Wellbeing Budget 2021

Our Recovery

Child Poverty Report 2021

This is the third report on child poverty to be released with the Budget. It shows the progress we have made in reducing child poverty since we set child poverty reduction targets in 2018.

Budget child poverty reporting requirements

The Child Poverty Reduction Act 2018 amended the Public Finance Act 1989, introducing section 15EA that requires the supporting information for the main Appropriation Bill (the Budget) to include a report on child poverty. The report must:

  1. discuss any progress made, in the most recent completed financial year, in reducing child poverty consistent with the targets under the Child Poverty Reduction Act 2018, and
  2. indicate whether and, if so, to what extent, measures in or related to that Bill will affect child poverty.

The most recently completed financial year is 2019/20, which is the second year of reporting on the targets under the Child Poverty Reduction Act 2018.

This report addresses paragraph (a) by providing a high-level view of recent trends up to, and including, 2019/20. It addresses paragraph (b) by discussing the expected impact of Budget 2021 on child poverty.

This Government has made child poverty reduction a priority, to help make Aotearoa New Zealand the best place in the world to be a child. Reducing child poverty helps children now and lays the foundation for healthy development and positive wellbeing in the future. Good material standards of living enable parents and caregivers to provide children with a good start in life, which has been shown to contribute to lasting wellbeing outcomes in areas like health, housing and education.

In Budget 2021, to tackle inequality and child poverty, we are lifting weekly main benefit rates by between $32 and $55 per adult, to bring these rates in line with a key recommendation of the Welfare Expert Advisory Group (WEAG) and provide an additional boost to families with children. This is expected to lift between 19,000 and 33,000 more children out of poverty on the after-housing-costs measure.

This builds on our previous work that has included a range of policies to support low-income families and children. Some actions, like the Families Package, put more money in the pockets of parents, while others, like healthy free lunches in schools and free doctors' visits for under 14s, take pressure off household budgets and improve childrens' quality of life.

The Families Package was introduced in late 2017 and increased financial support for low-income families, including increases to the Family Tax Credit, Accommodation Supplement changes and the introduction of the Winter Energy Payment and the Best Start Payment.

In total, 109,000 sole parents and couples with children will be, on average, $175 per week better off as a result of changes made by the Government since late 2017.

These actions to date have reduced child poverty rates. As of 2019/20, there are 43,300 fewer children in low-income households on the after-housing-costs measure than in 2017/18 and 18,000 fewer children experiencing material hardship. This is one of the largest policy-driven falls in measured child poverty in decades. While the latest rates do not take into account the impact of COVID-19, Treasury modelling suggests that the Government's income support measures have greatly reduced the negative economic impact of the pandemic (see pages 31 to 32).

We know there is more to be done. We are also investing in a broader range of initiatives to address material hardship and directly help children and their families in areas such as housing, employment and direct services, for example through food in schools.

Looking forward, the Government will continue to work on overhauling the Welfare system and addressing other recommendations from the WEAG. We have committed to bringing forward the review of the Working for Families tax credits, currently on the medium-term Welfare Overhaul work programme.

In June, we will announce our next round of child poverty reduction targets. This will set out our ambitions for the next three years, as we continue on our path towards meeting our ten-year targets and making Aotearoa New Zealand the best place in the world to be a child.

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