This week's
Listener contains a three page opinion piece (invited) from me about child poverty.
It is behind a pay-wall so I've reproduced it here in full.
The Listener titled it,
Greatest Risk.
Growing up in 1960s New Zealand, houses were smaller and families
bigger. Paradoxically, overcrowding and child poverty weren't a major issue.
Most families had two parents and many could even afford a stay-at-home mum. A
very small percentage of families experienced financial hardship associated
with an absent father.
What changed?
In 1973, influenced by the Royal Commission on Social Policy's urgings, the
government introduced a statutory benefit for sole parents regardless of the
reason for their single parenthood. In the following 20 years unmarried births
with no resident father more than quadrupled from around 2,500 to 12,000 - 22%
of all births - annually. The relatively generous DPB saw single mums dropping
out of the workforce. (The Royal New Zealand Plunket Society partially
attributes this development to the eventual non-viability of Karitane hospitals
which had provided live-in employment for unmarried mothers.)
These births accumulated in the statistics. By the early 1990s around a quarter
of a million (mostly) mothers and children were dependent on the state for
their survival. But the benefit still kept them above the poverty threshold.
When the incoming National government of 1990 opened Treasury books, the news
was bad. This is where the authors of Child Poverty in New Zealand pick
their story up. They describe "benefit cuts of between 10 percent and 30
percent for many beneficiaries supporting children." In fact, for a lone
parent with one child, the cut was 10.7%; for those with two, 8.9 percent.
The universal family benefit was abolished, but half of the savings were
reallocated into increasing Family Support for beneficiaries and low-income
families.
Nevertheless, the drop in income was enough to push beneficiary households
below the poverty threshold (though they had probably been barely over it
prior). Compounding this was the high number of partnered jobless parents
created by an unemployment rate exceeding 11 percent in 1992. From that time
the proportion of children in poverty, measured at below 60 percent of median
disposable household income after housing costs, has been flat to falling
slightly.
Sixty nine percent of children in sole parent households are poor compared to
15 percent in two parent families. Today, a lone parent heads around 30 percent
of all families with dependent children. Long-term dependent sole parent
families aren't typically the result of a marriage breakdown. They hail from
very young mothers with no educational qualifications, work skills or regular
partner.
Every year around one in five new-born babies will be reliant on their
caregivers benefit by Christmas. This pattern has persisted from at least 1993.
For Maori the number jumps to over one in three. Add to this Treasury's
advice to the Ministerial Committee on Child Poverty,
"...around 1 in 5 children will spend more than half of their first
14 years in household supported by main benefit. This group is at the highest
risk of material hardship and poor outcomes across a range of dimensions”.
The worrying
aspect of this pattern is its persistence through good economic times. In
2007, when New Zealand had record low unemployment, the percentage bottomed at
around 19%. Over three quarters will rely on a sole parent benefit, the
remainder on either an unemployment or disability benefit. While some of the
reliance will be due to unforeseen circumstances like are job redundancy, most
could have been predicted by the parent.
In a recent Listener column Jonathan Boston wrote "...it is
worth pausing and considering how easy we would find it to raise children under
such circumstances." The same counsel should be put to those
people who can actually change the pattern. Though too much emphasis on
"personal responsibility" would give less weight to "fairness
and compassion" according to the book. Why these societal attributes would
be mutually exclusive is unclear.
Not all poor children live in beneficiary families. Fortunately, though, low
incomes in working families are often short-lived. Crucially, Boston and
Chapple find:
"Sustained
full-time employment of sole parents and the fulltime and part-time employment
of two parents, even at low wages, are sufficient to pull the majority of
children above most poverty lines, given the various existing tax credits and
family supports."
The reality
is raising children on one income is more difficult than on two. Compounding
this are lower educational qualifications and work skills amongst the
beneficiary population. Any moral judgement about single parents is irrelevant.
Sole parents can raise children well but it's nearly always a financial
struggle.
So knowing where the major share of chronic poverty lies, what can be done
about it?
Currently sole parents must be available for part-time work when their youngest
is 5, full-time at 14. Boston and Chapple suggest full-time work expectations
much sooner. Following the Nordic States example, work-testing when a child is
aged 1-3 is mooted. As well, much stronger "employment activation policies"
are urged. But the question of why education and training would work
post-parenthood when it failed pre-parenthood isn't addressed. It is the
first-time failure of education that makes having a baby at 16 or 17 look like
a palatable prospect. (Neither is the significant population of sole parents in
a multitude of small towns like Kawerau, Kaikohe and Ruatoria dealt
with).
To satisfy the authors' recommendation, the economy would need to quickly
produce around 60,000 jobs for newly work-tested parents (not to mention the
100,000 or so people on an unemployment benefit). That is a very big ask.
But not an impossibility. To meet the needs of mothers expected to work when
they have infants, substantial expansion of Early Childhood Education would be
required. That in itself presents work opportunities. Our rapidly ageing
population demands a growing workforce of residential and in-home carers. Many
more jobs could be created by transferring funds from Work and Income's budget
into Education and Health. These job creation schemes could be expenditure
neutral.
Boston and Chapple though, want a good deal more government expenditure and
increased revenue. Not only to support the "employment activation
policies", but to pay higher benefits. It is improbable that raising
income tax, introducing a capital gains tax, re-introducing inheritance tax and
redirecting child support offset are likely to generate the economic growth
needed to produce thousands of new jobs.
Even more concerning, raising benefit incomes is an enormously risky solution
to solving child poverty. Multiple studies from a wide array of countries show
a strong correlation between the level of benefits and unmarried births. Last
year Innsbruck University published research that found,
"... the welfare state decouples marriage and
fertility, and therefore, alters the organization of the family."
OECD research shows when English-speaking countries reduce poverty through the
benefit system, they simultaneously increase the number of workless households.
If the gap between income from welfare and income from work is further reduced,
the incentive to take a job diminishes. An average sole parent with two
children in South Auckland receives $642 weekly, a combination of basic benefit
rate, Family Tax Credits and Accommodation Supplement. That's 73 percent of the
median weekly income from wages or salaries in Auckland. A large portion may go
on rent but that's ultimately the parent's choice. Importantly, the poverty
rate for sole parents who live within a wider household is only 23 percent
versus 69% for those who live as a separate unit. Perhaps the most accessible
and immediate financial relief for single mums is to pool resources: flat
together, live with their own parents or take in boarders.
There is no doubt that some New Zealand children are doing it very hard.
Treasury estimates that the number exposed to long spells of low income
associated with "significantly worse outcomes" is 180,000 (50,000
spend 13-14 years on a benefit; 130,000 spend half of their first 14 years
dependent.)
It's a shame that some advocates insist on promulgating inflated numbers
like 285,000. That turns the debate away from practical remedies to fighting
over definitions.
Recognising most of the deep-seated deprivation occurs in beneficiary families,
the government is acting accordingly. Aware that very young parents produce
the most vulnerable children, the way support is provided has been changed.
Under the new Young Parent Payment regime dedicated mentors ensure rent and
power is paid directly, funds for food and groceries are loaded onto a payment
card, and only a small cash allowance is given. Parents are required to attend
a teen parent unit, enrol their child in the WellChild programme and with a
local GP. Extra income can be 'earned' by attending parenting and budgeting
courses. Paternalistic? Yes. But the priority is their babies. Simply paying
young parents a non-conditional cash sum doesn't protect their children or
break the inter-generational dependence shown by 90 percent of 16 and 17
year-old beneficiaries coming from welfare-supported homes. For older parents
not coping, who are repeatedly turning up at Work and Income needing extra
cash, it's highly likely the payment card regime will be extended. Provision is
signalled in the planned rewrite of the Social Security Act 1964.
Many other practical developments over the past few years have targeted poor
children. Insulation of over 200,000 homes; increased access to GPs; an
intensive campaign to reduce rheumatic fever; boosted budgeting advisory
services; low cost procurement of household essentials like washing machines;
low interest loans to combat loan sharks; partnering with charities providing
food and clothing to poor children; home visitation programmes like Early
Start; extended income-related rents to non-government social housing; and
Whanau Ora, to mention some.
Large scale second-hand clothing stores like Savemart and Rebound make it hard
to understand why any child would lack a warm jacket or more than one pair of
shoes. The quality of merchandise often outstrips cheap retailers at much lower
cost.
In relative terms, New Zealand remains a rich country where social security
protects against grinding poverty. But it is vital to recognise benefits have
also influenced a major change in family structure culminating in our current
dilemma.
Boston and Chapple say, "In our view, all children should have the
opportunity to fully participate in and belong to New Zealand society."
Exactly the same sentiment ushered in the DPB forty years ago. Yet the hoped
for panacea only exacerbated the problem. A small level of insufficiency at the
margins developed into a major shortfall.
Employment for existing sole parents, and deterrence for prospective, particularly
young parents, is the most effective approach to reducing child poverty. In
that respect Jonathan Boston and Simon Chapple's prescription is half right.
But a strong and competitive economy capable of producing the necessary jobs
won't result from the greater taxation and wealth transfer the authors
advocate.
A prevailing attitude that only government can solve child poverty is actually
a large part of the problem. If there is a solution it largely lies in the
hands of those who choose the circumstances in which their children will be
raised.
