Tax break penalises poorest kids

New Zealand continues to grapple with a poor track record for child poverty and particularly the rising inequality affecting our poorest children.

Plenty of reports attest to the sad state of child poverty in New Zealand and the resultant consequences for child health and social outcomes.

Alongside this data there is an abundance of international evidence pointing to the importance of investing in the very early years for the long-term emotional and physical outcomes for our children.

Despite the evidence as a country we continue to run social policies that actively choose to allow our most vulnerable members, our young children, to grow up in the greatest poverty.

Current New Zealand research shows that about 20 per cent of our children are growing up in severe and significant hardship, compared with less than 5 per cent of our elderly.

We have universal, non-judgmental support for our elderly. Policies for our children are highly targeted and discriminatory. This is our choice as a country, despite the fact it flies in the face of all logic when the greatest gains long term are likely to be from investment in the early years.

The Child Poverty Action Group has been pursuing the issue of discrimination against our poorest children since 2008.

The origins of the case start with the Working for Families package introduced in 2005.

This important social policy legislation has helped considerably to ease the burden for many children from poor families.

However, a significant part of the package got ring-fenced for a completely different purpose, removed from being a benefit for children and turned into an incentive payment for parents to go back to work, and craftily renamed the "in-work tax credit" (IWTC) to obscure the fact it originated as a child benefit.

The result is that any child who has the misfortune to live in a family with adults dependent on a state benefit (where a sole parent is working less than 20 hours a week or a couple less than 30 hours a week) is not allowed this money, which amounts to $60 a week for one to three children and a further $15 per child for larger families. This takes no account of family circumstances, recessions, illnesses or general bad luck.

Furthermore, the incentive is applied only to families; apparently people without children do not need incentives to go to work, whereas those with children do.

The results of this policy are that the children in the most hardship are now even worse off than anyone else.

If New Zealand wishes to run a work incentive programme it seems very bizarre to do so by removing funding from child benefits.

Current estimates are that about 170,000 children fall below the 50 per cent median income poverty line. This is a huge number of our children. And this matters a lot.

We all understand that child poverty is a complex issue with multiple factors, but what is extremely clear from all the data is that despite all the other factors, income matters and children growing up in significant economic hardship will have a much harder time through life than others.

There may be the exceptional cases, there may be the feckless cases, but overall these children need help more than almost anyone else and are not getting it adequately.

As highlighted in the expert advisory group's report for the children's commissioner last year, there is little evidence that poor families manage their finances any worse than rich families, but lots of evidence of the reality of living with multiple stresses when struggling in poverty. For the children the stark reality is poor-quality nutrition, cold damp houses, stressful family lives, all leading to recurrent illnesses and reduced education achievement.

Then there are the less obvious social exclusions such as missing out on social activities, parties, sport, music and the rich options that New Zealand has to offer.

The oft-circulated argument is that New Zealand cannot afford to do anything about this.

The Unicef Innocenti recent publication on child poverty in richer countries illustrated there is very little association between the gross domestic product of a country and the child health and welfare outcomes. The countries that do better make active choices in their social policies to do so, and New Zealand certainly can if it wishes to. The cost of rectifying this injustice through redistributing the family benefit to all poor children and not excluding the most poor is in the order of $450 million – a small price for gaining better long-term outcomes for those who need it the most.

New Zealand has recently sunk $100m into advertising the asset sales programme; it does not seem a big stretch to suggest we have more pressing needs as a society to better look after our children.

To quote Dame Anne Salmond, "a nation that does not care for its children has a death wish".

Nikki Turner is an associate professor at Auckland University's faculty of medical and health sciences, and the health spokeswoman for the Child Poverty Action Group.

The Dominion Post