Utopia, you are standing in it!

A local doctor thinks we can abolish child poverty in New Zealand with $1 billion in increases to welfare benefits and family allowances.

During the 1987 Australian Federal election campaign, Labour Party Prime Minister Bob Hawke announced a Family Allowance Supplement that would ensure no Australian child need live in poverty by 1990.

Child poverty was to be no more in Australia by 1990. These changes in social welfare benefits and family allowance supplements would ensure that every family would be paid one per week dollar more than the poverty threshold applicable to their family situation. I know child poverty was to be done in this way because I worked in the Prime Minister’s Department at this time.

Bob Hawke was not a man for admitting error, most certainly was not, but he admitted that this promise was his greatest error – his pledge that no child will need live in poverty by 1990:

It was a silly shorthand thing,” Mr Hawke has told News Limited newspapers. “I should have just said what was in the distributed speech.” “We set ourselves this first goal: by 1990 no Australian child will be living in poverty,” Mr Hawke said on June 23, 1987 at an election campaign launch. The comment entered Australian political folklore after it was supposed to improve the ALP’s major social welfare reform. The printed version had it as: “By 1990 no Australian child need live in poverty.” Mr Hawke’s words returned to haunt him as his pledge was impossible to keep.

About 580,000 Australian children lived in poverty in 1987. In 2007, at least 13 per cent of children, or 730,000 people, were poor. This was after social welfare benefits and family allowance supplements were increased to $1 above the child poverty threshold.

There is an infallible test of the practicality of Left over Left dreams such as the abolition of child poverty by writing bigger and bigger cheques to those currently poor.

If you could abolish child poverty simply by increasing welfare benefits and family allowances, the centre-right parties would be all over it like flies to the proverbial as a way of camping over the middle ground and winning the votes of socially conscious swinging voters for decades to come. Many people who would naturally vote for the centre-right parties on all other issues vote over to centre-left parties out of a concern for poverty and a belief that centre-left parties will give a better deal to the poor.

Countries all round the world have attempted to buy their way out of poverty by lifting welfare benefits and family allowance rates with no success. Simon Chapple is also quite clear that social welfare benefits reduce the incentive to work.

The payment of welfare benefits to families who do not work creates a number of potential issues. Firstly, as it guarantees an income to people not in paid employment, including those with children, it creates incentives not to work. While theoretically indisputable, much debate surrounds how large this effect is in practice, and how best to offset it.

There is child poverty in northern European and Scandinavia despite the most generous possible welfare states. Most of this child poverty is among single parent families in all industrialised countries.

Around 60 percent of New Zealand children in poverty are in social welfare beneficiary households, and most of these are sole-parent households.

Child poverty rates are lower in the Nordic states but the Nordic states expectation that mothers will return to the workforce rapidly – when their child is 1 to 3 years old. Employment is front and centre in the Nordic welfare state strategy to reduce child poverty.

The notion that poverty is simply the result of a lack of money and giving people more money will abolish child poverty has never worked. As the OECD (2009, p. 171) observed:

It would be naïve to promote increasing the family income for children through the tax-transfer system as a cure-all to problems of child well-being.

The only major success in reducing beneficiary numbers anywhere has been time limits in the USA in 1996. Time limits on welfare for single parents reduced caseloads by two thirds, 90% in some states.

After the 1996 US Federal welfare reforms, the subsequent declines in welfare participation rates and gains in employment were largest among the single mothers previously thought to be most disadvantaged: young (ages 18-29), mothers with children aged under seven, high school drop-outs, and black and Hispanic mothers. These low-skilled single mothers were thought to face the greatest barriers to employment. Blank (2002) found that:

…nobody of any political persuasion predicted or would have believed possible the magnitude of change that occurred in the behaviour of low-income single-parent families.

Employment are never married mothers increased by 50% after the US well for a reforms: employment a single mothers with less than a high school education increased by two thirds: employment on-going single mothers string ages of 18 in 24 approximately doubled. With the enactment of welfare reform in 1996, black child poverty fell by more than a quarter to 30% in 2001. Over a six-year period after welfare reform, 1.2 million black children were lifted out of poverty. In 2001, despite a recession, the poverty rate for black children was at the lowest point in national history.

This great success of US welfare reforms was after a quarter of six century of no progress, poverty among single mothers and among black children declined dramatically.

The best solution to child poverty is to move their parents into a job. Simon Chapple is also quite clear in his book last year with Jonathan Boston that a sole parent in full-time work, and a two parent family with one earner with one full-time and one part-time worker, even at low wages, will earn enough to lift their children above most poverty thresholds. Welfare benefits trap children in poverty.

Sustained full-time employment of sole parents and the fulltime and part-time employment of two parents, even at low wages, are sufficient to pull the majority of children above most poverty lines, given the various existing tax credits and family supports.

The best available analysis, the most credible analysis, the most independent analysis in New Zealand or anywhere else in the world that having a job and marrying the father of your child is the secret to the leaving poverty is recently by the Living Wage movement in New Zealand.

According to the calculations of the Living Wage movement, earning only $19.25 per hour with a second earner working only 20 hours affords their two children, including a teenager, Sky TV, pets, international travel, video games and 10 hours childcare. This analysis of the Living Wage movement shows that finishing school so your job pays something reasonable and marrying the father of your child affords a comfortable family life.