• Home
• Introduction
• Economic Indicators
• Health & Wellbeing Indicators
• Contact Us

Gross Domestic Product (GDP) | Income Inequality | Child Poverty and Living Standards |
Unemployment Rates | Children Reliant on Benefit Recipients Appendices

Child Poverty and Living Standards

Introduction

High rates of child poverty are a cause for concern, as low family income has been associated with a range of negative outcomes including low birth weight, infant mortality, poorer mental health and cognitive development, and hospital admissions from a variety of causes [1]. Further, the Christchurch Health and Development Study suggests that exposure to low family income during childhood and early adolescence may increase the risk of leaving school without qualifications, economic inactivity, early parenthood and contact with the justice system. While adjusting for potentially mediating factors (e.g. parental education, maternal age, and sole parent status) reduces the magnitude of these associations somewhat, they do not disappear completely, suggesting that the pathways linking low family income to long term outcomes are complex, and in part may be mediated by other socioeconomic variables [2]. Yet while there is much debate about the precise pathways involved, there is a general consensus that the relationship between poverty and adverse outcomes is non-linear, with the effects increasing most rapidly across the range from partial to severe deprivation [3].

In New Zealand, the Ministry of Social Development has periodically reviewed the socioeconomic wellbeing of families with children using information from two data sources:
1. The New Zealand Household Economic Survey, which can be used to assess the proportion of families with children who live below the income poverty line [4].
2. The New Zealand Living Standards Survey, which uses the Economic Living Standards Index (NZELSI) to assess the proportion of families with children who live in severe or significant hardship [5]

The following section uses information from these two data sources to assess the proportion of New Zealand children living in poverty, or exposed to severe or significant hardship in recent years. 

Children Living in Households Below the Poverty Line

Child Poverty Trends Using Different Poverty Measures

Before Housing Costs
Relative Poverty (Compared to Contemporary Median): In New Zealand, relative child poverty rose rapidly during 1990–1992, a rise which Perry [7] attributes to rising unemployment and the 1991 Benefit Cuts (which reduced incomes for beneficiaries to a greater extent than the median fell during this period). During 1992–1998, relative child poverty rates then declined, a trend which Perry attributes to falling unemployment, occurring in a context where incomes for those around the poverty line rose more quickly than the median. After 1998 however, as economic conditions improved, median incomes again rose, while incomes for many low-income households with children did not, resulting in a rise in relative child poverty up until 2004. From 2004 to 2007 relative poverty rates again declined, a decline which Perry attributes to the roll out of the Working for Families package. Before housing cost, relative child poverty rates in 2010 were similar to what they were in the 1980s [6] (Figure 1).

Fixed Line Poverty (Compared to 1998 and 2007 Median): In New Zealand during the early 1990s, fixed line child poverty measures increased markedly, for similar reasons to those outlined above. During 1994–1998 however, child poverty rates declined, a trend which Perry attributes to improving economic conditions and falling unemployment. During 1998–2004, child poverty rates continued to fall (CV 2007 median only). Rates fell more rapidly (both CV 1998 and 2007 median) during 2004–2007, a change which Perry attributes to the Working for Families package [7] (Figure 1).

After Housing Costs
Relative Poverty (Compared to Contemporary Median): In New Zealand during 1982–2010, while trends in relative child poverty after adjustment for housing costs (AHC), were broadly similar to before housing cost (BHC) measures, one key difference was evident: that AHC child poverty rates in 2010 remained higher than in the 1980s, while BHC measures were closer to 1980s levels. In addition, during 2007–2010 using the after housing costs measure, child poverty increased from 22% to 26%. Perry [6] attributes these differences to the fact that housing costs in 2010 accounted for a higher proportion of household expenditure for low-income households, than they did in the 1980s (in 1988 16% of households in the bottom income quintile spent >30% of their income on housing; in 2007 this figure was 33%). Perry notes however, that the income-related rental policies introduced in 2000, along with later changes to Accommodation Supplements, helped reduce housing expenditure for some low income households, and that these changes contributed to reductions in AHC child poverty during 2001–2007. There were no further policy changes during 2007–2010 however, with maximum rates of assistance remaining fixed, as housing costs continued to increase. As a result, net housing expenditure rose, especially for low income households and this resulted in increases in AHC child poverty rates during 2007–2010 [6] (Figure 2).

Fixed Line Poverty (Compared to 1998 and 2007 Median): In New Zealand during 1984–2008, trends in fixed line child poverty after adjustment for housing costs (AHC), were broadly similar to before housing cost (BHC) measures, with the fixed line (AHC) poverty rate in 2007 being around the same as it was in the 1980s (in contrast to the relative AHC poverty rate, which was much higher than in the 1980s) (Figure 2).

Figure 1. Proportion of Dependent Children Aged 0–17 Years Living Below the Income
Poverty Threshold Before Housing Costs, New Zealand 1984–2010 HES Years

Source: Perry 2011 [6], derived from Statistics New Zealand, Household Economic Survey (HES) 1984–2010

 

Figure 2. Proportion of Dependent Children Aged 0–17 Years Living Below the Income
Poverty Threshold After Housing Costs, New Zealand 1984–2010 HES Years

Source: Perry 2011 [6], derived from Statistics New Zealand, Household Economic Survey (HES) 1984–2010 

Child Poverty Trends: < 60% of 2007 Median, After Housing Costs

Child Poverty by Children’s Age
In New Zealand during 1984–2010, poverty rates for younger children (0–6 years and 7–11 years) were generally higher than for older children (12–17 years) (Figure 3).

Child Poverty by Number of Children in Household
In New Zealand during 1984–2010, child poverty rates for households with 3 or more children were consistently higher than for households with 1–2 children (Figure 4). (Comment: Perry notes that in 2010, children from these larger households made up 48% of all poor children [6]).

Child Poverty Trends by Household Type and Work Status of Adults in Household
In New Zealand, child poverty rates for children in both sole-parent and two-parent households increased rapidly between 1988 and 1992. In absolute terms however, poverty rose most rapidly for children in sole-parent households, with rates reaching a peak of 77% in 1996 (two-parent: rates peaked at 29% in 1994). While rates for both household types declined between 2001 and 2007, during 2007 child poverty rates for those in sole-parent households remained higher than their 1980s levels, while rates for two-parent households were similar (Figure 5). (Comment: Perry notes that one in three sole parent families live in wider households with other adults, and that children living in these “other” households have significantly lower poverty rates than those living in sole parent households, because of the greater household resources available to them [6]).

Figure 3. Proportion of Dependent Children Living Below the 60% Income Poverty Threshold (1998 and 2007 Median, After Housing Costs) by Age, New Zealand 1984–2010 HES Years

Source: Perry 2011 [6], derived from Statistics New Zealand, Household Economic Survey (HES) 1984–2010. 

Figure 4. Proportion of Dependent Children Aged 0–17 Years Living Below the 60%
Income Poverty Threshold (1998 and 2007 Median, After Housing Costs) by Number of
Children in Household, New Zealand 1984–2010 HES Years

Source: Perry 2011 [6], derived from Statistics New Zealand, Household Economic Survey (HES) 1984–2010

 

Figure 5. Proportion of Dependent Children Aged 0–17 Years Living Below the 60%
Income Poverty Threshold (1998 and 2007 Median, After Housing Costs) by Household
Type, New Zealand 1984–2010 HES Years

Source: Perry 2011 [6], derived from Statistics New Zealand, Household Economic Survey (HES) 1984–2010.

Figure 6. Proportion of Dependent Children Aged 0–17 Years Living Below the 60% Income Poverty Threshold (1998 and 2007 Median, After Housing Costs) by Work Status of Adults in the Household, New Zealand 1984–2010 HES Years

Source: Perry 2011 [6], derived from Statistics New Zealand, Household Economic Survey (HES) 1984–2010. 

  

Child Poverty Trends by Work Status of Adults in Household

In New Zealand, child poverty rates for children in workless households, or where no adults worked full time, increased rapidly during 1988–1992. Poverty rates for children in these householdsremained elevated during the 1990s (range 66%–78%), before declining during 2001–2007. Even at their nadir in 2007, poverty rates for children in these households remained much higher than 1980s levels. In contrast, increases in child poverty for households where an adult worked full time, or was self employed, were much less marked, with rates in 2007–2009 being similar to those in the 1980s (Figure 6). (Comment: Perry notes that during the 1980s, children in workless households were ≈2x as likely to be in poor households; during 1992–2004 this had risen to ≈ 3–4x higher, and by 2007–2009 it was ≈ 6–7x higher [7]).

Summary: Child Poverty
In New Zealand during 1988–1992, child poverty rates increased markedly, as a result of rising unemployment and the 1991 Benefit cuts. During 1994–1998 however, rates declined, as economic conditions improved and unemployment fell. During 1998–2004, child poverty trends varied, depending on the measure used, but between 2004 and 2007 they again declined, following the roll out of the Working for Families package. For the majority of this period, child poverty rates were higher for younger children (0–11 vs. 12–17 years), larger households (3 or more children vs. 1–2 children), sole parent households and households where the adults were either workless, or where none worked full time.

 

---

Families with Reduced Living Standards

The Ministry of Social Development has undertaken three national Living Standards Surveys, in 2000, 2004 and 2008. The 2008 Survey collected information from 5000 households on their material circumstances, including ownership and quality of household durables, their ability to keep the house warm, pay the bills, have broken down appliances repaired, and pursue hobbies and other interests [4]. The following section briefly reviews the living standards of children aged 0–17 years, using the 2008 Living Standards Survey’s composite index of deprivation.

2004 Living Standards Survey

 

Proportion of Children with High Deprivation Scores

In the 2008 Living Standards Survey, 51% of Pacific children, 39% of Māori children, 23% of “Other” children and 15% of European children aged 0–17 years scored four or more on the composite deprivation index, which measured a range of “enforced lacks”, as outlined in the Methods box above. In addition, 59% of children whose family’s income source was a benefit had scores of four or more (Figure 7). When broken down by individual item, those children who scored four or more on the composite deprivation index had much higher exposures to household economising behaviours such as having to wear worn out shoes or clothing, sharing a bed or bedroom, cutting back on fresh fruit and vegetables and postponing doctors visits because of cost (Table 1).

Living Standards by Ethnicity of Family Members
The 2004 Living Standards Survey also noted that European and Other families with dependent children had higher average living standards (37.6 and 38.4 respectively) than Pacific and Maori families with dependent children (25.3 and 31.6 respectively). Of note, 30% of all Pacific families with dependent children in the 2004 Survey reported living in severe hardship, as compared to 20% of Maori families, 8% of European families and 4% of Other families (Figure 7).

Table 1. Restrictions Experienced by Children, by the Deprivation Score of their Family, NZ Living Standards Survey 2008

Source: NZ 2--8 Living Standards Survey [4].

Figure 7. Proportion of Children Aged 0–17 Years with Deprivation Scores of Four or More by Ethnicity and Family Income Source, NZ Living Standards Survey 2008

Source: NZ 2008 Living Standards Survey [4]. Ethnicity is Total Response.  

Summary

In the 2008 Living Standards Survey, 51% of Pacific children, 39% of Māori children, 23% of “Other” children and 15% of European children aged 0–17 years scored four or more on the composite deprivation index, which measured a range of “enforced lacks”. In addition, 59% of children whose family’s income source was a benefit had scores of four or more. When broken down by individual item, those children who scored four or more on the composite deprivation index had much higher exposures to household economising behaviours such as having to wear worn out shoes or clothing, sharing a bed or bedroom, cutting back on fresh fruit and vegetables and postponing doctors visits because of cost.

---

References

1. Aber J, Bennett N, Conley D, et al. 1997. The Effects of Poverty on Child Health and Development. Annual Review of Public Health 18 463-83.

2. Maloney T. 2004. Are the Outcomes of Young Adults Linked to the Family Income Experienced in Childhood? Social Policy Journal of New Zealand 22 55-82.

3. Bradley R, Corwyn R. 2002. Socioeconomic Status and Child Development. Annual Review of Psychology 53 371-99.

4. Perry B. 2010. Non-income measures of material wellbeing and hardship; first results from the 2008 New Zealand Living Standards Survey, with international comparisons. Wellington: Ministry of Social Development.

5. Jensen J, Krishnan V, Hodgson R, et al. 2006. New Zealand Living Standards 2004. Wellington: Ministry of Social Development.

6. Perry B. 2011. Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2010. Wellington: Ministry of Social Development.

 7. Perry B. 2010. Household incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2009. Wellington: Ministry of Social Development.