Poverty trap snapping shut on children

Children are the new face of poverty in New Zealand.

Children and their parents now make up seven out of every 10 people living in homes earning below the level of basic welfare benefits recommended by the Royal Commission on Social Security in 1972, adjusted for inflation and the number of mouths to feed.

Some 39 per cent of sole parents and 18 per cent of two-parent families fell below that basic level in a 2002 report.

Only 6 per cent of households without children fell below the same level, again adjusted for the number of people in each home.

After adjusting for housing costs as well, households with children accounted for 82 per cent of all homes falling below the basic level.

A generation ago, the opposite was true, says the lobby group Child Poverty Action.

"In the 1960s and early 1970s, poverty was associated mainly with the elderly, as families and children were well supported, while pensions were low," it said.

"The situation is now reversed."

After a seven-year freeze, family support payments finally increase next Friday, for the first time since the Labour Government took office.

The Working for Families package, unveiled in last year's Budget, will lift family support payments by $25 a week for the first child and $15 for every extra child, for families earning less than about $400 a week.

The changes will help all two-child families on incomes of up to $940 a week to some extent, and larger families up to even higher incomes.

Child Poverty Action economist Susan St John says the increases are long overdue.

"Imagine the catch-up in dollar terms if the pension had not been inflation-adjusted for the same period and then caught up in one fell swoop," she said.

But there has been no outcry, because many doubt that "child poverty" exists here.

"If poor Kiwi kids are just missing the latest iPod or sports shoes, that's too bad, but I won't lose much sleep," wrote Stuart Feigin, of Viaduct Harbour, in the Herald on March 11.

As always, the reality is complicated. People are "poor" for a variety of reasons.

Many single parents feel they cannot work while their children are young.

Gloria Chan (not her real name), of Glen Innes, stays home to look after her daughters, aged 8 and 11.

"If you work part-time you get tired and grumpy, and who gets it? It's the children," she said.

"I want to be with my children until they don't need me to cook for them and prepare their lunches."

Mrs Chan lives on the domestic purposes benefit of $256.52 a week plus family support, which is $47 a week for her first child and $32 for her second.

She has not yet tried to get an accommodation supplement, but she has recently moved into a rental house costing $330 a week and will probably qualify for a supplement of about $177 a week. Fortunately for her, Friday's changes will include lifting the maximum supplement in Auckland from $150 to $225 a week.

But options are limited.

"My daughter loves ballet but I can't afford it," she said. "My daughter's intermediate school wants her to read the newspaper but I can't afford it.

"My fridge is always too warm because I can't afford to replace it."

Karen Tawa (also not her real name), a mother of three living on the widows' benefit in Glen Eden, says her two sons, aged 11 and 13, play no sports and cannot go to school camps because of the cost.

Her 11-year-old is supposed to drink a lot of high-calcium milk to help with a serious health condition, but it's too expensive: "I substitute multivitamins because they're cheaper."

And she is battling to get a nebuliser for her 16-month-old baby, who has asthma, but Work and Income only lends up to $200 for major items and it's not enough.

Her car registration has lapsed and she has sold all her jewellery except for the wedding ring from her late husband.

"I'm not coping," she says. "As a New Zealander, it's beyond a joke."

From Friday, she will be $45 a week better off. Family support payments will go up by $55, offset by a cut in the widows' benefit from $256.52 to $241.47.

Social Development Ministry officials say the changes will slash "child poverty". The proportion of children living in homes earning less than half the average wage will plunge from 14.7 per cent to just 4.3 per cent, shifting New Zealand's status from the fourth-highest rate of child poverty among developed countries to the fifth-lowest by 2007.

But the changes are controversial.

A Herald-DigiPoll after last year's Budget found 60 per cent of New Zealanders would prefer tax cuts to state handouts for families. However, Child Poverty Action says the increased handouts are not targeted enough at reducing poverty, because they give more to working families than they would to the same families on benefits.

Monday: Winners and losers

Working for families

Changes to family assistance and other subsidies include:

* Family Support up $25 a week for first child and $15 for each other child.
* Main welfare benefits for most families down $17-$21 a week.
* Special benefit top-ups down by an average of $13.50 a week.
* Higher accommodation supplements in urban areas.
* Further changes on April 1 next year and in 2007.