Child poverty reduction target unchanged following Treasury’s revisions

The Government’s target, to reduce the proportion of children in poverty from 15% now to a world-leading 5% within ten years, remains unchanged following Treasury’s corrected and updated projections, Prime Minister Jacinda Ardern says.

Meanwhile, the Government will prioritise improving the quality of data used to measure child poverty following Treasury’s correction to its coding error and updated child poverty projections, Finance Minister Grant Robertson says.

The review process by Treasury had two aspects. The first was to correct the coding error which overestimated its projections for the number of children lifted out of poverty by both the Coalition Government’s Families Package and the previous government’s Family Incomes Package. Treasury announced that correction today.

Treasury said its December projection that the Families Package would lift 88,000 children out of poverty by 2021 had been corrected to 64,000. The corresponding figure for the Budget 2017 Family Incomes Package was a fall from 49,000 to 33,000 children lifted out of poverty by 2021 – a proportionate fall for the two packages.

“The new results continue to indicate that the Coalition Government’s Families Package will have double the impact reducing child poverty than National’s poorly targeted and more costly tax cut package,” Grant Robertson says.

“The coding error does not impact what families will receive from the Families Package – 384,000 families will still be better off by an average $75 per week.”

The second aspect of the review was for Treasury to update the underlying data in its model from Stats NZ’s 2014/15 Household Economic Survey (HES) to 2015/16 numbers. During this process, problems with that data and for some other years were uncovered. Treasury turned back to pooling 2014/15 data with the 2012/13 HES, producing different numbers to the corrected figures – 54,000 and 27,000, respectively.

“Treasury has said that caution should be applied to using these numbers on their own due to the small underlying sample sizes, and says that they should not be used for benchmarking purposes. This is why we have made the decision to provide for stronger and larger data sets for these surveys, and we are working with Stats NZ on this,” Grant Robertson says.

“Best advice remains that about 14%-15% of children live in households earning below 50% of the median income before housing costs. This level of child poverty is totally unacceptable for a country like New Zealand,” Jacinda Ardern says.

“Our target to ensure this falls to below 5% of all children in 10 years’ time is unchanged by Treasury’s correction. This goal would see New Zealand achieve one of the lowest rates of child poverty in the world. I believe we have the opportunity and the moral obligation to ensure children are free from the burden of poverty,” Jacinda Ardern says.

Information about the Child Poverty Reduction Bill and Government poverty targets can be found here and here.

Note: The corrected projections, and the 15%-5% target, relate to the below 50% of the median income before housing costs measure of child poverty.