Sunday, September 17, 2017

Jacinda Ardern will increase poverty because she doesn't understand the drivers

Last year I wrote a paper which explored the link between child poverty and family structure. The strongest correlate with child poverty is single parent families on welfare. Additionally, children born into de facto relationships - which had a much higher likelihood of dissolving than marriages - were much more likely to become poor.

In a Sunday Star Times column Jacinda Ardern attacked my research:

This week I opened the paper to find some astonishing "news" - a lack of marriage is to blame for child poverty.

I've spent the better part of six years reading and researching the issue of child poverty, and what we need to do to resolve this complex problem in New Zealand

And yet here it was, the silver bullet we have all been looking for. Marriage. Getting hitched. Tying the knot. It turns out that we didn't need an Expert Advisory Group on child poverty, or any OECD analysis for that matter - apparently all we really need is a pastor and a party.

At least, that's the world according to Family First, who commissioned a report this week which, they claim, provides "overwhelming and incontrovertible" evidence that when it comes to child poverty, a lack of marriage is our problem, and it's simply become "politically unfashionable" to talk about it.

I'm happy to talk about it; in fact all of Parliament is. We debated the ins and outs of the institution not that long ago - it was called the Marriage Equality debate. Oddly, I don't recall Family First supporting the idea of increasing access to marriage when it came to same-sex couples. But I digress.

The major piece of evidence Family First use to back up their claims? Child poverty has risen significantly since the 1960s, and more people were married back then. I am paraphrasing, but that's the general gist. And yes, those two pieces of information are true. But are they linked? You only have to look at where child poverty figures really jump around to figure that bit out. Back in the mid-1980s, child poverty numbers (after taking into account housing costs) were about half the levels they are now. What happened to cause the spike? De facto relationships and single parenting didn't all of a sudden become "on trend".

What happened was Ruth Richardson's Mother of all Budgets. Government support was slashed, unemployment rates were grim, and child poverty, as you would expect, went up significantly. Equally, you can also see a downward trend in child poverty numbers around the early 2000s when Working for Families was introduced.

So what about the other claims in the report? How about "51 per cent of children in poverty live in single-parent families". Stating the obvious, surely. Single parent equals single income.

So, Family First, here's my view for what it's worth. Families will take many forms. Some children will be raised by one parent, some will be raised by two, possibly with some distance in between, and some will be raised by four. But the other factors Family First was so quick to dismiss - low wages and staggering housing costs - mean we have 305,000 children in poverty. And this is the stuff that needs to change. It's time we faced reality.

I was allowed only 150 words to respond via a letter-to-the-editor, but you can read my full response here.

Because she doesn't understand child - no let's call it 'family' poverty, Ardern is on the brink of making it much worse.

Granted that particular paper was about incomes. But they account for only one aspect of the poverty problem.

When countries redistribute wealth to raise incomes it comes at a cost - joblessness. Peter Whiteford and Willem Adema write:

"...there is an unavoidable trade-off between providing generous assistance to the poor and improving incentives for people to work and provide for themselves. On average across OECD countries, there is a fairly strong correlation between the effectiveness of tax and benefit systems in reducing poverty and the level of family joblessness. The correlation coefficient is 0.63 – implying that every 1 percentage point increase in the level of poverty reduction achieved by the welfare state is associated with an increase in the number of jobless families by 0.63 percentage points. Among the English-speaking countries  the correlation is even stronger (about 0.92), so that Australia and the United Kingdom reduce child poverty very significantly and have very high levels of joblessness among families; while Canada and the United States reduce poverty much less, but have much lower levels of joblessness (although they have much higher poverty among working families with children). That is, in the English-speaking countries the argument made by Adam, Brewer and Shepherd (2006) appears to apply – more generous support to poor families is associated with higher levels of family joblessness."


In a nutshell, for every percentage point family poverty is reduced, joblessness increases.

The possible future Prime Minister will substantially lift benefit incomes for young parents but reduce the incentive to work. Adding $3,120 annually per child aged 2 or under (and that's only one part of her policy) reduces, if not closes, the gap between incomes from work and incomes from benefits. And don't doubt that recipients factor this into a choice between working and staying dependent on the taxpayer.

"I get a good amount of money on the benefit, why bother working?"

Because work has many more benefits than money alone. Most importantly it teaches your children how the real world operates.

The last two decades has seen countries across the western world debating which is the best strategy to get families out of poverty - increasing work participation or redistributing income. National went largely with the former with their welfare reforms. Now there are fewer children benefit-dependent than since the 1980s (though there's a long way to go yet). Ardern though is predominantly choosing the latter. And if she needs the Greens, a softening of the reforms will be inevitable.

While claiming to have researched  child poverty extensively she has ignored the effect that redistribution has on both work participation and relationship status.

NZ Herald's Simon Collins summarized some of the research into the effect of welfare on relationships:

For parents on benefits or low incomes, the tax and benefit system actually created a financial incentive to separate. Economist Patrick Nolan calculated in 2008 that a mother earning $240 a week and an unemployed father would be $132 a week better off apart, even allowing for the extra costs of two households, because of the extra welfare top-ups the mother could get if she lived alone with the children.
Social researchers Paul Callister and David Rea, in a new draft paper, trace the other side of the equation - a worrying minority of mid-life men aged 30 to 44 missing out on both work and marriage. Mid-life men outside the labour force rose from 2 per cent to 11 per cent in the 30 years to 2006, and those living without partners rose in the past 20 years from 19 per cent to 33 per cent. 
Ardern is intent on reducing income poverty (with no guarantee the money will be spent on the children) but will unwittingly or worse, uncaringly, increase another kind of poverty. A poverty of purpose and spirit. These deficits are what drives the problems all New Zealanders want to see alleviated.

Monday, September 11, 2017

Farmers fight back

Great to see:

Maniototo farmers challenge Ardern to visit them on water tax

A group of Central Otago farmers are challenging Jacinda Ardern to visit their farms to discuss Labour's water tax plans.
The group of women, known as Water Maniototo, say they cannot afford a royalty on irrigated water, planned at one to two cents per thousand litres of water, and it could drive some off their land.


Saturday, September 09, 2017

Crucial good news stories ignored by 'change' voters

The number of teenage mothers granted a benefit has plummeted:


The percentage of children dependent on a benefit is falling and is lower than it has been for decades:

Sunday, September 03, 2017

Not all are awestruck

Jacinda Mania hasn't struck everywhere:

Not a skerrick of interest in the royal party it would appear. Working too hard to notice.

Photo source

Election 2017

Muriel Newman accuses the Labour leader of being neither open nor transparent which Ardern claims "at every soundbite".

A democracy deserves politicians who are transparent and honest. Labour’s new leader is showing she is neither.
The reality is that voters deserve to know exactly how much proposed new taxes are going to cost them, before an election. That’s what openness and transparency is all about – revealing the truth to voters, no matter how unpopular it might be.


While Rodney Hide questions Winston's moral entitlement to a pension and also reminds us:

As an aside, Peters is on his third pension entitlement.
Through a quirk of parliamentary history he has been entitled to two extremely generous parliamentary pensions.
His entitlements are gold-plated and make national Super look extremely mean.


Saturday, September 02, 2017

Saturday morning read

If you have a few spare minutes this morning  Jacob Hornberger is well worth reading:

The leftist shibboleth that undergirds America as a welfare state is that Americans, if left to their own choices, would never voluntarily help out others to a sufficient degree. Given such, it is necessary, liberals say, for the state to enter the picture and force Americans to do their moral duty.

Friday, September 01, 2017

ACT well shot of this one

John Banks never appealed to me at any level. Not as a National MP, not as a talkback host, not as a mayor. But most certainly not as an ACT MP.

Follow the link to court decision from here.

Of particular note, Banks alleged reaction on finding his 19 year-old girlfriend was pregnant.

As a committed opponent of the DPB I struggle with the bona fide reasons for its introduction - abandoned pregnant females. If the DPB had only ever been extended to those women, it would never have become the social undoer it did.

The Honourable John Banks. It jars.

Thursday, August 31, 2017

Jacinda versus Bill: TV One Debate

Jacinda would be great cast as the humble, charismatic  up-and-coming politician who wins hearts and minds. Tom Hanks would play the male equivalent.

But this is an election. Not Hollywood.

Bill wouldn't be cast by any director. He gets tongue-twisted, he misses his cues and he resides very much in the head space where facts are a given and don't need ardent defence or advocacy. They speak for themselves - thank goodness. Because he does't.

But on a more subtle level, Bill versus Jacinda found a perfect performance in him. There was not a skerrick of anything  unsightly or ugly. He looks like the man who continues to do the business; who gets what aspiring NZers are about, and is respectful. We might have preferred more sass and sparks but that wasn't going to happen.

Bill is a bit of a bumbler. The crew had to contain him when the show ended. He went to move away and then realised he was supposed to stay still. Is that the man who can't wait to get out of the limelight or the man who needs to move on to the next task?

Personally I just think it's the man who has a job to do and finds all of the media stuff an unwelcome intrusion and burden.

That's the kind of character I would to prefer running the country.

Let's never forget that as Minister for Social Welfare Steve Maharey spent his period in office defending welfare dependency. Bill English turned that on its head. He sought to understand what drove it and what would reduce it. English goes deep when it comes to social deprivation.

Jacinda would return to pulling the levers that drive it.

Monday, August 28, 2017

Is Jacinda the next Michael Joseph Savage?

Is Jacinda the next Michael Joseph Savage?

Will the portrait of Adern adorn walls for decades to come?

Jacinda has evoked Savage for some time now.  She frequently drops his name and talks  about how his welfare ideal degenerated into a judgemental and unjust system under National. She is a little bit Turei, and a little bit Clark.

But no bit Savage.

His goal was to provide assistance for people who were utterly down on their luck through no fault of their own. 

Savage's social security, following in the tradition of the Old Age Pension and even the Widow's Pension, required applicants to prove they were worthy of state support - that provided by their unknown fellow New Zealanders. There was a strong and shared understanding about the deserving and the non-deserving.

That may seem archaic today - certainly to leftists (but not insurance companies). The 'societal social compact' the Left strongly champions was necessarily based on the deserving/non-deserving concept. Without it, the common understanding that held the compact together as a successful policy for so many decades was gone.

Now Ardern  talks forcefully about a better and fairer NZ. But she has no idea - or chooses to ignore - what fairness on Micky Savage's terms would look like.

He wouldn't have been trying to convince Labour supporters they need to pay a young woman $3,000 a year for her newborn. He would have been demanding that a father support his child. He would have strongly rejected any idea that the state should pay for what  Jacinda advocates.

She should quit exploiting past leaders to build support for her own senseless spraying of social subsidies.