A damning report - and a cowardly response

- Don Franks


Activist and author Anne Else was the keynote speaker at a public meeting of the Campaign Against Rising Prices held on Saturday June 7 in the Wellington suburb of Newtown.

Anne spoke as a member of the Child Poverty Action Group (CPAG), a non-profit group formed in 1994. CPAG believes that “New Zealand’s high rate of child poverty is not the result of economic necessity, but is due to policy neglect and a flawed ideological emphasis on economic incentives”.

Anne told the meeting about CPAG’s case against the government currently being heard by the Human Rights Review Tribunal. CPAG contends that Labour’s in-work tax credit breaches New Zealand’s human rights legislation by discriminating against children of beneficiaries.

“Current policies ensure that people are trapped in poverty,” Anne said. “The damage done by poverty in childhood never goes away. People are precluded from having a decent life.”

She argued that it is “totally unjust and discriminatory” not to help beneficiaries: “Unpaid work is still work. Bringing up children is work. And it now takes a much bigger investment to produce a child for modern life.”

Anne’s talk inspired this reporter to find out more about the work of the Child Poverty Action Group. Below are some quotes from the CPAG’s legal case against government discrimination of beneficiaries at the Human Right Review Tribunal.

Thousands of children in hardship

In the last decades of the 20th century, New Zealand had the fastest growth in income and wealth inequality in the OECD. Little has been done to improve the situation since then. In 2001, NZ ranked near the bottom of the rich nations’ index measuring infant mortality, children’s health and safety, teenage pregnancy, and immunisation. It also ranked bottom in the percentage of 15-19 year olds in full- or part-time education, and in the number of deaths from accidents and injuries.

Despite the better economy and significant increase in paid employment, between 2000 and 2004 the proportion of all children in severe and significant hardship increased by a third, to 26%. In 2004, there were about 185,000 children in benefit families in some degree of hardship, with 150,000 of them in significant or severe hardship. While official data is yet to be produced for 2007, this report concludes that little has changed for this group of children who have been “left behind”.


Tax credits discriminate

In 1996, child benefit policies that discriminated against the children of beneficiaries were introduced. One key policy was the Child Tax Credit (CTC), which was available only to children whose parents were not on a benefit, ACC or student allowance. These policies undermined the principle that all children from low-income families should be treated the same.

In 2002, the New Zealand government finally acknowledged child poverty, and vowed to eliminate it. Yet it was not until 2005 that Working For Families was implemented. WFF represents a significant redistribution of money in favour of low- and middle-income working families with children, and has reduced child poverty in many of these families. But for families supported by benefits, increased family assistance has been offset by a range of benefit cuts, leaving many simply “no worse off” than they were before these changes. WFF has not only continued the discrimination in the CTC, it has further widened the gap between low-income families on benefits and those in work, by introducing the In-Work Tax Credit (IWTC). The IWTC gives $60 a week to families with up to three children and an additional $15 a week for subsequent children. Now, to be eligible for the IWTC families must come off an income-tested benefit and meet a work test.

Families receiving a benefit are also excluded from receiving the Minimum Family Tax Credit (MFTC), which itself is a very unsatisfactory income support policy.

In 2005 the government augmented the WFF package by an additional $500m by targeting families earning more than $27,500. Children in families receiving benefits were not helped at all by this extra spending and remained excluded from the IWTC.


Work is not sufficient

The reforms to New Zealand’s social security initiated in the 1990s focused on moving people off welfare into work. Principles relating to the health and general welfare of the community, and participation and belonging, were abandoned.

Working for Families and Working New Zealand have entrenched and extended this approach, promoting paid work as the way out of poverty.

While work is very important for reducing poverty and increasing overall wellbeing, a “work first” policy is not sufficient to eliminate child poverty. Parental or child illness and disability, physical and social isolation including poor access to services, fewer employment opportunities and lack of support may all act to preclude parents from paid work.

Leveraging more parents into low-wage jobs is expensive and, in the long term, largely ineffective. The cost of the additional administration required for Working New Zealand (WNZ) from 2007 to 2012 was estimated at approximately $100 million.

Contrary to the assumptions underlying WFF and WNZ, evidence shows that most beneficiaries leave the benefit system of their own accord when they can. Generous welfare regimes need not result in a poverty trap and may be the most effective at reducing child poverty.

Unfair taxes

Low-income families are disadvantaged by the combination of New Zealand’s relatively flat personal income tax regime and consumption tax (GST).

Conversely, high-income earners are advantaged by the existing income tax regime and by gaps in the tax system, such as the lack of a capital gains tax.

Recent changes to the tax regime, such as tax breaks for savings in managed funds and KiwiSaver, signal a likely return to manipulations by the better-off to minimise tax, as occurred in the early 1980s. The fiscal costs of these tax breaks may preclude overdue tax cuts for those on low incomes.

Poverty affects health

New Zealand children have higher rates of preventable illness and deaths from injuries than children in almost any other OECD country. They have comparatively high infant mortality rates and low immunisation rates.

The single most important determinant of health is income. A child growing up in poverty is three times more likely to be sick than a child growing up in a higher-income household. Poor nutrition, a stressful environment and substandard housing are factors that diminish a child’s ability to fight infection.

Maori and Pasifika children are most at risk of poor health. Insufficient disposable income, substandard housing, inadequate nutritious food and unequal access to health care all contribute to the risk of poor health. Of all ethnic groups, Pasifika children have the highest rates of infant mortality.


Housing unaffordable

Rates of home ownership are now at their lowest since the early 1950s, reflecting decreased housing affordability and an absence of government-funded programmes to support home ownership for modest income households. Ma¯ori and Pasifika families are disproportionately affected by reduced housing affordability, and as a consequence are most likely to live in inadequate, overcrowded housing.

Low-income families increasingly unable to meet day-to-day expenses are often doubling up in the cheapest accommodation available, often state housing.

Transience is a significant problem for the many thousands of low-income families in private rental accommodation, and has high costs for children’s socialisation, education and health.

Housing and neighbourhood policies that deal with the many disadvantages faced by low-income households and communities are the key to providing stable, safe, healthy living arrangements for children, and supporting their development and education.

Education prospects at risk

Early childhood education (ECE) policies have a profound impact on children and their families. Quality early childhood education has been demonstrated nationally and internationally to have long-lasting benefits for both individuals and society.

Insufficient funding was identified as “the major issue confronting ECE services” in a 2007 national survey of New Zealand early childhood services. Almost a third of parents surveyed stated that they had difficulties in paying fees and donations, with low-income families more likely to face this dilemma.

Whanau-led services such as Playcentre and Te Kohanga Reo are not eligible for the recently introduced provision of 20 hours per week free early childhood education for 3- and 4-year-olds, raising significant equity issues for low-income families who wish to use these services.

Poverty also affects the education prospects of school-age children. Inequalities have been reinforced over time, compounding the disadvantages many children already face. Levels and methods of funding for low-decile schools are an issue, both because of relatively low parent and community contributions in such schools, and because of the sheer scale of their students’ needs.

The reinstatement of school zoning would appear to protect the right of students from poorer families to attend local schools. However, the fact that zones are now drawn up by schools rather than government allows zones to be manipulated to exclude lower socio-economic areas.
The CPAG report concluded by urging the Government to address child poverty in New Zealand now. In the short term, CPAG calls for reforms including immediate tax credits to all families with children and free food for hungry children in poor schools.

In the longer term, CPAG calls on the government to:

* provide affordable, accessible and healthy housing for all low-income New Zealanders

* provide free health care for all children under 18 - day or night

* provide genuinely free, quality public education for all, with no school fees.

* legislate a realistic minimum wage for raising a family today.


Union leaders’ response

Following the release of the Child Poverty Action Group’s report, Council of Trade Unions secretary Carol Beaumont made a statement commending the group for their “persistent work in keeping child poverty in the public domain and on everyone’s agenda”.

Carol Beaumont “agreed with many of the points made in the report”, but did not suggest any meaningful ways to fight poverty. Instead, she returned yet again to the tired old CTU leaders’ theme of seeking excuses for the Labour party: “We also recognise changes that have been made by this government that have benefited low-income people and working people.”

The CTU comment on the report concluded lamely: “It’s an important discussion to have with government and the political parties.”

Not so surprising when you remember that Carol Beaumont is a Labour candidate in a safe Labour seat this year. But that still leaves a huge unresolved problem for the working class. Faced with a comprehensive report of desperate poverty in New Zealand, leaders of the largest workers’ organisation in the land don’t really want to know.

The demands of the Child Poverty Action Group are just and reasonable, but they will require nationwide mass action from below to be realised. That will call for a stronger and braver form of workers’ organisation than we have at the moment.

3 Responses to A damning report - and a cowardly response

  1. stuatwhakatu says:

    well the road user charge increase is the straw that broke the camels back. i am (was) a fourth generation labour voter, but you have kissed goodbye not only my vote but the whole of my wider family. Seems a shame for a political place that was started for the common people will be voted out by the common people. Of coarse the worse part is that now we all have to vote for the nats. “election 08, the year that labour committed suicide”

  2. It’s good to see that you’ve become disillusioned in Labour, I’m always pleased to see recovering Labourites! :P

    But we certainly don’t “all have to vote for the nats”. The party whose website you’re on right now, the Workers Party, genuinely does stand up for the rights and class interests of ordinary working people, and while we’re obviously not a mass party yet we do consistently struggle for and with workers, unlike Labour, the Nats, the Greens, the Maori Party, RAM or whoever else you might want to name.

    Why don’t you think about voting for us? We’ll be contesting a number of electoral seats, and will hopefully be on the list as well, marking the first time an anti-capitalist organisation has been on every ballot in the country.

  3. Tax Guy says:

    I’ve been active in taxations for lengthier then I care to admit, both on the private side (all my working lifetime!!) and from a legal standpoint since passing the bar and pursuing tax law. I’ve offered a lot of advice and righted a lot of wrongs, and I must say that what you’ve put up makes perfect sense. Please uphold the good work - the more individuals know the better they’ll be armed to deal with the tax man, and that’s what it’s all about.

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