Poor Children: the Government Has Not Attended to the Child Poverty Problem

Listener 3 February, 2001

KeywordsDistributional Economics; Social Policy

Possibly the best established finding of twenty-five years of research on poverty is that children are disproportionately among the poorest of the nation. Not just brown children or yellow children or white children. Not just one parented children or two parent children. Just children. Over 30 percent of all children under the age of 15 are in the bottom fifth of the population by income. That means that over half the poor are children and their parents, and their rate of poverty is almost double the rate for the childless.

It is not a new phenomenon. In the nineteenth century there was little the state could do. Following a 1908 Arbitration Court decision the practice was to set basic male wages according to the needs of a two parent-two child family. But this meant that male workers without children or just one (or a wife working) were treated generously, while those with more than two children were insufficiently supported. In 1926 the Reform Government under prime minister Gordon Coates introduced ‘family allowances’ available to those with more than two children. By the international standards of the time the approach was revolutionary, because the benefits were funded out of general taxation. (Today New Zealand would no longer be considered an innovator.)

The first Labour Government initially alleviated the burden on families by free health and education, and improved housing, and then in 1945 introduced the universal family benefit at a rate of 10 percent of the average wage. These policies were broadly pursued for the next forty years – albeit sometimes grudgingly – because of their fiscal cost, and the relative value of the benefit declined. (There was also separate support for single parent families beginning with the 1911 Widows Benefit, with incremental extensions through to the statutory Domestic Purposes Benefit in 1973.)

In the 1970s Rob Muldoon and the Royal Commission on Social Security began refining the tax system to give greater financial relief to poorer families, culminating in the fourth Labour Government’s introduction of ‘family support’ which targeted low incomes. They also muddled around with the free services, as did their National Government successor. But a crushing burden was imposed on older children with major hikes in tertiary education fees (and creeping increases in ‘voluntary’ schooling fees). National eliminated the universal family benefit in 1991, although almost in contrition it hiked family support in the late 1990s. Yet the nation’s children are still disproportionately among the poorest.

Intriguingly, the current government has not yet paid much attention to the child poverty problem. Its spending from raising top tax rate hardly touched the children of the poor, and the fiscal tightness for the rest of its first term suggests it will be struggling to do much over the next two years.

The lacuna has not gone unnoticed by the Child Poverty Action Group (Box 56-150, Auckland: http://thor.he.net/~cpanz) which last week launched a report Our children: the priority for policy, with an aim ‘to reinforce political commitment to progress on the priorities of children.’ It reflects the values expressed by long time child rights campaigner, Hillary Clinton: ‘the whole village brings up a child.’

In addition to surveying the evidence of child poverty, the report makes over fifty recommendations. Many aim to get the policy ball rolling, but some are expensive. Inevitably, because there is a lot of child poverty.

The report says ‘New Zealand is a signatory to the United Nations Convention on the Rights of the Child. This convention is receiving increased attention, but New Zealand has made very little progress on its implementation. We encourage a plan of action to develop and implement the principles of the convention immediately with provisions for regular monitoring and reporting.’ (If we are not taking the convention seriously, perhaps we should just withdraw our signature.) It goes on: ‘New Zealand’s monetary and fiscal policies need to be evaluated in terms of the impact on families and young people, not just their impact on inflation, debt and Gross Domestic Product, The macroeconomic framework must explicitly include social responsibility.’

Its most revolutionary recommendation is we need to focus on all children, not just a subset. They do not mean we should ignore, say, those children suffering physical abuse. But too often we look only at pathological issues, and ignore the context, failing to recognize that tackling the general problem would also reduce the worst things that happen to our children too.

Writing in 1927 on family allowances, the precursor of our current regime of comprehensive – if inadequate – family support, Dick Campbell, who became a key economics adviser to Coates and eventually chaired the Public Service Commission, concluded ‘even in this reputedly wealthy and specially-favoured country, industry in the broadest sense has grievously failed to do elementary justice to children, and the interference from politics to redress the balance is justified. These allowances … are to be approved, and their direct provision by means of taxation provides an eminently satisfactory form of State Activity – promising, without diminishing production, to improve the distribution of wealth by the transfer of purchasing power to a most deserving quarter.’ Amen.