National digs itself into child poverty hole

National just doesn’t get it. Pre-election, even in the face of mounting political damage, Bill English persisted with his accusation that Labour had an $11.7 billion fiscal hole in its figures. The hole was actually one he was digging for. When roundly discredited by most commentators, political acumen would surely have suggested dropping this tack. But no. Now National is persisting with another blatant subterfuge: that they were the party that lifted 85,000 kids out of poverty and that they are much more ambitious in their goals to reduce child poverty than Labour.

So, in the debate last week on the first reading of The Child Poverty Reduction Bill, the Opposition continued to dig themselves further into the hole in speech after tired, self-justifying speech. Paula Bennett, Michael Woodhouse, Louise Upston repeated the mantras that they alone were the caring ones.

National’s Michael Woodhouse appeared to think the 85,000 was the result of his party’s families’ package (which was never implemented). He refers to the throwaway line pre-election from Bill English about taking 100,000 children out of poverty as if it constituted a real plan. And while never too coherent, deputy leader Paula Bennett accuses the Government of not being ambitious enough with its targets and urges that it follows the “great example” of National’s two previous finance ministers to “put more money genuinely into tens of thousands of New Zealanders’ homes that need it”.

We can see where National’s selective figures came from: The Ministry of Social Development 2017 report shows a reduction in the numbers of children with seven or more lacks (standard) by 85,000 since 2011. But that was the height of the recession. Since 2008, the numbers fell by only 35,000 and scarcely at all on the more severe measure.

Green Party MP Jan Logie’s speech came closest to exposing National’s outrageous fabrication when she said: “Looking at that one measure over a different time period tells us a very, very different picture about the success of that last government’s approach to child poverty. …That Opposition’s measure should have been from when they came into government to the end, and they should have been looking across different measures like this Bill will set up, because if they had, and were completely honest about what had happened, then they would have admitted that the latest household income survey showed that the number of children living beneath 60 percent of the median wage, after housing costs, which is the relative income poverty line, is now 290,000—30,000 more than in 2008. Most importantly, between 2008 and 2016, the number of children experiencing the most severe poverty rose from 105,000 to 140,000. So the point of this Bill is to have a suite of measures—a comprehensive look at how we are doing, to stop government's cherry-picking numbers that put rhetoric and their own political ambition ahead of the well-being of our children.”

Displaying a lack of understanding of what the figures actually show, Woodhouse blustered: Yes, there were nine years, and in nine years a far greater number of children were lifted out of poverty than at any time in this country’s history. Louise Upston got even further carried away with fake news and said in an interview for The Press on the Salvation Army’s report last week: Perhaps most notably though, since 2010 we reduced the number of children living in material hardship by 135,000.

In the meantime reports such as the Salvation Army State of the Nation report tells of growing food insecurity, homelessness, and families in growing desperation. Charities are increasingly overwhelmed. Both the hardship data and income figures have another limitation: the survey on which they are based include only families with a residential address. Growing homelessness is making this data less representative and less reliable.

The small reduction in the numbers experiencing hardship in the last few years has a lot to do with the stepped up role of private charities, who fill some of the gaps, reducing measured hardship. These are stop gap measures.

The fact is — even if some families now have shoes and raincoats for their kids, and therefore slightly less material hardship which takes them out of the hardship figures, their poverty is not addressed. Their parents still don’t have enough income and, as a consequence, they have too much debt.

Let’s be clear: deliberate cuts made by Bill English to Working for Families have wiped about $2.5 to $3 billion from the finances of low income families since 2010. And spending on WFF by 2016 was $700m per annum below the real value of WFF in 2010. Family distress soared. Pre-election National suddenly discovered there was a problem and that the cuts and outright neglect had been too severe.

They had the means to remedy this last year, but instead they dangled a carrot of a 2018 increase to Working Families. That is, poverty would be addressed but only if they were elected. Their Families Package was minimal and their figures showed it came nowhere near restoring $700m of spending let alone making up for the lost income since 2010.

Under Bill’s plan, working families would face draconian clawbacks after the very low threshold of just $35,000. They had to do this to limit the overall cost of the package to pay for proposed tax cuts which were largely to the benefit of the better-off. National would have created a great deal more family poverty among working families and they had no vision or plan at all for their pie in the sky lifting 100,000 kids out of poverty.

Labour’s Family Package is a great deal more likely to impact on child poverty than was National’s. It is not perfect – it’s coming in months too late and is not indexed properly, but it is a much bigger package.

National should remember the adage: when in a deep hole stop digging.

Dr Susan St John is an Honorary Associate Professor of Economics at the University of Auckland's Business School. Her research and teaching interests are focused on public sector and retirement policy issues, including decumulation of savings and annuity issues, tax and poverty issues, and applied macroeconomics. She is also economics advisor to Child Poverty Action Group.

This article reflects the opinion of the author and not the views of the University of Auckland. 

Used with permission from Newsroom, National digs itself into child poverty hole published on Tuesday 20 February 2018.