For the poorest 5 percent of families with children in private dwellings, about half were unable to afford two pairs of shoes per child. Photo: 123rf
Claims New Zealand has "a high rate" of child poverty does not square with international data, but having 130,000 children in material hardship is still too high, a new report says.
The Child Poverty in New Zealand report, was written by Bryan Perry for the Ministry of Social Development.
The report was initially planned to for publication in March, but Perry told RNZ it was delayed after they decided to make it much more comprehensive and to share some of the data being compiled with Stats NZ.
He said data for a breakdown of data in six areas of Auckland and looking into the living standards of each also did not become available until September.
"These all pushed the delivery time out. We are aiming at mid-2023 for the next one."
Hardship rate declines
The report found New Zealand's rate of material hardship for children in 2020 - 11 percent - was the middle of the range when compared to 25 European countries.
This rate had fallen in the three years from 2017 from 13.5 percent to 10.6 percent, compared to a fall in Europe from 12.3 percent to 10.3 percent.
For the poorest families (those in the 5 percent band at the bottom of the material wellbeing index):
- 78 percent delayed replacing or repairing damaged appliances "a lot" to keep costs for other basics down
- 64 percent reported putting up with feeling cold "a lot" to keep costs for other basics down
- 58 percent did not have daily access to fresh fruit and vegetables
- 49 percent did not have two pairs of good-condition shoes
- 42 percent reported going without music, swimming, kapa haka or similar lessons "a lot"
- 37 percent reported limiting sport engagement "a lot"
The report noted that most of those who experienced severe hardship were likely to remain there for some time, and even if all those identified in that 5 percent band above were in such straits "for 'only' 12 months, then experienced good improvement, this is still a state-of-affairs that the bulk of New Zealanders would find unacceptable".
Sole parent households - which New Zealand also has a higher proportion of than many EU countries - were more likely to be worse off, with 29 percent in hardship on the 2020 numbers. This was down from 34 percent in 2017 but still well above the EU median of 19 percent.
About 70 percent of households were two-parent households, with 15 percent single-parent homes and 15 percent in other multi-adult homes, which would include sole-parent families living with others.
Rates were also affected by ethnicity, with Māori (23 percent) and Pacific children (28 percent) much more likely to be affected than European (10 percent) or Asian families (6 percent). The report noted this difference was "much the same as in previous MSD reports".
The proportion of households with dependent children relying on two parents in full-time work continued to increase, 2021's numbers bringing it up to 49 percent of all households, and about three quarters of two-parent households.
The report also found the more children a family had, the more likely they were to face material hardship.
New Zealand legislation aims to bring material hardship rates for children down to 6-7 percent by 2027-2028.
Photo: Child Poverty in New Zealand Report / Bryan Perry / Ministry of Social Development
Doesn't reflect Covid, cost of living crisis, the homeless, or emergency housing
The report has some serious limitations.
It noted the findings were from interviews spread across a 12-month period, and the interviews related to the 12 months prior to the interview - meaning the information could be referring to situations across a nearly two-year period.
This meant the 2020-21 data did not "reflect the full net impact of Covid on the one hand and government actions to mitigate the impact on households on the other".
Perry told RNZ policy changes like the increases to main benefit rates, the Working for Families changes, minimum wage increases, and indexation adjustments to support payments could help, but it would be "not possible to estimate the impacts" of Covid until Stats NZ released the 2021-22 Household Economic Survey (HES), due in February.
Crucially, it also gathered information from people living in private accommodation. This would include owned homes, rentals and retirement villages - but not rest homes, hotels, boarding houses, those in more transient housing or living rough.
The survey noted this did not mean it did not reach households with severe hardship or very limited finances, but acknowledged other surveys would be needed to address people in those situations.
Comparisons with EU countries excluded some of the smallest - like Malta and Luxembourg - along with Bulgaria and Romania, which had a much lower general standard of living than New Zealand or the other EU countries.
This report is the second of its kind and offers a much broader range of historical data - covering hardship rates dating back to 2007, and low-income rates back to 1982 - than the previous edition. It also considered housing affordability measures, and a more detailed breakdown of the data about those in the deepest material hardship.
Perry notes it partly overlaps with the Stats NZ Child Poverty Statistics report from February, but is intended to complement it by focusing more on long-term trends, international comparisons and policy implications.
Clearing up misconceptions
The report had a section specifically dedicated to three common misconceptions about child poverty in New Zealand.
First, while many commentators have claimed New Zealand has a high rate of child poverty, it said New Zealand ranked only slightly above the median on international league tables.
It said this could be in part because statistics typically used for New Zealand tended to measure rates of poverty after household costs were accounted for, and this may have been compared to international measures which did not - kind of like comparing (international) apples with apples that already had a bite taken out.
Perry noted that New Zealand should still aspire to do better than having 11 percent of families - 130,000 children - in material hardship, and aim to be more like the high achievers.
Second, it noted previous claims that one in five New Zealand children did not have a waterproof coat or shoes in good condition had incorrectly assumed that all children in the 'income poor' category lacked such things.
Finally, it rejected the assumption that child poverty was closely linked to beneficiaries, and claims work was the best way out of poverty.
"Even the more nuanced 'work is usually the best way out of poverty' is misleading," the report said. "For many households, full-time paid employment on its own does not provide enough for the household even at a very basic level, especially where there are children."
Perry told RNZ poverty was multifaceted and the narrative was hard for people to get their head around, and common misconceptions could get in the way of clear thinking and productive discussion.
"MSD reports regularly have a 'misconceptions' section to try to reduce the 'noise' for public discussion and policy development. The three in the current report have a particular relevance to child poverty," he said.
The report also noted poverty relative to median incomes (excluding household costs) could be expected to increase if high inflation continued: an increasing wage gap for the poorest households.
Poorer households also tended to spend a much larger proportion of income on housing, with rent making up more than 40 percent of costs for many in the lowest-income group of households with children. Average housing costs as a proportion of income were 22 percent based on the 2021 data, compared to 15 percent in 1988.
A key theme identified in the report was that hardship and income were not always so closely aligned, with liquid assets - savings and accessible investments - playing a role too.
Some low-income households were for instance able to rely on past savings, lack of debt, or accumulated goods and appliances. Equally, some higher-income households also fell into hardship because of higher demands like health-related costs or debt; or a change in circumstances like a relationship breakup, or previous long-term reliance on a low income.
Data for 2018, 2019 and 2020 showed while hardship levels for poorer families decreased, hardship levels for families with higher incomes increased, but in the 2021 data, hardship levels decreased for both groups.
Working families account for half in hardship
Hardship rates for children in families where at least half their income was from a benefit was also four to five time higher than families with at least half of income coming from employment.
However, because many more families overall relied primarily on employment, the total number in hardship relying on a benefit was about the same as the total number in hardship relying on employment.