Improving Educational Performance:
Why Tackling Child Poverty Must be
Part of the Solution
Jonathan Boston
Co-Chair, Expert Advisory Group (2012)
Professor of Public Policy, VUW
Director, Institute for Governance and Policy Studies
24 May 2013
Outline
1.
2.
3.
4.
Summary of argument
Measuring child poverty
Child poverty in New Zealand
The relationship between child poverty
and educational performance
5. Implications for policy
6. Conclusions
Summary
1. Children from disadvantaged backgrounds (low SES) perform
less well educationally than those from advantaged
backgrounds; there are large attainment gaps
2. Low family income impacts negatively on educational
performance
3. There are various reasons why family income matters
4. Reducing child poverty needs to be a policy priority –
especially if the aim is to improve average educational
performance, enhance equality of educational opportunity
and reduce the current attainment gaps
5. The policy tools exist for reducing child poverty; the main
issue is whether there is the political will
Measuring Poverty
1. Poverty can be defined in various ways:
– deprivation or lack of material resources:
•
to satisfy basic human needs (food, shelter, health care) and/or
•
to participate fully in economic, social and political life
c.f. poverty of spirit, lack of aspiration, social/cultural deprivation
2. Different degrees/kinds of poverty:
– abject poverty (lack of basic necessities, regular hunger and starvation)
– relative poverty (missing out on things that most people regard as
necessary for a fulfilling life)
– best to think in terms of a continuum, from very severe …
– most measures of poverty are relative in some way or other
– both the severity and persistence of poverty matter in terms of
outcomes
Measuring Poverty
3. In developed countries there are two main ways of measuring
poverty:
– low income
– material deprivation
4. There are different ways of setting the relevant benchmarks –
complex area; many technical issues (e.g. equivalence scales,
before or after housing costs, etc.); a range of approaches
possible; no international consensus, but some common
approaches
5. Only a few countries have official poverty measures (e.g. US,
UK, etc.); NZ does not
Child poverty in New Zealand
Main points:
1.Poverty rates depend on the precise measure used
2.Poverty rates on some measures are higher now than in 1980s
3.Poverty rates for children are much higher than for most other
groups, especially those aged 65+
4.Poverty rates are particularly high for sole parents and those
on welfare benefits
5.Income poverty rates are around the OECD average or slightly
above this on most measures
6.Material deprivation rates for children are higher than
comparable rates in Western Europe
Proportion of all individuals in low-income
households by age, 60% REL threshold (AHC)
Proportions below the threshold
50%
0-17
Moving line (REL) threshold,
60% of BHC median, less 25%
18-24
40%
25-44
45-64
30%
65+
20%
10%
0%
1980
85
90
95
00
HES year
05
10
2015
Numbers of poor children in New Zealand
BHC
AHC
BHC ‘moving line’
60%
AHC ‘moving line’
50%
AHC ‘moving line’ 60%
AHC ‘fixed line’ 60%
(07 ref)
2001
250,000
215,000
310,000
380,000
2004
270,000
200,000
290,000
320,000
2007
210,000
170,000
240,000
240,000
2009
210,000
190,000
270,000
230,000
2010
215,000
170,000
270,000
230,000
2011
200,000
170,000
270,000
230,000
Proportion of children below selected thresholds (AHC):
fixed line (CV) and moving line (REL) approaches compared
(Perry 2012)
Proportion of children in low-income HHs
60%
Constant value (CV) or 'fixed line' thresholds are
based on the BHC median in a reference year. The
current reference year is 2007. Up to 2007, the
reference year was 1998.
50%
40%
60% 98 CV
60% 07 CV
30%
60% REL
20%
50% REL
10%
0%
1980
85
90
95
00
HES year
05
10
2015
Identifying Deprivation
Australia -- Overall Changes in Deprivation, 2006 to 2010 (weighted %)
Essential items
Warm clothes and bedding, if it's cold
Medical treatment if needed
Able to buy medicines prescribed by a doctor
A substantial meal at least once a day
Dental treatment if needed
A decent and secure home
Children can participate in school activities and outings
A yearly dental check-up for children
A hobby or leisure activity for children
Up to date schoolbooks and new school clothes for school-age
children
A roof and gutters that do not leak
Secure locks on doors and windows
Regular social contact with other people
Furniture in reasonable condition
Heating in at least one room of the house
Up to $500 in savings for an emergency
A separate bed for each child
A washing machine
Home contents insurance
Presents for family or friends at least once a year
Computer skills
Comprehensive motor vehicle insurance
A telephone
A week's holiday away from home each year
Average deprivation rate
2006
0.3
2.1
4.5
1.2
14.5
7.1
4.9
13.2
7.8
2010
0.4
1.7
3.5
0.9
13.1
6.7
4.3
11.0
6.8
5.9
4.8
5.0
4.7
2.8
2.1
19.6
2.2
1.1
11.1
6.8
4.6
9.8
1.9
23.6
6.7
4.7
7.4
5.8
6.2
2.2
2.5
17.8
2.1
1.0
9.5
5.5
2.9
9.1
3.8
19.8
6.2
Deprivation Rates: 3+ enforced lacks,
using 9 item EU index (%), 2007
Children 0-17
Aged 65+
Total
Population
New Zealand
18
3
13
UK
15
5
10
Ireland
14
4
11
Germany
13
7
13
Sweden
7
3
6
Netherlands
6
3
6
Spain
9
11
11
Italy
18
14
14
Czech
20
17
20
Reasons for concern
A large and growing body of research highlights:
A. The negative impacts of family poverty on children, including:
1.Greater likelihood of death in childhood
2.3x higher incidence of ill-health, including 2x greater likelihood of hospital admission
for acute infectious diseases
3.5-6x higher incidence of hospitalisation from assault
4.Lower participation in ECE and higher school absenteeism
5.Negative impact on cognitive development and educational attainment
6.Higher residential mobility, poor housing and homelessness
7.Lower family resilience – higher parental stress and separation rates
B. The negative impacts of childhood poverty on the wider
society, including:
1.Higher unemployment and lower productivity growth
2.Higher fiscal costs: health care, benefit payments, criminal justice system, etc.
3.Significant overall economic and social costs
The relationship between child poverty
and educational performance
1. The educational attainment gap between children
from different SES backgrounds – international and
local evidence
2. The impact of family income on educational
performance
3. The reasons why child poverty affects educational
achievement – three main pathways:
–
–
–
The parental stress pathway
The biological pathway
The economic pathway (economic models of child
development
Implications for policy
1. Policies matter; governments can make a
difference
2. Prevention is better than cure
3. Alleviating child poverty needs to be part of the
solution
4. There are compelling reasons for reducing child
poverty aside from the educational grounds
5. Direct measures to alleviate child poverty need
to be complemented by efforts to mitigate its
worst impacts
Expert Advisory Group
Solutions – Overall Approach
1. Acknowledge policy complexity, trade-offs and tensions
2. Draw on the best available international evidence regarding
what works
3. Draw on a range of principles and considerations to guide
policy development
4. Develop a strategic approach:
–
–
–
Need official poverty measures and child poverty-related indicators
Set specific targets: e.g. reduce child poverty rates by 30-40% and
severe and persistent poverty by well over 50%
Embody relevant poverty measures and reporting obligations in
legislation to enhance political accountability
5. Need to raise the disposable incomes of many lowincome households by at least $100 per week (or more)
Policy approaches
How to increase family incomes?
1.An employment strategy
2.A social assistance strategy
3.EAG – need a mixed approach, drawing on (1) and (2) plus
other measures (e.g. changing child support and housing
policies)
4.Assistance should be targeted particularly to low-income
families with young children and more than two children
5.Need a range of other policy measures (e.g. improved access
to quality ECE, enhanced parental education, etc.)
6.Achieving a substantial and durable reduction in child poverty
will be fiscally costly, but worth it
Conclusions
1. Child poverty is a serious issue in NZ, with significant
long-term economic and social implications
2. Child poverty contributes to the lower educational
performance of children from low SES backgrounds
3. We have the means to make a difference
4. Fundamentally, we need to increase the incomes of
low-income households (especially families) – this
requires a combination of measures
Supplementary Slides
1.
2.
3.
4.
5.
Principles for policy design
Specific EAG proposals
The global picture
Supplementary figures
Acknowledgements
Principles for policy design for
addressing child poverty
The following principles and considerations should guide policies:
1.
2.
3.
4.
The rights enunciated in the UN Convention on the Rights of the Child
The best interests of the child, including the child’s developmental needs
The provisions and principles of the Treaty of Waitangi
A ‘social contract’ that recognizes:




The mutual responsibilities of parents, the community and the wider society for
the care and wellbeing of children
The requirement to provide social assistance to those unable to work or secure
paid employment sufficient to meet the basic needs of children
The importance of parental employment in reducing child poverty, but in a
context where the developmental needs of children are protected (e.g. through
accessible, affordable, high-quality childcare, ECE, etc.)
The vital role of housing, high-quality education, and equitable access to health
care
5.
The desirability of a strong future focus, and hence an investment approach
6.
The desirability of selecting policy measures that are simply, effective,
efficient and fair
The need for fiscal responsibility
7.
Priorities
1. Greater accountability via a Child Poverty Act – specifying
poverty measures, and requiring targets, CPRIs, monitoring
and reporting
2. Changes to FTC in short-term; longer-term reforms to family
assistance including a Child Payment
3. Increase the supply and quality of affordable housing
4. Free child health care from birth to 18 years
5. Establish hubs in low-decile schools
6. Develop a national strategy for food in schools (especially for
year 1-8 students in low-decile schools)
7. Pass-on child support to custodial parents on DPB
8. Establish a micro-financing fund
Specific Proposals:
Measuring Poverty
Need at least 5 poverty measures (should be
official/authoritative):
a.
b.
c.
d.
e.
Moving line – 60% of median equivalized household disposable
income, annually adjusted, AHC and BHC
Fixed line/constant value – 60% of median equivalized household
disposable income, adjusted every 10 years, AHC and BHC
Material deprivation – material wellbeing index score in levels 1 or 2
out of 7
Severe poverty – mix of (a) and (c); and poverty gap (distance of
median income of the poor from the moving-line measure)
Persistent poverty – at least 3 of 4 years, using both (a) and (c)
•Supplementary measures: inter-generational transmission, lifecycle, and geographic
Specific Proposals:
Income and Employment
Short- term proposals:
1.Improve tax/welfare system:
 Rebalance Family Tax Credits to favour young children and larger
families
o Lift all payments to rate of eldest child aged 16+ ($101.98 per week);
implies an increase of about $10 per week for eldest child under 16,
and close to $40 per week for additional children under 13
o Subsequently, raise rates incrementally for children aged 0-6




Index all child-related benefits annually
Monitor and publish annual take-up rates
Establish performance incentives to encourage high take-up rates
Appoint a person to the Work and Income Board with child wellbeing and development expertise
Specific Proposals:
Income and Employment
Short- term proposals:
2. Amend the Child Support Act to require:
 Pass on a proportion of payments to custodial
parents who receive a sole-parent benefit
 Government underwriting of payments
oThese changes would benefit over 130,000 children, close to
90,000 of whom live in poverty
o$159m was withheld from these children in 2011 by IRD; if all
this were passed on, the average per child benefit would be
$1,200 per annum or $23 per week
oThe proposed changes would have many other benefits
Specific proposals:
Income and Employment
Longer-term policy framework:
1.Focus on children’s developmental needs, tilt assistance to
young children, and incentivize paid employment that is
appropriate to age of child
2.Establish a Child Payment – universal for the first 6 years,
targeted thereafter; higher rate during infancy and declining
gradually in steps
3.Undertake an independent review of all child-related benefits,
including In-Work Tax Credit
4.EAG doing further work on income support regime for our
Final Report
Specific proposals:
Income and Employment
Rationale for universal element to the proposed
child payment:
1.Need a pragmatic approach to the debate over universality
versus targeting; various criteria need consideration
2.There is a good case for universal funding under certain
conditions
3.NZ has universal funding of ECE, compulsory education,
aspects of tertiary education, most of health care, old age
pension, etc.
4.21 of 34 OECD countries have a universal child payment as part
of their child assistance policies
Specific proposals:
Income and Employment
Rationale for universal element to the proposed child payment:
1.Reduces labour market disincentives (by reducing EMTRs)
2.Recognizes the wider social benefits of raising children and the high costs of younger
children
3.Recognizes the complexity of contemporary families
4.Simpler and more transparent, with lower transaction & compliance costs
5.Ensures high take-up rates
6.Potentially provides an alternative to more extensive paid parental leave, and would be
fairer than current paid parent leave arrangements
7.Supports a parent to stay at home during infancy (with positive child development
impacts)
8.Provides a population database (for use by health and social service agencies)
9.Provides a symmetry with the universal nature of National Superannuation
10.Enhances political commitment for, and long-term stability of, the policy (political
economy reasons)
Specific proposals:
Income and Employment
Employment policies:
1.Weak case for raising the minimum wage
2.Little scope for further reduction in employment regulation
3.Job subsidy schemes may have merit, but only under strict conditions
4.Need to ensure adequate incentives for paid employment and support for
parents of younger children via subsidies, accessible and good quality child care,
ECE, OSCAR, holiday programmes etc.
5.Need appropriate support for training/up-skilling/tertiary education for
parents, especially beneficiaries
6.Need to encourage child-friendly workplaces
7.Need strong incentives for welfare agencies to place parents with children
into sustainable, child-appropriate forms of employment
Specific Proposals:
Housing
• Improve the quality and quantity of housing
o Prioritize housing in the National Infrastructure Plan
o Establish a Warrant of Fitness for all rental accommodation
o Extend subsidies for insulation and heating
• Enhance the supply of social housing
• Re-focus the Accommodation Supplement and IncomeRelated Rent subsidies
• Enhance opportunities for home ownership
Specific Proposals: Health
Short-term:
•Support free primary health care for all children from 0-6 years especially
after hours
•Establish a common assessment framework and pathway for all children
from before birth to identify and respond to needs, shared by all health
practitioners
•Apply principle of ‘proportionate universalism’
Longer-term:
•Expand free primary health care progressively to all children (0-17)
•Improve information systems via a unified enrolment system
•Develop a national plan to improve child nutrition
•Establish youth-friendly health and social services in all low-decile secondary
schools
Specific Proposals: Education
• Continue to implement ECE work programme
• Develop a national strategy for food in schools
• Incentivize schools and ECE centres in disadvantaged
areas to become ‘full service schools’ or ‘community
hubs’
• Improve access to after-school care and holiday
programmes
• Expand the Teen Parent Units
Specific Proposals: Pasifika
• Develop measures and indicators using Pasifika understandings
of identity and success
• Focus on making progress in Auckland especially
–
–
–
–
–
Overcrowding
Employment
Education
Health promotion
Justice
• Ensure government services have effective links with Pasifika
community and church groups
• Encourage high-quality research to drive innovation &
responsiveness in public services for Pasifika children
Specific Proposals: Māori
• Develop measures of Māori well-being and set targets
to eliminate the disparities in rates of poverty for Māori
children
• Better outcomes in education, health, employment &
justice
• Develop a strategy to prevent Māori homelessness
• Better integrated health & social services for Māori
children, including parenting programmes
• Support trusted workers and develop integrated service
hubs
Specific Proposals: Other
Other specific proposals cover:
•
•
•
•
•
Community & local initiatives
Debt
Substance abuse
Gambling
Research needs
The Nature of Poverty:
The Global Picture
1. Around 1 billion people (around 15% of the world’s
population of 7 billion+) experience regular hunger
2. Many millions die of poverty-related causes each
year
3. By NZ standards, most people in the world are poor
– about half live on less then US$2.50 per day
4. In relative terms, things are improving globally, but
many future risks, including the impact of climate
change and political instability
Long-term Trends in Child Poverty in
Australia
50% median
60% median
Below real 1982 50% median
Below real 1982 60% median
25
20
15
%
10
5
0
1982
1986
1990
1994
1995
1996
2000
2002
2003
2005
2007
2009
Child Poverty and Overall Poverty in
OECD Countries
30
Mexico
Romania
25
USA
20
Latvia
Child
poverty
rate (%)
Canada
15
Australia
New Zealand
UK
Ireland
Korea
10
Sweden
5
Denmark
0
0
5
10
15
Overall poverty rate (%)
20
25
30
Mexico
Turkey
Estonia
Spain
USA
Italy
Canada
Poland
Greece
Chile
Japan
Luxembourg
OECD average
UK
Australia
Korea
Couple poverty rate
Belgium
Slovak Republic
Switzerland
Ireland
Austria
New Zealand
Slovenia
Netherlands
Hungary
Czech Republic
France
Germany
Sweden
Finland
Norway
Denmark
Child Poverty among Couple and Sole Parent
Households in OECD Countries, 2008
Sole parent poverty rate
60
50
40
% 30
20
10
0
Australian data -- Are Identified Essentials Robust?
(unweighted percentages)
Australian data -- Are Children’s Needs Universal?
(unweighted percentages)
Acknowledgements
Expert Advisory Group, Solutions to Child Poverty in New Zealand:
Issues and Options Paper for Consultation, August 2012
Expert Advisory Group, Solutions to Child Poverty in New Zealand:
Evidence for Action, Final Report, December 2012.
Bryan Perry, Household Incomes in New Zealand: Trends in
indicators of inequality and hardship, 1982 to 2011, Wellington,
Ministry of Social Development, 2012)
Peter Saunders, Presentation for IGPS Workshops, 19 and 21
September 2012