The Wellbeing Budget

Child Poverty Report

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What are we doing to reduce child poverty?

This Government has already implemented a number of policies to reduce child poverty. Some of these initiatives are designed to directly impact children living in poverty by putting more money in the pockets of parents. Others have a more indirect impact and are designed to ease the pressures faced by families – such as changes to health, housing and education settings. Wider economic policy settings implemented by this Government will also have a positive impact on reducing child poverty numbers.

In order for an initiative to have a discernible effect on measured child poverty rates, it needs to improve the resources available to families living in poverty – either by increasing incomes, reducing housing costs, or reducing other demands on household budgets.

But it’s important that we don’t become too fixated on the 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 the families and children living in poverty. Initiatives can reduce

the depth and severity of poverty itself. Others, such as education and health initiatives, can address some of the related challenges faced by families and children living in poverty, by mitigating the consequences of poverty and disadvantage.

Table 5 – Policy changes intended to reduce child poverty

Directly impacts the incomes of parents of children in poverty

The Families Package, implemented from July 2018:

  • increased the Family Tax Credit
  • increased the Accommodation Supplement
  • introduced the Winter Energy Payment for those on a main benefit and people who receive Superannuation or a Veteran's Pension
  • introduced the Best Start payment for all families in the first year, followed by two more years of support for middle- and low-income families.

The package will increase the incomes of around 384,000 middle‑ to low‑income families with children, on average, $75 a week once it is fully rolled out.

Total investment of $5.5 billion over four years

Budget 2019 includes further changes to income support settings that will impact child poverty, including:

  • the indexation of all main benefits to average wage growth
  • increasing the amount that beneficiaries can earn before their benefit reduces
  • removing the penalty for sole parents who don’t identify the other parent and/or don’t apply for child support (section 192).

Ministry of Social Development (MSD) modelling indicates that approximately 146,000 families with 269,000 children will benefit from this investment.

Total investment of $535.1 million over four years

Other changes designed to ease the pressures faced by families

In Budget 2018 we:

  • expanded school‑based health services in decile 1‑4 schools, and free and low‑cost doctors' visits for children under the age of 14
  • expanded Housing First, public housing and transitional housing
  • began improving the affordability and availability of housing through KiwiBuild
  • continued funding KickStart and KidsCan
  • provided a clothing allowance for children whose caregivers receive an Orphan’s Benefit or Unsupported Child’s Benefit.

Other changes designed to ease the pressures faced by families

In Budget 2019 we are:

  • helping parents with education costs by providing increased funding for decile 1-7 schools that agree not to request donations for parents, and removing NCEA fees
  • further expanding school-based health services in decile 1-5 schools
  • continuing funding for KickStart and KidsCan
  • working to tackle homelessness, including through further investment in transitional housing and Housing First
  • supporting increasing incomes through meeting minimum wage obligations
  • supporting people into sustainable employment through increasing the capacity of the Ministry of Social Development’s frontline workforce.

Other changes implemented by this Government include:

  • improving the quality of housing and conditions for renters by implementing the Healthy Homes Guarantee Act 2017 and through changes to the Residential Tenancies Act 1986
  • reviewing the price of electricity for households and investigating whether the prices paid are fair, efficient and equitable
  • reducing problem debt, by introducing legislative measures to stop predatory lending.

Changes to wider economic policy settings that will affect child poverty and intergenerational cycles of poverty

We are committed to:

  • working toward reaching an unemployment rate of 4 per cent in our first term
  • improving pay and conditions for New Zealand workers through Fair Pay Agreements, minimum wage increases and pay equity
  • improving employment opportunities and outcomes, including the following in Budget 2019:
    • Improving Māori Labour Market Resilience – Expanding the Cadetships Initiative to Improve Employment Outcomes – $6 million
    • Expanding the Pacific Employment Support Service to Reduce the Rate of Pacific Young People Not in Employment, Education or Training – $14.5 million
    • He Poutama Rangatahi – Continuing to Reduce the Rates of Māori Rangatahi who are not in Employment, Education and Training – $26.5 million
    • Mana in Mahi – Employment Programme to Support Successful Transition into Sustainable Work – $49.9 million

A fuller list of the Budget 2019 initiatives that may affect child poverty is included at Table 5 at the end of this report. There are also a number of Budget 2019 initiatives that are unlikely to materially reduce poverty in the short to medium term, but which should nonetheless have a positive impact on the wider wellbeing of some children living in poverty and may also help break cycles of disadvantage and intergenerational poverty over the longer term. These include initiatives related to child development, whānau wellbeing, mental health, prisoner reintegration, child protection and family violence.

While we are committed to reducing child poverty and improving child wellbeing, we also have to balance this focus with other priorities. At times this could mean implementing policies that might not impact positively on reducing child poverty in the short term. The increase in Petrol Excise Duty may increase some families’ costs if there are no offsetting factors. The impact of this on child poverty has not been modelled. In the longer term, transport costs for families could come down owing to the resulting investment in roads, rail and public transport.

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