How do we measure child poverty?
The Child Poverty Reduction Act 2018 (the Act) specifies ten 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 - no single measure tells us the complete story of child poverty on its own. Positive movement on all these measures means real progress for our children.
There are three primary measures of child poverty for which data is available, and six supplementary measures. 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 is a non-income measure and relates to material hardship. Persistent poverty is the fourth primary measure, targets for which are required for and after the financial year commencing on 1 July 2025.
Table 1 - The primary measures of child poverty
|Low income, before
housing costs - moving- line measure (BHC50) *
|Low income, after
housing costs - fixed-line
|What are we measuring?||A measure of the number of children in households with much lower incomes than a typical household.||A measure of the number of children in households with incomes much lower than a typical 2018 household, after they pay for housing costs.||A measure of access to the essential items for living.|
|How do we measure it?||The threshold line is 50 per cent of the median household income in the year measured.||The threshold line is 50 per cent of the median income in 2017/18, after housing costs are removed.||The threshold line is a lack of six or more out of the 17 items in the material deprivation index.|
it tell us?
|How households with low incomes are doing relative to other households.||
How households with low incomes are doing relative to previous years.
How much housing costs impact the money available for other budget items.
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.
* BHC50 = before housing costs, 50 per cent of the median
** AHC50 = after housing costs, 50 per cent of the median
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 (HES) and make a number of other improvements to its data and methods. The 2018/19 HES was the first year these improvements were implemented, and the impact can be seen in the most recent child poverty release by Stats NZ, including greater precision around the number of children in poverty on the different measures, and the ability to report on rates of child poverty by ethnic groups and regions.
As a consequence of COVID-19, Stats NZ ceased face-to-face statistical data collection across a range of surveys, including the Household Economic Survey (HES) for 2019/20. Stats NZ is working through the implications of this for child poverty reporting, and whether there are any implications for the next scheduled reporting on the rates of child poverty in early 2021, as well as for rates in subsequent years.
The Act requires the Government Statistician to report on persistent child poverty, including developing a definition and setting targets, from the 2025/26 financial year. In Budget 2020, we have set aside $22.1 million over the forecast period for Stats NZ to develop and implement a child poverty persistence measure.
-  Items include 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; 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; feeling limited by available money; being able to pay for an unexpected and unavoidable expense of $500 within a month without borrowing; 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.