Poverty in New Zealand

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Contents

Introduction

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Poverty is a serious issue that plagues the health and prosperity of those living in such conditions. High levels of poverty are indications of injustice and instability. The Food and Agricultural Organisation (FAO) defines poverty as the lack of, or the inability to achieve a socially acceptable standard of living<ref>http://www.fao.org/docs/up/easypol/312/povanlys_defpov_004en.pdf</ref>.

In the New Zealand context, the impact of low-income is mainly responsible for most families to be in poverty in this country<ref name="nzcss">http://www.nzccss.org.nz/uploads/publications/Facts%20about%20Poverty%20Update%202009%20-%20FINAL.pdf</ref>. Thus families who earn a relatively low income affects their ability to access proper health care, good housing, nutritious food and decent education. The lack of these basic necessities mean that poverty becomes apparent among these families.

Analysis and research into poverty are crucial for understanding the specific issues of the causes and effects of this social stigma. Due to the complex nature of poverty, there are various underlying effects that are interconnected with this issue. The impacts of poverty are multidimensional, and the effects are associated with various complications such as health, economic, political, and social issues. The pressures of poverty are thus a hindrance to the well-being of members living in New Zealand.

The current statistical data and measures of poverty in New Zealand provides a general indication of the current state of the population who are living in poverty. Levels of hardship, income as well as income inequality, and level of deprivation, are some of they key statistical measures used for defining poverty rates in the country.

Effects of poverty in New Zealand

The impacts of poverty on families and individuals relate to a series of issues. Social problems, health, and the economy are the three main areas of concern. Poverty is often a vicious cycle. Whether they are living on low wages or on benefits, people living in poverty have fewer opportunities and resources. This means that less education, fewer job skills, higher number of health issues, and an increase chance of needing benefits.

Effects of welfare and Low-wage income implications on NZ families

A considerable number of low-income families become in debt. Household bills are usually responsible for this debt, where a survey from 2009 showed three quarters of low-income families struggled or had been unable to pay at least 1 regular household bill that past year, and that half of the low-income families could not pay their bills on three or more occasions. <ref name="nzcss">http://www.nzccss.org.nz/uploads/publications/Facts%20about%20Poverty%20Update%202009%20-%20FINAL.pdf</ref>

Families living off benefits do not get the appropriate amount to acquire adequate necessities. The amount of benefits that families get is too low to have the ability to feed, clothe and house themselves sufficiently. For example, the disposable income of food bank clients, who are mostly beneficiaries, have barely enough to cover the estimated food costs required to feed a family of two adults and two children, even though they also rely on food banks. The cost of food leaves little or nothing for other household costs. As well, people seeking emergency accommodation is high which has led to shortages of supplies, such as beds and food supplies from food banks. <ref name="nzcss">http://www.nzccss.org.nz/uploads/publications/Facts%20about%20Poverty%20Update%202009%20-%20FINAL.pdf</ref>

In terms of state housing, many families of low-income have been left in a deficit situation after paying rent and other essential expenses. The Housing New Zealand Corporation (HNZC) has showed large number of people on the waiting list looking for suitable housing. <ref name="nzcss">NZ Council of Christian Social Services (2009)http://www.nzccss.org.nz/uploads/publications/Facts%20about%20Poverty%20Update%202009%20-%20FINAL.pdf</ref>

Private rental markets are where majority of people on lower incomes rent their housing. Many of the tenants from private markets who rely on benefits experience constant financial distress, such as cash flow problems, where a difficulty in paying bills and needing to find financial help from others is sometimes required. As well, There is hardship, such as basic needs like clothing, meals and heating are somewhat compromised. Furthermore, leisure activities and hobbies for example are missed out frequently. <ref name="nzcss">http://www.nzccss.org.nz/uploads/publications/Facts%20about%20Poverty%20Update%202009%20-%20FINAL.pdf</ref>

Debt written families sometimes need to force themselves to borrow money. When they are unable to gain access to main sources of credit from banks and finance companies, people tend to seek “loan sharks".<ref name="nzcss2">http://www.nzccss.org.nz/site/page.php?page_id=278</ref>

Communities in New Zealand who are living in Low-income communities are significantly more likely to be problem gamblers and current smokers. Low- income parents who abuse alcohol, drugs, smoke tobacco around their children, and who suffer from gambling problems, are negatively affecting their childrens well-being. This means parents are less likely to look after their children at a sufficient manner and they will have less money to spend to meet their familys needs, and with higher chances of being less able to work.<ref name="nzcss2">http://www.nzccss.org.nz/site/page.php?page_id=278</ref>

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Research shows that there is a direct relationship between poverty and deprivation, and child maltreatment and neglect. Financial stress has led to some parents living in poverty to hold poor parenting skills and or abusive parenting behaviour towards their children. Parental sense of control and competence are reduced or absent because of this. Some of the research identified in New Zealand shows that parents living in poverty have described it as a constant struggle, and trying to make sufficient money to support living and dealing with finances as the hardest part of life for them. This hardship may result in parents to also discontinue from attending their children if they are trying to secure an income, or are trying to handle employment or housing issues.<ref name="cpag">http://www.cpag.org.nz/assets/Publications/130610%20CPAG%20Child%20Abuse%20Report%201%20June%202013.pdf</ref> In addition, Evidence from parent behaviour suggests the lifestyle of families living in poverty is stressful. There are indications from research which suggests parents with lower socioeconomic status (SES) are more likely to use ‘authoritarian’ parenting styles in contrast to parents in higher SES groups. The social and emotional problems from children are related with the exposure to parental stress. Persistent stress has a detrimental effect on a childs brain development, particularly in the foetal and early childhood periods. In addition, poverty affects the way people process information about their circumstances are affected which leads to poor decision making and less effective coping.<ref name="ChildrensCommissioner">http://anzasw.org.nz/documents/0000/0000/0536/Child_Poverty_Report_Web.pdf</ref>

Well-being of Children

Children who are living in poverty in New Zealand experience hardship and are usually excluded from the normal routines of modern life, sometimes for long periods. Children lack the opportunity to do certain activities which most New Zealanders who are living well off take for granted. Thus, opportunistic experiences are compromised and lessened, for example travelling to visit another city can be too costly for families who cannot afford modest transport costs.<ref name="ChildrensCommissioner"> Childrens Comissioner (2012) Solutions to child poverty in New Zealand. Evidence for action, http://anzasw.org.nz/documents/0000/0000/0536/Child_Poverty_Report_Web.pdf</ref>

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Poverty affects the children directly and to the wider society of New Zealand. It reduces the opportunity for children to utilise and develop their potential gifts and talents. The lack of basic necessities leaves children unable to enjoy their rights, achieve their full potential in life, and participate as equal members of society in New Zealand. Child poverty is associated with material deprivation and hardship which means, for instance, a much higher chance of having insufficient nutritious food, going to school hungry, wearing worn-out shoes or barefoot. As well, child poverty is also associated with having inadequate clothing, living in cold damp houses, and sharing a bed to sleep. It impedes on their educational achievements, reduces labour productivity and earnings ability, and increases the cost of health care and crime. In terms of their cognitive development and educational accomplishments, constructive ways in learning are impeded by children living in poverty. Children who have inadequate consumption of food have difficulty in concentrating, along with having lower academic achievement and poorer performance, especially in numeracy and literacy. Families of low-income can struggle to pay school fees, purchase school and sport uniforms, and provide space for children to study at home. In addition, instead of going to school, older children may be kept at home to look after their younger siblings while their parents work. Furthermore, low-income families are also less likely to have a computer or internet access at home.<ref name="ChildrensCommissioner"> Childrens Comissioner (2012) Solutions to child poverty in New Zealand. Evidence for action, http://anzasw.org.nz/documents/0000/0000/0536/Child_Poverty_Report_Web.pdf</ref>

Health

The health effects of growing up in poverty is carried on through to adulthood. Children in the Dunedin longitudinal study who grew up in poverty were more likely to have poor health outcomes in adulthood, including higher risk of heart disease, alcohol and drug addiction, and worse dental health at age 26.<ref name="ChildrensCommissioner"> Childrens Comissioner (2012) Solutions to child poverty in New Zealand. Evidence for action, http://anzasw.org.nz/documents/0000/0000/0536/Child_Poverty_Report_Web.pdf</ref> Therefore with the higher health risks hospital admissions are more frequent.

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Children in poverty tend to live in poor quality homes, along with overcrowding which can cause a number of health issues. These health problems include infectious diseases, respiratory illnesses and preventable injuries, where these problems can affect normal child development. Babies and Pre-schoolers of poor housing are more vulnerable to these health problems since they spend 90% of their time inside their homes. Furthermore, overcrowding of households leads to children suffering from significantly high rates of infectious diseases such as pneumonia, rheumatic fever and meningococcal disease. The mental health of children, their social well-being and school performance are also affected as a result of overcrowding. For instance, the lack of space to study at home and deprived sleep leads to low concentration during classes. <ref name="ChildrensCommissioner"> Childrens Comissioner (2012) Solutions to child poverty in New Zealand. Evidence for action, http://anzasw.org.nz/documents/0000/0000/0536/Child_Poverty_Report_Web.pdf</ref>

Having not enough or adequate nutrition during pregnancy and childhood is linked to poor health outcomes as well. Development delays and more frequent illnesses are a result of this. Furthermore, a lack of healthy food is affiliated with higher cholesterol intake and obesity. A survey of 136 families from Wellington and Dunedin gave evidence that 47% of the low-income families reported food shortages because of lack of money ‘often’ or ‘sometimes’, and that groups in this survey also noted that they purchased fewer vegetables per week, and so there is a lack nutritious foods. <ref name="ChildrensCommissioner"> Childrens Comissioner (2012) Solutions to child poverty in New Zealand. Evidence for action, http://anzasw.org.nz/documents/0000/0000/0536/Child_Poverty_Report_Web.pdf</ref>

Economy

Large sums of public money are spent on managing the negative effects of poverty in New Zealand. In the short-run, the government spends a considerable amount on services to treat and remedy the effects of child poverty, including primary health care and hospitalisations. Significant additional costs are also implemented for treating health issues of adults and children alike who grew up in poverty. As well, housing subsidies, benefit payments to low-income and unemployed families are also exhausting a large fraction of government expenditure. Adults who were raised in poverty as children have less earning capacity, so there are low productivity costs and a reduction in government revenue through the loss of taxation. In addition, children who grow up in poverty are more likely to associate themselves into crime, thus costs are also incurred onto the New Zealand criminal justice system. <ref name="ChildrensCommissioner"> Childrens Comissioner (2012) Solutions to child poverty in New Zealand. Evidence for action, http://anzasw.org.nz/documents/0000/0000/0536/Child_Poverty_Report_Web.pdf</ref>

Statistical Data and Indicators of Poverty in New Zealand

Introduction

It is necessary to measure poverty as a means of determining the scale and effect of poverty for various regions and groups, and in order to develop strategies for its alleviation. This section will identify and evaluate some of the measures of poverty and poverty indicators in New Zealand, and to a lesser extent, internationally. It will then present some of the findings derived from the use of these indicators and offer some suggestions of ways to improve the measurement of poverty in New Zealand.

Measuring Poverty

Efforts to measure poverty in high-income countries have increasingly incorporated social dimensions of poverty, reflecting shifts in focus from experiences of absolute to relative poverty in these countries. Absolute poverty refers to the proportion of a population above or below an acceptable standard of living, while relative poverty refers to the social context in which poverty is experienced. The diagram below (Figure 3.1.0) shows some of the social, material and geographical factors that contribute to overall living standards <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury</ref>.

Figure 3.1.0: Diagram showing factors that may positively and negatively influence overall living standards <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury</ref>

There are multiple indicators of welfare that can be used to measure poverty. Information on welfare is primarily derived from qualitative and quantitative survey data. The most prevalent measure of welfare employed worldwide is the poverty-line approach, which establishes absolute poverty by quantifying basic food and non-food needs in monetary terms <ref name="chapter3"> unstats.un.org/unsd/methods/poverty/pdf/Chapter-3.pdf‎</ref>. Due to the multidimensional nature of poverty, the most effective measures combine a number of indicators to provide a poverty profile that represents social, geographical and economic elements of poverty.

Three steps need to be taken in measuring poverty involve:

• Defining an indicator of welfare

• Establishing a minimum acceptable standard of welfare indicators in order to separate the poor from the non-poor (the poverty line)

• Generating a summary statistic, which aggregates the information from the distribution of this welfare indicator relative to the poverty line.

The first step in measuring poverty is defining an indicator of welfare. These may include economic, social and environmental characteristics.

Economic Indicators

The most important indicators of economic welfare are income and consumption, where income is defined as consumption + change in net worth. These help to define whether a household is “poor” or “non-poor”. The pros and cons of using income and consumption indicators of poverty are summarised in table 3.1.0 below. Apart from income or consumption there are a number of other economic characteristics that correlate with poverty, most notably household employment and the property and other assets owned by the household. These indicators are of interest because they represent the household’s command over economic resources and therefore affect its income flow. Furthermore, certain households, especially in rural areas, can be poor in income, but wealthy when their property is taken into consideration. Despite its importance, property is difficult to value in practice due to underdeclaration or problematics of quantifying certain elements of property, such as livestock.

Table 3.1.0: showing some of the advantages and limitations of economic poverty measures <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury</ref>

Social Indicators

Three types of indicators are normally used to determine a household’s living standards: health, education and shelter. The indicators used to determine health include:

- Nutritional status

- Disease status, for example, infant and juvenile mortality and morbidity rates

- Availability of health care services

- The use of these services by poor and non-poor households.

Literacy and schooling are important indicators of wellbeing in and of themselves, as well as being key determinants of poor people’s ability to take advantage of income-earning opportunities. Three types of indicators are normally used to characterise education, including:

- The level of education achieved by each household member

- Availability of education services

- The use of education services by the poor and non-poor

Shelter is measured using housing and environmental indicators. Housing indicators include the condition/type of building and whether one rents or owns their dwelling. Environmental indicators of shelter concern the level of sanitation, the degree of isolation, and the level of personal safety.


Subjective Indicators: Subjective indicators of poverty have also been utilised to a limited extent around the worlds and in New Zealand. Subjective poverty measures enable respondents to self-determine an acceptable standard of living as well as their position relative to that standard (using social and economic indicators as for above). A benefit of subjective poverty measures is that they prevent the definition of a poverty line that may not actually correspond to individuals and households minimum acceptable standard of living. However,they also have a number of problems, primarily that there is a risk of overestimation of the minimum standard of living and that they are more cost-intensive to carry out <ref name="handbook"> Haughton, J. and Khandker, S. (2009) Handbook on Poverty and Inequality, Washington DC: World Bank, 405pp.</ref>


Measuring Poverty in New Zealand

Poverty measures in New Zealand are designed to determine two interrelated concepts:

1. Level of Inequality

- Proportion of population with relatively low level of material well being. This is measured by surveys of income that include information on the household (e.g. Household Economic Survey).

2. Level of Hardship

– the proportion of people constrained by their material circumstances from achieving a minimum ‘decent’ level of wellbeing. This is measured by surveys of wellbeing that include questions about material deprivation (e.g. Living Standards Survey).

Hardship is defined by designating some point on the spectrum of hardship levels as ‘below what is decent’. The measures used are:

- Equivalised income below 50% or 60% of the median income.

- Population reporting an enforced lack of basic items. The Living Standards survey requires people to identify whether they have been forced to do without or delay purchase of food items, clothing, heating or medical services that are defined as necessities.<ref name="income">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>

These indicators provide absolute measures of poverty in New Zealand. A key, multidimensional phenomenon for understanding and measuring poverty is that of deprivation, where deprivation is defined as “a state of observable and demonstrable disadvantage relative to the local community or the wider society or nations to which an individual, family or group belongs.” <ref name="deprivation">Mare, D., Mawson, P. and Timmins, J. (2009) Deprivation in New Zealand: Regional Patterns and Changes, Treasury Working Paper 01/09, Wellington: the Treasury</ref> Indicators of deprivation help to provide a relative measure of poverty. In New Zealand, deprivation is measured by determining a 'deprivation score' for each meshblock (the smallest defined geographical area for which statistical data is collected)in New Zealand. Based on this score, each mesh block is placed into deprivation deciles. It then combines different variables to obtain a summary deprivation measure. These include:

- Communication (access to communications devices)

- Income (a distinction is made between those receiving a benefit or not)

- Employment

- Transport

- Support

- Qualifications

- Owned home

- Living space <ref name="deprivation">Mare, D., Mawson, P. and Timmins, J. (2009) Deprivation in New Zealand: Regional Patterns and Changes, Treasury Working Paper 01/09, Wellington: the Treasury</ref>

The biggest drawback of these, and international measures of poverty is that they are weighted towards determining material dimensions of poverty and thus may fail to capture the many social dimensions of living in poverty in New Zealand <ref name="deprivation">Mare, D., Mawson, P. and Timmins, J. (2009) Deprivation in New Zealand: Regional Patterns and Changes, Treasury Working Paper 01/09, Wellington: the Treasury</ref>. The authors propose that a means of better understanding and developing initiatives for social dimensions of poverty could involve small-scale qualitative analysis of those deemed to be living poverty. Research efforts could be focussed on regions of high deprivation, such as Auckland. A regional focus would enable better understanding of the community characteristics in each area that contribute to experiences of poverty in order to develop targeted, community specific measures. A qualitative focus would enable better understandings of the subjective realities of poverty, including its psychosocial effects. In addition, a qualitative "measurement" of poverty would be of particular use for better understanding child poverty by directly obtaining data of their experiences.

Trends in Poverty

Figure 3.1.0 shows trends in poverty absolute poverty over time. Using a poverty-line threshold of 50% of median income, the level of poverty (constant value) experienced by New Zealanders has decreased since the 1990s. However a relative measure of poverty, which adjusts income to contemporary medians, shows that the level of poverty experienced by New Zealanders has remained static since 2006. The following sections provide a breakdown of some of the internal variation of poverty in New Zealand, as expressed by Table 3.1.1.


Figure 3.1.0: New Zealand trends in the proportion of the population with income lower than 50% of median income <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury</ref>
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Table 3.1.0: showing comparisons of living standards <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury</ref>
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Age Figure 3.1.1 shows that there is a wide range of internal variation in poverty experienced by different age groups. While under 18s still experience the highest levels of poverty, the proportion of children living in poverty over time has decreased, while the proportion of people over 65 experiencing absolute poverty has increased over time. Trends for over 65s living in poverty suggest greater attention should be paid to poverty alleviation measure for this demographic. In addition, New Zealand's ageing population means that the proportion of the population over 65 is expected to double in the next 50 years <ref name="Bryant">Bryant, J., Teasdale, A., Tobias, M., Cheung, J. and McHugh, M. (2004). Population Ageing and Government Health Expenditures in New Zealand, 1951-2051', New Zealand TreasuryWorking Paper 04/14</ref>.]]. This means that experiences of poverty as a function of age may increase for over 65s in coming decades.

Figure 3.1.1: showing demographic variation in poverty by age <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury</ref>
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Child Poverty

Figure 3.1.2: The graph shows the proportion living in poverty (below 50% median income). As shown in the graph, New Zealand has the second highest child poverty rate compared to the United States<ref name="childpoverty">http://www.cpag.org.nz/assets/Publications/121204%20LFB%20CPAG%202011.pdf/</ref>.

Children in poverty adds another perspective to the whole situation. Statistics show that with seven out of ten poor children live in rental accommodation, <ref name="stats">http://www.stats.govt.nz/browse_for_stats/people_and_communities/Households/nzgss_HOTP2012.aspx/</ref> and also taking other factors into consideration, children are highly affected and therefore at risk from poverty in New Zealand. For example, those most significantly affected are the Maori and Pacific children who on average from 2010 to 2012, just under half (48%) of poor children were Maori or Pacific. <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref> Poverty rates for children in beneficiary families are typically around 70 to 75%, much higher than for children in families with at least one adult in full-time employment (10% in 2012) <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref> Nevertheless, on average from 2007 to 2012, two in five poor children (40%) were from households where at least one adult was in full-time employment or was self-employed, down from around one in two (50%) before WFF (2004).<ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref> Children in sole-parent families have a higher risk of income poverty (46%) than those in two-parent families (13% in 2012): on average over 2007 to 2012, half of poor children lived in sole-parent families and half in two-parent families.<ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>


Household Type


Data on the types of households living in absolute poverty (Figure 3.1.3) provides insight into New Zealand's high rate of child poverty. It shows that households with children experience high levels of poverty, with a quarter of sole-parent and two-parent households living in poverty. Trends over time suggest that the proportion of sole-parent households with children living in poverty is increasing. This has implications for women, who are most likely to head sole parent households <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury</ref>.

Figure 3.1.3: showing demographic variation in poverty depending on the presence or absence of children and the number of parents <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury</ref>
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Geographic Variations

Figure 3.1.4: showing regional variation in socio-economic deprivation <ref name="Blakely">Blakely, N. (2012) Treasury Report: Data on Poverty in New Zealand, T2012/37, Wellington: the Treasury </ref>


Figure 3.1.5: showing regions with the highest levels of deprivation <ref name="deprivation">Mare, D., Mawson, P. and Timmins, J. (2009) Deprivation in New Zealand: Regional Patterns and Changes, Treasury Working Paper 01/09, Wellington: the Treasury</ref>


Figure 3.1.6: showing the amount of people living (as a percentage) in the most deprived decile meshblocks <ref name="deprivation">Mare, D., Mawson, P. and Timmins, J. (2009) Deprivation in New Zealand: Regional Patterns and Changes, Treasury Working Paper 01/09, Wellington: the Treasury</ref>


Figure 3.1.7: showing the percentage of the population living in the most deprived decile meshblocks <ref name="deprivation">Mare, D., Mawson, P. and Timmins, J. (2009) Deprivation in New Zealand: Regional Patterns and Changes, Treasury Working Paper 01/09, Wellington: the Treasury</ref>

Figure 3.1.4 provides an empirical picture of the distribution of deprivation in New Zealand, showing that deprivation is located primarily in East Coast/Poverty Bay region of the North Island, Northland and South Auckland. A further regional breakdown of deprivation (Figure 3.1.5) shows the location of the most deprived people as well as regions. Figures 3.1.6 and 3.1.7 provide greater regional specificity of the locations of both the greatest deprivation and the most deprived people. Figure 3.1.6 shows that the most deprived decile meshblocks are in Auckland, Waikato and Northland. Figure 3.1.7 shows that regions with the highest percentages of their population living in the most deprived decile meshblocks are in Gisborne, Northand and Bay of Plenty. Overall, this suggests that the relative state of poverty in Auckland in particular is much greater than other areas. However, it provides little insight into the subjective experiences of deprivation <ref name="deprivation">Mare, D., Mawson, P. and Timmins, J. (2009) Deprivation in New Zealand: Regional Patterns and Changes, Treasury Working Paper 01/09, Wellington: the Treasury</ref>

Income Inequality

One of the impacts on households as a result of the Global Financial Crises (GFC) is the instability of incomes over recent years. Income inequality has fluctuated around a fairly flat trend line, rising a little in HES (Household economic survey) 2009, falling in HES 2010, rising in HES 2011 and falling again in HES 2012. <ref name="stats">http://www.stats.govt.nz/browse_for_stats/people_and_communities/Households/nzgss_HOTP2012.aspx/</ref>.

The Gini coefficient is a common measure of inequality used internationally. It gives a summary of the income differences between each person in the population and every other person. A higher score indicates higher inequality. In OECD (Organization for Economic Cooperation and Development) countries scores range from 25 (eg Norway and Denmark) to 38 (USA), and even higher (eg Chile 51).<ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>

Figure 3.2.0:New Zealand trend line compared with the OECD average, taking into consideration adjustments made for occurrences such as the ongoing GFC and the Christchurch earthquake<ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>


From the late 1980s to the mid 1900s, New Zealand has risen from well under the OECD average to well above. This is primarily because of the significant and rapid increase in income inequality in NZ during this time. From the mid 1990s to around 2011 there was a small net fall in New Zealand’s income inequality trend line and a rise in the OECD average, thus bringing the two lines closer together. Income inequality in New Zealand is similar to that in Australia, Ireland, Canada and Japan. <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>

On the latest OECD figures (c 2010), New Zealand’s trend-line Gini score of 33 was close to those of Australia, Canada and Japan (32-34) and a little above the OECD-34 median (31). Countries such as Denmark, Norway, Finland and Belgium have lower than average inequality (Ginis of 25-26). The US and Israel have higher scores of 38. <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>


Wealth is distributed more unequally than income. Those receiving the top 1% of income in New Zealand have an 8% share of total income (2009 to 2010), similar to France and Australia, and much lower than the UK (14%) and the US (17%). <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>

Material Hardship

It's important to realise that there is a difference between 'material hardship' and 'income poverty.' For example - only half of those who are in material hardship are also in income poverty. <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref> The other half have incomes above the poverty line, but generally below the median. In other words, some of the “non-poor” experience material hardship and some of the “poor” do not. One consequence of this and of the different way each approach looks at disadvantage is that it is possible at times to have income poverty and material hardship moving in different directions. <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>

Figure 3.3.0: Trends in material hardship (deprivation), 2007 to 2012<ref name="childpoverty">http://www.cpag.org.nz/assets/Publications/121204%20LFB%20CPAG%202011.pdf/</ref> .

From the 2009 to the 2011 HES, the child poverty trend was flat, but the material hardship rate increased. This difference of trend is mainly because families with children whose family incomes were above the poverty line reported increased hardship, thus increasing measured hardship irrespective of what the income poverty trend was. In addition, some of those with income below the poverty line but not previously in hardship will have experienced a decline in daily living standards as other resources dwindle. For those on very tight budgets it takes only a relatively small loss of income or other resource to tip the household from barely getting by into more serious hardship. <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref>

According to the Ministry of Social Development: "Material hardship (deprivation) rates increased for some groups from 2007 to 2011, notably for children and older working-age adults living on their own. For children and the population as a whole, hardship rates fell from 2011 to 2012." <ref name="glossary">http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/</ref> This can be observed in Figure 3.30.

Severe Poverty

Those living in households whose incomes are below the AHC (After Housing costs) 60% of median poverty line and who are also experiencing material hardship are sometimes expressed as being in “severe poverty or hardship”. For the population of New Zealand, the size of this group has remained the same from 2007 to 2012, around 5% to 6% (220,000 to 260,000). 10% of children (105,000) were in this group in HES 2012, down from just under 12% (125,000) in HES 2010. And so, for those in hardship as well as having low incomes, there is a slim chance of improvement of living standards until incomes rise and stay up. This is the group sometimes referred to as being in “severe poverty or hardship” (Figure 3.4).

Figure 3.4.0: Trends in the proportion of those who are both income poor and materially deprived, 2007 to 2012

Health

Hospital Admissions: In New Zealand during 2007–2011, gastroenteritis, bronchiolitis, and asthma made the largest individual contributions to hospitalisations for medical conditions with a social gradient, although infectious and respiratory diseases as a whole were responsible for the majority of admissions. Similarly, accidents such as falls, followed by inanimate mechanical forces’ were the main causes of injury admissions with a social gradient, although transport injuries as a group also made a significant contribution <ref name="nzccc"> http://www.nzchildren.co.nz/document_downloads/Childrens%20Social%20Health%20Monitor%202012%20Update.pdf</ref>.

Hospital Admissions for Conditions with a Social Gradient in Children Aged 0–14 Years (Excluding Neonates) by Primary Diagnosis, New Zealand 2007–2011<ref name="nzccc"> http://www.nzchildren.co.nz/document_downloads/Childrens%20Social%20Health%20Monitor%202012%20Update.pdf</ref>.


Mortality: In New Zealand during 2005–2009, Sudden unexpected death of an infant (SUDI) made the single largest contribution to mortality with a social gradient in children aged 0–14 years. This occurred even though the fact that, by definition, all of these deaths occurred during the first year of life. Deaths relating to a vehicle accident made the largest contribution to injury-related deaths, followed by pedestrian injuries and drowning, whereas bacterial/non-viral pneumonia was the leading cause of mortality from medical conditions <ref name="nzccc"> http://www.nzchildren.co.nz/document_downloads/Childrens%20Social%20Health%20Monitor%202012%20Update.pdf</ref>.

Mortality from Conditions with a Social Gradient in Children Aged 0–14 Years (Excluding Neonates) by Main Underlying Cause of Death, New Zealand 2005–2009<ref name="nzccc"> http://www.nzchildren.co.nz/document_downloads/Childrens%20Social%20Health%20Monitor%202012%20Update.pdf</ref>.

Employment/Unemployment

• The unemployment rate for the year ending March 2013 increased for seven out of the 12 regional council areas. Manawatu-Wanganui saw the largest unemployment rates rise (up by 1.7 percentage points). Taranaki region saw the largest unemployment rates drop (down by 0.3 percentage points). <ref name="employment">http://www.dol.govt.nz/publications/lmr/reports/regional-mar-13/index.asp/</ref>

• The labour force participation rate rose in five of the 12 regional council areas between the year ended December 2011 and March 2013. The rate grew the most in the Gisborne/Hawke’s Bay region (up by 1.4 percentage points). Drops in the participation rate were most significant in the Otago region (down by 2.1 percentage points). <ref name="employment">http://www.dol.govt.nz/publications/lmr/reports/regional-mar-13/index.asp/</ref>

• Seven out of 12 regional council areas experienced employment growth between the year to December 2011 and March 2013. The strongest growth was in Taranaki, which saw employment grow by 8.3% from the previous year. Among all the 12 regions, Otago experienced the strongest fall in employment (down by 5.5%) between the year to December 2011 and March 2013. <ref name="employment">http://www.dol.govt.nz/publications/lmr/reports/regional-mar-13/index.asp/</ref>

Poverty reduction and prevention provisions

“Give a man a fish, and you feed him for a day; show him how to catch fish, and you feed him for a lifetime”

This is a Chinese proverb saying, which suggests that the ability to work is of greater benefit than a one-off handout. If you teach a man to fish you feed him for a lifetime." It is better to teach someone how to do something than to do it for him or her. Giving someone a fish is good for the short term, but it is better to teach him or her how to do it so that in the long term they can take care of themselves<ref>http://www.phrases.org.uk/meanings/give-a-man-a-fish.html</ref>.

Ten actions to reduce poverty by the NZCTU

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According to the New Zealand Council of Trade Unions (NZCTU, 2012) they have provided ten actions to reduce poverty in New Zealand. If achieved they believe poverty would be reduced greatly in New Zealand.

The ten actions include:

1. Raise low wages:

Raise low wages by raising the minimum wage to $15.00 per hour and to two thirds of the standard wage within 3 years, strengthening collective negotiating for low paid workers, and increasing Working for Families tax credits for low-income families<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.

2. Increase incomes to households reliant on welfare benefits:

Raise the level of benefits and link them to a percentage of the average wage. This will increase the thresholds of earnings from work, which beneficiaries can retain without deduction<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.

3. Provide good jobs:

Improve employment conditions for casual workers by strengthening minimum employment rights around use of casual employment, termination of employment, and conditions such as parental leave. This can also be done by giving contracted workers the protections of employment law including the right to bargain collectively, and prevent the use of contracting as a means to lower pay and working conditions<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.

4. Create the conditions for good employment practices and job creation:

This could be done by strengthening a collective bargaining and extend its benefits within industry sectors. Repeal legislation, which encourages poor management practices such as the 90 day trial. Also, by extending the assistance given to people out of work to gain skills and match their skills with jobs and pay them 90% income replacement for the first year of unemployment. This could be conditional on commitment by the worker to acquiring new skills if necessary, and job searching. This will create more jobs in work schemes that help people into more permanent work. Institute industry policies, which support the creation of good and sustainable jobs<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.

5. Provide strong public health programmes and services:

This can be done by, ensuring all New Zealanders have affordable access to quality primary health care. Strengthen public health programmes such as warm homes, vaccinations, health and nutrition education in schools, improved safety practices in workplaces and anti-smoking campaigns<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.


6. Ensure access to low cost, good quality housing:

This can be done by, maintaining and extending the stock of state and local government housing with income related rents. This will provide stronger protection for long term tenancies, ensure an adequate supply of low cost, good quality housing designed to suit different family compositions and different cultures, provide assistance with mortgages for first home byers, programmes that meet maori needs, and stronger building regulations to maintain standards for health homes<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.

7. Make sure people have good nutrition and enough food:

Provide food and milk in schools where there is proof of need, and establish nutritional procedures for food and drinks sold in schools. Review whether benefits and low household incomes reliant on on people in paid work are meeting minimum nutritional, housing, energy, health and other essential needs. Establish an inquiry into retail competition in the supermarket sector<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.

8. Build education and skill levels, and the rewards for them:

Ensure that every child has access to affordable quality early childhood education provided by qualified teachers. A clear path for transition from school to vocational education and training and provide advice and guidance to school pupils and staff. Raise the returns to trainees from vocational education by requiring employers to tie qualification achievement to pay levels. Raise caps on tertiary education enrolments<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.

9. Address inequalities:

Increase the progressivity of the tax system by instituting a 38% rate on income more than approximately twice the average wage ($100,000) and a 45% rate on income more than approximately three times the average wage ($150,000). Institute a capital gains tax while progressively decreasing GST. Also, review the social impacts of international commercial agreements and the form of New Zealand’s international trade and financial integration with the rest of the world<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.

10. Provide quality public services:

Maintain quality public services and provide assistance to low income households in essential services other than those already discussed such as electricity and water by providing essential entitlements at low cost, and low cost quality public transport in our cities<ref name = "listverse">http://listverse.com/2012/02/13/top-10-highly-developed-countries/</ref>.


Recommendations from the Ministerial Committee on Poverty

The Ministerial Committee on poverty is a working committee that focuses on the circumstances that trap people in cycles of poverty and seeks to provide opportunities those living in poverty to enable them to improve their living conditions. In their most recent report, the committee made a number of short-term recommendations to alleviate child poverty, including:

- passing on child support payments to sole parents who are beneficiaries

- a Warrant of Fitness for a rental housing, including state housing

- public-private partnership "micro-financing" to provide modest low-interest and no-interest loans

- extending existing food-in-schools programmes, involving collaboration with the public and private sector and

- Support for young people who are parenting and/or pregnant to remain in education.

They also made a second set of recommendations designed to effect longer-term measures to alleviate child poverty, including:

- a review of the rates of all child-related benefits

- a new, simpler income support payment for families with dependent children for all children aged 0 to 5 years, and then targeted (based on family income) from age 6 onward

- increasing the number of social houses by a minimum of 2,000 units per year through to 2020, and

- free primary care visits for all children, 24/7, from birth to age 5; then extending over time to all children to age 17. <ref name="MCOP">Ministerial Committee on Poverty. (2013) Six Monthly Report of the Ministerial Committee on Poverty, April 2013, Wellington: Department of the Prime Minister and Cabinet</ref>.

New Zealand Government Role in Alleviating Poverty

The New Zealand Government has a key role in alleviating poverty, primarily through the provision of affordable rental housing, benefits, health care and funding supporting services. The Government currently spends annually:

- Almost $5 billion ion benefits

- $2.1 billion on the Family Tax Credit

- $241 million on children's health initiatives

- Approximately $2 billion on subsidised housing, and

- $1.4 billion on early childhood education <ref name="MCOP">Ministerial Committee on Poverty. (2013) Six Monthly Report of the Ministerial Committee on Poverty, April 2013, Wellington: Department of the Prime Minister and Cabinet</ref>.

Current Organisations in New Zealand helping with Poverty

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In New Zealand there are many organisations with the sole purpose to better the lives of people living here. Working for families, Kinds can, Red cross and Choose Kids to a name a few. Although many of these organisations focus on child poverty, there are still organisations that aim to help adults facing poor environments in New Zealand, but there could be more. Here are some of the orgainisations in New Zealand that help people in need.


Working for families

This is a package designed to help make it easier to work and raise a family. It pays extra money to many thousands of New Zealand families who need Greater financial support<ref>http://www.workingforfamilies.govt.nz/</ref>.


KidsCan

Helps to meet the physical and nutritional needs of Kiwi kids less fortunate than others so they can be more engaged in their education and have a better chance of reaching their potential in life. They supply food, shoes and clothing to schools whose children need it<ref>http://www.kidscan.org.nz/</ref>.


Red cross Improves the lives of vulnerable people. They do this by mobilising the power of humanity to respond and build resilience to disasters, conflicts and injustices all over the world and in our own backyard<ref>https://www.redcross.org.nz/what-we-do/</ref>.


Presbyterian support They deal with residential care, home care, community care and support, day/activity programmes, social work support, counselling, employment programmes, education, foster care, support for parents, mentoring, food banks, budgeting/money management, welfare, advocacy and advice<ref>https://ps.org.nz/about-us</ref>.


Family Works Otago Provides services to the community which include foodbanks, counseling and workshops to strengthening families and the public. They also support children, youth and families not only in Dunedin but in rural parts of Otago<ref>https://otago.familyworks.org.nz/about-us</ref>.


Child poverty action group This is an independent charity working to eliminate child poverty in New Zealand through research, education and advocacy<ref>http://www.cpag.org.nz/about-us/</ref>.


The Salvation Army Sought to bring salvation to the poor, destitute and hungry by meeting both their "physical and spiritual needs". They run charity shops, operating shelters for the homeless, and providing disaster relief and humanitarian aid to developing countries<ref>http://www.salvationarmy.org.nz/about-us</ref>.

Potential solutions for New Zealand

According to a study conducted by the University of Auckland they Investing In Our Nation’s Kids. This is an evidence-informed project that aims to advance the immediate priorities put forward in the child poverty solutions report. They came up with some solutions to tackle child poverty.


Establish a warrant of fitness for all rental housing

If New Zealand introduced a warrant of fitness (WOF) for private and public rental housing we could make sure that no child has to live in a cold, damp, poorly maintained home. The current regulation for rental housing, dates back to 1947. Some rental properties don't even meet basic standards for sanitation or safety. It's time we got our act together and provided better insulated homes which are more affordable to heat<ref name="educationAuckland">http://www.education.auckland.ac.nz/uoa/child-poverty</ref>.


Microfinancing

Business Partnerships between the government, banking sector and community groups, could offer modest, low or zero interest loans, mortgages, insurance and debt consolidation to those families who need it the most. In other countries, these partnerships are called social lending or micro-finance systems. Social lending fills the gap between banks and loan sharks, so that less families get caught with spiralling debt, trapped in poverty. This will stop low-income families falling prey to high interest rates and through roll out social lending schemes and a national programme to increase financial literacy<ref name="educationAuckland">http://www.education.auckland.ac.nz/uoa/child-poverty</ref>.


Food in schools

If New Zealand supports breakfast and lunch clubs in schools, fewer children will go to school hungry. Programmes like these have been shown to promote a healthy diet, and to improve children's school attendance, behaviour, and ability to learn. Breakfast clubs also provide a safe, early morning place to increase social skills and confidence, creating a better school environment. Supporting schools, communities and businesses to turn all children into healthy, well-educated adults<ref name="educationAuckland">http://www.education.auckland.ac.nz/uoa/child-poverty</ref>.

Safe public space

Children were asked about some of the solutions to child poverty. One of their main ideas was safe public area’s to meet and play together. Children also said being poor limited their opportunities for leisure and community activities. This is important because a child's inability to take part in the same social and leisure activities as their peers means they often experience bullying and are fearful of stigma and social isolation. Children need safe and accessible public spaces. These are local playgrounds and parks. But safe and free public spaces can also include libraries, museums, skate-parks, sports fields and town squares. Many children referred to their local areas as 'scary places' and many have seen aggression or drunkenness, or have been harassed by adults or older youths. Safe and accessible local spaces are important.They're free, children don't need transport to get there, all children with different abilities and ages can participate, and children don't need much parental supervision to use them. All children deserve the opportunity to play with their friends, even if they are poor. Allowing children to manage their free time, and maintain their own spaces, will help them become more responsible adults and engaged citizens. Give children safe spaces to meet, learn and play that are accessible and inclusive for all children<ref name="educationAuckland">http://www.education.auckland.ac.nz/uoa/child-poverty</ref>.


Pass on payments

There are many solo parent families who are living in poverty. Child support payments made by absent parents are kept by the New Zealand Government if their former partner who is caring for their children is on state benefits. In 2011 the payments withheld by government amounted to $159 million. Money was denied to chidren, many of whom are living in poverty.Passing on just a small fraction of these child support payments would make a huge difference for children living in low income families. The Child Support Amendment Bill was recently passed by Parliament, and was a rare opportunity to make an important policy change for children. The government chose not to do this. They didn't include pass-on payments, even after this was strongly recommended to the Select Committee considering the Bill. Politicians need to know this isn't acceptable. If we start with a capped per child pass-on rate of just $10 per week, less children living with solo parents will have to go cold and hungry<ref name="educationAuckland">http://www.education.auckland.ac.nz/uoa/child-poverty</ref>.

Further resources

Why New Zealand has Child Poverty: http://www.youtube.com/watch?v=JLH2u2uIBhw

Pasifika children living below the poverty line: http://www.youtube.com/watch?v=JZ23Mth66E8


References

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