Government releases second set of child poverty targets

 Government releases second set of child poverty targets

The Government has released the second set of official three-year child poverty targets, as required by the Child Poverty Reduction Act 2018.

The new targets announced today cover the 2021/22, 2022/23, and 2023/24 financial years and are set at rates required to keep New Zealand on track to meet its longer-term 10 year targets.

“Reducing child poverty was a priority for us in the last term, and remains a key priority in this term,” said Prime Minister and Minister for Child Poverty Reduction Jacinda Ardern.

“We have made progress, but there is more to do to achieve our bold plan of more than halving child poverty within 10 years. The targets being released today keep us moving towards that goal.”

Achieving the new targets for 2023/24 would see the following reductions from the 2017/18 baseline rates of child poverty:

1.            Reduction in the before-housing-costs measure from 16.5 to 10 percent – lifting around 70,000 children out of poverty

2.            Reduction in the after-housing-costs measure from 22.8 to 15 percent – lifting around 80,000 children out of poverty

3.            Reduction in the number of children experiencing material hardship from 13.3 to 9 percent – lifting around 40,000 children out of hardship

“Our plan is based around making progress in three key areas: increasing incomes for families, reducing housing costs and other pressures on low-income households, and changes to support the wider wellbeing of families.

“Budget 21, which included main benefit increases of between $32 and $55 per person, is an important part of this.

“Since the Government introduced child poverty reduction targets, reductions have been achieved across all nine child poverty measures, and we have already exceeded our first three-year target for the after-housing-cost measure which has lifted 43,300 children out of poverty.

“Achieving our longer term 10 year targets will place New Zealand alongside those countries with the lowest rates of poverty and hardship in the world and contribute to our goal of making New Zealand the best place in the world for children and young people.

“We know that COVID-19 has had a disproportionate impact on already disadvantaged groups, and the long-term economic impact of COVID-19 will make reducing child poverty in the coming years more challenging.

“Nevertheless, the new three-year targets maintain our bold ambition and continue our progress towards the 10 year targets,” Jacinda Ardern said.

Additional notes

•               The Child Poverty Reduction Act requires Governments to set and publish longer-term targets (ten years), as well as intermediate targets (every three years), for a set of ‘primary’ measures of child poverty. There are currently three primary measures, with reporting on a fourth beginning in 2025/26.

•               Our first three year targets, ten year targets and current rates are set out in the table below:

MeasuresBaseline yearCurrent rateFirst three-year targetsSecond three-year targetsTen-year target rate
(2017/18)(2019/20)(2020/21)(2023/24)(2027/28)
Before-housing-cost measure of low income (BHC50)Rate16.5%13.8%10.5%10%5%
Children183,000158,000122,000116,000~60,000
After-housing-cost measure of low income (AHC50)Rate22.8%18.4%18.8%15%10%
Children254,000211,000218,000174,000~120,000
Material HardshipRate13.3%11.3%10.3%9%6%
Children148,000130,000119,000104,000~70,000

Note the target periods are as follows:

–          The first three-year target period covers 2018/19, 2019/20, and 2020/21

–          The second three-year target period covers 2021/22, 2022/23, and 2023/24

–          The ten-year target period covers 2018/19 through to 2027/28

•               So far, the Government has reported on the first two years of the targets (2018/19 and 2019/20), which show reductions across all nine reported measures in the Act, including the three primary measures. Since the 2017/2018 baseline year, there are 25,600 fewer children in poverty on the before-housing-cost measure, 43,300 fewer children on the after-housing-costs measure, and 18,000 fewer children experiencing material hardship.

•               The Government will know whether it has met its first three-year targets when Stats NZ releases its report on the 2020/21 year in February 2022.

•               In addition to Budget 21 announcements, some of the policies and measures that have been instrumental in reducing child poverty to date include:

1.    $5.5 billion Families Package increased financial support for low income families, including increases to the Family Tax credit, Accommodation Supplement changes and the introduction of Winter Energy Payment, and the Best Start Payment.

2.    Indexation of main benefits, increasing the amount that beneficiaries could earn before their benefit reduces, and removing the Section 192 sanction which penalised sole parents. 

3.    Lifting the minimum wage from $15.75 in 2017 to $20 as of April 2021

4.    $2.8 billion COVID income support package, which permanently increased main benefits by $25 (on top of the increases from wage indexation), expanded eligibility for the In-Work Tax Credit and doubled the Winter Energy Payment for the 2020/21 year.

5.    Increased rates of the Orphan’s Benefit, Unsupported Child’s Benefit, and Foster Care Allowance – by $20.31 in 2018, and by $25 in 2020

6.    Increasing funding for deciles 1-7 schools that agree not to request donations, and removing NCEA fees

7.    Delivering a free and healthy daily school lunch programme in schools with high levels of disadvantage and rolling out free period products across New Zealand schools.

8.    Added more than 4,500 newly built state homes across New Zealand, as well as invested in transitional housing and other support through the Homelessness Action Plan

9.    Improved the quality of housing and conditions for renters through the Healthy Homes Guarantee Act 2017 and changes to the Residential Tenancies Act 1986

10.  Introducing measures to stop predatory lending, through changes to consumer credit legislation

Media contact: Andrew Campbell +64 21 243 8573

Andrew Campbell |Chief Press Secretary

Office of the Prime Minister of New Zealand
Mobile +64 21 243 8573| Landline +64 4 817 9098 | Email Andrew.Campbell@parliament.govt.nz

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