Editorial: Those in poverty need money now

COMMENT



New Zealand should be ashamed, said the Prime Minister on Budget day, at how many poor children it had. Strong words. How many do we have? Officials define poverty as having less than 60 per cent of the median disposable income, and 29 per cent of children - nearly one in three - live in households with incomes that low. When we consider our high rate of divorce and the percentage of children now being raised by a sole parent, it is easy to believe that poverty is as serious as Helen Clark suggests.

That being so, why is her Government not doing something about it? Thursday's Budget, for all its acclaim, was not really about poverty; it was about income redistribution, which is not quite the same thing.

It will boost the incomes of the lower-paid who have jobs by much more than it will increase benefits. Increasing the incomes of lower-paid workers with families is a worthwhile thing to do, and it is sound economic policy to ensure the rewards of working are superior to benefits. But it is not addressing child poverty; it could even make it worse. Here is how:

When the Government boosts the incomes of those in work it will increase the country's median disposable income, and with it the statistical poverty line. Since it is not boosting benefits by nearly the same degree it will probably increase the gap between those on benefits and those in work. The significance is not merely statistical; relative poverty, which is measured in this way, is real to children who cannot be provided with the living standard they see around them.

And if the Budget had been seriously designed to tackle poverty, it surely would not have delayed its relief so long. The additional benefits are programmed over the next three years and in most cases the first instalments are not coming until near the end of next fiscal year. Families in serious poverty need the money now, not next April, not the following year and certainly not in 2007 when they might see the full amounts trumpeted on Thursday.

Few of those families will be counting chickens that are due to hatch one, two or three years hence, and for good reason. Much can change in two or three years, not least the Government.

Labour plainly hopes that the promissory note it issued in the Budget will induce all possible recipients to return the Government at the election late next year. But that assumes voters' circumstances are static.

Poverty is more transitory than policy makers seem to suppose. The poor need help today, not next year or the year after. Next year their fortune may have markedly improved. They may have landed a job, or a better-paying job.

They may have married again. An asset in the family may have come their way. They may at last have overcome an expensive addiction or regained sufficient health to hold down a job. And always, of course, children are growing older and less dependent.

The Budget encourages people to improve their circumstances by offering wage supplements and easier access to child care and preschool education. In those respects the Budget is a praiseworthy package. But it is not immediate relief for people in genuine poverty, it is not a drastic reversal of the 1991 benefit cuts, no matter how much the Government may wish it to seem so.

The 1991 reforms slashed some basic benefits by as much as 25 per cent and invited beneficiaries to apply for grants for particular needs. That realignment of the system still stands. This week's package was another dizzying array of entitlements and supplements for accommodation, childcare and other needs. Social Welfare Minister Steve Maharey has ambitions to simplify the system but the people's circumstances vary.

This was a Budget for the working poor, not the 24 per cent of children who depend entirely on the state.