Why not just fix child poverty? Fabian Society 30 th August 2010 1 - - PowerPoint PPT Presentation

Why not just fix child poverty?

Susan St John 1

Fabian Society 30th August 2010

Where did child poverty come from?

1970s old age poverty

• National Superannuation
• 1979 child benefit $6

1980s– rise of family poverty

• Rising Unemployment
• Family assistance not indexed

Wages and the Poor_ Brian Easton 1986 Poor New Zealand Charles Waldergrave 1987

4

1991 mother of all budgets Family benefit abolished

Family Support per child per week payment Reduces as income increases

0% 10% 20% 30% 40% 50% 60%

1980 82 84 86 88 90 92 94 96 98 00 02 04 06 08 2010

HES year Proportion of population below thresholds

60% 2007 CV 60% REL 50% 2007 CV 50% REL 60% 50% Constant value (CV) or 'fixed line' thresholds are based on the 2007 BHC median and adjusted forward and back with the CPI.

Proportion of children below selected thresholds (AHC): fixed line (CV) and moving line (REL) MSD 2010

TODAY

Despite strong economic growth Despite Working for Families…

2009

between 170,000 and 270,000 children were in households with incomes below the low- income thresholds (ie ‘in poverty’) MSD 2010

Third world diseases

Professor Innes Asher Starship hospital

2,000 4,000 6,000 8,000 10,000 12,000 14,000 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Quarter ended Numbers of food parcels provided

Food parcels provided by Salvation Army foodbanks 2005-09

“They are without a doubt … experiencing serious hardship and unacceptably severe restrictions on their living conditions for citizens in a developed nation like New Zealand.”

MSD Survey of 2008 living standards 19% children still live in serious

• r significant hardship-

MSD 2009 MSD 2009

Distribution of ELSI-3 by income source (2008)

26 4 2 21 6 2 18 10 3 19 20 10 10 25 23 5 26 46 10 14

10 20 30 40 50

Income-tested benefit Market <65 65+

Population percentage

E2.4

4 13 20 5 10 6 13 13 6 8 8 15 19 13 10 17 23 21 21 18 24 19 15 27 28 30 14 11 24 20 12 3 2 4 7

10 20 30 40

European Maori Pacific Asian Other

Population percentage

By ethnicity, 2008

Beneficiaries by presence of children (2008)

18 30 22 21 11 22 24 17 15 7 10 3 1

10 20 30 40

No children With children

Population percentage

Family Tax Credit In Work Tax Credit Minimum Family Tax Credit Parental Tax Credit

Role of WFF

FTC 2.06 B IWTC 0.59B Total WFF $2.6B

In Work Tax Credit

• Part of family assistance
• Requirement of “off benefit”
• Required number of hours

– 20 sole parent – 30 couple

18

19

Problem - there were two

• bjectives for the In Work Tax

Credit

• Reduce child poverty
• Encourage work effort

Does neither well

• entrenches poverty of the poorest
• limited impact on target group
• May allow mothers in higher income families

to work less

Impact on sole parents

Domestic purposes beneficiaries, January 2000 - December 2009

“WFF had little if any impact on the poverty rates for children in workless households” MSD 2010

Impact on poverty? Child Poverty Rate fell but…

Who was left out? Why have we not been concerned about those left

• ut ?

Sorry record of Family assistance

• Family benefit and Family support
• 1991 Family support
• 1996 Family support increased by $20

but $15 as marked off for those independent of the state

24

The beginning of gap

25

And what did Labour say in 1996?

What this Government has done is create two classes of children: the children of beneficiaries and the children of people in work. We have never had a public policy that labels children and put value on a child whose parents have a job and a lesser value on a child of a person who is on a

• benefit. But that is exactly what this Government has done

with its announcement. If one is the child of a beneficiary,

• ne is not as valuable as the child of a working person.

Annette King 1996 MP

26

It is no wonder that we do not value the work that is done in our homes, because we dismiss it and give it no economic value at all. That is

• disgusting. To divide children into those whose

parents are good parents because they work and children who are bad because their parents do not is absolutely disgusting. Annette King MP What did Labour said in 1996

• 2

27

Hon Michael Cullen

• “a simplistic tangle of bigotry and ignorance …

barely disguised attack on beneficiaries … mean spirited, ill thought through and punitive … unholy product of National’s deeply held view that everyone on a benefit is a bludger and Treasury’s new right agenda … based on highly questionable incentives arguments.”

28

Max family assistance 3 child $2004

80 100 120 140 160 180 200 220 240 1986 1989 1992 1995 1998 2001 2004 2007 years ended March Family assistance Family Support w ith CTC and IWP Family Support

The fallacy of independence

In Work Tax Credit Family Assistance

Minimum Family Tax Credit Net earned income Guaranteed Income EMTR=100%

Why have the left ignored this issue?

• Is it too difficult?
• Is it too political?

My challenges

Too difficult?

• Too

political? 3 2

Then in 2005

Abatement of family assistance pushed further up the income scale, at lower rate providing a higher EMTR for some women in higher income families. Cost $500m but the poorest children got nothing 33

The Human Rights Review Tribunal

Is it

because we have all been contaminated by the market ideology Work is the way out of poverty You have to make work pay There must be gap

Gap partly due to lower benefit % wages

36

Work incentive aspects associated with Working for Families 2005-2007

• Lower core benefits
• Lower hardship assistance
• Lower abatement of family assistance/ higher

threshold

• Exclusion from IWTC
• Extended use of the guaranteed floor of the

Minimum Family Tax Credit

• Enhanced case management
• Strong economy Rise in minimum wage

37

• You cant support women on benefits

because they will simply breed more- pay to breed

• The DPB pays women to leave their

husbands

• Women need to be kept under
• They are lazy – watch TV all day
• Child rearing is not proper work

Is it latent misogynistic thinking?

A lack of empathy with the child‟s perspective

• – Insulation from the realities of families

– Lack of imagination – Generation of older men protected from playing a more equal role in child rearing- do not understand the importance of nurturing especially until age 3

Or is it

Since 1996 each year there has been a cumulative loss from poor families’ balance sheets $2.25B due the CTC 1996-2006 $2.25 B due to IWTC 2006-2010 $4.5 Billion and rising

What has been the cost to „non- deserving ‟families

1.07 m dependent children

• Pay additional $30 per child per week…costs

$1.7B

• If we abandon the IWTC the cost is still $1.1B
• If we make part of WFF universal – it costs a

fortune and does not impact on the poor

• If we get rid of WFF could give every child
• nly $50 a week

Why is a call for a universal child benefit the lazy answer?

incorporate the IWTC with FTC Treat all children the same

• cost $450m
• Dramatic impact on child poverty

but just the start of what needs to be done

Cost-effective answer