POVERTY AND POLICY. New Zealand Poverty Measurement Project Robert Stephens. Charles Waldegrave. Address to Treasury 16 March, 2004

Transcription

1 POVERTY AND POLICY New Zealand Poverty Measurement Project Robert Stephens School of Government, Victoria University and Charles Waldegrave The Family Centre Social Policy Research Unit Address to Treasury 16 March, 24

2 Brief History of Poverty Measurement Policy direction not always follow evidence Traditions in Conceptualising Poverty 1. Living Standards: Survey of the Aged Monetary Constraints - 21 ELSI 2. Income Poverty, using HES: - 197s & 198s Easton: Benefit Datum Line - 199s+ NZ Poverty Measurement Project MSD 3. Deprivation Indices - Area based: NZDep 91, 96 - Individual based Dep Index

3 History of Poverty Measurement 1991 Benefit Cuts: no official monitoring, small community studies, food bank growth Impact of market rents, after housing cost poverty and move to rural areas Poverty Measurement Project Role of medics and teachers Labour/Alliance: pensions, state rents, Public Health Organisations, child assistance, employment growth

4 Objectives of Poverty Measurement Concern for social justice Participation by poor people Direct resources to those with greatest need finding an indicator for targeting Monitor impact of change on vulnerable Standard of adequacy for benefits Cost of alleviating poverty Causes and consequences of poverty Duration and persistence of poverty Policy instruments to alleviate, ameliorate, efficiency

5 Establishing a Poverty Measure Concept of Poverty: absolute/relative; objective /subjective Definition: a lack of access to sufficient economic and social resources that would allow a minimum adequate standard of living and participation in that society. Developing poverty indicator: consumption of specific commodities, expenditure, income Technical issues: unit of assessment, time period, equivalence scales, adjustment through time Setting the poverty threshold Focus Groups Obtaining data source HES, HLFS, q aire Measuring extent and severity

6 Projected TAXMOD June 25 equivalised income distributions based on EFUs and Households 16 number of income sharing units (s) EFU median Hhld median Note that bin sizes of $1 equivalised are used. This means that the plot of the number of EFUs at, say, $1,, represents all those with equivalised income between $9,5 and $1,5. EFUs Hhlds equivalised income ($$ pa) for the income sharing unit

7 3 Headcount poverty rates for whole population: based on HES data using constant value thresholds 25 proportion in poverty Hhld 6 disp 98CV EFU 6 disp 98CV Hhld 5 disp 98CV HES year

8 3 Headcount poverty rates for children: based on HES data using relative thresholds 25 p ro p ortion in p overty Hhld 6 disp rel EFU 6 disp rel Hhld 5 disp rel HES year

9 Minimum Adequate Weekly Expenditure Estimates by Low Income Panels, Lower Hutt, 1993 Table 1: Weekly Expenditure Estimates, Lower Hutt, 1993 Estimates of Minimum Adequate Weekly Expenditure for 2 Adults and 3 Children, by Low Income Panels Focus Group Type Sole Wage Expenditure Category Maori Samoan Pakeha Parent Earning Average Food $1 $ 15 $ 1 $ 13 $ 9 $ 114 Household operations $ 1 $ 1 $ 1 $ 15 $ 1 $ 11 Housing $15 $ 18 $ 15 $ 15 $ 15 $ 156 Power/Heating $ 3 $ 2 $ 2 $ 25 $ 2 $ 23 Phone $ 11 $ 1 $ 1 $ 1 $ 1 $ 1 Transport $ 4 $ 3 $ 4 $ 55 $ 6 $ 45 Activities/Recreation $ 15 $ 1 $ 25 $ 21 $ 3 $ 2 Insurances $ 11 $ 11 $ 15 $ 2 $ 15 $ 14 Life insurance/super $ 2 $ 1 $ 2 $ 1 $ 5 $ 13 Exceptional Emergency $ 1 $ 2 $ 1 $ 1 $ 5 $ 11 Appliances $ 1 $ 6 $ 1 $ 5 $ 4 $ 7 Furnishings $ 1 $ 6 $ 5 $ - $ 3 $ 5 Medical $ 15 $ 5 $ 15 $ 5 $ 15 $ 11 Clothing/Shoes $ 37 $ 1 $ 2 $ 2 $ 15 $ 2 Education $ 6 $ 5 $ 8 $ 15 $ 1 $ 9 TOTAL $475 $ 483 $ 458 $ 491 $ 442 $ 47

10 Minimum Adequate Weekly Expenditure Estimates by Low Income Panels, 23 Using focus group food estimates (2A+3C) 2A+3C Equivalent estimate for 2A+1C (2A+3C/ 1.314) Equivalent annual Median annual Equivalent of Median Maori Auckland Maori Wellington Pakeha Auckland Pakeha Wellington Pakeha Christchurch Average Median

11 Minimum Adequate Weekly Expenditure Estimates by Low Income Panels Adapted Using Equivalised Nutrition Survey Food Figures, 23 Using equivalised Nutrition Survey figures (2A+3C) Equivalent estimate for 2A+1C (2A+3C/ 1.314) Equivalent annual Median annual Equivalent of Median Maori Auckland Maori Wellington Pakeha Auckland Pakeha Wellington Pakeha Christchurch Average Median

12 Steps in Measuring Poverty Use Jensen (1988) scales to adjust focus group results for other household sizes Omit outliers : self-employed losses, income 3 times expenditure from HES data Determine incidence, severity of poverty using market and disposable income Data for , using household types, age of head of h hold, tenure, ethnicity, work status, no. of children, no. in h hold Income distribution

13 Incidence and Severity of Poverty, before Housing Costs People Adults < Adults Children Market Disposabl e Efficiency Poverty Gap $m Market Disposabl e Efficiency

14 Incidence Incidence and Severity of Poverty, People After Housing Costs Adults Adults Children Market Disposabl e Efficiency Poverty Gap $m Market Disposabl e Efficiency

15 Living Standards MSD and Surveys of elderly, working population, Maori Ownership, social participation restrictions, economising behaviour, financial and accommodation problems, self-rating Show ability to prioritise Lack of congruence income and outcomes Policy uses of living standards surveys: inkind benefits, targeting, adequacy

16 MATERIAL WELL-BEING INDICATORS: BY AGE AND ETHNICITY estriction Older Age Group Younger Age Group Maori European Maori (65+) European erious financial roblems wnership deficits ocial articipation eficits conomising ll Restrictions urce: Fergusson et al (21)

17 Living Standards Restrictions Ownership Restrictions Total Two Parent One Parent Elderly Elderly Maori Dishwasher Heating main rooms Winter coat Good shoes Car Social Participation Restrictions Holiday every year Friends over for meal Presents family Childcare services for

18 Living Standards Restrictions Economising Total 2 Parents 1 Parent Elderly Elderly Maori Less/cheaper meats Older clothes Postponed doctor visit No glasses Not got prescription Kids share bedroom Financial Problems Borrowed money Can t pay utilities Relied on charity Accommodation Problems Dampness Plumbing

19 Overlap Income and Living Standards Scales Source: B. Perry SPJNZ 21 Country income poor ( living standards poor by construction overlap between two measures of population both income and living standards poor Portugal Greece UK Spain Italy Belgium Ireland Germany France Netherlands Denmark New Zealand

20 NCIDENCE, STRUCTURE AND SEVERITY OF POVERTY, BY ETHNIC STATUS, 2 6 per cent of Median Equivalent Household Disposable Income Threshold thnicity Incidence (pre-housing) Structure Incidence (post-housing) Adult Child Total Adult Child Total Adult Child Total uropean aori acific ther otal

21 Socio-economic Deprivation and Ethnicity. NZDep96 Life expectancy at birth European Female European Male 68 Maori Female Maori Male NZDep96 index of deprivation * 1 = least deprived 1 = most deprived * Deciles 1-7 and 8-9 are grouped to enable comparisons between ethnic groups

22 Life Expectancy in Years by Maori and Non- Maori Males and Females rce: Ajwani S, Blakely T, Robson B, Tobias M, Bonne M. Decades of Disparity: Ethnic tality Trends in New Zealand Ministry of Health, Wellington, Life expectancy in years Non-Maori Male Old official SNZ Mäori series Male Corrected average Mäori ethnic group Male Non-Maori Female Old official SNZ Mäori series Female Corrected average Mäori ethnic group Female

23 Assessing the Progress on Poverty Reduction Post 1999 Anti-Poverty Policies NZ Superannuation: lift rate to 67.3 average weekly earnings Super fund Income-related State Housing, 25 awe Employment Strategy Primary Health Care Improving Child Assistance

24 INCOME RELATED RENTS ON STATE HOUSES As at 31 March 23, there were 62,624 state house rental properties, of which 89 (54,554) qualified for an income related rent. The average rent paid for these properties at that time was $85.28, less than half the market value of these rents (HNZC 23b). The budgeted extra cost to the Government for the income related rents initiative from 1 December 2 when they were introduced to 3 June 23 was $257 million (Treasury 2)

25 The following bullet points set out a range of employment statistics: Unemployment is down to 4.9, the lowest figure since 1988 New Zealand s unemployment rate is lower than the UK (5.1), USA (6.), Australia (6.2) and Canada (7.5) Maori unemployment is down from 19.5 in 1998 to 11.4 Pacific unemployment is down from 13.3 in 1998 to 8.2 During the last year, the number of jobless people fell by 11,. Total job numbers have increased consecutively for the last 1 quarters (3 monthly periods). In the last year there has been an net increase of 44, jobs, lifting employment levels by 2.4 (Stats NZ, HLFS 23c)

26 Poverty Incidence, by Number of Children 2, before Housing Number of Children Market Disposable Efficiency Structure Poverty gap $m Total

27 Causes of Child Poverty Inter-related factors leading to high poverty rates Decline in real value of Family Plus Generosity falls per additional child Extreme targeting of Family Plus High proportion of Sole Parents, with low employment rates Maori and Pacific families larger, younger and greater proportion in low income groups Lack of cash and in-kind assistance Issue: is lack of financial input cause of poor child outcomes?

28 Social Exp Exp GDP Real 1994 Exp Total Exp Child Tax Credit Family Support Family Benefit ear

29 Figure 1 Incidence of Family Assistance Tax Credits, by Deciles, 1997/ Household Deciles Household Market Income Household Equivalent Disposable Income

30 eden ain rway lands burg ly land rman nce land nmar nada lgium stria strali Net Other Health costs School costs Net local tax Net rent Universal child ben Targeted child ben Income Tax untry Structure of Child Benefit Package: 2A+3C, ½ av male earnings

31 Policies for Children Beyond the 24 Budget Gosta Esping-Andersen offers a critical lead. Family policy becomes the flagship for modern social democracies. Social inheritance is still today the best predictor of outcomes in later life. As such, a major goal of advanced states is to overcome social inheritance as a determinant in later life, has yet to be fully achieved. The focus needs to concentrate much more on children. Recent research has shown that brain development occurs very early in life. Later interventions are less effective, because they will always involve playing catch up. A critical solution is to focus future investment substantially in children by developing family friendly and mother friendly policies involving high quality childcare, job security and generous parental leave.

32 Policies for Children continued This should not be paid out of current consumption, but instead be viewed as a physical and human capital investment. The policy approach almost pays for itself because of the extra production that occurs as a result of the increased employment of mothers. Family focused policies encourage a better work life balance and deeper and more enhancing relationships between parents and children. European policy makers are focussing more on policy directions whereby the social policies are recognised as contributing substantially to economic development (Torres OECD 23). In this approach, society including employers and the community, expect parents to fulfil two major responsibilities, that of earning an adequate living for their household and to care responsibly for their children. Policy is developed to enhance these critical roles through work, social institutions and community networks.