Cost of living pushes child poverty rates to pre-Covid highs

The government says it'll address the issue by supporting more beneficiaries into work. Critics say its policies will only make things worse.

Mōrena, and welcome to The Bulletin for Friday, February 23, written by Catherine McGregor.

In today’s edition: National candidates scored biggest election campaign donations; Complainants ‘dismayed’ by report clearing Hamilton Crown Solicitor of bullying; Motorists who were sold contaminated fuel by an Ōtaki BP station face serious engine problems. But first, child poverty is one of New Zealand’s most intractable problems, as shown by the latest Stats NZ figures.

Child poverty figures worst in years

The number of children living in material hardship – meaning they lack the essentials of life such as warm clothing and enough to eat – increased in the year to June 2023 from 10.5% to 12.5%. For Māori children, it’s 21.5%, according to new Stats NZ figures. A second measure of child poverty, the number of children living in households with less than the median wage, also increased. By all these measures, 2023 was the worst year for child poverty since 2019, the first year the statistics were reported. The figures show that “Labour made real inroads pre-Covid, but then didn't do enough during pandemic and inflation spike to shield poor families from the damage”, tweeted commentator Max Rashbrooke. Child poverty reduction minister Louise Upston says it’s clear Labour’s approach wasn’t working and that “supporting parents into paid work and breaking the shackles of welfare dependency” will be the cornerstone of National’s strategy to turn things around.

Sallies report suggests Pacific families hardest hit

The new child poverty figures echo many of the findings of the Salvation Army’s State of the Nation report. It was published last week, before the latest Stats NZ release, so it uses slightly better child poverty numbers from before the worst of the cost-of-living crisis hit. As Gabi Lardies reports in The Spinoff, food insecurity is a major throughline of the Sallies report: a shocking 40% of Pacific households with children told researchers that food runs out “often or sometimes”. Next came Māori households with children, at 35.1%, and then households with children living with a disability, at 35%. The food insecurity numbers come from Ministry of Health data with a large margin of error, so the Sallies also include their own food parcel reporting. In the year to December 2023, it distributed around 92,000 food parcels around the country – 40% more than in the previous year.  

Will this government’s policies make things better or worse?

While National says supporting beneficiaries into work is the best way to address the issue, Council of Trade Unions economist Craig Renney says the government’s policy prescriptions will only make things worse. In a tweet thread, he points to the government’s own analysis that welfare changes could put up to 13,000 more children into poverty by 2028, and argues that minimum wage changes and the reinstatement of prescription fees will add to parents’ financial burden. “This government must show that it has a deliverable plan to reduce child poverty that puts their welfare first – ahead of anything else.” Minister Upston says households experiencing hardship will benefit from the government “providing tax relief, easing mortgage pain, unlocking housing supply, making childcare more affordable, and lifting skills and education to provide our children with greater opportunities”.

Rising rents contributing to hardship, while mortgage holders take biggest hit

Yesterday also saw the release of Stats NZ’s Household Economic Survey, which covered the same period of June 2022 to June 2023. Read in conjunction with the child poverty report, it suggests that rising housing costs are continuing to impact overall hardship. The survey found that 27.5% of non-homeowners (aka renters) are now spending 40% or more of their household income on housing; the figure is 13.3% for people who own or partly own their home. However, while rents are continuing to rise, it’s mortgage holders who are bearing the brunt of skyrocketing inflation. Average mortgage payments increased by 27.5%, the biggest single-year increase since 2018, while average rents increased by a comparatively puny 4%. A reminder that these figures date from June 2023 – since then many more homeowners have refixed at higher rates, while more tenants have been hit with rent increases. 

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National candidates scored biggest election campaign donations

Eight out of 10 recipients of the biggest donations in the 2023 election were from National, according to Electoral Commission figures reported by The Post’s Luke Malpass and Thomas Manch. Also in the top 10 was Chlöe Swarbrick, whose $95,000 in donations included $15,000 from musician Neil Finn. Her Auckland Central race was one of the most expensive in the country, with her National opponent Mahesh Muralidhar receiving $109k from donors, the second highest haul overall. NZ First MP Shane Jones was the only other non-National MP in the top 10. Jones, who has long received criticism for perceived conflicts of interest with the fishing industry, received $5000 from Westfleet Seafoods, whose chief executive Craig Boote “was one of the industry leaders lobbying Jones to review policy around cameras, catch limits, bottom trawling and immigration waivers at an exclusive wine and oysters function”, reports Newsroom’s Laura Walters.

Complainants ‘dismayed’ by report clearing Hamilton Crown Solicitor of bullying

Hamilton Crown Solicitor Jacinda Hamilton’s behaviour "at times fell below the standards expected" but did not amount to bullying, an investigation has found. A group of about five complainants tell RNZ’s Guyon Espiner they are “shocked and dismayed” at the finding. They say they suffered extreme mental distress as a result of Hamilton's behaviour which they call "persistently aggressive, critical, and unpredictable”. The group allege the behaviour continued "over a period of years" and led to "extreme symptoms of anxiety and depression" in several of the staff employed at Hamilton Legal, the Crown Solicitor’s legal firm. Crown Law refused to give the complainants a copy of the Dew investigation into Hamilton, only a summary which they were not allowed to discuss, they say. According to the investigation, Hamilton has accepted responsibility, "deeply regrets that some of her actions have had a hurtful impact in her workplace" and is committed to changing her behaviour.

The real reason our government won't borrow to fix our infrastructure issues

Christopher Luxon has described Aotearoa’s government finances as fragile, but the most qualified folks in financial markets don’t see it that way. In this week’s When the Facts Change, Bernard Hickey talks to S&P Global’s government ratings director Anthony Walker about just how fragile our government and local council finances actually are.

Click and Collect

• Motorists who were sold contaminated fuel by an Ōtaki BP station face serious engine problems and large mechanic’s bills.

• An impending law change that would have forced big businesses to reveal how long they take to pay suppliers is being binned.

• Yesterday was the 13th anniversary of the deadly Christchurch quakes and the CBD is still pockmarked with empty buildings and vacant lots. Why is the rebuild taking so long?

• Alexey Navalny’s mother has seen her son’s body but says officials are "threatening" her into agreeing to a secret funeral, or "they will do something with my son’s body."

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Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz.

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