Why not just fix child poverty? Fabian Society 30 th August 2010 1 Susan St John
Where did child poverty come from? 1970s old age poverty • National Superannuation • 1979 child benefit $6
1980s – rise of family poverty • Rising Unemployment • Family assistance not indexed Wages and the Poor_ Brian Easton 1986 Poor New Zealand Charles Waldergrave 1987 4
1991 mother of all budgets Family benefit abolished Family Support per child per week payment Reduces as income increases
Proportion of children below selected thresholds (AHC): fixed line (CV) and moving line (REL) MSD 2010 60% 60% 2007 CV Constant value (CV) or 'fixed line' thresholds are based on the 2007 BHC median and Proportion of population below thresholds 60% REL adjusted forward and back with the CPI. 50% 50% 2007 CV 50% REL 40% 60% 30% 20% 50% 10% 0% 1980 82 84 86 88 90 92 94 96 98 00 02 04 06 08 2010 HES year
TODAY Despite strong economic growth Despite Working for Families…
2009 between 170,000 and 270,000 children were in households with incomes below the low- income thresholds (ie ‘in poverty’) MSD 2010
Third world diseases Professor Innes Asher Starship hospital
Food parcels provided by Salvation Army foodbanks 2005-09 14,000 12,000 Numbers of food parcels provided 10,000 8,000 6,000 4,000 2,000 0 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Quarter ended
MSD Survey of 2008 living standards 19% children still live in serious or significant hardship- MSD 2009 “They are without a doubt … experiencing serious hardship and unacceptably severe restrictions on their living conditions for citizens in a developed nation like New Zealand.” MSD 2009
E2.4 Distribution of ELSI-3 by income source (2008) 50 46 40 Population percentage 30 26 26 25 23 21 20 19 20 18 14 10 10 10 10 10 6 5 4 3 2 2 0 0 Income-tested benefit Market <65 65+
By ethnicity, 2008 40 30 30 Population percentage 28 27 24 24 23 21 21 20 20 20 19 19 18 17 15 15 14 13 13 13 13 12 11 10 10 10 8 8 7 6 6 5 4 4 3 2 0 European Maori Pacific Asian Other
Beneficiaries by presence of children (2008) 40 30 30 Population percentage 24 22 22 21 20 18 17 15 11 10 10 7 3 1 0 0 No children With children
Role of WFF Family Tax Credit In Work Tax Credit Minimum Family Tax Credit Parental Tax Credit
FTC 2.06 B IWTC 0.59B Total WFF $2.6B
In Work Tax Credit • Part of family assistance • Requirement of “off benefit” • Required number of hours – 20 sole parent – 30 couple 18
Problem - there were two objectives for the In Work Tax Credit • Reduce child poverty • Encourage work effort Does neither well entrenches poverty of the poorest limited impact on target group May allow mothers in higher income families to work less 19
Impact on sole parents Domestic purposes beneficiaries, January 2000 - December 2009
Impact on poverty? Child Poverty Rate fell but… “WFF had little if any impact on the poverty rates for children in workless households” MSD 2010
Who was left out? Why have we not been concerned about those left out ?
Sorry record of Family assistance • Family benefit and Family support • 1991 Family support • 1996 Family support increased by $20 but $15 as marked off for those independent of the state
The beginning of gap 24
And what did Labour say in 1996? What this Government has done is create two classes of children: the children of beneficiaries and the children of people in work. We have never had a public policy that labels children and put value on a child whose parents have a job and a lesser value on a child of a person who is on a benefit. But that is exactly what this Government has done with its announcement. If one is the child of a beneficiary, one is not as valuable as the child of a working person. Annette King 1996 MP 25
What did Labour said in 1996 - 2 It is no wonder that we do not value the work that is done in our homes, because we dismiss it and give it no economic value at all. That is disgusting. To divide children into those whose parents are good parents because they work and children who are bad because their parents do not is absolutely disgusting. Annette King MP 26
• “a simplistic tangle of bigotry and ignorance … barely disguised attack on beneficiaries … mean spirited, ill thought through and punitive … unholy product of National’s deeply held view that everyone on a benefit is a bludger and Treasury’s new right agenda … based on highly questionable incentives arguments.” Hon Michael Cullen 27
Max family assistance 3 child $2004 240 220 Family Support Family assistance w ith CTC and 200 IWP 180 Family Support 160 140 120 100 80 1986 1989 1992 1995 1998 2001 2004 2007 28 years ended March
The fallacy of independence In Work Tax Credit Family Assistance Guaranteed Minimum Family Income Tax Credit EMTR=100% Net earned income
My challenges Why have the left ignored this issue? • Is it too difficult? • Is it too political?
Too difficult?
• Too political? 3 2
Then in 2005 Abatement of family assistance pushed further up the income scale, at lower rate providing a higher EMTR for some women in higher income families. Cost $500m but the poorest children got 33 nothing
The Human Rights Review Tribunal
Is it because we have all been contaminated by the market ideology Work is the way out of poverty You have to make work pay There must be gap
Gap partly due to lower benefit % wages 36
Work incentive aspects associated with Working for Families 2005-2007 • Lower core benefits • Lower hardship assistance • Lower abatement of family assistance/ higher threshold • Exclusion from IWTC • Extended use of the guaranteed floor of the Minimum Family Tax Credit • Enhanced case management • Strong economy Rise in minimum wage 37
Is it latent misogynistic thinking? • You cant support women on benefits because they will simply breed more- pay to breed • The DPB pays women to leave their husbands • Women need to be kept under • They are lazy – watch TV all day • Child rearing is not proper work
Or is it A lack of empathy with the child‟s perspective • – Insulation from the realities of families – Lack of imagination – Generation of older men protected from playing a more equal role in child rearing- do not understand the importance of nurturing especially until age 3
What has been the cost to „non - deserving ‟families Since 1996 each year there has been a cumulative loss from poor families’ balance sheets $2.25B due the CTC 1996-2006 $2.25 B due to IWTC 2006-2010 $4.5 Billion and rising
Why is a call for a universal child benefit the lazy answer? 1.07 m dependent children • Pay additional $30 per child per week…costs $1.7B • If we abandon the IWTC the cost is still $1.1B • If we make part of WFF universal – it costs a fortune and does not impact on the poor • If we get rid of WFF could give every child only $50 a week
Cost-effective answer incorporate the IWTC with FTC Treat all children the same - cost $450m - Dramatic impact on child poverty but just the start of what needs to be done
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