Jenesa Jeram: Truth on poverty lies amid wealth of statistics

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Poverty in New Zealand can mean nearly anything the commentator wants it to mean. Photo / Thinkstock
Poverty in New Zealand can mean nearly anything the commentator wants it to mean. Photo / Thinkstock

There is no poverty in New Zealand because the poor are not living in slums. Some people in so-called poverty even have cars and ovens.

Whether you agree or disagree with the above statement, you are right. And with that same kind of reasoning, Jamie Whyte's recent opinion piece - that there is no poverty in New Zealand - is not wrong.

Not technically, anyway. Poverty in New Zealand can mean nearly anything the commentator wants it to mean. After all, there is no formal definition (though international organisations and agencies have advocated their own).

New Zealand also does not adopt an official poverty measure. Rather, a suite of measures is collected annually by the Ministry of Social Development on trends in indicators of inequality and hardship. The measures have different purposes.

If poverty were to be defined in global terms, then it is indeed ridiculous to compare the cellphone-toting poor in New Zealand with the malnourished children we see on World Vision ads. It is not the most compassionate definition of poverty, but it is not incorrect.

Whyte is also right to take issue with some of the most common measures of poverty. When you hear 305,000 children in New Zealand are in poverty, or even the Child Poverty Advocacy Group's assertion there are 220,000 children in poverty, what you are really hearing is a measure of relative income inequality. Most commonly set at 50 per cent or 60 per cent of the median income (after housing costs), these measures yield the most shocking statistics.

Yet, as Whyte points out, these income measures tell us nothing about how people live, or their material suffering. Poor students whose lifestyles are still funded by their parents would be considered in poverty. So would those lucky Aucklanders who can afford to stay home and play World of Warcraft all day thanks to their property investments.

And among these will be those suffering from many of the indicators traditionally associated with poverty such as low disposable incomes, inadequate housing, poor nutrition and lack of security.

The relativity of the measure also means the poverty could decrease when the median income decreases, or the poverty rate could rise, even if the incomes of the poorest rise too. That's fine, if inequality is the concern. But inequality is not absolute hardship. Inequality says nothing about how people live.

Now, all poverty measures in advanced economies like New Zealand will necessarily be relative measures. Even absolute poverty measures must first depend on an agreed set of minimum standards of living.

If it is standard of living that is of concern, then measures of relative material hardship come close to reflecting that. Material hardship includes criteria such as situations where households face an enforced lack of essentials, have had to economise, cut back or delay purchases, are in arrears, or face financial stress and vulnerability.

Those reporting on poverty do not have to hunt much for those hardship statistics either. They are published in the same ministry report used to extract those headline-grabbing figures. The ministry itself discourages the reporting of just one headline-grabbing statistic such as 305,000 children in poverty, stating "While it is true that that is one figure given in the range of income poverty figures reported, the Incomes Report does not support such a bald definitive claim that is misleadingly matter-of-fact."

Delve deeper into the ministry report, and you may even be surprised to note that there is only a modest overlap between the income poor and materially deprived. Not all low-income households are suffering hardship, and not all of those in hardship are defined as low income.

In 2012, only 48 per cent of those experiencing material hardship were also households earning less than the 60 per cent median income (after housing costs) threshold. A small but significant portion of those in material hardship (17 per cent) even earned above the median household income.

The poverty campaigners who scream the highest number they can extract on poverty are being just as hyperbolic as those who claim there is no poverty in this country.

Between the extremes though, lies some real insight into who the poor are, and the nature of their hardship.

Thanks to the Ministry of Social Development, at least there is no poverty of measurements and statistics from which to draw from.

Jenesa Jeram is a researcher at The New Zealand Initiative, which will be releasing a report on poverty in February.

Debate on this article is now closed.

- NZ Herald

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