same hardship rates for children in working households.

But the same report found the overall numbers of children in material hardship was almost the same between working and non-working households. Children of working parents are less likely to be in poverty, but they’re certainly not immune to it.

And so far at least, there is one significant problem with the Government’s approach to benefit levels when paired with its child poverty goals.

At the same time the Government is scaling back benefit increases, the number of unemployed New Zealanders is set to significantly increase.

Both the Reserve Bank and Treasury are forecasting unemployment to peak above 5%. This would see more than 35,000 additional people without work.

Most of these newly unemployed people will lose their jobs through no fault of their own.

They are not lazy, unmotivated, or unwilling to work. Instead, they will fall victim to broader economic conditions influenced by the monetary and fiscal policies which the Government says are critical to finally taming inflation.

And, of course, many of those people have kids. Kids who will statistically be much more likely to find themselves on the wrong side of New Zealand’s bleak child poverty statistics.

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