Annual cost of child poverty up to $8.8 billion

Public Health Association media release

Embargoed until 12.30pm Tuesday 4 September 2012

Child poverty could be costing New Zealand as much as $8.8 billion each year, with 75 percent of that cost avoidable, the Public Health Association Conference at Pipitea Campus, Victoria University, Wellington was told today.

Independent researcher John Pearce, who spent two years studying child poverty in New Zealand, said around 200,000 of our children grow up in poverty. This can mean in poor and often crowded housing, lacking sufficient food, and having inadequate health care. Most importantly, growing up in poverty can affect children’s early learning, and long term educational outcomes.

Mr Pearce said, “No one disputes child poverty is an important and difficult problem, but so far no one has added up the national economic cost of our current policies on child poverty.”

Mr Pearce estimated what child poverty costs the country each year in four key areas: poor education and its impact on productivity ($2.2 billion), health ($3-$4.5 billion), crime ($2.2 billion) and social welfare ($1.4 billion).
Combined, these figures put the cost of child poverty at around $8-$10 billion annually, approximately 4.5 percent of our GDP.

“Estimates of the costs of child poverty will never be exact,” said Mr Pearce who carried out the research pro bono with Auckland Thinktank Analytica.

“What is needed is a much more in-depth analysis by the government to make the real costs of child poverty known. It’s within our power to change, and should be a top national priority. All that’s needed is leadership and motivation.

“Child poverty has an even greater impact on our GDP and national productivity than global warming, and for every child that is neglected or abused, there are five who live in poverty.”

Mr Pearce said there are a number of key social and policy changes that would go far in reducing child poverty and its cost to the taxpayer. These included tax-system review to reduce inequalities and create more sustainable jobs, reducing housing costs, better systems to identify at-risk children and improving education for future parents about child development.

“Reducing child poverty could save the country up to 75 percent of that $8.8 billion, which would make everyone, but especially our children, better off, not just in childhood but for life,” he said.

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