A Secure Future

What progress has been made in reducing child poverty?

The Government has achieved two out of the three of the first three-year child poverty targets it has set itself.

In the three years covered by the first set of targets, we introduced a comprehensive range of policies that have been instrumental in improving support to families and whānau and reducing rates of child poverty.

We have lifted incomes through the $5.5 billion Families Package which has benefitted 330,000 families and whānau in the first year of their children's lives, significantly increased main benefit rates and indexed them to average wage growth. We've also introduced measures to support children directly, such as the Free and Healthy School Lunches Programme, and undertaken a range of other of actions focused on helping parents and caregivers to provide children with a good start in life. This has included lifting the minimum wage, supporting people into training and employment, and boosting the supply of affordable housing.

Despite the profound impacts of COVID-19 on the economy and society, the Government's strong public health response and the measures taken to protect the economy and jobs, have helped reduce these impacts on child poverty rates. The Government's Wage Subsidy and other support for businesses supported over 1.8 million jobs throughout COVID-19 to help ensure parents kept their jobs.

We also introduced a number of temporary measures, including doubling the Winter Energy Payment for the 2020 year and introducing the COVID-19 Income Relief Payment. These changes, as well as investments in community services and non-government organisations to provide additional support, along with a residential rent freeze, have all played a critical role in supporting New Zealand families and whānau.

What changes can we see in the targets?

The 2020/21 figures show the full impacts of policies including the Families Package and the April 2020 benefit increase. However, they do not include more recent changes such as the main benefit increases announced in Budget 2021 and changes to Working for Families tax credits announced in November 2021.

The combined measures we have taken have meant that, despite the significant impacts of COVID-19, there are now tens of thousands fewer New Zealand children living in poverty.

Although we achieved a statistically significant reduction in child poverty on the before-housing-costs primary measure, our ambitious target of reducing this measure to 10.5 percent by 2020/21 was not met. This result partly reflects how this is a challenging relative measure, which depends on changes in median incomes as well as low incomes. If median incomes increase in a given year, then the corresponding moving line poverty threshold will increase too. Median incomes in 2020/21 grew by around 5.5 percent, which made it harder to raise low-income households over the threshold.

What are the trends around child poverty for specific population groups?

Stats NZ has been able to produce reliable annual estimates of child poverty rates by ethnicity from 2018/19 onwards, and for children impacted by disability from 2019/20 onwards. Rates for these groups are broadly comparable on the AHC50 primary measure, but there are significant disparities on the material hardship measure and before housing costs income poverty measure.

Māori and Pacific children have experienced higher rates of poverty over at least the last decade.[3] However, because robust year-on-year data on rates by ethnicity and disability have only been available since after the Families Package was implemented in 2018, we cannot know the full progress we have made for Māori and Pacific children and children impacted by disability.[4]

What we do know is that policies like the Families Package and benefit rate increases are likely to have had a proportionately greater positive impact for Māori and Pacific children than for children generally. This is consistent with some of the early signs of progress we are seeing on the AHC50 primary measure.