Unlike the worsening average OECD situation, New Zealand is making small progress with child poverty. But it's not enough by miles. We need to rid ourselves of vanity projects and focus on this core, urgent problem

It is the shame of modern society - children living in poverty.

The issue has been politicised in New Zealand by some parties campaigning in a partisan way on the issue. But all parties seem to be working to reduce it.

The OECD has released a paper on the subject which concludes that over the whole group of rich countries the situation is going backwards. Nearly 1 in 7 children lives in poverty on average in the OECD, and children often face higher poverty risks than other population groups.

Child poverty rates have increased in almost two thirds of OECD countries since the start of the GFC.

New Zealand doesn't rank well in this group, being worse than the OECD average.

Measurement issues

There are several ways of measuring child poverty. The usual or most common measure is the “relative” child poverty rate. This captures the share of children in households with incomes below 50% of the median equivalised income in given country and year, and is entirely relative. When median incomes change, so does the poverty line: it “floats” over time. This is the way it is presented in Figure 1 above.

The relative child poverty rate is useful for capturing poverty at a given point in time, but can sometimes be misleading when comparing how things have changed over years. Its relative nature means that the threshold for who is and isn’t consider poor is always changing.

An alternative measure especially useful for comparing across time is the “anchored” child poverty rate – a rate based on a poverty line fixed at some given income level (though still adjusted for price inflation), such as the median equivalised income in a certain year. Using the anchored rate, it is possible to see how many children are poor today based on the standards of some point in the past.

On this measure, New Zealand has done much better.

The key is productivity

Parental employment protects against poverty. On average across the OECD, 60% of jobless families are poor compared to only 9% of families where at least one parent has a job.

Increasing parental employment can thus be expected to lead to a major reduction in child poverty.

A basic simulation can  illustrate the point. If all parents were to be in paid employment (and assuming that poverty rates of working families remain at their current levels), this would halve the poverty rate in families with children, from an OECD average of 11% to 5.4% (Figure 4). And if joblessness among single-parents were to be eliminated their poverty rate would fall from 33% at present to 22%.

Obviously, at family level, the risk of being poor or not depends on the quality of the job held by one and/or both parents. The OECD says the risk of poverty will be significantly lower if both parents are in work. Helping parents gain good-quality employment is crucial for reducing child poverty and reversing the decline in living standards experienced by many families. It involves enabling parents to have a stable and if possible full-time job.

Our already high participation rate and low jobless rate reduces the impact compared with other OECD countries, but the benefits are still worthwhile. And because the OECD data for New Zealand is from 2014 and we have had significant improvements in participation and reductions in unemployment from then, some of the gains suggested have already been acheived.

But New Zealand's core problem is low pay caused by low productivity. Without a sustainable productivity solution, we will be left with the problem of in-work poverty, which itself makes child poverty intractable.

Arbitary pay increases without productivity increases don't really change anything in the medium term. They may give a short boost, but cause distortions and pressures elsewhere in the workforce by lowering the incentives for improving workskills and lowering the premiums for sustainable productive work. (Why add to your skills when those that don't get rises that bring their pay closer to what is paid for your skills?) Those arbitary increases by the public sector just make the issue worse if they aren't accompanies by improving productivity for the whole community. This is because the funds to pay the rises are being taken from those that haven't seen gains, widening the problem. It will build resentment on a large scale.

And children will be at the tough end of all this.

The OECD suggests improving benefit coverage can go some way to easing the stress. Redistributing family allowances, or improving the distribution of housing benefits are options offered. Proper housing is a key thing the State can provide.

And the State can stop doing unhelpful things, like vanity projects in the name of productivity. New Zealand has had a few and is proposing more. Examples that come to mind are the Waterview Tunnel, a multi-billion underground project designed to politcally protect a prime minister when for 25% of the cost the project would have delivered the same benefits above ground (and been completed years earlier). Others include building waterfront stadiums, and shifting the port of Auckalnd hundreds of kilomoeters away from its main market. "Light rail to the airport" is another multi-billion wet-dream that will no doubt be the boondoggle that it is in other cities. It is these types of grand vanity projects that squeeze the resources needed to address the underlying productivity problems that cause in-work proverty, and find children at the short end of how thee benefits of modern society get allocated.

Lecturing by academics in ivory towers is pretty tone-deaf as well.

Housing, education, and individual family mentoring, are the essential investments needed to break poverty's grip. Fortunately, there seems to be renewed progress on some of these. If we can get those in poverty making independent economic contributions to the community well above the 'living wage' levels and outside of State support or public 'employment' then child poverty will become less of a pressing issue.

Until then, it should be a priority, pressing issue. That we have done better than the OECD average, bucking their trend of going backwards in the past ten years, is to our collective credit. But that is a depressingly low benchmark and it is not enough for New Zealand.

Let's forget the political posturing and commit to building on the small but real (and insufficient) progress we have made.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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130 Comments

A really important subject. Measurement is confusing the issue; adjust your threshholds and suddenly the number in poverty alters. In terms of money my parents stories of being children growing up in the 1930's were as bad as any stories now but they did have access to a parent at home, warm food, dry place to sleep and no sense of belonging to an unwanted inferior group.
Solutions:
1. Generous universal child benefit (it means increase income tax)
2. All taxes and benefits to hold families together and never to drive them apart.

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"" And if joblessness among single-parents were to be eliminated their poverty rate would fall from 33% at present to 22%."" A caring single-parent is not jobless; they are full time carers for children. Getting them into rubbish waged jobs may make the stats look better but does not necessarily help the children.

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All I know is if we keep increasing our population without infrastructure and work, then we are going to keep squeezing out those who cannot keep up financially.
Life is becoming more and more precarious at the bottom, no stability in housing, many probably don't even bother to think of a better life, for fear of yet another disappointment. Depression will be rife among the ranks and depression becomes drug abuse becomes crime and so it self perpetuates.
If you have access to the means to live in some sort of stability, in a supportive community with enough to eat, then people will be okay. And it is way past time that we stopped praying to the god of money, you only have to look at Eric Watson to see it does not make you anyone worthy of admiration.
People and their kids who can see a pathway to a better life (one they can afford, not necessarily one where they can buy a spot of the QB honours list) will not succumb to breeding young and a life on welfare. Maybe they can see happiness in their future, because for most of us, we not need much more than that.

I believe the biggest poverty problem (esp childhood poverty) is the struggles that the working poor have. This is directly related to housing costs soaking up all the gains from employment.

Housing prices and rents that inflate above building costs, in places where there are employment opportunities, is like a labour permit system where the permit price of entering a city-based labour market inflates faster than wages. This ‘permit’ costs workers and business billions if not trillions of dollars -far larger than any other cartel, monopoly or rort in the economy.

Even worse than the productivity costs, excessive housing costs increase inequality. The wider public are concerned about such housing issues, commonly discussing the problems of increased homelessness, generation rent and the housing crisis in general. Polling in New Zealand shows that housing is the number one public concern.

Maybe NZ should stop talking about doing something and actually do something about housing.

https://iea.org.uk/our-terrible-planning-system-causes-untold-damage-to-...

Most of the employment opportunities for the working poor are in cities. Cities are defined as ‘places where there is an absence of space between people’.

New housing in cities can be constructed upwards or outwards.

To make it easier to build houses upwards at their true cost of production -a number of things need to happen.
1. Unnecessary planning restrictions that provide few benefits at huge opportunity cost need to be removed -such as the ridiculous ‘billion dollar viewshaft’ in Auckland providing a brief glimpse of Mt Eden from a motorway.
2. For planning restrictions that represent genuine externalities or nuisances then a system should be in place where neighbours can renegotiate these rules so they can best balance externality costs against developmental gain. Something like this;

https://medium.com/land-buildings-identity-and-values/hyperlocalism-how-...

For a city to build out
1. Again unnecessary planning restrictions need to removed
2. There needs to be infrastructure financing and charges so that the beneficiaries pay the full cost. So road de-congestion charges may be necessary, for instance.

Get families out of unlivable, unaffordable crowded cities like Auckland and Sydney and get businesses and jobs into regional cities. Will help alleviate child poverty.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=121...
How can a low income family help their kids thrive in Auckland? Spending most of their income on poor housing and then petrol/transport.

Didn’t the previous government try something similar with state housing moving grants? If the people don’t want to go, even when paid, then there’s more to their choice than money.

The company orchestrated the move to Gisborne, with the encouragement of their employees who can now afford a house and raise a family.
“I'm a great believer that people should be able to get onto the housing ladder at a younger age. We believed the housing in Auckland was a broken system and that we needed to try and help some of these staff, especially ones with young families, or looking to start a family, get on that pathway.”

I don’t think the people moving in that article figure in the poverty stats.

The story could be replicated for even lower income levels, if businesses decided to move.
Mind you, a $60k salary in Auckland plus a part time 2nd income may force a family into situational poverty with all income going on essentials and a ‘poor’ environment of disconnected people.

The article cites the lack of a job as a major issue. Is a person without a job in Auckland more likely to find one in Gisborne?

Yes, actually.
Some employers in Gisborne advertise for many months to fill vacancies.

And the unemployed in Auckland are qualified to take those jobs? If so, is it because the regions have lower standards? The unemployed are free to move to another area. Is it society’s issue if they don’t want to? Should we make them move for their children’s sake?

If you’re poor with kids, it’s a lot nicer to live in a smaller town/city with free access to natural surroundings, compared to being trapped in some giant mixed alienated poor city suburb with no walking access to pleasant parks etc. And smaller cities are not so divided around school zones, so poor families are more likely to have access to good public schools.

My wife works in a decile 1 school in Auckland. Some of the families have a household income of less than $20,000. I hear a lot of stories about how much support is available, how well some cope and how poorly others cope. I haven’t ever heard her speak of their desire to exit Auckland. I guess it’s more important to them to be around family. I have moved a lot to better my financial circumstances but now I’m sorted I have no interest in moving, even if it releases cash. Different ends of the spectrum but the same thoughts - some things are more important than money.

My wife works in a decile 1 school in Auckland. Some of the families have a household income of less than $20,000.

erm, you're a bit out of touch, a single parent with a single child gets more than $20K from Family tax credit and a main benefit alone, add in accommodation supplement based on $300/week rent and they are just shy of $30k a year.

Just repeating what she said. I daren’t ask her to clarify as she is very protective of the school and community. Apparently they get many groups looking to politicise their situation. Go figure.

Isn't getting jobs and businesses to move to smaller centres like swimming against the current of a rip? Cities exist in large part because they are efficient labour markets.

My guess is that 80% of new jobs in NZ are being created in cities with more than 100,000 people. Trying to create those jobs in small towns and rural areas is like trying to turn the clock back centuries. I don't think it can be done. Of course we can try -Provincial Growth Fund etc.

But relying on the Provincial Growth Fund to fix the problem of high house prices choking all the employment gains from the working poor would be naively putting all our eggs in one basket.

Why not try fixing the housing market so that workers can benefit from employment opportunities wherever they arise.

NZ should have genuine freedom of movement for workers. Not this clipping the ticket housing 'permit' system.

100,000 to maybe 300,000 in a town and you get almost everything you need (expect govt and university?) and importantly you can do so quickly. Compare to a larger city and you introduce congestion and long drive times.
For example one day assisting an Auckland chimney sweep we went from North Shore for the fire place dealer, to south Auckland for sheet steel, out west where they manufacture fire bricks and then out of town to Kaipara for the customer. As much of the day was spent in the vehicle as was spent actually working.
So while I agree about investing in rural villages I do think medium sized towns / small cities are economically efficient and pleasant to live in. They also have cheaper housing. On holiday this year I noticed Bavaria, Switzerland and the South of France had many highly successful cities with populations under half a million.

ack, posted in wrong thread

In Denmark both parents typically work, daycare for young children is the norm.

Here it's still a massive stigma. Daycare subsidies for those working or studying being extended to younger children (currently at 3 years of age) would go a long way to achieving poverty reduction.

We pay $40 per day for childcare. We're fortunate that we both earn fairly decent incomes and travel costs are negligible. You raise a very valid point about childcare subsidies though.

I imagine it's quite hard to justify sending the second parent to work if they're paying $200 per week on childcare so they can go earn minimum wage and take home $400 per week ...take out a very conservative figure of $50 per week in petrol and then their family tax credit drops from $92 per week to $0 per week and they're only banking $50 a week for 30 hours work.

Why should famililies that have kids get day care subsidies.?
Subsidies don't and won't end child poverty.
IMO subsidies add to poverty by creating a false economy.

Oh I don't know, I reckon subsidies for landlords (accommodation supplements) and employers (WFF) are working pretty well for them.

Ironically WFF and accommodation supplements would be reduced if the household earns more. Go figure.

The state fully subsidizes primary school. Are you suggesting this increases poverty?

I think you know i 'm not.

Number 1. Labour income share has fallen since 1978 by about 8% - mostly in the crazy 80s and 90s when we went bonkers on destroying unions, but also since it has fallen again. That means real wages have not kept up with productivity increases. That is both blatantly unfair and its legacy is inequality and stagnation with lower growth as workers would have a higher propensity to consume. Capital in turn does not invest as much in productivity due to a deficiency of demand. There need to be institutions in place to ensure labour gets its fair share of productivity increases in real wage increases. The absence of regulation and unions means this does not occur and capitalism faces it s fundamental realisation problem - increased product cannot be sold and workers incomes are too low. The labour income share needs to be higher and real wages need to keep up with productivity growth otherwise the working poor will grow.
2. Scrap the depressing dole and replace it with with a government job guarantee at the minimum wage with kiwisaver and working for families. This will soak up the underemployment that pervades NZ and the precariously employed. It will get the long term unemployed back into the swing of life so the private sector might actually hire them. It will act as a floor under the labour market which private sector employers will have to better in order to attract labour. It will also act as an automatic stabiliser in recessions and inflation anchor. These people's productivity right now is zero. There are a million better things they could be doing with their time.
4. Geunuine full employment would force businesses to invest in labour saving technology and in education and training to improve productivity.

We guarantee people health, education and provision in old age. Why can't we guarantee them a basic job when the private sector can't provide one?

https://www.productivity.govt.nz/sites/default/files/The%20Labour%20Inco...

Labour income share and growth https://www.youtube.com/watch?v=GH8S4nksaPs

good article by CS, by making the Unions very weak in the 90s is one of the many causes, Kiwis should have still supported their Union,
they only have themselves to BLAME,they believed the lies from self serving politicians who were only out for themselves and their cronies.

Also the Clark government did next to nothing either

to improve conditions the Government need to bring back time and a half for all weekend work to help improved Kiwis wages

National will never do this, their Cronies will not let them, Bridges and the rest of National are only out for themselves and not thinking about Kiwis ,
they cannot be trusted with the way they have behaved, they are not fit to be the government or worse rule New Zealand

they have no care for the poor do not be fooled by them

Children can't earn any income so this is absurd, eclipsed only by the efforts to reward the least productive members of society for reproducing. It's pushing all the factors that lead to the situation, in exactly the wrong direction.

Think of it as child benefits are an investment for our future.

Parents having fewer children means that resources can be focused on a smaller number. One average income supporting 4 or 6 kids is never going to end well.

Secondly, handing out more cash to deadbeat parents will also not solve the problem.

what about the kids, you are forgetting them you offer no solutions at all

Parents having fewer children means that resources can be focused on a smaller number. One average income supporting 4 or 6 kids is never going to end well.

Secondly, handing out more cash to deadbeat parents will also not solve the problem.

1) Very much agree with the sentiments of the article

2) The article doesn't directly note NZs high immigration policy - it drives up housing costs, drives down wages, drives down gdp/capita growth & reduces training of NZ citizens for jobs by replacing them with already skilled immigrants (employers love it as its cheaper - there should be a fee charged by the government per immigrant to level the playing field). This drives up the unemployment rate of unskilled NZ citizens (As a side issue the Government is most answerable to NZ citizens. The voting laws should be changed to limit voting eligibility to citizens only.)

Just as per student loans we are creating another millstone around the younger generation of NZ citizens.

3) Re Productivity - All NZ central and local government spending should go through business case assessment (which must be published) to ensure that it provides net socioeconomic benefits to NZ. It is hypocritical of local governments to be crying poor when too much of their spending is on vanity projects rather than essential infrastructure (note - however some local government areas are economically too small & should be amalgamated)

Absolutely agree that only citizens should be able to vote.

2) unemployment is not high in NZ but under-employment is; that is one in eight Kiwis would like more work. For those who are in full time employment at the bottom wages are set by the 3rd world immigrants -which rational employer would pay more and the irrational Kiwi businesses that pay their cleaners and such like a non-poverty wage go bust because they have competitors who have immigrant staff paying the boss for a job that can be defined as skilled for INZ.
However stopping immigration will take time even if/when we find a govt interested in poverty in NZ.

How do we incentivise the poor not to have children? It's a toughie. That's all the poor have done for many millenniums, nothings changed. What has changed is the way we work, how we work and it is very clear that the rich are getting richer, why? Because they're educated & motivated. The poor are always poor. Why? Because they don't won't to learn & don't won't to earn. It's paying them to have babies that pisses me off, and worse, paying them to be single-parent families no less. How corrupt is this. This devalues the family and the key relationships between parents to the point of despair, violence, all sorts of abuse & God knows what else. Incentivise the two-parent family (and ban television) and we'll be fine within a generation.

"How do we incentivise the poor not to have children? It's a toughie. That's all the poor have done for many millenniums, nothings changed."

Availability and effectiveness of contraception = nothing, righto.

"Why? Because they don't won't to learn & don't won't to earn."
10/10 for Irony.

" Incentivise the two-parent family (and ban television) and we'll be fine within a generation."

You sound like the Christian nut-job I work with, just add in sunday school and choir practice.

To pick a valid point to defend, two parent families are one of the biggest factors in preventing child poverty and since the DPB was introduced in 1964 the single parenthood has climbed from under 10% to just under 30% (as per census data). The road to hell is paved with good intentions.

And the number of women staying in unhealthy relationships due to not having a choice has gone from what to what?

I'm not sure if that's even measured? If we take a step back though I think it's safe to say the proportion of single mothers that have been incentivised (or atleast don't take having children seriously) is higher than the ones leaving unhealthy relationship.
It also cheapens and devalues a relationships importance as part of a relationship is each person providing something that improves the life of the other.

" If we take a step back though I think it's safe to say the proportion of single mothers that have been incentivised (or atleast don't take having children seriously) is higher than the ones leaving unhealthy relationship."

I disagree. I would like to see the rate of teenage pregnancies and solo parenthood drop, but i'm not at all keen on a return to the day when people stayed in poor relationships due to social or financial pressures. Its a nasty form of oppression. I'm lucky enough to count among friends some fantastic solo parents, and frankly the "need" for a child to have two parents to turn out good is complete load of horseshit.

A child needs one good parent. Having two doubles the chance.

I suspect you are arguing at cross purposes. Obviously at one extreme the wife as a chattel of the man is unfair and at the other extreme having to dump your partner to obtain priority on the state housing list is also unfair. We do need a system that nudges us towards investing in a relationship.
BTW I'm retired and my potential benefits would increase if the wife threw me out (please don't tell her).

and vice versa: the last thing a kid needs is an abusive or even just neglectful parent, having two doubles the chances.

" at the other extreme having to dump your partner to obtain priority on the state housing list is also unfair. "

Why? state housing is for those that can't afford free market housing.. it not supposed to be a handout for everybody that wants cheap rent.

@Pragmatist. "and frankly the "need" for a child to have two parents to turn out good is complete load of horseshit." Haha, as Lapun says it greatly raises the chances. Here's some (US) stats I ripped of the web quickly:

63% of youth suicides are from fatherless homes (Source: U.S. D.H.H.S., Bureau of the Census
90% of all homeless and runaway children are from fatherless homes
85% of all children that exhibit behavioral disorders come from fatherless homes (Source: Center for Disease Control)
80% of rapists motivated with displaced anger come from fatherless homes (Source: Criminal Justice & Behavior, Vol 14, p. 403-26, 1978.)
71% of all high school dropouts come from fatherless homes (Source: National Principals Association Report on the State of High Schools.)
75% of all adolescent patients in chemical abuse centers come from fatherless homes (Source: Rainbows for all Gods Children.)
70% of juveniles in state-operated institutions come from fatherless homes (Source: U.S. Dept. of Justice, Special Report, Sept 1988)
85% of all youths sitting in prisons grew up in a fatherless home (Source: Fulton Co. Georgia jail populations, Texas Dept. of Corrections 1992)

I don't doubt you know some great single parents (as do I) but don't let emotions get in the way of the facts. We can't improve if we put our heads in the sand in regards to the problem!

Pretty sure you will find the the numbers are very similar when you test against poverty instead of number of parents.

And how as a libertarian are you going to stop this? Or is this on of those fine situations were you are going to force the state into somebodies life? Seems to me you can't have your BS libertarian state, and also stop people from having sex and unplanned pregnancies.

Unfortunately you can't dismiss stats away that easily. Poverty does have an effect yes but other factors are much more important like single/dual parents, culture etc.

Part of the reason there are so many single parents is as the government has become bigger, familial and societal strucures have been forgone, as I mentioned above with the DPB example. The things in our immediate local environments that used to provide us with our moral outlook and framework have been devalued and our behaviour adapts accordingly or in this case we act less responsibly. In trying to help, the government has trampled on the institutions that served us so well.

As for my BS Libertarian state (so graciously endowed to me by you, I never knew I had one!). It would be a slow fix as it would remove the negative incentive structures and make everyone more responsible for their actions. Ideally we would see a return of social values which have disappeared/are disappearing as well.

I have no stats but I believe having a father not only is good for a child there are stats that prove the father can abroad or at sea and he doesn't even have to be alive. All a mother needs is a photo on the wall and when the child misbehaves she points to it and says "your father wouldn't approve of that". What destroys a child mentally is abandonment (especially suicide) by a parent. Social workers are well aware that removing children from quite dreadful parents can cause the child serious distress.

This government refused to fund the Roxburgh Childrens camp which ended in it's closure. '380 children a year will miss out on the Children’s Village trauma focused treatment programme.' It was a residential camp for children in Southland and Otago. If it had been in Auckland I wonder if it would have been refused funding - but Southland/Otago - they are at the end of the country so who cares? At a cost of $1.5m year/380 kids it would have been a far better investment at the top of the cliff than the cost of dealing with these kids later in life. But then as the Tremain cartoon showed, the govt would rather give the money to the America's Cup campaign than fund kids. https://www.odt.co.nz/regions/central-otago/closure-roxburgh-childrens-v...
I spoke to one young adult who went through the residential programme. They had siblings who also went through the camp. The person I spoke to said it was because of that camp, the experiences they had at it and personal support afterwards, that they kept off drugs and on the straight and narrow. They, like their siblings are now productive members of society earning good wages in provincial NZ.

Getting kids out of poverty isn't always about throwing more cash money directly to families. For many it's about giving those most at risk the sort of help and support those kids who went through Roxburgh Children's Camp received - it is sometimes about giving them hope and belief and support that despite their home circumstances there are options out there for them.
http://www.thenews.co.nz/news/last-ditch-campaign-for-roxburgh-childrens...

That is so disheartening, particularly given the high need for youth residential care services and the stories coming out of Oranga Tamarirki with respect to the desperate urgent placement shortfall they find themselves in.

This is the kind of thing that I hope the Children's Commissioner did have something to say about.

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One of the biggest contributors to child poverty is neo-liberal economic policy, and belief in the 'trickle down'. I'm not saying socialism is the answer - it's not - but look at the social democracies of Scandanavia with the lowest rates of child poverty.
In NZ a major factor is the very high cost of living. And the biggest contributor is housing. It's quite sad really, as so much could have been done 20 years ago to address this, but it wasn't - because of short termism. Now we are left to try and pick up all the pieces.
Low wages don't help either. And that hasn't been helped by the immigration policies of successive governments.

the trickle down theory was a big LIE which many people believed

Indeed

Hasn't it worked in a sense? Our living standards are much higher due to the period of Neo Lib we went through after Muldoon. I think if we look at trickle down in a monetary sense then no it hasn't trickled down but how about living standards? That's the point after all.

Neo-liberalism, is that how we emerged from the caves?

100% we needed a big shift from Muldoonism. But we overshot.
Living standards are certainly higher for many, but also not for many.

I could be persuaded to agree on the overshoot. Question is, do the poorest now have higher living standards than under Muldoon?
To quote Churchill "The inherent vice of capitalism (or nel lib in this case) is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."
If the living standards of the poor have improved isn't it just then jealousy that's driving the inequality debate?

No

No to improving living standards or to jealousy?

No to jealousy. Living standards have risen very much unevenly, people who did ordinary jobs used to be able to get by and even progress their lives now they can't. Why anyone would then try to sheet the disquiet that comes out of that as jealousy is really quite concerning, but I guess it gives those who benefit most an out.

Yes living standards have risen unevenly but to repeat the initial question, are they higher than under Muldoon? To play devils advocate would you rather have higher living standards with higher inequality or lower living standards with less inequality? That's more what I was getting at.

Why does it just have to be a matter of this or that according to you? If I had to answer, I will say yes, there is higher inequality and higher living standards are not necessarily the case for all, give or take a cell phone or cheap car. Housing and food are the primary needs and they are most definitely on lower living standard scale for a huge portion of society AND is mainly what creates higher inequality.

It doesn't have to be one or the other arbitrarily, thats how it seems to have panned out in this case hence why I see it as a valid question. (if it isn't then let me know otherwise as I'm finding it really hard to find relevant data.)

The reason I think this is important is I want to see living standards of the poor increase. Is inequality so bad if the system that raised inequality also raised living standards? Hence the jealousy question - I'm better off now than I was but somebody else is even better off again! Do we have to move in lockstep?

My view is inequality isn't bad inherantly. Bill Gates has improved the life of billions of people and through that has become immensely rich for example which is completely deserved. On the flip side, since the 70's when the US went off the gold standard and by proxy we did, house prices skyrocketed. People who had the luck to be born at the right time became rich through no virtue or production of there own. This is why I take issue with the dogma that inequality is bad as it may or may not be, and why I ask the question to see if I'm missing something.

No it isn't how it has panned out, it is how you perceive it.
You are not going to see the living standards of the poor increase until and unless they can afford to house and feed themselves, those two things out and the rest is out.
That jealousy question is just stupid, sorry, but it is.
We have never had equality, per se, but we have moved further and further away from it. It would much preferable that we did, by and large move in lockstep.
Bill Gates I call an accidental billionaire, he would have had about zero idea what was ahead for him while he was geeking away inventing Microsoft, most certainly not the extent he has. He understands he has far, far too much. Good for him for spreading it around, but can I tell you, most would prefer to make their own money. For every Bill Gates there will be many more extremely rich people who will be very disinclined to give any away, and no matter how much they have, it is not enough.
What too much inequality is doing is breaking down society so it is an extremely bad thing. Looking back at our ordinary family when I was a kid, in our ordinary house, with our ordinary one car and bringing us forward to today, I reckon our family would be in not very good straits at all. I certainly would not ride horses as a kid now as I did then, we would not have a large vege garden, pick fruit from our own trees. We were not rich, and in the same position in society now as then, today we would probably be pretty poor.
I will never accept that ever growing inequality is a good thing, it is not.

If you will never accept something then that is your dogma. I’ll think I’ll leave the conversation as I’ve enquired on a point which is valid only to receive that back. Thanks anyway

I'm old enough to remember the Muldoon years and to be honest I remember a kinder, gentler, economically fairer NZ. It lacked the glorious red palace and its plethora of cheap consumables that is the "Warewhare" and $7 soy lattes. But Muldoon's NZ managed to give most of its citizens at least a decent house to live in, a decent job at a living wage and a decent education where the doctor's kids went to school with the kids from the council houses nearby and didn't worry too much about 'zones' and their real estate prices. I would wager social mobility was better in the Muldoon years. I'd go back to them if the racism was dialed down a notch. And no weekend trading was fantastic for families. Also the quality of the public television was much better. Kaleidoscope anyone????

I lived through the Muldoon years too. It was a dreadful period of monoculturalism at its worst. Low standards, low expectations, poor attitudes, dominated by expectations people 'stayed in their class'. It was a suppressed time no-one should pine for, captured economically by those that could work the Wellington elites the best.

The subsequent turbulence was a direct result of decades of a suppressed little-england society. Almost everyone is now much better off (except those that grew their faimily fortunes from the corruption of the tariff walls around New Zealand).

In some part I owe my opportunities and financial success in life to the Lange Government of 1984. I was 23 at the time and the doors were opened wide for those that like me that didn't have the 'right' background. Sir John Key could probably say the same. I never voted for them but I thank the vision of Douglas et al.

A segment of society did very well out of the redistribution of wealth that the Lange Douglas years allowed. They were indeed freed to make a lot of money - some in privatized natural monopolies. Consumer goods became more diverse and cheaper. But whether as a whole NZ became better off in the things I think matter - housing, education, health - I think that is far from clear. The entrepreneurs were perhaps stifled and crony capitalism was a reality. But ordinary people had more freedom from want. I think the poorest in NZ now are poorer in absolute and relative terms due to the lack of social wage and underemployment. I think inequality is justified if it makes the least well off better off. I'm not sure that is true of neoliberalism in NZ. In fact I'm sure it isn't true. We could have chosen a more Scandinavian path.
And often I question the supposed consumer bliss we now live in. All I can afford is cheap warehouse stuff really. Same for most in my area. All the kids have the same crappy shoes that don't last and the same crappy toys and clothes that fall to pieces. Even as a consumer, I question the righteousness of the creation of a Walmart economy. Are we really better off?
Someone wrote about the pre Lange years - "Yes the coffee in the university coffee shops was bad - but the conversations people had were vibrant and intellectually stimulating". Now the coffee is better - but the vibrant intellectual culture and sense of values beyond the market have gone.
And to David Chaston's view that the pre-Lange years were dominated by expectations people 'stayed in their class'. Maybe the expectation has improved - but the reality I suspect is that it is harder than ever to transcend your class in NZ in 2018.

Consumerism is the modern drug/religion of the masses. Based on weekend shopping in an Apple Store I'd say it's in rude health.

Re transcending class, the rules are changing. I put one son through Kings (same time as sons of Maggie Barry, Willie Jackson and John Key) and thought it was a bit of an olde worlde experience. That son wasn't asked where he went to school, when in Silicon Valley, so I think it's more a NZ thing than elsewhere but they will happily take your money if you buy into the Private School ethos.

@Fritz. If you substitute neo-lib for money creation I think that would nail it, especially the cost of living/housing arguement. Scandinavian countries can only afford their expensive social services due to their liberal economies (they rank highly in economic freedom indexes).
There's many working parts to this problem but tossing liberalism out with the bath water won't help.

I think we need to import more people. That's the answer to all our economic woes isn't it?

We need more people from countries who know how to have rich children. Like India, China and the Philippines. There's no poverty there right?

These people are typically baristas, bakers, restaurant staff etc. They earn really high wages. And of course make NZers wages higher too!

Bring on the immigration! We need 50 million people in this country!

Thanks David. Your best article yet...

This is an area that needs massive attention in NZ. It's all well and good that 10% of the population (I include myself in that 10% but still argue that it's not good for the long term future of NZ) who all feel secure that their children will be okay (financially)... For society to function the other 90% need to have opportunity too.... There will always be a gap, but when you look at the gap in the graph for households that work and those that don't it highlights the issues we face - we have a huge working poor, paying rent and not being able to press forward with any security.

Society only functions when sound values are promoted. Sound values come from the sound parenting of someone with a vested interest and the vested interest arrives when one parent is and can afford to be responsible for looking after the children and bringing them up right whilst necessary income generation is produced by the other parent... That is why NZ is still a great place to live because those were the values of the 1970's - 1990's and the kids of that era are responsible...

This is not about men going out to work over women..... it's about the most appropriate parent earning the living and society being able to allow the other parent to do the harder job of instilling values and education to the children.... Whatever anyone says about childcare subsidies, quality of childcare in any country (UK is a classic example)..... is rubbish, it's akin to neglect.... No one other than a parent is more invested in bringing up their children to be nice to be around, involved, participative and responsible....... When two incomes are required just to service the interest on the 'average lower quartile house purchase at a maximum capacity of earnings over a 30 year term at artificially low interest rates' - what happens is that we enter the world of neglect.... children not being children, cared for by an institution rather than an invested parent and as a result child poverty ensues....... How quickly do we become 3rd World to satisfy the Usury of the banks and their interest payments.... When do we stop caring for our children and start sending them out to work at 12 to help pay for the household living expenses?

Completely agree, Nic. It worries me to no end that we will look back on this era where the State's promotion of the institutionalization of preschool age children under the auspice of Early Childhood Education, will be seen to have been an abject social failure.

It is the main reason why I feel a UBI for every adult is so necessary - parenting/raising and nurturing children is the MOST important job any of us ever take on in our entire lives.

The baby in nappies being dropped at a nursery and collected at 6pm - I'd agree with you. But a good preschool is great and takes the place of the playing in the street with other kids and the large familes of the past. The most important things we learn first: eating, language, toilet and what is more important for all adults than a minimum social awareness, empathy, inner resilience? They are learned as kids. Playing with other kids is the most important gift we can give to our children; play enough and you can overcome all the quirks and peculiarities of the parents. So a few hours at a well run playschool and/or preschool is recommended.
I'm not convinced that a UBI is achievable but I'd be happy to be proved wrong. What did work was the generous universal child benefit. Bite the bullet - increase all income tax rates by about 1% or 2% and redistribute as UCB.

In my opinion, daycare centres are not good at all for under 3 year olds (except if it’s for no more than 15-20 hours per week) but can work well if managed well for 3 years plus.

My 22 month old granddaughter lives with us; she is looked after all day long by her loving father (mother works) and I love having her around. However she started play school (Three 2-hour sessions per week) last week and it is just so good for her. I suspect it is good for the father who accompanies her too. Even at 22 months every child is different so maybe we should over generalise.

3 x 2 hour sessions per week.... that was my point - in moderation it's fine, even beneficial. But I am far from convinced that 40 hrs per week in daycare at age 22 months is a good idea

Our 18 month old spends 42 hours a week at pre school and she loves it. I guess it depends on the child. It’s no different to a weekend day routine wise, still has the regular naps etc it just means she’s surrounded by little humans her own age that she can interact with.

So a few hours at a well run playschool and/or preschool is recommended.

Absolutely to "a few hours". But you might be surprised how many 1-3 year old children spend between 40-50 hours a week at daycare centres because they have full time working parent(s). Many, many - it's a huge industry.

Think of all the extra taxpayers it creates.
What I find quite sickening about it is how most daycares are operated by corporations, heard an ad on the radio the other day pimping the investing in them, ick, ick, ick.

Yes exactly.
And the quality of them is often poor. I have a cousin who has worked for several of them, and to be honest it's often not much better than battery hen territory.
We pretty much sacrificed home ownership to keep our daughter out of them

I liked your article David until you said “arbitrary pay increases without productivity increases don't really change anything in the medium term’..... just tell that to the children who are living in cold damp houses, who haven’t enough food, who walk to school without shoes. Terribly sorry kiddo your parents aren’t productive enough! That argument is just so old hat David. Double the benefits for those who have children.

I'd prefer to halve the number of kids these parents have.

Hi Pragmatist. I just found this comment, I'm not sure it's consistant with what you have said previously. How would you propose the number halved? What do you think would achieve it?

This is a tax calculator I created which has WFF credits. Have a play and tell me the govt don't incentivise unwanted kids being born into poor families. I didn't even get around to calculating the $60/wk best start package.
http://45.32.191.40/#/

The housing is ridiculously expensive thanks to red tape in safety, materials and zoning making it nearly impossible to build anything. The basics like fuel and food are oligopolised. And to make things worse for wage earners there are illegally underpaid immigrants everywhere.

If you farm babies your income is guaranteed. There is no need to spend time and money traveling to work or on child care. There is no need to take out a huge student loan to sign up either, you just need a one night stand and 9 months later ...

WWF applies to 'working'. But you have a good point that there really are people who have a kid rather than find a job and that is not an ideal way of starting life. It is hard to create a system that stops kids being in poverty without it also rewarding some lowlife parent(s). The trouble with NZ is that among the poverty are some decent hard working families. You may be right - without our housing problem this would go away. It would be good to be back to a time when families didn't live in garages or single rooms.

The family tax credit is not linked to earned income in any way

You've fallen for the disingenuous name the politicians cooked up. Only the in work tax credit is exclusive to workers. I checked my calculations against IRDs own calculator and yes you can haul in loads of money without working. Though the IRD calculator does take into account degenerate circumstances like shared custody. Add in the benefits available to solo parents and you'll find $50k a year NET is quite achievable.

If one has more family tax credits than tax then they get a refund. So in reality it's more like a benefit which goes up when a person:
1) reducea their income by working less
2) has more kids
3) splits up with their partner

Obviously kids in these poor solo parent families are vulnerable but we don't want to encourage baby farms.
Easy solution here without hurting the kids is to make benefits and tax credits conditional on preventive measures like birth control.

Perhaps all those people who you say are having babies to get extra income are Catholics!. In my day it was the Catholics who were having babies by the bucketful. Apart from not wanting your child to marry a Catholic (because they would be poor for life by having all those babies) I can’ remember we worried too much. Wouldn’t it be better to look after our own littlies, after all they are the next generation, than importing more and more immigrants? After all the Scandinavian countries have managed to do it. When Scandinavian Drs came here they said they saw diseases they hadn’t seen in their countries for a long long time. And those diseases related to poverty.

You can never blame a child for poverty. The key is education - for children, and prospective parents. Have kids when you can afford them. No place in theses days of dwindling resources, soaring populations, climate change and god knows what else for more than two kids. Offer a snip bonus rather than a child bonus! And make sure every child attends school every day. No excuses, rich or poor.

I am astonished by all these blame the parent for having a child with adequate finance comments. Unless things have changed since I was young most children are 'unplanned'. Even those that are carefully planned and arrive on schedule can have parents who later separate or die or fall ill or lose the regular overtime. The old steady job for life has almost disappearred. Who can predict their financial state 10 years from now?
Plenty of excuses both rich and poor.

There is no reason for children to be unplanned these days. We know how children happen, and we have multiple cheap, safe & effective ways to prevent them from happening.

There is no issue with those that for unforeseeable reasons end up being solo parents, or temporarily unable to work, that is what the social welfare net is there for. Social welfare should not be a lifestyle choice, it should be a safety net for when things go sideways.

Hi Lapun. I generally agree with most things you comment on but I don't know if its quite the case with "most children are unplanned". Realistically the vast majority of people who have sex are well aware of the potential outcome. The main reason that the outcome may not be taken seriously is that they know they will be looked after to a certain extent by our social services. If those services weren't available there would be a hell of a lot more planning going on!
Agree with what your saying about the future as no one would begrudge helping anyone who was responsible, planned ahead but then suffered a tragedy but that's not the case with many children unfortunately.

As an advocate of reducing the human population in the world, I would still like to point out that at the way things are going, being able to afford to have kids will for many women not come till they are biologically past having them. Two children per couple will definitely see a reduction in population, and delaying fertility is a good way to limit numbers, but again, we should be mindful that we cannot deny women entirely.

In my opinion, the looming crisis in Auckland is private rental housing. It’s a time bomb.
The government will build social housing, and Kiwibuild, and the market will build higher end houses and apartments, but who is going to build the huge amount of housing required to accommodate people who are too rich for social housing but too poor to buy?
I don’t think new build apartments and townhouses are a particularly attractive investment. An investor can correct me, but you are lucky to get more than 4% yield, and capital gains are likely to be far less pronounced on apartments.
I have said it before and I will say it again. The government needs to become a private rental landlord in Auckland as well as a social housing one. In Scandanavia this is the model. My brother has lived in Stockholm for years, and he and many many others live in private rental housing supplied and managed by the government.

If the supply of houses outpaces population growth it will sort itself out. Supply and demand will do their thing. Just ignore the property spruikers who keep trying to tell us that houses disappear when investors sell.

Move enough people out some of the existing slum rentals into social housing, and some of the middle class renters into Kiwibuild etc, and the houses they moved out of have to end up somewhere.

a) they get re-rented, but less demand eventually results in lower prices
b) they get sold, at whatever they fetch on the market, removing one house from the rental pool, but also one household of renters from the demand side.
c) they get sold, demolished and 2+ new houses built in their place.

@Fritz. The housing market is suffering from terrible laws and regulation, the government becoming more involved will only make this worse as the initial problem hasn't been solved. The answer to bad intervention isn't more intervention.

do you think welfare has failed?

It only needs one hungry child living in a damp house to answer 'yes'.

Then welfare can never work, there are always going to be a portion of the population with mental illness, extreme selfishness and substance abuse problems.

Which doesn't mean we shouldn't try. Compare with the statement "I want the All Blacks to always be winners".

It means we need to redefine success and failure to something that is based in reality, not on the one kids with shit parents.

A test that is incapable of returning more than one possible answer is not a useful test, its a waste of time and effort.

100%

what was it like before we had welfare, how did people survive?

They burned the forests, they built roads, rail and tunnels pretty much by hand, my grandfather was a bullock driver in his youth, we had factories where we made clothing of all sorts and even shoes, we grew food, we even put cars together, and the wages earned from them supported people, that is how people survived. We still had welfare, its just it wasn't as needed.

We still had welfare, its just it wasn't as needed

Much of that work was welfare. The great govt make-work programs of the 1920s-30s..

https://www.maxim.org.nz/looking_back_to_look_forward_how_welfare_in_new...

That depends whether the work was something that needed to be done or was just digging holes and refilling them, really

Who decides if something is needed? If the world economy falls over next year, we could create a lot of work for a lot of people by building a double tracked high speed train line from Whangerei to Wellington. Some would argue its a massive money pit, some would argue its an essential transport link.

But where would the Government find the money??!?!?!? It's not like money just circulates round and round in the economy, when money is spent it's gone, forever!

That would probably depend on when you are judging it, at the time, many would argue it would be a waste, later on when things change, the people who built it would be thanked profusely for having done so. If you want to call that welfare, well, that is for you, but welfare is everywhere if you care to turn over a few stones and look, and it comes in more forms than hard cash

That's exactly the point I was making.

but we have lots of people needed to pick apple in HB, we have to import works while 8000 are on the dole

Pay more/improve working conditions or automate it.

automation is coming along nicely pack houses that used to employ 200+ people a shift are getting below 30 now.

Indeed, I've seen the stuff they were doing at Compac Sorting 8 or so years ago, weighing, imaging and categorising and sorting a piece of fruit every 1/10th of second per sort lane, but I was meaning the picking.

increasing planting densities, lower fruit, trailing a gantry system I believe.

I think we have gone way past working out why it is not feasible for the average someone on the dole in Auckland probably to upsticks to the Hawkes Bay for a few months picking apples. There's housing costs where they live have to be kept up, there's housing costs where they are going to be working, there's transport costs, there's stand downs and such from MSD. Not sure there would be a lot who could overcome all of those issues, especially the housing one.

meat industry has the same problem , low wages, shift work thats very seasonal and inconsistent. I see they want the government to let them import workers instead of addressing the low wages.

Ah, come on PocketAces, you can't inject reality into the situation, it gets in the way of a good holier than thou right wing rant session.

We let dairy farmers orchardists and meat companies import cheap labour which depresses wages in the rest of the economy. We have locals sitting at home watching telly while Filipinos run dairy farms and apiaries, Islanders pick apples , living in a single house 10 deep.
Many of the modern poor have jobs, just very badly paying jobs.

On Islanders picking apples and such, I reckon we should be rolling that into our aid package to the Islands, take the organisation of it out of the hands of these people who wring them out, basically use them to line their pockets and run it ethically. It is a win win as the money they take home from here goes a long way at home. The people we have left on the dole by and large, I think we might just have to put up with, would you want them among your precious stock, imagine some of them on the killing floor of an abattoir.
We have to work from there to improve the lives of some, but much of this work is now completely foreign to them, and it is putting people with little animal knowledge or experience who end up taking to cows with lengths of piping, twisting or breaking their tails.

it looks like our best option to help poverty is education.

Talk to the hand

You can go to PNG and see how. Nobody starves - or at least they don't in the villages (I left 16 years ago).

Not checked your links but everything dreadful is true. However many young female Papua New Guineans are happier in PNG than in for example Auckland. There is a small almost reluctant PNG population in NZ living here for various reasons. Applicable to Andrew's question about welfare: it is replaced by strong family and tribal ties that give Papua New Guineans a strong sense of identity - but maybe you would be better asking them.
Related to the article nothing looks better than an under five Papua New Guinean - whatever poverty their young kids are so strong, active and loved.

I doubt many of the others here will bother to read the second report either, so here is the bit that shows the lie of how well loved and cared for the kids really are:

In 2010, the Centre attended to 530 survivors of sexual
violence. Of these, 338 were adults (above 16) and the other 192 were children. Of the
338 adult cases, 322 were cases of rape. Of the 192 child cases, 149 were of rape.

Such love for their children..inappropriate "love"
https://en.wikipedia.org/wiki/Papua_New_Guinea#Human_rights

"Papua New Guinea is often ranked as likely the worst place in the world for violence against women. A 2013 study in The Lancet found that 27% of men on Bougainville Island, Papua New Guinea, reported having raped a non-partner, while 14.1% reported having committed gang rape.] According to UNICEF, nearly half of reported rape victims are under 15 years of age and 13% are under 7 years of age. A report by ChildFund Australia, citing former Parliamentarian Dame Carol Kidu, claimed 50% of those seeking medical help after rape are under 16, 25% are under 12, and 10% are under 8"

So yeah, you can spin your tales of how loved they are all you like, but I think most would rather stay the hell away from that sort of society.

I certainly don't dispute your stats. I was in PNG from 1984 to 2002 and could see how it was copying the worst of the west and losing the best of what it had. It also has over 800 languages with dramatically different cultures - some male dominated and some matriarchal - the former combined with a alcohol leads to disaster. You can trust Carol Kidu. To add to your stories there is also a problem with children being so loved that they are stolen by adults unable to have their own.
However I repeat in the last 5 years I have met several PNG young adults choosing to live in PNG. Of course they are not heading for the settlements around the cities where most of the trouble comes from. One thing that brings some back to NZ is having children: free health care and schooling.