WelCom News
A newspaper for the Wellington and Palmerston North Catholic Dioceses

Rights body yet to rule on uneven child poverty

The Child Poverty Action Group is still waiting for a ruling on its claim that the government’s Working For Families subsidy discriminates against the children of beneficiaries who are not eligible for the package.

The CPAG took its case to the Human Rights Review Tribunal in June and the hearing finished nearly two months ago on July 18.

Sep08Easton1282.jpg Wellington economist, Brian Easton, says there is a three-way split between groups in the community which makes the situation in terms of child poverty difficult to assess.

The government is using the Working for Families package to encourage people back to work so it is discriminating in favour of people with children who are working against people without children. But the CPAG’s case compares beneficiaries with children who are not eligible for the Working for Families package with low-income families with children who do receive the extra boost to their income.

‘It’s a classic piece of distributional economics that, once you have more than two groups, it’s very hard to tell whether things are going to be more or less equal. The CPAG argument is that the law allows discrimination in favour of those who are worse off. But this is a discrimination in favour of those who are better off compared to those with children who can’t or don’t work,’ Dr Easton says.

The problem with using such a policy instrument is that some people simply cannot work outside the home because their children are too young.
‘For a mother with three children under five, going out to work is not a particularly practical option.’

On top of childcare costs, she has costs associated with going out to work—transport, higher clothing costs, feeding, and then the complications of having less time to do anything around the home.

Dr Easton says children are a key common denominator in the statistics of poverty measurement. Since the majority of people in poverty are white, not brown; working, not unemployed; homeowners, not renters—‘virtually every variable we associate with poverty happens the other way and this is because there are about six times as many whites as browns.

‘What is the one thing that characterises the poor? Over 80 percent are children and their parents.
‘New Zealand poverty is about children. It’s quite different from other countries because they tend not to treat their elderly as generously as we do. We have consciously supported the elderly in a way that we haven’t supported the children.’

Sep08Eastongraph.jpg Dr Easton says of the 30 OECD countries on which there are data, New Zealand is 20th in the proportion of children who are in poverty and this situation has been fairly stable since the 1970s ( www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/index.html).
‘So we’ve had now 35 years in which we’ve known that the children are our Achilles tendon and we have not done much about it.’
A policy from 1976 when Sir Robert Muldoon was finance minister in the National Government has ‘influenced enormously’ the direction of social policy.

What is now New Zealand Superannuation was linked to wages and benefits were linked to prices.
This has meant that beneficiaries have received fewer increases than income-earners.

Dr Easton cites the Ministry of Social Policy’s report—Household Incomes in New Zealand: Trends in Indicators of Inequality and Hardship 1982 to 2007—which shows that beneficiaries have had virtually no improvement in their situation for 16 years because the benefit has been linked to prices rather than wages. ‘That’s the one mechanism that is opening up inequality. There is other evidence that it’s closing except right at the bottom where the beneficiaries are. Their standard of living is not rising,’ Dr Easton says.

Productivity has risen ‘quite strongly’ in recent years resulting in wage rises that have not translated into benefit increases.
Dr Easton says the only way the government can boost the standard of living for children is to increase family assistance for all children ‘and of course it would go proportionally and materially to those at the bottom of the heap’.
‘The trouble is that it costs large quantities of money and there’s not much political purchase in it because children don’t vote.’