What is the impact of COVID-19?
It is too soon to estimate precisely what COVID-19 will mean for all the child poverty measures and targets. An economic downturn can mean different things for different measures, and the results can sometimes be counter-intuitive. The three primary measures specified in the Act cover three different aspects of poverty, and together give a good high-level summary of what is happening in households with children.
Rates on measures of low income with a fixed threshold are expected to increase, as reduced employment and earnings flows through to reduced household incomes for households currently above the poverty lines.
On moving line measures of low income, rates can have more muted increases, show no increase at all, or even sometimes show a small fall, if median incomes fall faster than low incomes. This is because the poverty threshold is set each year in relation to the median, which means that reported rates are influenced by both changes at the middle of the income distribution as well as the bottom.
On measures of material hardship, rates are expected to rise sharply, as previous New Zealand experience suggests that these rates are particularly sensitive to economic changes. For example, rates rose strongly in New Zealand during and after the Global Financial Crisis (GFC), and then over the next few years fell back to their pre-GFC rates.