Geoff Simmons takes aim at the Government for its 'middle class cheerleading', arguing we are being softened-up for a watering-down of Labour's child poverty reduction goals

By Geoff Simmons*

It appears we are being softened-up for a watering-down of Labour’s target on child poverty.

Their initial plan was to reduce the number of children in poverty by 100,000. Their much vaunted Families Package alone was predicted to reduce poverty by around 88,000 (compared to National’s tax cut package with 50,000). But apparently someone in Treasury got their numbers wrong – the number is likely to be a lot lower (they don’t know how much yet).

Depending on how you measure it, there are between 150,000-300,000 children in poverty at the moment. The target of 100,000 looks a long way off, and there isn’t much moolah left in the kitty.

The hidden message here is clear; sorry but this is all a lot harder than it first looked. We are doing our best, but reducing child poverty will take a fair bit longer than we thought.

Of course this is complete poppycock. In Government anything is possible. It is simply a question of priorities. And clearly, like the last Labour-led Government, poverty isn’t as much of a priority as they like to claim it is.

Let’s look at the legacy of the last Labour-led Government. They came into power promising to ‘Close the Gaps’, but on their watch the gap between rich and poor, by most measures, stayed the same. No gap was closed.

Some may claim that simply holding the line is a feat unto itself, so let’s look at what they actually did. Their big ticket items were interest free student loans and Working for Families. Both of these were essentially middle class welfare and offered little for the truly poor. Sure they taxed high income earners more, but that only served to push people towards storing their money where it wouldn’t get taxed; in property. This kick-started the property boom, which continued under National, increasing the gap between rich and poor. Oops.

This Labour-led Government is looking much the same. Instead of allowing them to claim it is all too hard, let’s look at their record thus far. The big ticket spending items in their first 100 days -  free tertiary education, paid parental leave and Kiwibuild – all strongly favour the middle class. There isn’t a lot for the poor in any of those multi-billion dollar initiatives.

Even the much vaunted Families Package is a mixed bag. The Best Start grants are the only initiative squarely aimed at child poverty during the all important early years. The Winter Fuel Payment goes to beneficiaries which is helpful, but remember the lion’s share of our benefit budget goes to superannuitants (including the Deputy Prime Minister). The Accommodation Supplement changes will help paper over some cracks in our distorted housing market. However, it is no secret that this policy is broken, primarly benefits landlords and is in need of an overhaul. And finally the Working for Families (WFF) changes mostly succeed in sucking more of the middle class into the high effective marginal tax rates that WFF creates.

So out of all this, only the Best Start package is squarely aimed at reducing child poverty. No wonder the reduction in child poverty isn’t that big. Is that because of poor policy design, or because Labour don’t really have child poverty as a top priority?

Instead of letting Labour get away with claiming this is all too hard, let’s hold them to account. Who are they really there to serve? The poor and disenfranchised as they like to claim, or is it really the middle class? The same question must be asked of New Zealand First and Greens who have backed the Families Package without any question. The Greens are supposedly the voice of beneficiaries, and NZ First the voice of the working poor. So what is with all this middle class welfare they are cheerleading?

We know the top 3 things that would really put a dent in child poverty statistics. Researcher Jess Berentson-Shaw wrote a book about them. Boost the Best Start package to $200 per week and make it universal for the first 3 years. Ensure we have free, full time, high quality early childhood education for 3 and 4 year olds. And simplify the Working for Families regime to get rid of the punitive work tests. If child poverty were truly a priority, that would be the place to start.


*Geoff Simmons is an economist and former deputy leader of The Opportunities Party.  

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37 Comments

Agree that WFF and the Accommodation Supplement are abominations and achieve nothing good. Terrible subsidising of companies and property investors. Labour should be prioritising improving opportunities for more Kiwis instead. Unfortunate also that National went from calling WFF "communism by stealth" to perpetuating it and campaigning on increasing it. Both parties unfortunately two willing to keep these things going.

agreed; accommodation subsidies shouldn't need to exist if other existing policies are working correctly.

Spot on Rick. I'm tired of me and my wife's tax money supporting lazy landlords and enlarging dysfunctional families.

Yet here we are childless in order to pay for other peoples' kids and retirements. It's a near enough a form of cuckoldry.

If Labour *really* want to support families - Nuclear families - then they should allow couples to pool their tax bills like many nations do. The nuclear family with one productive bread winner and one nurturing parent has been demolished by the status quo. What's worse is the child support payments where solo mothers are rewarded substantially more for having kids with multiple fathers, particularly men with no kids.

We're in a similar boat. High household income, no kids.

We can't ultimately keep working around things via redistribution rather than fixing structural issues. Subsidising property investors and company wages is absurd. Encouraging all money into houses rather than into productive investment is absurd. Reducing opportunity and stability then picking up the tab for those at the bottom is absurd.

I'm with you Rick. Public money should be used to help people reach their potential. It was only supposed to be a safety net. Not a lifestyle hammock. Perhaps one of the worst policies was Nationals "first home subsidy". Young people get a "free" $20K which then gets multiplied into much more at the big Aussie bank and largely soaked up by Fletchers, lawyers, RE agents and land developers while providing the buyer with the same ticky tacky box as if they had no subsidy at all. Then people like me and my wife who didn't meet the income threshold have to outbid everyone else and the whole demand curve is pushed up. No wonder John Key works for ANZ now.

Perhaps one of the worst policies was Nationals "first home subsidy".

Agree - what was additionally notable about such subsidies is that overseas experience and research already highlighted that such subsidies were capitalised into house prices, driving prices up further. So it's simply a transfer of taxpayer money to those already in the market.

Hi Rick,

I wholeheartedly agree with you.
Here are some points to ponder:
1. The highest value as per history is attributed to the highest labour/skill put in.
At any point the value is in direct proportion to time. ie the more time spent getting
skilled/ more labour put in or a combo. directly proportional to value in eyes of investor common man etc viz gold, rare metals, wine, Sistine chapel etc etc
2. Whatever we do we tend to weigh it in terms of achieved viz saving the fair damsel
from the dragon....
3. Why we should aim at the mediocre is beyond me( historically...) we should aim at a 100% ( lends salt to life which by itself is meaningless) to achieve 90% . Quoting historically again the discovery of radium was achieved with sacrifice.

4. The QUESTION remain " WHO SACRIFICES" , THE GOVT, THE PEOPLE, ....

Geoff is no longer an untainted economist. He is an unsuccessful politician. Opinions that he may have been listened to before will not be given credence at the same level as formerly.

lol, that was really funny , just because he called the Pot black ?? .... BTW I hate this gentleman !! and believe that his views are eccentric !

However, rejoice sheeples, we are only in the first year .. it's going to be fun to watch the emprors stirp !!

What on earth are you talking about? The change was due to a modeling error that was made during the election campaign and discovered 10 days ago when a Treasury worker was integrating it with the agency's core models.

National's pledges were impacted by the same error which means your charge would have been able to be leveled at whichever party led Government.

Ah, I get it now.

That's boring Geoff. Why is the only solution about channeling money through government? What about building a high wage economy for New Zealanders as a technique. The Nats were deficient because they wanted to build an bigger economy using low wages (why would anybody do that). And Labour are deficient by thinking only of tax and subsidise as the technique. And Geoff can only think of fiddling with the government spend settings.

What a mess. How did it come to this?

"In Government anything is possible. It is simply a question of priorities"

Fine, then Labour should start moving up the age at which superannuation is available & use the released funds to address the poverty issue.

Several other developed nations have already moved or are moving the age of entitlement to reflect longer life spans.

up
11

And stretching out the qualification for Super to 20 years residence and apply it immediately.

Ah here we go again. Attack the low lying fruit, it must be the fault of National Superannuation being too generous.

"Kiwibuild – all strongly favour the middle class". Surely building houses benefits everyone? Poor people pay rent too right? (I guess most get free housing through HNZ?).
Housing is most people's biggest cost, anything that can be done to reduce it will have a much bigger effect than any handout.

That would certainly align with NZ's historical experience, that putting a focus on making land and housing more available achieved helped a lot. Helped achieve a high rate of home ownership and thus got more people on the capital ladder.

" Ensure we have free, full time, high quality early childhood education for 3 and 4 year olds"
Do we really have poor families where parents both are working full time? Even at minimum wage they would earn $60k per year.

Giving more money to the poor is in many cases never going to be channeled to the children. Even if it was food vouchers, that would allow the adults to buy more drugs with the other funds they are given.

Cancel the university fees give away and invest it in our poor, simple. But I am guessing Jacinda probably won't do that as university graduates are more likely to vote than the under/unemployed.

You can invest in people and get they'll reach a certain potential. Training more plumbers and electricians is a great thing. But in general, most simple jobs like drivers and retail staff being automated away the jobs left will require a greater IQ. We'll need to raise the IQ of the country if we want the unemployment rate to stay low. This is why cash for kids policies like WFF are so bad in the long run.

"Poverty problems" stem from/boil down to poor housing - whole neighbourhoods of poor housing. Savage and Fraser knew that.

No amount of "extra" money for living with more comfortably would remove the damage to health and "morale" for those living in a crap house in a equally materially crap neighbourhood.

It's the houses that are the root of these poor peoples prospects.

One does not want to be unfair to anyone , but if you are unemployed with nothing to do all day , getting into poverty is a very high possible outcome

Firslty with nothing to do , the devil will give you work , so you are possibly likely to end up in jail or at least "known to Police ".

A very likely outcome is having more kids.

A less likely outcome is ending up on some substance , which will be an expensive habit

But however you look at it , you are going to end up poor , and the more kids you have the poorer you and those kids will become .

The best thing this coaltion could do its follow Shane Jones idea of make-work schemes

They can start by ridding the upper North Island of alien vegetation like tobacco weed .

That would give people something to do as well as make the Greens happy , and also inject some money into the local economy in the form of proper wages instead of transfer payments

Give them a chance, Labour have barely got their feet under the table.
Spending on public good services and infrastructure which Labour & NZF will do is ultimately the best benefit to the poor as it gives children a better chance. Free schooling, free Tertiary education, free healthcare, old fashioned government housing, job opportunities for young people, - these are all best for the poor rather than cash payouts. Many current prosperous people can look back and thank all these public good benefits for providing options and pathways for overcoming poor family circumstances.

Like John Key

Exactly!

We have 4½ million people in NZ
Is this the best available you can get
Please try and avoid piggy-backing onto one-eyed political spin
DC you can do better than that

Free schooling,free tertiary education and free health care won't do anything to help kids at school unless their parents love and treat their kids with respect at home.
No amount of money can help morons.

NG unfortunately have to agree, your last line in particular.Sadly regardless of all the do goodin in the world there will always be the hoi polloi and worse.Been there like that before recorded history. Ain’t going to change now despite all the good genuine intentions of those who rale and sacrifice against it. Perhaps when it comes down to base human instincts Kipling sums it up best in saying something like, in the animal world there is no right and wrong, only life and death. Are humans when it really gets down to survival, and class as in social food chain, any different?
different

I agree NG - homes are the most important - but realistically Governments have a difficult job diving into dysfunctional family homes, or the disjointed living arrangements.
But Govts can provide a public sphere framework which allows kids hope, and the cash doesn’t get wasted by people who won’t help their kids. School is often the only safe supportive place for many kids.
Tertiary Ed is a way out of poverty.

Well said. But nobody"s listening to reason

Is early childhood education really that important?

I agree with MortgageBelt - give the poor buggers a chance. It takes a long time to make changes and longer for the effects to become evident. I do however think the free tertiary thing could have been designed slightly differently. Someone on this site said something once about financial incentivisation. How about this...

if ( you are studying XX or YY degree & you complete your degree on time ) {
Then the government will reduce your student loan by ZZ dollars
}

By the time they get around to making any changes they will be back in Opposition. They made the sticks to break their own back's Bring it on

Didn’t Labour engineer a 70% reduction in the available rental stock in Wellington in order to drive up rental prices?
Something to do with bright lines & healthier homes for renters who can afford it ?
https://i.stuff.co.nz/business/property/100675144/rentals-in-hot-demand-...

No, it was the law of unintended consequences. Its what happens when you don't understand how something works. The theory is great, nothing wrong with healthier homes. Unfortunately governments believe that nothing will change following any change they implement, they ignore the fact that people adjust their behaviours accordingly, been happening for years, but it doesn't sink in.

Labour Greens leaders represent a significant generational handing over of the reins. I'd rather see what a next generation can do.