Talking Child Poverty on Newstalk ZB

On NewstalkZB earlier this evening talking to Tim Dower about the latest Child Poverty report.

One of the e-mails that Tim read out later was, he said, representative of  "a developing theme". It said,

"I assume extreme poverty is being able to afford Sky Sport but not Sky Movies."

I didn't support the line that there is no poverty. I've seen kids in houses where they get sick because of crowding and unhealthy, unhygienic surroundings. Probably the same house has Sky.  But  the chronic poverty of benefit dependence exists. It's spirit and soul sapping.

Children's Commissioner Child Poverty Report

Some of the data from the forthcoming report is depicted at this site. This is their graph for the trend.

Another graphic shows that 51% of the children in poverty live in single parent families.

Here's a graph showing the number of single parents families over a similar period.

Again, the subsidisation of single parent families has been a major contributor to the growth in the numbers of children living in poverty.

And the best answer the Children's Commissioner can come up with is more subsidisation.

An unrepresented constituency?

A NZ Herald editorial begins,

There will always be a constituency for the Act Party's founding principles of individual freedom, personal responsibility, small government and lower taxes.

It does my heart good to see those principles re-stated. Unfortunately the writer goes on to enumerate the many problems that have faced the party over the years and concludes a come-back is unlikely.

So the constiuency that "will always be", which I believe is bigger than ACT's best result would indicate, will essentially go unrepresented in parliament?

I hope not.

"Blaming parents is pointless"

The Children's Commissioner is about to publish an apparently "shocking" report about the increasing number of admissions to hospital for "poverty-related illnesses". The Herald on Sunday editorialises,

"Child poverty should not exist in this country. Blaming parents is pointless."

 What or who then should be blamed?

A few weeks back I wrote something about this question. It was published on Breaking Views so apologies if you have already seen it.

 Without doubt one of next year's major election issues will be child poverty. Most of the voices heard on this issue, including the Children's Commissioner, blame the problem on inadequate wealth redistribution. Either wages or benefits are too low. Child poverty is therefore a product of the collective economic system and solving it becomes the responsibility of government.
I disagree. We are commonly told that approximately 270,000 children live in homes with incomes that fall below 60 percent of the median household income. Less focus goes on who these children are and why their parents are poor.
Around two thirds live in benefit-dependent homes; of those, around three quarters live with a sole parent. Yes, there are poor children with working parents but the poverty they experience tends to be temporary versus chronic. Their parents may experience short-term unemployment, or fewer working hours, especially during a recession but poverty is not entrenched. This scenario is quite different to that experienced by children who are born onto a benefit and spend much of their childhood there.
More than one in five children in New Zealand will be dependent on a benefit by the end of their birth year. The percentage improves only slightly in good economic times and worsens during bad. Because of the rapidity of the recourse to welfare it can be no surprise to most of their parents that their child would be born into economically difficult circumstances.

Over the years these children accumulate in the child poverty statistics. As Treasury observes…"around 1 in 5 children will spend more than half of their first 14 years in  a household supported by a main benefit."  So what began as a fifth of all children born in any given year extends out to become at fifth of all children at any given time.
This phenomenon is the main contributor to New Zealand's much publicised child poverty problem. The results of this reproductive pattern of behaviour get discussed broadly, but the behaviour itself is largely ignored. The misdiagnosis of the child poverty affliction leads to the wrong treatment, or at least calls for the wrong treatment.
For instance, in 2011 Labour and the Greens both proposed increasing welfare payments by paying the In Work Tax Credit to beneficiary parents. This would produce a short-term effect of increasing incomes but risks drawing more children onto welfare as the gap between wages and benefits, already very narrow, becomes non-existent. Internationally, attempting to reduce poverty via the benefit system has been shown to increase the number of workless households. The solution to child poverty is not increasing the number of children dependent on the state.
The current government has taken steps to discourage people from viewing a sole parent benefit as a legitimate alternative source of income to employment. It needs to go further by setting clear time limits and re-framing welfare as emergency assistance. It is nevertheless on a better track towards reducing child poverty than any proposed by the potential alternative government.
Trying to achieve economic, and arguably even more important, emotional security for children through the benefit system is like trying to get rich playing the pokies. It's never going to happen.

Teaching lies

Yesterday Green Party co-leader Metiria Turei gave a speech about child poverty. It was interspersed with animated clips. Here's an example:

(Animation: three children discuss the economic system “So what’s happening with all our money?” “We’re giving it to the government and they’re giving it to the rich people.” “And they’re spending it on stuff they don’t need.”)

Children get their ideas from somewhere. Hard to believe this was just one of those overheard unscripted quirky conversations children have.

It's pretty appalling to imagine adults teaching and prompting these lines for the camera.

But the Greens have never been above using children to buy votes.

The truth about NCEA

Dale Carnegie, the head of Engineering at Victoria University, writes in the NZ Herald about the consequences of NCEA. I don't want to politicise this particularly but I was dead against NCEA. In 2002  NCEA opposition was one of ACT's main policy planks. I recall putting up the large billboards around the Hutt South. My main concern was that it would dumb down or de-motivate bright kids. That the grading was just too broad. My child is currently practising for Level One next year. She comes home with grade and  remark, "Excellence, but if you'd done so and so you'd get a stronger excellence."  But there is no 'stronger excellence'. So why bother to go the extra mile.

Anyway, here's Mr Carnegie's thoughts on the matter:

NCEA has been successful in many areas, especially keeping students in school longer. However it is very clear from our research that for very many students NCEA is not effectively preparing them for engineering study at university.
Our research over a large number of first-year engineering students reveals a systemic problem with the concept of the "achieved" NCEA grade. This grade spans a huge range - it can include excellence-level students who have made some minor errors, through to students who really have not gained competence in the material. Many potentially capable students report that they just "cruised through NCEA" knowing they would be able to obtain the achieved grade with minimal work. A failed assessment is "no big deal"as often they get to re-sit that assessment. When they take that work ethic and expectation into University study, they are in trouble. The result is that there is significant variability in "achieved-level" students' study habits, work ethic and subsequently, actual subject knowledge.
Compounding this issue, we are aware of secondary schools that actively discourage students who have only gained an achieved grade in mathematics at NCEA Level 2 from enrolling in that subject at Level 3. This seems to be due to a concern that those students might fail, with a consequential adverse effect on that school's league table standings. This removes many potential students from even being able to consider enrolment in engineering.
At the core of the problem is the lack of a real, meaningful grade. I advocate for a return to real percentage scores - these motivate students to improve themselves, to gain the best score they can. It would end the farce of excellent students receiving an achieved grade due to one or two minor mistakes. It would give the universities a real understanding of student ability.

ACT's opportunity

Casting around for something meaningful to say about John Banks and the prospects of ACT in the future, I came across this on Scoop:

ACT on Campus thanks John Banks, looks to future

Wednesday, 4 December 2013, 8:43 pm
Press Release: ACT On Campus ACT on Campus thanks John Banks, looks to future

ACT on Campus President Taylor Warwood today thanked John Banks for his contribution to ACT in the past two years.
"John Banks has worked tirelessly in and out of parliament to achieve valuable goals. He has successfully overseen the introduction of Partnership Schools legislation, and has a voting record we in ACT on Campus can be proud of," said Mr Warwood.
"In particular, we thank him for his support of marriage equality, keeping the drinking age 18, and opposing the testing of party pills on animals.
"John is a politician of true integrity who cares about New Zealand. It will be sad to see him go.
"However, ACT is more than just John Banks. The party now has an exciting opportunity to rejuvenate itself, and we will welcome attention being refocused onto ACT's many potential candidates.
"ACT on Campus will play an active role in the selection of candidates and we welcome other young liberal kiwis to join us in this process."

Whoever wrote that, take a bow. It's honest, it identifies concretes instead of employing woolly platitudes and most importantly, reaffirms ACT's liberal credentials.

With the advent of the Conservative Party, ACT no longer needs to cast its net in that direction.

I really do see Bank's retirement as an opportunity, but like ACT on Campus, would  like to sincerely thank him for his animal welfare advocacy.

Education rating incongruities

Only recently the Legatum Institute rated NZ Number 1 in the world in education rankings.

They base their analysis on things like teacher/pupil ratio, enrolment and perceptions about the education system. Matters that governments can control. They do not appear to rate by individual achievement or performance.

The OECD measures the actual performance of students by testing 4,000 and delivers a different result. NZ is slipping in Maths, English and Science. Although the rankings could fairly be described as "plummeting" the absolute scores haven't dropped radically.

I heard one commentator talking about the worsening results being down to the "rich getting richer and the poor getting poorer." But the one trend that is 'up' is achievement by immigrant students. If immigrant students generally fall into lower income groups (I am making that assumption but could be wrong) then that doesn't stack up.

Another incongruity arises too. The OECD report apparently finds the gap between achievers and non-achievers is larger than any other country. Maori have traditionally featured disproportionately among the non-achievers.

Yet yesterday Census 2013 results found,

Over 36,000 Māori stated a bachelor’s degree or higher as their highest qualification at the 2013 Census – a more than 50 percent increase since 2006.

It's difficult to square all of this up.

Welfare checks de ja vu

MSD are apparently going to begin "home visits" to sole parent support beneficiaries to check whether they are indeed single.

But they intend conducting them 14 weeks after application. So only new applicants are scrutinised? 14 months or 14 years after any application would probably reveal more fraud.

In any case even if they find the beneficiary is living with a partner there are a number of ways she can challenge having her benefit stopped. Just read up on the Ruka Ruling in the MSD manual.

I don't particularly like this state snooping stuff (but can accept the legitimacy of it). It's been done before in 1980 under George Gair, a National Minister and sparked outrage then, with an Evening Post headline, BENEFIT CHECKERS DENY 'GESTAPO' TAG.

Here's the thing. If the benefit was strictly time-limited, if everybody had clear expectations that the degree and amount of assistance was tightly controlled and not open-ended (it effectively remains so despite the reforms) then the need to police welfare in this manner would disappear.

And Sue Moroney makes an utterly redundant comment:

But Labour social development spokeswoman Sue Moroney said the visits would be "complete overkill", levelling suspicion at people who had done nothing wrong. "If only they would put their money into putting people into paid employment, rather than bringing in the thought police," she said.

The "thought police"? What has freedom of speech and expression got to do with people defrauding the taxpayer? MSD aren't checking if beneficiaries are thinking about fraud; they are checking whether they are committig it.

Update: More de ja vu regarding "home visits". I was just reflecting on the following which I wrote some years ago:


The Ministry of Social Development’s procedural policy requires staff home visits to beneficiaries be in pairs due to security concerns.  During 2001/02 however, an experimental project involved unaccompanied home visits to discourage the pursuit of a benefit application.  On this occasion, staff members were trained to use cell phones for security, not make home visits out of cell phone range and to leave the property at the first sign of danger.  Some case managers declined to participate.
Source: 

Evaluation of Avenues: A Pilot of a Modified Domestic Purposes Benefit-Sole parent Application Process, Ministry of Social Development, June 2003

Who is Labour targetting?

This piece of personally addressed  electioneering material arrived in my letterbox today. Mrs Lindsay Mitchell was the only voter in this household to receive one. Makes me wonder about a number of things.

1/ Why does the text begin, "Most New Zealanders don't want assets like power companies sold off..." when they are asking me to vote in a referendum designed specifically to find out if Most New Zealanders don't want assets like power companies sold off... 

2/ Why did they put up the postshop/kiwibank locator web address to help me "find a post office or box near you"? What moron doesn't know where the nearest post box is? Or is this just subliminal messaging about kiwibank and its connection to Labour?

3/ Why has Labour left it until after many people will have already received and returned their voting papers to embark on this exercise?

4/ Why was I selected from the electoral roll?

5/ Was it purely random or do they have a target group?

6/ The message doubles as a recruitment drive for Labour so again, how are they profiling targets?

7/ Does Labour think older married women will be particularly receptive to their advances (oh look the little wife got  mail in her own right?) and have they given up commuicating to men?

8/ Have I simply found my way onto one of their databases because I am politically active?

Too late Labour. Voted 'yes' over a week ago.

Dealing with propaganda

The Child Poverty Action Group recently re-released this scatter plot (amended at the y axis after I pointed out their ealier calculation error) depicting the percentage of child abuse in each CYF site office against the rate of benefit dependency in each site office area.

Along the x axis they plotted, "% income-tested beneficiaries in the total estimated population". I argued with them that they should have used income-tested beneficiaries with dependent children if attempting to assess any association between child abuse and benefit dependency. Including everyone on an unemployment, sickness and invalid benefit would skew the result in my view.

To make my point I requested the relevant data from MSD.

Here's the result.

Below, in the first graph, I have used the CPAG data (available at their appendices) and recreated their scatter plot (the pattern is naturally identical to the one above).

In the second graph I have used the same CPAG data for child abuse (Y axis) but entered the new income-tested beneficiary with dependent children as a percentage of the 18-64 year-old population data (X axis).

As expected the correlation has strengthened markedly.

CPAG has tried very hard to downplay the association between child abuse and benefit dependency going so far as to state in the same report, "The data suggests there is no correlation between benefit receipt and child maltreatment." (p2)

Make your own mind up.

But also ask yourself why they would do this.

CPAG believes that children are poor because benefit payment rates are too low. They cannot accept there is anything inherently problematic with being on a benefit long-term barring children don't receive enough income from the state. If the public starts to believe that benefit dependency is a significant risk for children then CPAG is in trouble. And so are the electoral chances of the Greens and Labour, both promoting higher benefits.

NewstalkZB tomorrow

On NewstalkZB tomorrow after the 10am news with Justin du Fresne talking about welfare, social issues and the stuff I generally blog about.

Another good graphic from Statistics NZ

Another good graphic from Stats NZ showing how much we are spending on certain commodities when comparing 1974 with 2013:

Click here for enlarged view

Quote of the day

This moved me, particularly the second sentence.

The State never intentionally confronts a man’s sense, intellectual or moral, but only his body, his senses. It is not armed with superior wit or honesty, but with superior physical strength. I was not born to be forced. I will breathe after my own fashion. Let us see who is the strongest.

-- Henry David Thoreau, “Civil Disobedience” [1849]

Hat tip FFF

And as I check the link another excellent read appears:

Defenders of the welfare state argue that its purpose is implied in its name: providing for the welfare of its citizens. That is done by the judicious transfer of resources to ensure that even citizens on the lowest rung of the socio-economic ladder have access to the material resources necessary to lead minimally decent lives. The problem is, once you look at actual political outcomes a little more closely, they do not resemble the intentions of the welfare state’s defenders.

 In the United States, very little wealth is transferred from those fortunate enough to live in abundance to those unfortunate enough to have little. For example, some of the chief recipients of transfer payments in the United States are the elderly — those who are most likely to have amassed significant wealth and comfort over the course of their working careers; and the source of the transfer payments is largely the young — those who are just starting out on their careers and have little income or wealth to their names.

I'd take issue with that specific example but the point he makes is otherwise valid. There is a great deal of 'churn' from the haves to the have-nots whose degree of economic separation isn't great. Which only serves to create power and control for bureaucrats.

Tracking the life-cycle of the welfare state

Thanks to Steve Wrathall on Whale Oil who drew my attention to this illustration:

If you think this is only a contemporary observation, past welfare states (eg legislated parish-collected compulsory tithing) exhibit the same life cycle.

"Beyond Beveridge"

New work from Peter Saunders who provided advice to the Welfare Working Group:

A new Civitas book proposes a sweeping overhaul of the benefits system which would see National Insurance abolished and replaced with a system of personal welfare accounts that would put the contributory principle back at the heart of social security. The accounts could be used for saving, insurance and even loans - helping people spread the costs of unemployment, parental leave, higher education and old age across their lifetime.

Of course people would be compelled to contribute to these accounts which finds disfavour with libertarians.

My position has always been I'd rather be compelled to provide for myself than compelled to provide for someone else.

Beyond Beveridge can be found here. No, I haven't read it yet. And at 179 pages I probably won't.

But here's the plan for people interested in how we get there from here (given NZ's social security set up is similar). It sounds Roger Douglasish in the detail:

1. Wind up the National Insurance system:

The employee 12 per cent contribution should be added to

the basic income tax rate making a new basic rate of 32 per

cent (with appropriate adjustments for older workers, the

self-employed and people receiving income from savings

and pensions). The higher tax rate should rise to 42 per

cent to take account of the two per cent NIC levied on

earnings above the upper earnings limit. The 13.8 per cent

employers’ NICs should become a Payroll Tax.

 

2. Establish entitlement to the new state pension through

residency

Scrapping NICs means new eligibility rules are needed for

the state pension. Eligibility should depend on 10+ years

of residency in this country. Pension Credit should be

abolished.

3. Phase in a state pension means-test for new retirees

Over the next 40 years, if NICs are abolished now, the

contributory component of people’s state pensions will

gradually get smaller, and the taxpayer-funded component

will get larger, until eventually the whole of every state

pension claim will be funded out of tax revenues. The tax-

funded component of state pensions should be means-

tested. 

 

4. Freeze current National Insurance entitlements and recognise

them as government debt

Entitlements based on contributions up to the time National

Insurance is scrapped should be honoured by freezing

people’s NIC records, indexing their existing entitlement

to take account of inflation, and paying this amount as a

weekly or monthly pension from when they retire. The

future cost of these payments (currently estimated at £3.8

trillion) should be explicitly acknowledged as part of total

public sector borrowing. 

 

5: Make membership of workplace pension schemes compulsory

The right of workers to opt out of workplace pensions

should be ended. With a means-tested state pension, saving

in private retirement accounts has to be made compulsory

to minimise moral hazard. 

 

6. Boost personal retirement savings accounts

Minimum contributions into the new workplace pensions

schemes add up to 11 per cent of salary (combining the

employee’s and employer’s contribution, and adding the

value of government tax relief). This is too low to guarantee

self-reliance in retirement. Contributions should be boosted

by reducing the government’s tax-take from employees and

employers. In particular, savings accruing from means-

testing the state pension should be used to reduce the employer Payroll Tax from 13.8 per cent to 12 per cent (switching the 1.8 per cent reduction into an enhanced

employer contribution to workplace pensions), and the basic

rate of income tax for employees from 32 per cent to 30 per

cent (switching the 2 per cent reduction into an enhanced

employee contribution to the workplace pension). This

would take the minimum total contribution into workplace

pensions to almost 15 per cent. Proceeds from privatisation

of Royal Mail and the state-owned bank assets should also

be used to boost workers’ pension accounts. 

 

7. Gradually extend the permitted uses of workplace pension

funds to develop them into personal welfare accounts

Contributory unemployment and sickness benefits should

be scrapped two years after NICs are ended (all claimants

would then get the non-contributory Universal Credit).

At the same time, people should be allowed to use their

personal welfare accounts (or borrow against them) to

provide a benefits-level income for the first 6 months out

of work, during which time there should be no conditions

applied to them. Existing and future student loans should

be integrated into personal welfare accounts and, over

time, accounts should be further extended to cover periods

of parental leave to care for children and basic insurance

against old-age care costs. 

 

8. Apply activity conditions to receipt of working-age benefits

Unconditional support for people who cannot be expected

to work (severely disabled people and single parents with

infant children under one year) should continue, but for

those who are capable of working full- or part-time, and

who cannot support themselves from their own personal

welfare accounts, fairness requires that appropriate work-

based activity conditions should be attached to receipt of

state benefits. No activity conditions should be attached

to jobless people drawing on their own personal welfare

accounts

CPAG make me choke

I am "stunned" by the audacity of the Child Poverty Action Group in their comments about the error in CYF data collection and reporting.

Child Poverty Action Group researcher Donna Wynd said she was "stunned" to learn of the massive under-reporting.

Wynd has recently  (inadvertently?) been involved in her own case of massive under-reporting.

In their latest analysis of CYF abuse data, the percentage of children with a substantiated finding of abuse living in each site office area was under calculated by 10 times.

Originally their report stated, '...the proportion of 0-17 year olds who were victims of abuse in Papakura was not 4.0% but 0.40 of 1%.' "

In fact the proportion was 4 percent (608 distinct cases in an estimated 0-17 population of 14,413). The flawed methodology was repeated for every CYF site office recorded.

Then they calculated the rate of benefit dependence using the total population rather than the relevant 18-64 population resulting in another "massive under-report".

Ministry chief executive Brendan Boyle said data from 2011 onwards was affected. "The initial review of data shows a margin of error mainly around 2 to 3 per cent, up to 8 per cent."
Donna Wynd of Child Poverty Action said: "All they're doing is keeping a tally. How you can make such a simple error?"

Goodness Donna. So much charity.

Finally, even the Herald on Sunday account is ironically a "massive under-report",

Child, Youth and Family is to reveal this week the true extent of abuse, after finding it has been under-reporting notifications by as much as 8 per cent. The number in the past year is believed to be between 1,000 and 4,000 more than the 49,398 reported.

From memory (the data is currently off-line) there were 121,000 notifications in the last year available. 49,398 will refer to those requiring follow-up I imagine. The actual number of substantiated findings in 2011/12 was 21,526.