Addressing poverty will help solve skill shortage, say Russell Wills and Phil O’Reilly.

The Prime Minister recently made two announcements which appear worlds away but are intrinsically linked: making child poverty his priority this term, and attracting skilled people to New Zealand to enable continued economic growth.

There is an obvious link between the skills shortages we're experiencing now and the past 20 years of child poverty. The evidence is clear that many children growing up in poverty are arriving at school not ready to learn, failing in the education system, and not getting skills needed to get good jobs. Our lack of a skilled workforce stifles business growth and innovation and creates avoidable costs for the government purse.

Successful businesses are increasingly talent-driven, their employees' skill levels determining their success. Profitability depends on staff with a high degree of social and emotional intelligence; what psychologists call "cognitive flexibility". The foundations for these skills are laid in the first three years of life.

We fear that, unless we substantially increase our investment in our youngest children living in severe and persistent poverty, we will continue to see generations of children arriving at school not ready to learn and leaving early without qualifications or the social, emotional or life skills to find long-term, productive employment. Mental health problems, addictions and poor life choices quickly follow. Early pregnancy and poor parenting perpetuate the cycle.


The problem is large - by every measure the proportion of children living in poverty is at least double the rate in the 1980s. Most measures put our child poverty rate at 20-25 per cent or 200,000-260,000 children. It wasn't like this before and it doesn't have to be like this in the future.

The Prime Minister has made it clear the best route out of poverty is work. We agree. Children generally do better when their parents are in paid work - parents have more income, can afford better food and housing, have better self-esteem and purpose, and model work as the norm their children aspire to.

We support the critical mission of profitable companies creating more jobs within a competitive economy. We agree with many government investments, such as in early childhood education and free GP visits and prescriptions for children under 13. We support encouraging parents on benefits into work and the Youth Guarantee Programme, which supports young people who have left school early back into education and training.

However, there remain barriers to entry to work for parents, particularly quality early childhood care, after-school and holiday programmes and improving access to relevant training. Incomes are too low and costs too high, particularly housing costs, for some working parents to meet all their children's basic needs. Improving accommodation affordability must be seen as an investment in those children and in all our futures. We need to find more and better ways to improve incomes and reduce costs for the poorest families.

The Expert Advisory Group on Solutions to Child Poverty said there was no simple, silver bullet solution to a problem as complex as child poverty. However, there are solutions, including roles for business, iwi, local and central government and communities.

Government can't do everything. Businesses are central to all communities and many are leading the battle against child poverty. Examples include Sanitarium and Fonterra providing school breakfasts; businesses supporting charities like Feed the Need and KidsCan providing breakfasts, lunches, raincoats, shoes and stationery; BNZ and partners providing no-interest and low-interest loans; and the Warehouse tackling debt by providing financial literacy courses to staff.

An emerging model is for organisations to partner to achieve change. For example, the Sustainable Business Council, made up of many of New Zealand's largest companies, is leading a strategy to help sole parents into work. Among its projects is a partnership between Countdown supermarkets and Barnados to provide childcare tailored for sole parents.

There are hundreds of examples all over the country of businesses, non-governmental organisations and other organisations partnering to address issues within their communities. Each contributes its strengths, the response is tailored to local need and the whole is greater than the sum of the parts. And everyone benefits. This will mean a future where businesses will not need foreign job fairs to find workers for New Zealand jobs.


So government needs to do its bit. But meantime, let's all think about how we, as business owners, employers and members of communities, can act in our lives and our organisations to make a difference to those who need it most. Their lives and our prosperity depend on it.

Dr Russell Wills is a paediatrician and New Zealand Children's Commissioner. Phil O'Reilly is chief executive of BusinessNZ and was a member of the Children's Commissioner's Expert Advisory Group on Solutions to Child Poverty in 2012.