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Wednesday, 13 January 2016

Everyone is wrong about poverty

...well maybe not. But that's the feeling I got reading the recent opinion articles back and forth in the past weeks - first from former ACT leader Jamie Whyte and columnist Dave Armstrong.

Whyte argued that there is no poverty in New Zealand, and that the definition of poverty often quoted (leading to the claim one in three kids live in poverty) is useless for measuring poverty, being a relative one based on an arbitrary yardstick (i.e. a household which earns 50% of the national median income after tax and housing costs). I disagree on the first point but agree on the second.

There is poverty in New Zealand, which Armstrong helpfully goes to the Oxford English Dictionary to define. The definition of the venerable OED of poverty - being material deprivation - is, funnily enough, more useful. And the Ministry of Social Development has been monitoring material deprivation rates across the entire population. Here's an interesting graph:

Figure E.1
Trends in material hardship rates for the whole population, using five different thresholds
The MSD research shows the economic recession of 2007-2010 increased hardship. To my mind, debate about poverty should be focused on this measure, and not a relative income measure. The services that Jamie Whyte mentions in his article need to be held against this standard, especially where they're falling short, and how they can be targeted to reduce hardship. The MSD's research has been used for the policy design of the government's 2015 child hardship package, for example.

Right at the end of his article, Armstrong adds that Jamie Whyte must remember the days when there were hardly any foodbanks or homeless because he would "...remember those "dark" days because you couldn't move money quickly offshore, it took months to import an espresso machine and foreign boutique beers cost more than local."

This is an odd comment in the context of poverty, but I guess Dave thinks its related. In a way it is. The "dark days" he mentions were when New Zealand ranked highly in OECD rankings for per capita income - you know, before Britain joined the EEC and the oil crisis' of the 70s struck. The absurd import regime he mentions was part and parcel of Fortress New Zealand. The prosperity paid for a massive, inefficient state which employed thousands and acted as an extension of the welfare state.

Increases in hardship were the inevitable result of the inevitable end of Fortress New Zealand. Getting back to that sort of prosperity to help our most vulnerable ought to be our policy focus.