Child Poverty


Let us fisk

Child poverty is our most pressing social problem. It blights lives.

I’ve never understood the term “Child poverty”. It seems to mean “poor people who have children”.

It sees kids going to school hungry, or not going to school at all.

Given school is free (and compulsory) and breakfast is about the cheapest meal of the day, poverty seems a poor excuse to avoid schooling. In fact, people who are dissatisfied about their poverty should be the people who are making an effort to get their kids an education. At least, that’s the way it used to be.

It results in higher rates of illness. And it permanently reduces its victims’ life-chances, resulting in higher rates of unemployment, mental illness, criminal behaviour.

Translation: being poor is bad.

Yes, I think we call all agree with that. I have a few things to add to that list of “bad things”:

  • Slavery
  • Murder
  • Depression
  • Binge Drinking
  • Abset Parents
  • A culture if irresponsibility
By that last one I mean people who have no incentive to do anything positive whatsoever. Because whatever they do, the state will make sure they have food on their plate and a roof over their heads.

Eliminating it benefits all of us, not just by making this a decent country where no-one starves, but by reducing those costs, which we all end up paying.

Our system means that if someone has a problem, it becomes a problem that every one else must solve for them. That can be good, and it can also be very, very bad.

This morning, the Greens launched their policy to eliminate child poverty. The core problem is income adequacy,

Here we have the astounding observation that poor people don’t have much money.

and they address this by promising to raise the minimum wage to $15/hour,

Let’s stop here and think just a little.

Being poor is a problem. But as I said above, giving people stuff even if they don’t deserve it is also a problem. What we need is a solution that gives people incentives, not yet another handout. A better solution than “no one can be paid less than X” would therfore be a program to assist people on the minimum wage into higher paid work. That may be encouraging them into training, or it may be encouraging them into better attitudes towards work – a good employer won’t keep his most enthausitic employee on the minimum wage.

(Perhaps some work towards good employers would be an idea too!)

The added advantage of such a scheme is that the bar for employment remains low. See, the problem with the minimum wage is that, in order to get a job at that wage, someone has to be convinced that you’re worth that. Therefore by raising the wage, you actually make it harder to get work. So perversely, lowering the minimum wage in certain circumstances may actually lead to more employment and give people a hand up (if they are willing to do the work) – not a handout that people get no matter how they behave.

and universalise Working For Families’ “in-work” tax credit to cover all children.

See this chart. The IWTC $ column is the extra money that this would give. So for a person on an annual wage of $36,000 and say, 5 kids, that’s an extra $90 on top of their existing $332 weekly payment. That’s nice. But hang on – that person already gets hundreds of dollars from Working for Families. It’s a classic bit of left wing spin that most people think that the hundreds of dollars paid out by WFF is only paid to working families. It simply aint so.

What this policy really means is that beneficiaries going into work receive no incentive to do so – and they’re possibly worse off because they have to pay for travel.

So again, we have a case of blindly promoting the payment of more money with scant regard for the consequences.

In other words, unquestionably a bad policy. Never mind how will they pay for it. Remember, there is no such thing as a free lunch.

To help children of parents on benefits (70% of whom are in poverty), they would extend the Training Incentive Allowance, allowing those parents to upskill themselves and improve their employment prospects.

This, I think we can all agree with. Training and education is exactly what is needed here.

I’m idly curious though – why does the In Work Tax Credit have to go to people who are not in work, yet the Training Incentive Allowance only goes to people who are in training?

Never mind.

And to reduce health problems for children in poverty (and everyone else), they would introduce energy efficiency standards for rental accommodation, requiring all rental houses to be warm and healthy.

I’ve used a few time my experience in a South Auckland state housing area. The houses were modern, and I can vouch for the cast iron fact that they were insulated – why? Well, because the house I was visiting had big holes in it’s exterior cladding. The inside was extremely dirty.

I have little doubt that house could have met any standard you would care to name, yet the children that lived there had boils and sores on their skin cause by the way it was run – or rather the way it was neglected.

Yet on the path outside was a state-of-the-art DVD recorder. Broken.

This is what you get when you promote handout, safety net welfare. People with money, and resources but who don’t bother to care for either because it’s not their problem.

Yes, increase standards. Start with state houses – I hear some of them are in diabolical condition.

Also remember that there are already houses for rent that will meet these standards. But the reason why poor people don’t live in them is because they are more expensive to rent. This policy runs the same danger that an increase in the minimum wage does – reducing the pool of affordable housing.

There is no such thing as a free lunch.

This is a good package, which would significantly reduce the problem. It will be expensive, around $360 million a year. But its worth it. According to the Household Incomes in New Zealand report released yesterday, 25% of our children are growing up in poverty. 25%. We’re throwing a quarter of our future society overboard for the selfishness of the rich.

Let’s see if we can follow the logic here:

  1. The Greens have a policy that will cost $360m/yr
  2. That policy is intended to fix child poverty (which affects 25% of children)
  3. Children who grow up in poverty are going to end up thrown on the trash heap
  4. Therefore, if we spend $360m/yr we will fix child poverty and end up with a better society

In short: if we spend just a little more money, we’ll fix the problem.

Sort of sad that he really seems to believe that, isn’t it? But like I outlined above, the problem isn’t just about money. I’ve spent time in South Auckland, and I can vouch for this. The problem is that no matter what they do, the government will bail them out. There’s not enough incentives to get a better life. Even if they trash their houses, they are still housed. Their benefits are paid regardless of what they spend them on, or whether their kids go to school or not.

Do not get me wrong here. The modern welfare system has many good qualities. It does not place people into a life of plenty. Few people would chose to live their life on welfare.

But when the money just comes in, and you have no reason to take any responsibliy, the question becomes – why should I? Once responsibility for other part of life goes away, taking responsibility for children is simply another nuisance that gets in the way of drinking, TV and other idle pursuits.

And the Green policy as presented by NRT takes little account of this. It’s answer is to simply spend more money. Well, we’ve tried that in the past and here’s the funny thing – it doesn’t really work.

Anyone who thinks that is a price worth paying so that people like John Key (who are rolling in it) can pay a bit less tax does not have their head screwed on straight.

A little more money become a little more and a little more, and suddenly we have a really expensive and generous welfare system that is a massive drag on the economy, meaning that more tax must be taken from productive areas and a vicious cycle is promoted, if not implemented.

There’s a sense in which I want the rich to pay high tax rates. Then we can all get lots of that money from the government and have better lives.

If only life were that easy.


  1. I did wonder why only 70% of children in benefit-dependent families are in poverty. Surely their entitlements should be fairly similar? What is it that makes 30% of the children of beneficiaries not be “in poverty”? Better understanding of the system? Better budgeting? Parents who don’t smoke, drink or dope?

    I would think that this statistic alone would give good indication that the problem is a lot more complex than “lack of income”.

  2. I also love the way that it is John Key that is keeping all these defenseless children in poverty ( the evil monster!) Funny how child poverty ( whatever that is) was not eliminated in a decade of Labour government in a time of large surpluses and a booming economy.

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