4 mistakes showing Key is clueless on dealing with poverty

Geoff SimmonsTax and Welfare

The Prime Minister’s response to the increase in children living below the poverty line was incorrect and completely contradictory. On the one hand he dismissed the rise of child poverty as a result of parents not working, and in particular singled out drug dependency as a problem. Both of these statements are incorrect according to the Government’s own statistics. On the other hand he pointed to the case of Jonah Lomu’s kids as being a special case – for some reason those poor boys are deserving of help whereas the other 305,000 are not.

As we pointed out on Tuesday, this only reinforces the misconception that child poverty is the result of poor parenting. As we saw in that blog this approach is incorrect and has failed to deliver effective policies, yet we continue with it. 

Blunder #1: Poverty is due to people not working

According to the Child Poverty Monitor, the majority of children in poverty live in households where one or more parents are employed. So actually Key is wrong – finding these people work will not be the answer to poverty. More likely it will push the child from living in a poor beneficiary household to a poor employed household. A lot depends on how you define ‘employed’ of course, as with casual employment some people move in and out of receiving benefits many times over a year.

This tells us two important things. Firstly, the benefit system is out of date and can’t keep pace with the rapidly changing modern working world. Secondly, for low skilled jobs the market can no longer provide a living wage. Both of these are reasons for serious reform – which is why we think we need to introduce an Unconditional Basic Income.

Blunder #2: The answer to poverty is work

As we pointed out on Tuesday, there is no evidence that pushing solo parents back into work makes the kids better off. The only exception is when two conditions are met; the job is good enough for the family’s income to increase (after the additional costs of working), and the child is placed in high quality childcare (which often isn’t the case in our poor neighbourhoods).

Again Key (and Government policy) is wrong to be pushing solo Mums back to work when they have kids as young as 3, without a serious investment in skills and quality childcare.

Blunder #3: People are on benefits because of drugs

This was just plain fantasy land, and contradicted the statistics lauded by his own Government Ministers.

As we saw in 2014, of the 8,000 beneficiaries tested for drugs, only 22 tested positive or refused to take the tests. That is 0.27%. Statistics New Zealand figures show that beneficiaries and working households both spend the same amount of their income on alcohol, cigarettes and drugs: 2.7%. So in absolute terms, it appears that beneficiaries actually spend less on drugs than the rest of us. It shouldn’t be a surprise really, as they have less money.

Drugs are certainly a problem facing our society impacting on our health and economy. However, they are a problem right across our society. Some poor people take them as a way to deal with their stressed and difficult lives, but some rich people do the same. There is no evidence that drug problems are a significant cause of poverty or preventing people from working. If the Prime Minister has some evidence to the contrary, why isn’t he investing more in mental health and drug rehab programmes?

Blunder #4: Some people are deserving of help and others aren’t

The situation facing Jonah Lomu’s boys is certainly sad.

But why doesn’t the Prime Minister show the same empathy to the 305,000 other children growing up in poverty? They haven’t chosen the situation they are in. Indeed, neither have many of the parents that are living in poverty and trying to raise their kids.

Almost half of them are solo parents, who may have been abandoned by their partner, left them to avoid abuse, or even had their partner die. Many of the families in poverty are working in low paid jobs, trying to give their kids the best start they with the paltry sum they take home each week.

There are lots of incredible stories out there, of hard working parents struggling to do the best for their kids against the odds. Instead of singing Mariah Carey songs, all I want for Christmas is a Prime Minister who shows the same empathy for poor families that he doesn’t know as the ones he does. I’m sure Mariah would class many of them as heroes.

4 mistakes showing Key is clueless on dealing with poverty was last modified: June 21st, 2016 by Geoff Simmons
About the Author

Geoff Simmons

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Geoff Simmons is an economist working for the Morgan Foundation. Geoff has an Honours degree from Auckland University and over ten years experience working for NZ Treasury and as a manager in the UK civil service. Geoff has co-authored three books alongside Gareth.