By Geoff Simmons*
It appears we are being softened-up for a watering-down of Labour’s target on child poverty.
Their initial plan was to reduce the number of children in poverty by 100,000. Their much vaunted Families Package alone was predicted to reduce poverty by around 88,000 (compared to National’s tax cut package with 50,000). But apparently someone in Treasury got their numbers wrong – the number is likely to be a lot lower (they don’t know how much yet).
Depending on how you measure it, there are between 150,000-300,000 children in poverty at the moment. The target of 100,000 looks a long way off, and there isn’t much moolah left in the kitty.
The hidden message here is clear; sorry but this is all a lot harder than it first looked. We are doing our best, but reducing child poverty will take a fair bit longer than we thought.
Of course this is complete poppycock. In Government anything is possible. It is simply a question of priorities. And clearly, like the last Labour-led Government, poverty isn’t as much of a priority as they like to claim it is.
Let’s look at the legacy of the last Labour-led Government. They came into power promising to ‘Close the Gaps’, but on their watch the gap between rich and poor, by most measures, stayed the same. No gap was closed.
Some may claim that simply holding the line is a feat unto itself, so let’s look at what they actually did. Their big ticket items were interest free student loans and Working for Families. Both of these were essentially middle class welfare and offered little for the truly poor. Sure they taxed high income earners more, but that only served to push people towards storing their money where it wouldn’t get taxed; in property. This kick-started the property boom, which continued under National, increasing the gap between rich and poor. Oops.
This Labour-led Government is looking much the same. Instead of allowing them to claim it is all too hard, let’s look at their record thus far. The big ticket spending items in their first 100 days – free tertiary education, paid parental leave and Kiwibuild – all strongly favour the middle class. There isn’t a lot for the poor in any of those multi-billion dollar initiatives.
Even the much vaunted Families Package is a mixed bag. The Best Start grants are the only initiative squarely aimed at child poverty during the all important early years. The Winter Fuel Payment goes to beneficiaries which is helpful, but remember the lion’s share of our benefit budget goes to superannuitants (including the Deputy Prime Minister). The Accommodation Supplement changes will help paper over some cracks in our distorted housing market. However, it is no secret that this policy is broken, primarly benefits landlords and is in need of an overhaul. And finally the Working for Families (WFF) changes mostly succeed in sucking more of the middle class into the high effective marginal tax rates that WFF creates.
So out of all this, only the Best Start package is squarely aimed at reducing child poverty. No wonder the reduction in child poverty isn’t that big. Is that because of poor policy design, or because Labour don’t really have child poverty as a top priority?
Instead of letting Labour get away with claiming this is all too hard, let’s hold them to account. Who are they really there to serve? The poor and disenfranchised as they like to claim, or is it really the middle class? The same question must be asked of New Zealand First and Greens who have backed the Families Package without any question. The Greens are supposedly the voice of beneficiaries, and NZ First the voice of the working poor. So what is with all this middle class welfare they are cheerleading?
We know the top 3 things that would really put a dent in child poverty statistics. Researcher Jess Berentson-Shaw wrote a book about them. Boost the Best Start package to $200 per week and make it universal for the first 3 years. Ensure we have free, full time, high quality early childhood education for 3 and 4 year olds. And simplify the Working for Families regime to get rid of the punitive work tests. If child poverty were truly a priority, that would be the place to start.
*Geoff Simmons is an economist and former deputy leader of The Opportunities Party.