Editorial: Shock the ministry missed

Many readers will have raised an eyebrow this week at a Ministry of Social Development report identifying 17 "life shocks" that can cast people into poverty. Leading the list was marriage break-ups and the others, in no particular order, included redundancy, unplanned pregnancy, burglary, bankruptcy and prolonged illness.

The only surprising finding of the research was that none of them alone caused a serious drop in living standards; people could suffer up to seven such "shocks" and still have the same average living standard as those who had suffered none.

Eight seemed to be the tipping point, the ministry said.

Leaving aside that facile conclusion, the main question in readers' minds was probably, why are they telling us this?

The fact that marriage failure, sole parenthood and the like can quickly lower a household's living standard could be news only to somebody whose social knowledge was limited to academic research in which people are never the architects of their misfortune.

The report, issued, curiously, two years after it was compiled, is welcome for the sign that the ministry has seen a need to identify causes of relative poverty.

But most of its 17 listed events could not be called root causes.

"Forced sale of a house", for example, or "eviction from home or flat" were likely to be symptoms of a more basic problem. Likewise, "unexpected drop in income" or "substantial financial loss".

Much of the list was repetitive. Redundancy and unemployment were separate items, as were "victim of violence", "major injury or health problem", "illness lasting three months or more" and even "imprisonment" and "non-custodial sentence".

By listing so many life events, and emphasising the cumulative effects of an extraordinary run of misfortune, the ministry has managed to fudge the issue of personal responsibility. We need to know how much poverty is the consequence of poor decisions in education, employment, marriage, family planning, childcare, household spending and personal investments. The answers might lead to better social policy initiatives than simple income support.

But this report, entitled New Zealand Living Standards 2004, led only to the Government's Working for Families plan, and its findings were plainly ignored. The report's primary message was that living standards depended on many factors besides income. They mentioned sustained employment, higher levels of education and home ownership. But the resultant package was limited to income supplements for employed people with children to support.

Working for Families remains an ill-designed benefit, available to households quite high on the income scale but excluding those without paid employment. It was devised largely for political purposes, anticipating National's promise of tax cuts for all earners. Labour's payments to low and middle-income earning households would be misleadingly named "tax credits".

No wonder the Government waited two years to reveal the report. It found the gap between beneficiaries and the better-paid had widened since 2000, Labour's first year in office. While three in four New Zealanders reported their living standards to be fairly comfortable or very good, the number in severe or significant hardship had risen by 20 per cent in the Government's first four years.

Many of those people might be helped to make better decisions for themselves, but assistance of that kind is unlikely until social research focuses on the "life shocks" that can be fixed.

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