As the New Zealand First party’s vote share evaporated on election day, so too did Jacinda Ardern’s last excuse for not making more progress on child poverty, her signature issue.
No longer able to blame inaction on her one-time conservative coalition partner, and possessing an absolute majority, the Labour leader now has a free hand on an issue dear to her heart. She may have labelled climate change her “nuclear-free moment”, referencing the 1980s Labour government’s famous opposition to nuclear weapons, but it is child poverty reduction, not climate change, that she has always taken as her “extra” portfolio.
And Ardern has already made modest progress. Data released in February showed that, on seven out of nine key measurements, child poverty had fallen slightly in her first year in office. And that data was collected before her main anti-poverty initiative so far, the Families Package, had fully taken effect.
The latest Treasury modelling shows that, pre-coronavirus, Ardern was on track to achieve the 2021 targets in the Child Poverty Reduction Act, which include lowering from 16.5% to 10.5% the proportion of families with less than half the typical (median) household income. This, though, was a little bit like getting to base camp on Everest: no mean feat, but infinitely easier than the task ahead.
The coronavirus-induced recession has clearly worsened some forms of poverty – just look at the food bank queues. The Treasury thinks the number of families in “material hardship” – those reporting they are unable to afford basic items – will “rise sharply”. Progress on other measures, such as the household incomes one, is likely to stall or partially reverse.
Ardern’s long-term targets, meanwhile, are daunting. They require the proportion of households with less than half the typical income to fall to just 5% by 2028, for instance.
It is important to stand back and appreciate the scope of this ambition. It would cut the number of children in poverty by two-thirds in a decade, placing New Zealand amongst the world’s best performers and profoundly reducing misery and marginalisation.
But ambitious targets require ambitious policy agendas – all the more so as the hardest challenges are still to be met. The families helped so far will largely be those who were in relatively “shallow” poverty, needing perhaps an extra $50 a week to be lifted over the line. The families Ardern will have to help in later years will be as much as $350 a week under the poverty line, according to the 2018 Welfare Expert Advisory Group (WEAG). And their numbers will have been swollen by coronavirus.
For all that she is supposed to be a transformational figure, Ardern has relied largely on the “third way” policies of her Labour predecessor, Helen Clark, in her fight against child poverty. The Families Package rejigged a familiar array of tax credits and payments, albeit signalling a minor shift to universalism via the best start payment for all newborns.
Some more ambitious policies are on the way. The minimum wage will continue its rise towards $20 an hour, while so-called fair pay agreements will ensure that if workers win good pay rates with one employer, those conditions are spread throughout their industry. Beneficiaries will be able to earn significantly more before their benefits are clawed back, some 200,000 children will get free school lunches, and another 8,000 state houses will be built.
But most experts believe these policies will be nowhere near enough. “There’s nothing in place that would give you any confidence that they have the tools to meet the 2028 targets,” says Susan St John, a founding member of the Child Poverty Action Group. At a minimum, she says, the government needs to raise core benefits by nearly 50%, as the WEAG recommended. It should also simplify and increase Working for Families payments, remove sanctions, forgive beneficiaries’ debts and make housing more affordable.
Ardern’s innate fiscal and political caution will not help here. Although New Zealand’s coronavirus-induced public debt will, at 55% of GDP, be modest by global standards, she seems reluctant to spend up large on things like solving child poverty. Yet that fight, if it is to be successful, will be expensive, even if it brings immense savings – in the form of healthier, better-educated children – in the long run.
St John says the government could easily spend $1bn a year – on a package that includes extending some tax credits to beneficiary families – just as “a holding position to relieve the depth of poverty”. This starkly illustrates the scale of the challenge Ardern faces. She has made it part way up the mountain: but does she have the strength for the climb ahead?
Max Rashbrooke is a New-Zealand-based writer with interests in economic inequality and democratic participation. He is currently the 2020 J D Stout Fellow at Victoria University of Wellington