Unintelligent DomPost editorial

Today's DomPost editorial is typical of their unintelligent position on child poverty. The editorial is italicised with my points interspersed:

The government must act on poverty

Unicef's latest report on child poverty in rich countries in the years after 2007 includes a special criticism of New Zealand.
"Australia's increase in spending on families had a more positive impact than the ambitious tax cuts implemented in New Zealand, where poverty and inequality stagnated."
The last part, at least, is blunt but fair - whichever way you dice it, poverty levels in New Zealand are flat.
Perhaps, one might argue, that is still an achievement after years of recession. The National Government has not cut such social spending as the Working for Families tax credits, a help to many low-income families during the past 10 years. But Australia's success begs the question: why are we not doing more? Prime Minister John Key says it's all about the economy - Australia famously bucked the global slump after 2007.
"A strong economy is the No 1 way to lift youngsters out of poverty," he says.
This is at least an incomplete view. It must be relevant that the Australian government launched what one group of academics calls a "massive policy response" to the financial crisis, putting "billions of dollars into the pockets of low and middle income families".

Other sources conflict with this. According to the OECD's Society at a Glance 2014:

Relative poverty in Australia (14.4% of the population) is higher than the OECD average (11.3%). Even if they still are high, poverty rates for youth and particularly those over the age of 65 declined, while child poverty increased...

The strong increase in real public social spending between 2007/08 and 2012 is mainly explained by pensions, leaving many families with children behind.

 


Some will argue that New Zealand cannot afford such spending. 

According to the above graph, NZ almost did.

They will also say that policies to seriously dent child poverty rates are not worth it because they end up discouraging parents from finding work. 

An evidence-based argument. But not only is work discouraged by higher benefits,  the rate of single parenthood is encouraged.
 

Yet those arguments get something truly wrong. What New Zealand cannot afford is to keep leaving so many of its youngest people flailing.
The statistics are complex, but it is fair to say about one in five Kiwi kids is growing up in a house with resources so meagre that they are held back from meaningful participation in society. 

No it isn't fair to say "one in five" when the claim is based solely on relative poverty numbers. Many children in low income families are not experiencing hardship.

Why not use real data?

Describing hardship for children

Material hardship means going without goods, services, and experiences that people can reasonably be expected to have. Statistics New Zealand, with the advice of the Ministry of Social Development, has provided an analysis of what this means using the New Zealand General Social Survey data. They identified eleven key indicators of vulnerability such as:

•

having a smoker or a victim of crime living in the house (both about 20%)

•

living in a high deprivation area (22%)

•

living in an overcrowded house (13%)

•

having a low socioeconomic rating on the ELSI scale

•

having more than one housing problem like damp, cost, cold, or inadequate

heating (10%)

•

having limited access to facilities like shops, schools, libraries and medical

facilities (9%).

They assessed the six percent of children with five or more of these indicators as being at high risk of being in deprivation.

 
Is it any wonder that we keep seeing such figures across all the social indicators? There is a "long tail" of underachievement in our schools. A quarter of people face housing costs so high they are in financial stress. A quarter does not turn out to vote.
Does anyone doubt some connection here? These problems suggest a group cut adrift from the rest of the country. 

And voter turn out in Australia (despite compulsory registration) is falling too. As defined by the percentage of the voting age population that actually voted it has been falling steadily to reach 79.67% in 2013. So much for that theory.


It is not enough to insist that only a stronger economy can solve these problems. New Zealand's economy today is stronger than it was in the 1980s - the median household income has grown by half. 

Not according to the Household Incomes Report:

More like a quarter. Much of the increased median is due to households increasingly featuring more than one earner.


Yet the number of children in poverty has roughly doubled in that time.

Only when after-housing-cost household incomes are used.

 If their parents are earning, their real pay increases have been all but eroded by spiking housing costs.

And the government is addressing the housing affordability problem on a number of fronts not least of which is trying to reduce costly local government bureaucracy and land supply issues.



If they are not, their benefits have been cut. 

I recently calculated a benefit 'package' for a sole parent and two children comparing pre-cuts 1989 with today ( in $2014). They are not terribly dissimilar. Yes, the basic rate is considerably lower, but the add-ons are higher. It isn't that benefit cuts have eroded income support payments so much as the rising median household income means more beneficiaries and their children fall below the 60 percent threshold. That's why the poverty rate for beneficiary children is so much higher than for working families.




Meanwhile, what it means to participate in New Zealand has changed - now it's an internet connection as well as bread on the table and a pair of shoes.

This is about priorities. To hold off spending more on children because it discourages work, or might slow growth, is to have them backwards. 

To not prioritise encouraging work is economic insanity.  NZ research has proved that poor children in working homes do better than poor children in benefit-dependent homes.


Everyone agrees it is unacceptable for New Zealand kids to grow up in deprivation. That must be the starting point here - it cannot be qualified away.
If the Government won't transfer more money to those in poverty, it needs to explain how else it will answer this profound problem.
- The Dominion Post

If the writer had his or her eyes open it would be clear what the government has been doing to address the problem. Welfare reform.


Plus many other practical developments over the past few years. 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.

The more things change...November 2, 2014

"When I was silly" sounds like an excerpt from an A A Milne book.

Here it illustrates my theme of the more things change, the more they stay the same.

The personal chronological progression from left to right (economically) is perennial:


From The Evening Post November 2, 1934:

Do you own a state house?

Apparently you do. Annette King says the government is:

“... washing its hands of responsibility for housing our most vulnerable New Zealanders and it is selling another asset, built up over many years and owned by all Kiwis,” Annette King said.

The only advantage of government owning assets to me is if they generate a profit and as a consequence we all get to pay less tax (mindful that taxes make people poor too.) Yet  a look back at history would show the more governments own, the higher taxes go. If assets are owned by a party with access to unlimited, guaranteed funding, then management of them will reflect that reality. They can't fail regardless of inefficiency or poor return. Even not-for-profit enterprise shouldn't operate at a loss. Yet tax-funded enterprises by their very nature are often financial sink-holes. All you own is a liability.

State houses can only be defended as part of wealth redistribution to aid the poor. But as such they feature all the downsides of welfare benefits. They trap and isolate groups of people.

But I will give credit to King. At least she is trying to rekindle a debate with some substance instead of endlessly harping on about 'dirty politics' which is now synonymous with a gaping yawn.

In fact the old pair of hands increasingly looks a better option for Labour than the new. Again last week I heard wannabe leader Andrew Little berating unpopular Labour polices like raising the Super age and a capital gains tax. Voters didn't like them so they didn't  like Labour, he says. The guys wishy-washy.

According to polls, a majority of  voters didn't like asset sales but they still voted for the party running the policy because on balance, they viewed National as their best option.

Seymour on Employment Relations Bill

David Seymour makes solid anfd interesting speeches (much like Rodney Hide used to and still delivers as weekly columns in the HOS and NBR).

His contribution to the 'teabreak' bill debate uses a novel thought experiment reversing employers and employees. But it is the conclusion I've cut and paste below:

I support this bill because it is a step in the right direction towards more flexible labour markets.
Like all attempts to improve public policy, this amendment is imperfect.
Economic reality and experience suggest it should have gone further. Governments cannot legislate market outcomes, but can influence them.
Let me leave the opposition with two initiatives that might better help New Zealanders achieve better pay and conditions.
Nominal pay rates are only worthwhile to the extent that they are useful for buying real goods. The price of houses have doubled relative to incomes over the last two decades, overwhelmingly due to local authorities prescribing an urban development pattern incompatible with the housing people actually want.
Far more could be achieved for working New Zealanders by improving the responsiveness of housing market supply than by futile attempts to shift bargaining strategies in the labour market.
Another contributor to the outcomes in the labour market is the skill level of employees. Employees with greater skills earn more, and this factor is growing in importance.
Indeed, increases in inequality of market income in the western world can be attributed to increasing returns to skills – you can earn more and more if you are more literate and more numerate.
The real work achieving the opposition’s purported objectives is being done on the supply sides of the housing and education sectors, and I’m proud to support and encourage this government in this work.
In conclusion I am proud to support this bill and hope that this government will one day pursue best practice policy by confronting the fallacies that underlie too much of our labour law legislation.
The duty to enter into and conclude bargaining should be gone.
The duty to retain staff under Section 6A almost unconditionally dependent on the type of employee, and now the type of business, should be gone.
Doing so would put us in touch with the labour market of the 21^st century, whose businesses succeed or fail based on their ability to attract and retain workers.

It is a relief that the NZ parliament has at least one MP with some intellectual grunt and guts.

(Oh and related to this I noticed that during the week Statistics NZ announced the country now has a record number of businesses - one for every 9 NZers. Almost half a million.)

Marriage and wealth

NCPA has a report about marriage and wealth:

If the United States had a married parenthood rate at the same level that it had in 1980, the median income of families with children would increase by 44 percent.

Without doing the numbers it is certain the same effect would be seen in NZ.

Although (referring back to yesterday's post about the shortcomings of measuring poverty relatively), ironically, there would still be a percentage of children living on incomes 60 percent or less of the median income despite being much wealthier. Child poverty would persist!

The ambiguity of measuring 'poverty' relatively

The release of UNICEF's Children of the Recession report has once again triggered a discussion about the shortcomings of measuring poverty relatively.

We all understand how this method can throw up ambiguous outcomes but it's not always easy to explain.

The following is straight from the Household Incomes Report, the official poverty statistics source:

o    when all incomes at and below the median rise, but the median rises more quickly than lower incomes, then poverty is reported as increasing despite low incomes increasing

o    when all incomes at and below the median fall at similar rates, poverty is reported as not changing even though low-income households are in much more difficult circumstances after the reduction in their incomes. 

Clearly, nobody is a winner when a country gets poorer even if fewer people are described as 'in poverty'.

Feed the Kids Bill - say something

From the Green's blog:

Please help me get my Feed the Kids Bill to Select Committee

October 30, 2014 Metiria Turei

Last week I took over the Feed the Kids Bill that Hone Harawira had introduced to Parliament. If passed, my Bill will provide government-funded breakfast and lunch in all decile 1 and 2 schools.
Hungry kids can’t learn and are left trapped in the poverty cycle when they grow up. Let’s break that cycle, lunchbox by lunch box. We can feed the country’s hungry kids, if we work together.
My Bill is at a crucial stage of its progress – part way through its First Reading – and may be voted on as early as next Wednesday 5 November.
The way the numbers stack up in the new Parliament the Bill will be voted down unless we can persuade the National Party to change its position and support it going to Select Committee. National have been talking a lot about child poverty since the election, and supporting my Bill is one way they can start to address it.
You can help me persuade the Prime Minister to let the public have a say on this important issue by emailing  John Key, asking that National support my Bill at least to Select Committee. We need to broaden and build the public debate on addressing child poverty, and submissions on this Bill to a Select Committee will help achieve this.
Because of the potentially short timeframe, you’ll need to send your emails as soon as possible and before Monday 3 November at the latest.

As the link was provided I emailed the PM:

 Dear Mr Key

Green co-leader Metiria Turei has asked people to contact you directly to support her Feed the Kids Bill. She provided the link to your address through the Green blog. I have never written to you before.

I sincerely hope you will not support this bill. It would chisel away even more parental responsibility. The less that is expected of parents, the less they will provide or produce. That scenario does not auger well for their children's general welfare.

Even parents reliant on a benefit are paid enough to provide some fruit and modest sandwiches daily. An inability to do so is a symptom of a greater problem requiring scrutiny - for the sake of their child.

The 'income management' regime provides a response to genuinely hungry children. It may interest you that even Labour advocated for extended income management in its election manifesto. Their 2014 ‘Social Development’ policy paper proposed, “…allow[ing] income management to be used as a tool by social agencies where there are known child protection issues and it is considered in the best interests of the child, especially where there are gambling, drug and alcohol issues involved.”

Sincerely

Lindsay Mitchell

Doesn't take long to make a couple of points if you are so inclined.

"I was caught over the limit"

 I was caught over the limit

That's the front page headline on the DomPost cover this morning.

The  event wasn't yesterday, or last year, or even in the last two decades. It was 27 years ago - more than half of the new Police Minister's lifetime.

He disclosed the crime to the National Party in 2008 when applying to be a candidate, and admitted to it when questioned by a DomPost journalist.  He's honest.

But I wonder what is the moral point of the clean slate legislation? Society agreed that some crimes should be wiped after a period of time because they were committed when people were young, they've had a clean record since and the conviction might restrict the individual's ability to get a job or travel.

Obviously the DomPost has a less charitable view.

It also employed a photo that suggests a distressed Minister (whereas the on-line version is the polar opposite).

Tacky, tacky, tabloidism.

Moral hazard

I woke up this morning and a thought popped into my head.

'Child poverty' is the new term for 'moral hazard' :

In economic theory, a moral hazard is a situation in which a party is more likely to take risks because the costs that could result will not be borne by the party taking the risk.

(Had a call from Leighton Smith's producer to ask if I'd have chat with him about child poverty on the back of the UNICEF a report and I couldn't resist dropping my thought in. He laughed.  He doesn't laugh enough. Not on air. His serious demeanour probably masks a sense of humour. Mine does.)