The Wellbeing Budget

Child Poverty Report

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How do we measure child poverty?

The Act specifies 10 distinct measures of child poverty, including measures related to income and material hardship. Given the complexity of the issue it is important that these measures are considered together. Positive movement on all these measures together will mean real progress for the children of New Zealand.

There are three primary measures of child poverty for which data is available, and six supplementary measures (see Table 3). Two of these primary measures are income measures (one moving‑line measure, with the poverty threshold taken the year the data is gathered; and one fixed-line measure, with the poverty threshold fixed to 2017/18). The third primary measure is a non‑income measure and relates to material hardship. In addition, persistent poverty is an upcoming fourth primary measure, targets for which are required for and after the financial year commencing on 1 July 2025.

Table 3 – The primary measures of child poverty

 

What are we measuring?

How do we measure it?

What does it tell us?

Low income, before housing costs – moving- line measure (BHC50)

A measure of the number of children in households with much lower incomes than a typical household.

The threshold line is

50 per cent of the median household income in the year measured.

How households with low incomes are doing relative to other households.

Low income, after housing costs –

fixed-line measure (AHC50)

A measure of the number of children in households with incomes much

lower than a typical 2018 household, after they pay for housing costs.

The threshold line is 50 per cent of the median income in

2017/18, adjusted for inflation, after housing costs are removed.

How households with low incomes are doing relative to previous years.

How much housing costs impact the money available for other budget items.

Material hardship

A measure of access to the essential items for living.

The threshold line is a lack of six or more out of the 17 items in the material deprivation index.1

Directly measures living standards and households going without the basics.

Picks up the impact of the level of income and other resources, the costs of housing and other essentials and other social and personal factors.

Understanding our progress towards reducing child poverty each year relies on good quality data. In Budget 2018 we invested $25.7 million to improve the measurement of child poverty in New Zealand. This funding has allowed Stats NZ to survey more people through the Household Economic Survey and to look into improvements in data methodology and integration. We will see the full results of this investment in our Child Poverty Report in Budget 2021.

The most recent data we have for child poverty reporting is for 2017/18. This is the year prior to the full implementation of our first significant investment to reduce child poverty (the Families Package) and is the base year from which to measure progress on child poverty.

Notes

  1. 1. Items are listed under four categories:
    Category 1 – enforced lack of essentials: a meal with meat, fish or chicken (or vegetarian equivalent) at least each second day; two pairs of shoes in good condition; suitable clothes for special occasions; home contents insurance; the ability to give presents to family or friends on birthdays, Christmas, etc;
    Category 2 – economising behaviours: going without fresh fruit or vegetables; buying cheaper cuts of meat or less meat than desired; putting off visits to the doctor; putting off visits to the dentist; doing without or cutting back on trips to the shops or other local places; putting up with feeling cold; delaying replacing or repairing broken appliances;
    Category 3 – restrictions: feeling limited by available money; not being able to pay for an unexpected and unavoidable expense of $500 within a month without borrowing;
    Category 4 – financial stress and vulnerability: inability to pay electricity, gas, rates or water bills on time; inability to pay for car insurance, registration or warrant of fitness on time; and borrowing from friends or family to meet everyday living costs.

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