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The BulletinFebruary 23, 2024

Cost of living pushes child poverty rates to pre-Covid highs

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The government says it’ll address the issue by supporting more beneficiaries into work. Critics say its policies will only make things worse, writes Catherine McGregor in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.

Child poverty figures worst in years

The number of children living in material hardship – meaning they lack the essentials of life such as warm clothing and enough to eat – increased in the year to June 2023 from 10.5% to 12.5%. For Māori children, it’s 21.5%, according to new Stats NZ figures. A second measure of child poverty, the number of children living in households with less than the median wage, also increased. By all these measures, 2023 was the worst year for child poverty since 2019, the first year the statistics were reported. The figures show that “Labour made real inroads pre-Covid, but then didn’t do enough during pandemic and inflation spike to shield poor families from the damage”, tweeted commentator Max Rashbrooke. Child poverty reduction minister Louise Upston says it’s clear Labour’s approach wasn’t working and that “supporting parents into paid work and breaking the shackles of welfare dependency” will be the cornerstone of National’s strategy to turn things around.

Sallies report suggests Pacific families hardest hit

The new child poverty figures echo many of the findings of the Salvation Army’s State of the Nation report. It was published last week, before the latest Stats NZ release, so it uses slightly better child poverty numbers from before the worst of the cost-of-living crisis hit. As Gabi Lardies reports in The Spinoff, food insecurity is a major throughline of the Sallies report: a shocking 40% of Pacific households with children told researchers that food runs out “often or sometimes”. Next came Māori households with children, at 35.1%, and then households with children living with a disability, at 35%. The food insecurity numbers come from Ministry of Health data with a large margin of error, so the Sallies also include their own food parcel reporting. In the year to December 2023, it distributed around 92,000 food parcels around the country – 40% more than in the previous year.

Will the government’s policies make things better or worse?

While National says supporting beneficiaries into work is the best way to address the issue, Council of Trade Unions economist Craig Renney says the government’s policy prescriptions will only make things worse. In a tweet thread, he points to the government’s own analysis that welfare changes could put up to 13,000 more children into poverty by 2028, and argues that minimum wage changes and the reinstatement of prescription fees will add to parents’ financial burden. “This government must show that it has a deliverable plan to reduce child poverty that puts their welfare first – ahead of anything else.” Minister Upston says households experiencing hardship will benefit from the government “providing tax relief, easing mortgage pain, unlocking housing supply, making childcare more affordable, and lifting skills and education to provide our children with greater opportunities”.

Rising rents contributing to hardship, while mortgage holders take biggest hit

Yesterday also saw the release of Stats NZ’s Household Economic Survey, which covered the same period of June 2022 to June 2023. Read in conjunction with the child poverty report, it suggests that rising housing costs are continuing to impact overall hardship. The survey found that 27.5% of non-homeowners (aka renters) are now spending 40% or more of their household income on housing; the figure is 13.3% for people who own or partly own their home. However, while rents are continuing to rise, it’s mortgage holders who are bearing the brunt of skyrocketing inflation. Average mortgage payments increased by 27.5%, the biggest single-year increase since 2018, while average rents increased by a comparatively puny 4%. A reminder that these figures date from June 2023 – since then many more homeowners have refixed at higher rates, while more tenants have been hit with rent increases.

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