What is the real crisis: public debt, or private destitution along with rampant child poverty?
The budget ignores child poverty and lets us all down
It is revealing to see the list of the top ten issues for Budget 2026
Child poverty reduction, once a top agenda item does not make any of the top ten.
Up in lights at No 1 however were the fiscal targets of budget surpluses and reducing debt.
A budget surplus was guesstimated for 2028/29 to supposedly ‘secure New Zealand’s future’ and to contribute to ‘bending the curve ‘ of government’s debt % GDP, with no mention of course of the assets accumulated and the strength of the government’s balance sheet.
The real crises of child poverty, hunger, homelessness, with the associated youth unemployment, suicide and child ill health are ignored, amid unprecedented demands on foodbanks and other charities.
Jack Tame (Q&A Sunday 31st May) mentioned the cost to the New Zealand economy of child poverty. Using OECD guidelines, it has been estimated at a staggering annual $15 billion.
Surely the impact of poverty on productivity, mental and physical health costs, child protection, retention of the young are critical to understanding the poor performance of the economy.
On those grounds alone, I would have expected government take the Child Poverty report for the budget seriously.
The Child Poverty Reduction Act had bipartisan support. Under section 15EA of the Public Finance Act 1989, the Minister of Finance is required to present to the House on Budget Day a report on child poverty that:
• discusses 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
• indicates whether and, if so, to what extent, measures in or related to the Budget will affect child poverty.
One of the three main measures used to measure child poverty is material hardship. But Treasury says it can’t model any impacts of current policy on this measure, not even hazard a guess or offer an informed, or indeed any opinion.
The graph shows the latest figures on material poverty stop in 2025 but even, that figure is based on survey data that by 2025 was well out of date. We can anticipate from the irrefutable evidence from social agencies, and the absence of any meaningful policies, that the upward trend will continue unbated and the target of 6% by 2028 is an utter fantasy.
The other two measures used in the Act to assess progress are income-related. Based on what, and how, did Treasury model child poverty for these measures? Here is their projection for the after-housing costs (AHC) 50% poverty line.
It is going to be interesting to find out how they did this modelling, but they put the best possible spin on a very desultory projection.
“Tax and transfer measures in the Budget 2026 package are estimated to decrease child poverty in 2026/27, on both the AHC50 and BHC50 measures. These decreases are statistically significant and are driven by the temporary, $50 a week increase in the in-work tax credit. Impacts in subsequent years are small and not statistically significant.”
What a farcical picture. There is nothing to point to except their very unfair policy for the temporary $50 a week fuel boost.
Under the Act the Minister for Child Poverty Reduction must:
Set long-term (10-year) and intermediate (3-year) targets.
Publish those targets.
Present them to Parliament.
Review them periodically.
Explain publicly if targets are missed.
That should mean they will be held to account for the reasons targets are missed and explain why there is no specific plan to achieve those targets.
Their actual response is profoundly worrying and highly ideological: ‘benefit dependency’ is to blame and economic growth will solve all problems in spite of the clear evidence that growth alone cannot be relied on to reduce child poverty.
In the Budget Child Poverty report they explain:
The focus is on changing the circumstances that trap people in poverty, by providing them with opportunities to make changes and choices.
A key driver of child poverty is living in a benefit-dependent home. The Government is committed to supporting parents who are receiving a benefit into work, including as part of the target to reduce the number of Jobseeker Support recipients by 50,000. An important element of this is making work pay.
Willis just expects the market to provide the cure for child poverty. The queues of families in low paid work at foodbanks however indicate that paid work is no panacea. In a time of very high unemployment and long-term underemployment it is totally unrealistic to expect the market to provide secure well-paid jobs for all. The impacts on Māori and Pacific populations which are predominantly young, and families with disabilities are especially severe.
A disturbing claim is made in the budget that illustrates the mindset that paid work is only the way out of poverty
Budget 2026 includes funding of $93 million for additional case management and assistance to support sole parents into work.
That is the upfront cost, but the initiative is expected to deliver net savings of $97 million as more sole parents move from receiving a benefit to having a job.
Forcing sole parents into full time work will mean an army of expensive case managers interested in ticking boxes regardless of whether there are good well paid suitable jobs out there. It ignores the work sole parents already do in taking care of their children and the extra work of looking after very young, and sick or disabled children.
The table shows the expectation that in the next two years the case managers will do their work, then expect to be sacked so their cost falls to zero for the next two years. Meantime saving is made from reduced sole parent benefits but that assumes mothers remain off benefit. By 2030 government has saved a net $97m. Yeah right.
Fundamental issues
There is a blindness to the difference between a low wage or benefit for adult individuals, and the need for an additional income for children- A person with no children may need the living wage to just get by but if there are children, extra income is required if living standards are not to drop sharply. Low wages are never ever going to be enough on their own to support a family-- so why is support for children ignored?
Benefits are for adults.
Working for Families (the sum of the Family Tax Credit and the In Work Tax Credit) is for children.
When low-income families lose their jobs (as so many have recently), and have to go onto an inadequate adult benefit, their children will this year also lose nearly $150 a week of Working for Families in the form of the IWTC.
Treasury’s cynical projections point to the $50 per week IWTC increase as the saviour of the government’s appalling child poverty record. Willis said on Q&A that she was proud of her policy to support low-income families with this ‘targeted’ measure. But the IWTC abates last-- so many families on well over $100,000 have become eligible for the $50- while 250,000 children in the poorest families are deliberately excluded.
Politically this is the time for Labour to step up and own the Child Poverty Reduction Act and to set out a clear reform path for Working for Families, the principal income tool for achieving better incomes for children. They need to call bullshit on the temporary $50 IWTC fuel subsidy policy. They also need to call out its inclusion in the budget’s child poverty projections.
This makes horrendous reading....reinforces ,for me, that this Government is full of the people Christ kicked out of the temple.
There’s no question to be answered is there Susan. As Willis accidentally acknowledged to Jack Tame, doubling welfare to struggling families would not only improve the government’s Child Poverty stats, it would also be the sensible economic position. Tame then suggested that the cost of child poverty to New Zealand was in the vicinity of $15 billion every year, asking Willis why there wasn’t a much stronger response and focus on reducing it. An honest admission from Willis might have been that she puts Bond markets before Kiwis and that the reluctance to fix the tax system creates an endemic structural deficit and around and around and around we go.
We all know that is because this government is ideologically trapped by what has become the BIG CON - Maintaining a 30% deficit to GDP ratio is economically illiterate.
Nobel economics laureate Prof. Joseph Stiglitz led the landmark OECD commission on measuring economic performance, arguing that GDP is a poor measure of societal well-being. Therefore, managing an economy to satisfy narrow deficit-to-GDP metrics often results in distorted, harmful policy decisions. Hello New Zealand. Willis of course cannot make an argument that will stand up to scrutiny here. Luxon’s weak leadership has facilitated an explosion in suffering. Poverty in New Zealand is a political choice and this lot, led by Christopher Mark Luxon has made the choice to abandon citizens.