It's time business leaders took Govt to task over programmes that fail to address problem of child poverty.

It may have been possible some time ago to bury our heads in the sand and ignore the prevalence of child poverty in New Zealand. That time has well and truly past.

Today, many new voices are adding to the demand that "something be done". Recently, on this page Allan Freeth took a step outside the corporate mould and challenged business leaders to see that "their behaviour suggests that they do not care enough about our youth and children". Such business leaders should be holding the Government to account for failing to ensure that policies to address child poverty are actually working.

Working for Families, a key policy, introduced in 2005 to reduce child poverty, got sidetracked into being a sop for business and "making work pay". "Work is the way out of poverty" became a convenient mantra. So a significant part of Working for Families, the In Work Tax Credit, was ring-fenced and given only to the caregiver of the children when the family met certain work criteria. This peculiar approach to recognising the costs of raising children has meant that some children in low income families have been helped while others have been left to languish. In Australia all low income children are treated the same (and, it should be noted, much more generously).

New Zealand's approach locked in the notion that low income children's weekly needs could only be properly met by Working for Families if parents met two tests.


The first test requires 20 hours of paid work a week for a sole parent and 30 hours a week for a couple. This anachronistic rule has never been reviewed in light of the nature of the modern, just-in-time, casualisation of the low end of the labour market. Business leaders ought to be raising questions about the design of this policy. Families that don't meet the hours of work in any period can be chased for any over-payment, making many families very nervous. In a recession or an earthquake there is no recognition that the needs of the child don't change when parents lose hours of work.

The second test is having no parent on any kind of benefit, or student allowance, even if working part-time. No matter what work incentive is offered, most parents cannot leave the benefit system for work because they are either sick, disabled or chronically ill, have care-giving roles, or there is no work available.

By denying these poorest families a significant payment (misleadingly named the In-Work Tax Credit) worth $60 a week for one to three children, with an extra $15 per child for larger families, the Government has saved $3 billion since 2006. Yes, Working for Families did reduce child poverty for some low income families who report using the extra payments well for their children. The Ministry of Social Development 2012 household incomes report says for two parent "working" households, the fall in child poverty rates from 28 per cent in 2004 to 9 per cent in 2007 "was very large, reflecting the Working for Families impact, especially through the In-Work Tax Credit".

But what of those who don't get this payment? As the Expert Group on Poverty said, of the 270,000 poor children who still fall below the 60 per cent median income poverty line, 170,000 children fall below the very low 50 per cent line. These are the ones driving the most upsetting child poverty statistics. The policy left them out. These children are denied the protections of the UN Convention on the Rights of the Child that states all children have a right to social security and that the Government has an obligation to implement measures necessary to achieve full realisation of that right.

Child poverty is not a party political issue; it is a moral and ethical issue. As Bryan Bruce says in his award-winning documentary, Inside New Zealand Child Poverty, "We are good people. We can fix this. If we want to."

The outrage of business leaders should be harnessed to support practical and just steps to make a difference for these children. New Zealand has much work to do in housing, health and education as well as income support to restore a semblance of egalitarianism to New Zealand society. But a vital first step is to require the Government to use poverty alleviation measures properly by not excluding the poorest children.

Child Poverty Action Group has been pursuing this issue in the courts since 2008, arguing that the In-Work Tax Credit discriminates against children on the basis of their parents' work status, which is prohibited under the Human Rights Act. The case has reached the Court of Appeal and will be heard in May this year.

Susan St John is an Associate Professor of Economics at Auckland Business School and a spokesperson for the Child Poverty Action Group.
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