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Govt optimistic it will meet initial child poverty targets

By Pattrick Smellie

May 30 (BusinessDesk) - The embryonic nature of the government’s approach to policy-making focused on ‘well-being’ is writ large by the fact that the 2019 Budget contains just two new metrics for measuring success.

However, the direction of future activity is clear and the Treasury gains a $20 million funding boost to allow it to accelerate development of the Living Standards Framework that will form a key part of the way future governments will be judged on performances in national wellbeing.

And for the first time, the Budget documents include a separate Child Poverty Report, based on the requirements of child poverty legislation passed last year.

The report revolves around three key metrics of progress:

• The number of children living in poverty before housing costs are taken into account

• The number of children living in poverty after housing costs are taken into account

• The number of children living in households experiencing ‘material hardship’.

However, only the first two metrics are capable of being modelled, at this stage, the child poverty report says.

That modelling estimates that the government should be on track to meet its first set of targets for reducing the numbers of children living in poverty both before and after housing costs.

According to the 2017/18 baseline for before housing costs poverty (BHC), some 16.5 percent, or 180,000 children were living in that definition of poverty. On an after-housing costs (AHC) basis, some 22.8 percent, or 250,000 children, were living in poverty.

In 2020/21, the formal targets are to reduce the BHC cohort to between 10.1 percent and 12.7 percent of children. Treasury projections suggest it will come in at around 11 percent, within the targeted band.

On an AHC basis, the estimates suggest the government may squeak into its target range of between 15.2 percent and 18.6 percent of children living in poverty, which would reduce the total of 250,000 children living in poverty to between 172,000 and 212,000 children in those circumstances.

However, the report says that the target of reducing the numbers of children living in material hardship – a measure based on children who lack six or more of 17 indicators of material wellbeing – is unable to be modelled at present.

By 2028, the government is targeting 5 percent of children still in poverty on a BHC basis, 10 percent on an AHC basis, and 6 percent in material hardship.

The Well-Being Budget main narrative says that ongoing government intervention to assist people on the lowest incomes is almost inevitable in a country “experiencing broadly favourable economic conditions and wage growth”.

That’s because “the general pattern is for incomes in the middle of the income distribution to increase at a slightly faster rate than incomes at the bottom”.

As a consequence, without specific government intervention, rates of child poverty on the moving-line measure will generally gradually increase over time.”

The Budget also acknowledges that other priorities won’t always assist wellbeing for low income households and singles out the imposition of additional fuel excises to fund Auckland public transport initiatives as an example.

However, the Treasury has not tried to include that additional cost in its modelling, while the Budget suggests that “in the longer term, transport costs for families could come down owing to resulting investment in roads, rail and transport”.

Elsewhere, the Budget acknowledges that the Treasury’s LSF work is “a first version and further work is needed to ensure future versions improve known gaps and limitations” and “look for opportunities to increase alignment” with a national indicators dashboard being developed by Stats NZ.

The Budget acknowledges it is “too soon to tell” whether the new focus on collaborative policy-making that constantly assesses well-being impact is succeeding and warns that it is “important we don’t get too fixated on targets alone”.

“Some initiatives may not affect the headline numbers on the primary measures but will still make a material difference to the lives of children and families living in poverty.”


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