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Ten actions to reduce poverty in New Zealand

13 September 2012

Ten actions to reduce poverty in New Zealand

The New Zealand Council of Trade unions has released a programme it has proposed to the Government to attack the high levels of poverty in New Zealand. “We presented this to the Minister of Finance four months ago following a discussion about the Ministerial Committee on Poverty”, says CTU Economist Bill Rosenberg.

“Our view is that addressing poverty cannot be done in a piecemeal way. It must recognise that wage levels in New Zealand are unfairly low compared to the income available from the economy’s production. The very unequal distribution of income in New Zealand is the starting point for the development of high levels of poverty. Low wages are a crucial part of that. Over 70 percent of the income going to households with at least one working age member is from wages. Though beneficiaries are the main victims of poverty, two in five poor children come from households where at least one adult is in full-time employment or self-employed.”

However the poverty suffered by beneficiaries must also be addressed. According to the Ministry for Social Development, poverty rates for children in beneficiary families are consistently around 70 percent. Increasing incomes to families reliant on benefits is the single most important way to address poverty, particularly for children. Our benefit levels are low. The MSD says that income tested benefit levels have fallen significantly as a proportion of average earnings since the mid 1980s with the exception of a small increase in 2004-05. Unemployment benefit rates in New Zealand are among the lowest in the OECD as a proportion of average wages.

“It is fine to encourage beneficiaries to work”, says Rosenberg, “but harsh and intrusive measures that force struggling parents to work will only make matters worse for them and their children.”

“Cutting benefits in half as punishment for failure to comply with a government directive will in the end make poor children even poorer”.

The ten actions address wages, benefit levels, good jobs and employment practices, job creation, strong public health programmes and services, low cost good quality housing, improving nutrition and adequate food, improving education and skill levels – and the rewards for them, addressing New Zealand’s high and growing inequalities, and providing quality public services such as health, education, housing and public transport that are significant non-financial checks on the worst effects of poverty and are part of people’s effective income.

“There needs to be a broad range of actions to be effective in reducing poverty,” says Rosenberg. “Piecemeal solutions won’t address the causes which lie in low wages and benefit levels, and not enough jobs.”

Ten actions to reduce poverty in New Zealand


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