"Our overall results are overly influenced down by a few key areas which we know about and are working to improve."
Health Minister Jonathan Coleman believed conditions had improved for vulnerable Kiwis.
He cited the increased immunisation target that has seen 92 per cent of 8-month-olds receive their immunisations on time, a $2 million increase to prevent sudden infant death syndrome and free doctors' visits and prescriptions for under-13s.
"This is supported by the extra $888 million being invested into health services for 2017/18 which is the biggest increase in 11 years. This takes health investment to a record $16.77 billion in 2017/18, an increase of around $5 billion across our nine Budgets."
Acting Minister for Children Amy Adams said the Government was taking many steps to care for children.
This included Budget 2017's $2 billion per year Family Incomes Package, which will lift families' incomes by an average of $26 a week.
She said it was expected to lift 20,000 families above the threshold for severe housing stress and reduce the number of children living in families receiving less than half the median income by around 50,000.
The Government had also invested a further $11.6 billion in education and set up the Ministry for Vulnerable Children, Oranga Tamariki as a standalone ministry.
Unicef executive director Vivien Maidaborn said the damning report proved that the country needed a more child-centred policy approach.
"Children don't do well in a country by accident, they do well by design. Countries like Iceland, Norway and Finland have very specific strategies in place so they know every child will do well. They reduce inequality.
"We need to put children at the centre. At the moment we design for the economy or for reasons of risk management or efficiency. Then we try and fix the bits that don't work for particular families."
Adams believed the Government had already made policy more youth-centred. An example of this was the youth-led advocacy service for children in care - VOYCE - Whakarongo Mai.
"This is a core focus in the Government's four to five year transformation of our care and protection system."