New Zealand Finance Minister, Grant Robertson. Image courtesy of New Zealand Tertiary Education Union.
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Analysis by Bryce Edwards.

Political scientist, Dr Bryce Edwards.

Jacinda Ardern and Grant Robertson like to think of themselves as leftwing politicians. So why aren’t they prioritising and championing the vulnerable at the bottom of society? Since Covid hit they have chosen economic policies that benefit the rich while pushing more into poverty.

Increasing inequality was thrown into stark relief last week with the release of a Statistics New Zealand report showing wealth had grown by $402bn over the last year. This is about four times faster than usual, and can be attributed to fast-rising prices of assets like houses, rentals, and businesses that have skyrocketed in value as a result of a government-induced economic boom.

Tomorrow’s Political Roundup column will focus on how the rich have got significantly richer due to government policies over the last year. But today’s column deals with those on the other side of increasing inequality – the poor. Many reports and articles have shown that poverty is getting worse, and this is directly related to government policies and neglect.

New report on increasing poverty over the last year

Yesterday the Child Poverty Action Group released their research on the impacts children from low-income households faced during the first year of the pandemic, and showed child poverty had increased by ten per cent, or an additional 18,000 kids – see: The first year of Covid-19: Initial outcomes of our collective care for low-income children in Aotearoa New Zealand.

According to one news report on this, the anti-poverty group “put much of the increased poverty, inequity, homelessness and food insecurity down to government neglect as it created its policies during the pandemic” – see Eva Corlett’s New Zealand pandemic policies pushed 18,000 children into poverty, study shows. And one of the report’s authors, Leah Bain, argues that although billions of dollars were pumped into business through the Wage Subsidy Scheme, “many people in lower-socioeconomic positions missed out”.

The article reports the response from Prime Minister Jacinda Ardern who says: “As soon as Covid hit, we knew that the impact would be felt heavily by children already experiencing poverty, that’s why put in an extra $25 into weekly benefits, changed requirements for in-work tax credits and, in the last budget, made substantial changes to our welfare system.”

Another article reports Child Poverty Action Group researcher Janet McAllister as believing that when Covid hit, “the government did not give children and their families the prioritisation they needed as it developed policy responses to the pandemic.” She says that recent benefit increases aren’t enough to make up for the worsening position of those at the bottom – see Sarah Robson’s Covid-19 may have pushed thousands more children into poverty.

This article also reports that demand for food banks increased dramatically, and has not returned to pre-Covid levels: “Auckland City Missioner Helen Robinson said, in the year to June, they handed out 48,000 food parcels – double the number in the year before Covid-19 hit.”

The Child Poverty Action Group points out that Māori and Pasifika children have been hit particularly hard by economic policies under Covid. And in this regard, the government-funded Whānau Ora commissioning agency for the South Island says the latest report is in line with what they’ve been seeing: “Over the past year there has been an unquestionable increase in requests for support for the basic things like kai, power and data and accommodation costs” – see: Rachel Sadler’s Poverty burden for children increases in first year of Covid-19 due to Government neglect – Child Poverty Action Group.

There have been a number of other recent signs showing the extent of poverty in New Zealand. Newshub has reported the Salvation Army’s observations that “there has been a massive increase in demand” for their services recently, and their belief that “a third of New Zealand’s children are living in homes that are ‘way too cold'” – see: Salvation Army calling for donations as cold, hard winter causes increase in demand.

Similarly, another charity agency is calling for more radical measure to fix poverty – see Newstalk ZB’s Barnardos: Bold actions need to be taken to reduce child poverty in New Zealand. According to this article, which refers to the Government’s new official child poverty targets, “The government’s significantly lowering its ambitions for child poverty reduction. By next year they wanted to lift 61,000 kids out of poverty. They haven’t come anywhere near that. They’re now giving themselves an extra three years to get to 67,000 kids out of poverty.”

Government policies for the poor

The Government’s increase in benefits is obviously their answer to the plight of the poor. But are the increases enough? Today in the Guardian, inequality researcher Max Rashbrooke explains his research into whether the promised increases are really going to eventuate – see: ‘Can we opt out?’: New Zealand benefit increases leave some worse off.

Rashbrooke finds that “clawbacks” in the welfare system mean the promised $20/week increase that was introduced this month is actually much less for some recipients, including some examples where they are actually worse off than before. He also reports: “A survey by Auckland’s St Vincent de Paul budgeting service showed just 12 of 91 beneficiary clients would get the full amount. Most would get $14-$15.”

See also Justin Latif’s Extra $20 a week not enough to fix housing crisis for beneficiaries – budgeters.

Other anti-poverty advocates claim that the recent benefit increase is far too little. Auckland Action Against Poverty co-ordinator Brooke Fiafia was reported earlier this month saying the latest increase “is woefully inadequate amid the rising cost of living, keeping people trapped in poverty” – see 1News’ Recent benefit increases ‘trash more than transformative’ – advocate.

The Prime Minister appears to be surprised about the level of support for further increases, and says she also wants to see more progress on both poverty levels and the reform of welfare – see 1News’ Should benefit increases have gone further? PM defends Budget but admits she’s not satisfied.

Researcher Max Rashbrooke has been a critic of the Government for not doing enough about poverty. But in a recent presentation on the topic gives the Government marks for heading in the right direction at least. For a report on his views, see Brenda Harwood’s Child poverty remedies slow and incremental. In contrast, Child Poverty Action Group activist Jude Sligo is reported as being much less positive, saying “At the moment, they seem to be patching up the leaks, rather than trying to change the system”.

There are other criticisms at the moment about Labour’s welfare policies. The “Best Start” payments to parents of newborn babies, for example, don’t just go to poor families, and the Herald has pointed to information showing that the wealthy have received the payment too, “including $5.5m to more than 4000 families on incomes over $200,000” – see Claire Trevett’s Prime Minister’s Best Start scheme for babies pays out millions to the well-off (paywalled).

Others are arguing that the welfare system is too draconian when it’s used to punish beneficiaries who don’t show up for court appearances – see 1News’ Use of court sanction against beneficiaries explodes under Labour despite Ardern raging against it in 2013.

What does the public think about poverty and inequality?

Do New Zealanders still care about poverty and inequality? The signs are that they certainly do, and many want the Government to be doing a lot more.

Last week the polling company Ipsos released their June report on what the current major issues in New Zealand are, and this showed that poverty/inequality is listed by 26 per cent of the public as one of the biggest problems. This was surpassed only by housing (53 per cent), Healthcare (27 per cent) and Cost of living (27 per cent) – see: Ipsos NZ Issues Monitor – June 2021.

This big increase in public consciousness about poverty, with strong support for governments to take action, is also reflected in new data from the International Social Survey Programme (ISSP), which is reported this month by Max Rashbrooke and Peter Skilling – see: Public opinion supports action on inequality. Jacinda Ardern has no more excuses.

This shows that between 2009 and 2020 the proportion of those who think that income differences in New Zealand are “too large” went from 63 per cent to 73 percent; the proportion who think the government has “a responsibility” to deal with those differences increased from 42 per cent to 51 per cent; and the proportion of people who think success in life is related to coming from a wealthy family went up from 9 per cent to 17 per cent, and those who think it’s related to knowing the right people rose from 29 per cent to 41 per cent. Rashbrooke and Skilling conclude that these results are at variance with the current Government ruling out egalitarian policies.

What about benefit levels? Is the public satisfied with the latest increases? A UMR poll result was released earlier this month which shows that 60 per cent of the public think that support levels are still too low – see Dan Satherley and Isabella Durant’s Kiwis say latest benefit boost still not enough – poll.

The poll was commission by a number of anti-poverty groups, and Child Poverty Action Group researcher Janet McAllister argued that the result “shows this government has the social license to deliver on much more meaningful and long lasting change than what was announced at Budget 2021”.

Finally, last week the former Reserve Bank Chief Economist and Chairman Arthur Grimes, now at Victoria University of Wellington, accused the Government of engineering the worst wellbeing disaster of the last two decades in the economic policies they chose to implement since Covid hit. Rising cost of living and housing affordability. For his arguments about how the Government has caused a crisis for the poor in terms of cost of living and housing affordability, and why and he accuses Treasury of being “utterly incompetent”, see Jenée Tibshraeny’s Arthur Grimes: RBNZ and the Govt have engineered a ‘wellbeing disaster’.

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