Some babies are more equal than others
28/01/2014 § 9 Comments
So…Labour made its big policy announcement. I guess I should comment on it.
Let’s focus on the $60 per week for babies. Here’s the case for such a payment:
Our society recognises that the first few years of life are crucial to later development — stuff happens or should happen in that period that can’t be undone or redone. This is, for example, your DOHaD (developmental origins of health and disease) hypothesis. We collectively decide that we want new individuals — babies — to have the best start they can. Maybe we want each one to reach his or her full potential, maybe we just calculate that an ounce of prevention costs less. Either way, the 2 million plus of us with work each put a little money into the pot for the 59,000 families with babies. We use government to organise the whole thing. Given that families are a key institution in society, we route the payment through families. Giving credence to what economists say, we provide families with money rather than things (food, clothing) because each family is best placed to decide what it needs.
But then there’s this detail about excluding families making more than $150,000. If the payment is essentially for the new individual, then why make it contingent on the family’s income? And furthermore, the exclusion would affect only 5% of families, so it has only a marginal impact on the total cost. The exclusion tells us that the payment isn’t just about society supporting new babies, it’s about supporting specific babies.
So then we get into a debate about which babies deserve support. It turns the policy from baby-focused to family-focused. Labour has determined that some families need support, well, actually, that 95% of families need support. And that’s where they lose me.
I definitely see the need-based case for providing extra money to the one-quarter of children in poverty. We could increase the scope even more to include the near-poor. But when we increase it half or three-quarters or 95% of families, we aren’t talking about needs any more. In no plausible way can we argue that 95% of New Zealand families are needy. They may be ‘struggling’, in the sense that we can all find ways to spend our entire incomes and then a bit more. But needy?
And so the policy looks like a giveaway to the middle class, dressed up in concerns about kids and poverty. It’s a great ploy — voters (who are mostly middle class) can feel like they are doing something for barefoot urchins while getting paid themselves. The pay-off is psychological AND financial. That makes it good politics.
Groping towards Bethlehem 
The pragmatics of politics (deliverables pegged to electoral cycles) trump the pragmatics of health and welfare (deliverables pegged to generations) every time – not to speak of the relatively trivial influence of ideals. This is a real problem in anything to do with child health and welfare because children are not electorally enfranchised. I have long since maintained that te average ten year is perfectly capable of making an electoral decision that is at least as well informed and reasoned as that of most adults – and probably less self-interested if most of the political discussions by children that I have witnessed are anything to go by. If we lowered the voting age to 10, or even 12, we would see some real shifts in political power and priorities!
This is why I’ve been trying to understand how the focus of economics on methodological individualism affects the place and treatment of children. They are clearly human beings, but lack full economic agency. Your suggestion is certainly radical, and it would give them more power in society.
“one-quarter of children in poverty”
The family income that defines poverty for this statistics is:
Cash in the hand per week (ie after paying taxes and receiving benefits)
— the Living Wage family of 2 adults and 2 children — $835 per week
— the larger family of 2 adults and 4 children — $1035 per week
— the small family of 1 adult and 2 children — $670 per week
I find these levels unbelievable … but that is what the Childrens’ Commissioner tells us that poverty is.
I wonder if he would have got as far if he had said
“Poverty is a family of 6 having $1000 to spend each week.”
Mary –
I’m not sure where you’re getting your numbers, but they don’t tie to what I could find. The ‘one quarter of children in poverty’ article (http://www.stuff.co.nz/dominion-post/news/9492016/One-in-four-Kiwi-children-living-in-poverty) cites the Child Poverty Monitor (http://www.childpoverty.co.nz/), although it ties roughly to the Min Social Development percentage (http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/). CPM have a technical report (http://www.nzchildren.co.nz/document_downloads/2013%20Child%20Poverty%20Monitor%20Technical%20Report%20MASTER.pdf) (pdf) that explains the multi-measure approach they have used. Unfortunately, the income measures are all relative rather than in dollar terms. That’s probably to keep the report from going stale too quickly, but it makes it harder to compare to your numbers.
One hard-ish number is: ‘In 2012, 265,000 children aged 0–17 years lived in poverty (using the <60% contemporary median after housing costs
measure). This equated to 25% of all New Zealand children.' I can't see how they have calculated income after housing costs or where it is sourced. However, Min Social Development does give income figures (http://www.stats.govt.nz/browse_for_stats/income-and-work/Income/NZIncomeSurvey_HOTPJun13qtr.aspx), and Stats NZ will have some, too. MSD says that the median weekly income from wages and salaries is $844, so 60% of that would be $506. That's not disposable income, but gross. There will be taxes and transfers, and families with incomes under $60,000 generally are net beneficiaries (not including GST and rates). Assuming housing costs of 30%, that gross income after housing costs is more like $354 per week, or $18,418 per year.
And just for perspective, my family of four spends more than that on groceries alone.
My numbers are just a rough calculation — someone will have better ones — but they do suggest that the poverty measure is not a family of 6 with $1,000 to spend each week. It would be good to see your sources.
I got the figures exactly where the Children’s Commissioner got his — from the MSD Household Income Report produced by Bryan Perry.
Table E.2 on page 103 gives the thresholds for the different household types and different definitions of poverty.
The ones I chose, reflecting the one the Children’s Commissioner chose, were for the relative poverty measure using 60% of median household income.
This shows without any doubt that
“Poverty is a family of 6 having $1000 to spend each week.”
Actually the number is $1035 so I rounded it down.
Ah, thanks for the reference. My calculations were wrong. I see now, too, that median _household_ income is more like $69k (http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11164406). That produces numbers much closer to the MSD report.
So, what do you think the income should be for a family of 6 for them to be considered poor?
Oh, and for those watching, the MSD report is:
http://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/monitoring/household-income-report/hir-main-report-2013.doc
Bryan Perry. July 2003. Household incomes in New Zealand: Trends in indicators of inequality and hardship, 1982 to 2012. Wellington:
Ministry of Social Development.
[…] Bill Kaye-Blake is right that the $150k family income cutoff is a bit odd. […]
[…] Bill Kaye-Blake is right that the $150k family income cutoff is a bit odd. […]