Wellbeing Budget 2021

Securing
Our Recovery

No single measure tells a complete story of child poverty

The Child Poverty Reduction Act 2018 (the Act) specifies three primary measures[24] of child poverty, described in the table below. The Act also has six supplementary measures.[25] Given the complexity of the issue, it is important that these measures are considered together.

Table 2 - Primary measures of child poverty

Table 2 - Primary measures of child poverty

Income measure:

After-housing-costs, fixed-line measure

AHC50

What does this measure?
The number of children in households with incomes much lower than a typical 2018 household, after they pay for housing costs.

How do we measure it?
The threshold line is 50 percent of the median household income in 2017/18, after housing costs are removed.

What does this tell us?
How many households have very low incomes relative to previous years, after considering housing costs and increases to the cost of living.

What are our goals?

In 2017/18, 22.8 percent of children were living in poverty on this measure.

Our goal is to reduce this to 10 percent of children by 2027/28.

Our intermediate target is to reduce this to 18.8 percent of children by 2020/21.

Income measure:

Before-housing-costs, moving-line measure

BHC50

What does this measure?
The number of children in households with much lower incomes than a typical household.

How do we measure it?
The threshold line is 50 percent of the median household income in the year measured.

What does this tell us?
How many households have much lower incomes than other households. An increase in median incomes leads to an increase in the threshold, which can make it harder to lift households out of poverty.

What are our goals?

In 2017/18, 16.5 percent of children were living in poverty on this measure.

Our goal is to reduce this to 5 percent of children by 2027/28.

Our intermediate target is to reduce this to 10.5 percent of children by 2020/21.

Non-income measure:

Material hardship

What does this measure?
A measure of access to the essential items for living.

How do we measure it?
The threshold line is a lack of six or more out of the 17 items in the material deprivation index, which include things like having two pairs of shoes in good condition and not putting off visits to the doctor.

What does this tell us?
Directly measures living standards and the number of households going without the basics. This measure 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.

What are our goals?

In 2017/18, 13.3 percent of children were living in poverty on this measure.

Our goal is to reduce this to 6 percent of children by 2027/28.

Our intermediate target is to reduce this to 10.3 percent of children by 2020/21.

Notes

  • [24]Persistent poverty is the fourth primary measure. Targets are required for this measure from 2025/26.
  • [25]BHC60, AHC40, AHC50, AHC60, severe material hardship, and BHC60 and material hardship combined.
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