Words I wish a NZ Labour leader would say

December 17th, 2014 at 9:00 am by David Farrar

The Telegraph reports:

Jim Murphy has been announced as the new leader of the Scottish Labour Party. …

“The majority are fulfilled, getting on, getting by, being successful. A minority are falling behind, denied opportunity, trapped, unable to escape the hardship of their upbringing.

“That inequality is wrong and it is my driving purpose, it is our driving purpose, it is the Scottish Labour Party’s driving purpose to end that type of inequality once and for all.”

Mr Murphy said the best way to tackle poverty was to boost the economy.

“The most effective anti poverty measure is a successful economy,” he said.

Would we even hear NZ Labour or the Greens say this here?

“It’s about backing businesses, it’s about creating jobs, because if redistribution is our aim, which it is, then we need more wealth not less. We want more entrepreneurs, not fewer. A growing middle class that more families are able to join.

“The debate about how we spend our wealth starts with how we earn it.”


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8 ways to measure poverty

July 11th, 2014 at 3:00 pm by David Farrar

The Maxim Institute has a very thoughtful discussion paper on poverty. They pose a number of questions, and also outline eight different ways you can measure poverty. They eight ways are:

  1. Average income threshold – a percentage of mean or median income
  2. Consumption expenditure – a percentage of amount spent on consumption compared to average household
  3. Budget standards – based on a budget judged high enough to avoid deprivation
  4. Component and multiplier – based on amount needed for an essential such as food, and multiplied
  5. Subjective measures – based on self-assessment as poor
  6.  Benefit-based/statutory measures – based on government definition of minimum income
  7. Material deprivation indices – based on actually lacking essential necessities
  8. Multi-dimensional measurement of poverty, deprivation or social exclusion – a mixture of the above and more

No measure is prefect. I don’t like the income measures because they treat all households as identical in terms of needs, and they are more about income spread than actual poverty. They also avoid the effect of tax, as they tend to be on before tax incomes.

My preference is No 7.  Stats NZ already do this – an occasional survey asking if families can afford stuff such as more than two pairs of shes for kids, transport to school etc etc. This is relatively objective, and measures actual deprivation rather than merely equality of income.




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Behind the headline

March 21st, 2014 at 2:00 pm by David Farrar

The headline:

A global survey has found that one in every six Kiwis ran out of money for food in 2011-12 – more than in all except eight other developed nations.

Sounds shocking.

The shock finding contrasts with other data in an annual survey by the Paris-based OECD that put New Zealand near the top of the 34 developed countries on social indicators such as people’s perceived health status and employment rates, and above average on relative poverty.

So on most indicators doing well, so let’s do a shock headline on the one indicator that isn’t, which is based on three year old data.

The NZ figure matches Statistics NZ’s annual household economic survey which asks people if they have not enough, just enough, enough or more than enough money to meet “everyday needs for such things as accommodation, food, clothing and other necessities”. Those who said “not enough” rose from 16.2 per cent in 2007 to 18.5 per cent in 2010, but fell to 17.6 per cent in 2011, 16.6 per cent in 2012 and 14 per cent last year.

So the real headline should be fewer families unable to make ends meet than in 2007!

Here’s some other stats from OECD survey:

  • NZ 2nd highest in OECD for percentage of welfare going to low income families
  • Between 2007 and 2010 NZ richest 10% of households had higher drop in disposable income than the poorest 10%
  • NZ has 8th highest employment rate
  • Gini coefficient which measures income inequality declines from 2007 to 2010
  • NZ relative poverty rate declines from 2007 to 2010
  • NZ 2nd highest for adults in good health and highest in world for adults with low income
  • NZ 11th highest for overall life satisfaction
  • NZ 5th highest for confidence in government

This is not to say that things are not tough for some families. But if you read the overall OECD report, NZ is better than most other developed countries. And fewer people in 2013 than in 2007 are unable to make ends meet.


Does Cunliffe stick by shoes claim?

February 1st, 2014 at 10:00 am by David Farrar

Hamish Rutherford at Stuff reports:

When David Cunliffe tried to hit home the message that many Kiwis were struggling this week, he chose a simple, heartbreaking example.

Not only was one in four living below the poverty line ‘‘one in five don’t even have two pairs of shoes to wear to school’’ the Labour leader said in his state of the nation speech in Auckland.

Later in the week Cunliffe was challenged by Prime Minister John Key in Parliament to quote the source of the claim (as had Right wing commentators), but he did not do so.

His office is now ignoring questions on whether he sticks by it, but the foundations are shaky.

Staff confirmed that it was based on the report last year of Children’s Commissioner Russell Wills, which said 17 per cent of children (which is one in six, not one in five) were exposed to ‘‘a range of economising behaviours’’.

These included having at least two pairs of shoes in good repair, but could also mean parents cut back on fresh fruit, limit heating or avoid going to the doctor to save cash.

The report this all comes from I blogged on last week. It clearly states that only one in 20 families can;t afford two pairs of shoes. Cunliffe’s figure was 400% higher.

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More on poverty and school results

January 30th, 2014 at 2:00 pm by David Farrar

Amanda Ripley at Talking Points Memo writes:

There is just one valid way to compare how students from different socio-economic backgrounds do on this same international test. And that’s to look at the scores for kids at different income levels, data the Organisation for Economic Co-operation and Development (OECD) routinely collects. What we see from the data is that our poorest kids perform worse than their peers in other countries—and so do our richest kids. Even our middle-class kids score worse than middle-class kids in Germany, Finland, New Zealand and Korea, among other places. Our kids do better in reading than in math or science—but they don’t tend to score at the very top of the world in any subject.

Countries with significant levels of child poverty now outperform the U.S. on international tests (Canada, Estonia, Poland and Vietnam, for example). So the urgent question is not whether we must fix poverty before we fix schools (or fix schools before we fix poverty). The question is, What did these other countries do to help mitigate against the toxic effects of poverty? And what can we learn from them?

Poverty is a factor, but as the US results show it is not a determining one.

To me, the value of the international educational comparisons is not to prove who is right or wrong; it is to see what is possible, to find the outliers and try to learn from them. Poland, which has a 16 percent child-poverty rate and spends dramatically less than we do per pupil, had worse PISA scores than we did in 2000. Today, Polish 15-year-olds outscore their American peers in math, reading and science. Poland has more teenagers performing at an advanced level in math than Finland (which has a mere 4 percent child poverty rate). Meanwhile, other countries have very low levels of child poverty but end up with worse education outcomes than Poland (Norway and Sweden come to mind).


The Huffington Post also reports:

The data was provided to The WorldPost by Pablo Zoido, an analyst at the Organisation for Economic Co-operation and Development, the group behind PISA. It shows that students’ wealth does not necessarily make them more competitive on an international scale. In the United States, for example, the poorest kids scored around a 433 out of 700 on the math portion of PISA, while the wealthiest ones netted about a 547. The lower score comes in just below the OECD average for the bottom decile (436), but the higher score also comes in below the OECD average for the top decile (554).

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Mitchell on income inequality

January 28th, 2014 at 10:00 am by David Farrar

Inequality in NZ and the oecd trend

From Lindsay Mitchell.

The Gini coefficient is what most on the left say is the best measure of income inequality. This clearly shows no worsening trend, and in fact most of the OECD is getting more unequal, but not New Zealand.

Mitchell also looks at the standard measures of poverty. These are not measures the right might use such as actual need, but the normal proportion of median income. What is the record for NZ from 2007 to 2012:

  • AHC fixed line 60% dropped from 18% to 14%
  • AHC moving line 60% dropped from 18% to 17%
  • AHC moving line 50% dropped from 13% to 12%
  • BHC moving line 60% dropped from 18% to 16%

So when a politician claims NZ has more poverty or income inequality, just ask them a simple question. On what measure.

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Gates on 3 myths that block progress for the poor

January 26th, 2014 at 7:00 am by David Farrar

Bill Gates writes:

By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and I are struck by how many people think the world is getting worse. The belief that the world can’t solve extreme poverty and disease isn’t just mistaken. It is harmful.


The global picture of poverty has been completely redrawn in my lifetime. Per-person incomes in Turkey and Chile are where the United States level was in 1960. Malaysia is nearly there, as is Gabon. And that no-man’s-land between rich and poor countries has been filled in by China, India, Brazil, and others. Since 1960, China’s real income per person has gone up eightfold. India’s has quadrupled, Brazil’s has almost quintupled, and the small country of Botswana, with shrewd management of its mineral resources, has seen a thirty-fold increase. There is a class of nations in the middle that barely existed 50 years ago, and it includes more than half of the world’s population.

Botswana has a huge focus on education and fights corruption actively. And progress is not just in Asia:

First, don’t let anyone tell you that Africa is worse off today than it was 50 years ago. Income per person has in fact risen in sub-Saharan Africa over that time, and quite a bit in a few countries. After plummeting during the debt crisis of the 1980s, it has climbed by two thirds since 1998, to nearly $2,200 from just over $1,300. Today, more and more countries are turning toward strong sustained development, and more will follow. Seven of the 10 fastest-growing economies of the past half-decade are in Africa.

Africa has also made big strides in health and education. Since 1960, the life span for women in sub-Saharan Africa has gone up from 41 to 57 years, despite the HIV epidemic. Without HIV it would be 61 years. The percentage of children in school has gone from the low 40s to over 75 percent since 1970. Fewer people are hungry, and more people have good nutrition. If getting enough to eat, going to school, and living longer are measures of a good life, then life is definitely getting better there. These improvements are not the end of the story; they’re the foundation for more progress.


It also helps to look at the overall impact this spending has. To get a rough figure, I added up all the money spent by donors on health-related aid since 1980. Then I divided by the number of children’s deaths that have been prevented in that same time. It comes to less than $5,000 per child saved (and that doesn’t include the improvements in health that go beyond saving the lives of young children).5 $5,000 may sound expensive, but keep in mind that U.S. government agencies typically value the life of an American at several million dollars.

Also remember that healthy children do more than merely survive. They go to school and eventually work, and over time they make their countries more self-sufficient. This is why I say aid is such a bargain.

And some things foreign aid has helped achieve:

  • 440 million children vaccinated
  • 2.5 billion children immunised against polio
  • 11.2 million cases of TB detected and treated
  • 360 million insecticide treated bed nets distributed


Second, the “aid breeds dependency” argument misses all the countries that have graduated from being aid recipients, and focuses only on the most difficult remaining cases. Here is a quick list of former major recipients that have grown so much that they receive hardly any aid today: Botswana, Morocco, Brazil, Mexico, Chile, Costa Rica, Peru, Thailand, Mauritius, Singapore, and Malaysia. South Korea received enormous amounts of aid after the Korean War, and is now a net donor. China is also a net aid donor and funds a lot of science to help developing countries. India receives 0.09 percent of its GDP in aid, down from 1 percent in 1991.


Going back at least to Thomas Malthus, who published his An Essay on the Principle of Population in 1798, people have worried about doomsday scenarios in which food supply can’t keep up with population growth. …

When children survive in greater numbers, parents decide to have smaller families. Consider Thailand. Around 1960, child mortality started going down. Then, around 1970, after the government invested in a strong family planning program, birth rates started to drop. In the course of just two decades, Thai women went from having an average of six children to an average of two. Today, child mortality in Thailand is almost as low as it is in the United States, and Thai women have an average of 1.6 children.


Because most countries—with exceptions in sub-Saharan Africa and South Asia—have now gone through this transition, the global population is growing more slowly every year. As Hans Rosling, a professor at the Karolinska Institute in Sweden and one of my favorite data geeks, said, “The amount of children in the world today is probably the most there will be! We are entering into the age of the Peak Child!”

Peak Child – I like it.

Gates summarises:

If you read the news every day, it’s easy to get the impression that the world is getting worse. There is nothing inherently wrong with focusing on bad news, of course—as long as you get it in context. Melinda and I are disgusted by the fact that more than six million children died last year. But we are motivated by the fact that this number is the lowest ever recorded. We want to make sure it keeps going down.

A really good open letter.

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Chart of the greatest and most remarkable achievement in human history

January 25th, 2014 at 12:00 pm by David Farrar



Mary Perry at AEI writes:

Everybody’s featuring their “graphs and charts of the year,” like The Atlantic and theWashington Post (be sure to see Vice-President Joe Biden’s “Graph of the Year” on Amtrak ridership). Well, the chart above could perhaps qualify as the “chart of the century” because it illustrates one of the most remarkable achievements in human history: the 80% reduction in world poverty in only 36 years, from 26.8% of the world’s population living on $1 or less (in 1987 dollars) in 1970 to only 5.4% in 2006.

And what has been the major reason for this huge success?

So what did that? What accounts for that? United Nations? US foreign aid? The International Monetary Fund? Central planning? No.

It was globalization, free trade, the boom in international entrepreneurship. 

Yet so many who profess to care about the poor fight so hard against free trade.

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An end to global poverty?

October 2nd, 2013 at 7:00 am by David Farrar

Nicholas Kristof writes in the NYT:

IMAGINE having to pick just one of your children to save, while leaving the others to face death.

One of my most searing experiences as a reporter occurred in Cambodia, where I met a woman whose daughter had just died of malaria and who was left caring for seven children and grandchildren.

The woman, Nhem Yen, showed me her one anti-malaria bed net and told me how every evening she agonized over which children to squeeze under it — and which ones to leave out and expose to malarial mosquitoes.

That’s the kind of excruciating question that extreme poverty forces on families.

Most of us couldn’t even comprehend having to make a choice like that.

For thousands of generations, a vast majority of humans have lived brief, illiterate lives marked by disease, disability and the loss of children. As recently as 1980, a slight majority of people in the developing world lived in extreme poverty, defined as surviving on less than $1.25 in today’s money.

So 30 years ago half the developing world were near starvation, or did starve.

The share of people in the developing world who live in extreme poverty has been reduced from 1 in 2 in 1980 to 1 in 5 today, according to the World Bank. Now the aim is to reduce that to almost zero by 2030.

That is a huge gain, and a trend we want to continue.

Timeout for a skeptical question that is both callous and common:

When additional kids survive in poor countries, does that really matter? Isn’t the result just a population explosion leading to famine or war, and more deaths?

That’s a frequent objection, but it’s wrong. When child mortality drops and families know that their children will survive, they are more likely to have fewer babies — and to invest more in them. There’s a well-known path from declining child deaths to declining births, which is why Bangladesh is now down to an average of 2.2 births per woman.

An interesting observation I had not seen before.

Ancient diseases are on the way out. Guinea worm and polio are likely to be eradicated in the coming years. Malaria has been brought under control in many countries, and a vaccine may reduce its toll even further.

AIDS is also receding. Last year in southern Africa, I interviewed coffin-makers who told me grumpily that their businesses are in recession because AIDS is no longer killing large numbers of people.

Good news for most is always bad news for some!

The drop in mortality understates the gains, because diseases don’t just kill people but also leave them disabled or unproductive, wrecking the economy. Poor people used to go blind routinely from disease or were unable to work for want of reading glasses. Now they are much less likely to go blind, and far more likely to get glasses.

These achievements aren’t just the result of work by Western donors or aid groups. Some of the biggest gains resulted from economic growth in China and India. When the poor are able to get jobs, they forge their own path out of poverty.

Their embrace of a market economy has pulled hundreds of millions out of extreme poverty.

The world of extreme poverty and disease that characterized life for most people throughout history may now finally be on its way out.

I’d love to see that in my lifetime.


Hooton on poverty and income inequality

July 28th, 2013 at 1:00 pm by David Farrar

Matthew Hooton writes in NBR:

Since then, activists and academics have emphasised inequality. 

In New Zealand, the Child Poverty Action Group says 270,000 children – half of them Maori or Pasifika – live in poverty, around a quarter of the total.

Otago University says 400,000 New Zealanders suffer fuel poverty.

Depending on the measure, the welfare industry tells us that around 760,000 New Zealanders live in poverty.  Our income inequality is said to be a bit better than the hellhole of Canada but a bit worse than the paradise of Greece.

So the aim of the left is to have us more like Greece, and less like Canada!

In reality, all these measures are mere statistical constructs.

If every New Zealander’s income immediately doubled (ignore for the sake of argument any inflation effect) so-called poverty in New Zealand would remain unchanged.

If dairy farmers and tourism operators have a good year, more children would be said to live in poverty because the median income would rise.

Similarly, cut middle-class salaries, or slash the value of the Rich List’s portfolios, and child poverty apparently falls.

This is very true, and those numbers quoted are near meaningless. The far better measure of hardship is the survey done by eithers Stats and/or MSD every few years asking a representative set of households what items or services they do not have, that they wish to have.

This is nonsense and confirms Margaret Thatcher’s famous assertion that the left would rather have the poor poorer provided the rich were less rich.

That case was made just last week by Dr Geoff Bertram – the architect of the Labour/Green electricity nationalisation to combat “fuel poverty” – when he proposed chief executive salaries should be no more than three times that of a company’s lowest-paid worker.

If Fonterra employed even one factory hand on, say, $20/hour, its chief executive would be limited to a salary of about $125,000 a year.  It is impossible to see how that would help even one of the 760,000 New Zealanders apparently living in poverty.  It is a proposal solely motivated by the politics of hate.

Dr Bertram is the architect of Labour’s and Green’s power policy.

Could you imagine Fonterra being unable to pay any staff member over $125,000 a year?

There is an argument that, at a certain point, inequality can become harmful because it can become a barrier to economic growth.

In a system of pure feudalism, where all new wealth that is created is confiscated by the rich, or a system of pure communism where all wealth is redistributed, no one would have an incentive to do anything, with economic collapse following.

The question, though, is whether there is the slightest evidence that New Zealand is remotely approaching either extreme.  If there is, it would surely be towards the latter.

Under the current tax system, including Working for Families which John Key rightly described as “communism by stealth” but has kept in place, the top 3% of New Zealand households pay a third of all net income tax.

The top 5% of households pay half and the top 12% pay three-quarters.

In net terms, the 44% of households earning under $50,000 pay no income tax at all.  Their true net tax rates are below zero.

Even when taking into account GST, fuel taxes and tobacco and alcohol excise, the redistributive effects of the current system are overwhelming.  Just 12% of indirect taxes are paid by the poorest 20% of households and a third by the wealthiest 20% of households.

The current economy is one that is growing, where unemployment is falling, wages are rising, inflation is below 1% and even the constructed measure of inequality is marginally narrowing.

It is also a country where someone like Rod Drury can turn an idea into a $2 billion company, including quite a few hundred million for himself.

We should return to the values of the 1980s and celebrate him and all those who have made it honestly onto this year’s list.

They create wealth and opportunities for New Zealanders.  It is a lie to say they make children poor.

A great column.

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Begging for the essentials?

July 3rd, 2013 at 12:00 pm by David Farrar

The Herald reports:

Begging could be banned throughout Auckland under a bylaw being drafted by the council – a move described as overdue by advocates and fascist by those targeted.

An initial draft of the bylaw banned asking for money, food, other items or soliciting donations “in a manner that may intimidate or cause a nuisance to any person”.

But after public feedback, commissioners appointed by the Auckland Council and Auckland Transport have recommended all begging be banned.

The total ban was sought by business associations, including Heart of the City, and an upmarket department store, which said a hard core of beggars intimidated shoppers.

“We have too many examples of behaviour being defended under the guise of exercising a public right to occupy public spaces,” said Heart of the City chief executive Alex Swney.

NZ has a generous welfare system. We provide benefits, family and child support and accommodation assistance. There is no need for anyone to be begging. The few who do, tend to have issues of addiction or worse.

Simon Robinson, begging for money on Queen St yesterday, said he did so for about three hours a day, and felt he had the right to do so.

The 43-year-old, who began begging five years ago after his debts got on top of him and lives in a boarding house in Mt Eden, said banning begging was a “bit fascist” and “stepping towards a police state”.

“I used to shoplift, so it’s either that to get food, or sit there begging and not being a nuisance, and as soon as someone gives me $20 to get a decent meal and a couple of cans of beer, I’m off.”

Need more be said.

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Some facts from Bono on the progress on poverty

April 8th, 2013 at 7:00 am by David Farrar

I get TED talks on my podcast to listen to while exercising. Found this one interesting enough to share, and embedded below.

Some facts he cited:

  • Since 2000 there are eight million more AIDs patients getting antiretroviral drugs.
  • Eight countries in Africa have cut their malaria rate by 75%
  • The same countries have 2.65 million fewer child deaths a year or 7,256 a day.
  • The number of people living in extreme poverty has reduced from 43% in 1990 to 21% in 2010.
  • At the current rate of decline, the number of people in extreme poverty would be close to zero by 2030
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Poverty and choices

January 5th, 2013 at 6:33 am by David Farrar

Two items of interest. First the NZ Herald reports:

Adolescents living in the most deprived areas in New Zealand drink almost twice as much alcohol than their peers living at the other end of the scale, a joint study has found.

Researchers from the University of Southern Denmark and Massey University surveyed 1144 adolescents aged between 12 and 19 living in New Zealand across 10 area deprivation levels, 1 being the least deprived.

Their paper published in Health & Place found that at the poorer end of the scale, teenagers drank an average of 96.2ml of pure alcohol or 6.4 serves on each drinking occasion, while t the least deprived adolescents drank 50.6ml or 3.4 serves.

The left response to poverty is a belief that it is simply an issue of money. They say those not in work must be given more money, as they do not have enough money to afford even the basics such as food for breakfasts.

We see this in a Twitter exchange:


Hat Tip: Whale

On this rare issue I am with MP Lole-Taylor. The concept of personal responsibility and choice seems to be alien to some people. If a poor person makes awful decisions, it is not their fault. It is our fault because of poverty. Never mind that if the parents did not buy so much alcohol, and gamble so much, they might not actually be in poverty.



Raising money for Oxfam

September 28th, 2012 at 12:00 pm by David Farrar

It turns out that the five Labour MPs living on $2.25 a day are not making You Tube videos for WINZ offices on better budgeting but are in fact trying to raise money for charities like Oxfam that try to alleviate poverty in countries where significant numbers do live on under $2.25 a day.

Overall fewer people each year are living in poverty, due to the economic growth of China and India as they have opened up their economies. There are lessons there for other countries.

But I certainly support assistance to those less fortunate, and support a number of charities and also micro-financing organisations such as Kiva, which I’ve made a couple of dozen loans through.

Now you would think five of the most senior Labour MPs would raise a lot of money for people in poverty. So let’s look at their efforts.

The Deputy Leader, Finance Spokesperson, Welfare Spokesperson, Aid Spokesperson and Housing Spokesperson had raised around $1,400 between them, with some as low as just $90. They obviously have not hit their colleagues up enough!

This is less than the just over $1,500 raised by a Dunedin based Young Nat, Varsha Singh.

The challenge finishes at the end of today. Who will have raised more money – half the Labour frontbench, or the Young Nat?

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Labour MPs showing beneficiaries how to budget

September 27th, 2012 at 1:00 pm by David Farrar

I think it is superb that a group of Labour MPs are living on $2.25 of food a day, for a week, to demonstrate how you can eat cheaply.

Their potato and spinach curry recipe should be displayed in all WINZ offices.

I am a bit confused that they are so eager to demonstrate you can feed yourself on just under $16 a week, that they demand increased welfare payments for beneficiary parents. Currently a low income parent gets $88 a week welfare for their first child, and $61 a week for additional children (on top of core benefit, accom supplement etc). Of course you have non food expenses also, but thanks to Grant, Jacinda, Phil, Annette and David they are showing you can have $72 to $45 a week for those other expenses.

I look forward to their other recipes on how to cook for $2.25 a day. Maybe they could publish a book with Muriel Newman on it?

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Income distribution

April 26th, 2012 at 9:02 am by David Farrar

The Press reports:

Children raised in poor families will earn less and achieve at a lower academic standard but will not have higher crime levels, a Christchurch study has found.

The Christchurch Health and Development Study (CHDS), run by Otago University, has been following the lives of more than 1000 people since 1977.

The latest study, published in Social Science and Medicine, has looked at the impact of family poverty on children up to the age of 10 and how this is reflected in adulthood.

“Being brought up in an affluent family is advantageous to your education and career,” he said.

This is not a huge surprise.

Fergusson said the cohort was split into 20 per cent groups, with the bottom group earning an average of $43,000 a year and the top group earning $55,000.

“It’s not a huge difference but it’s definitely there, and we have seen that it definitely makes a difference.”

I am surprised it is not greater. This is saying the bottom quintile earn 80% of the top quintile. Sure that is a gap, but not as large as many would have predicted.

One of the reasons why the gap is less than other studies of income distribution, is these are people all the same age. Age is a large factor in income. That is why I have little time for the notion that an 18 year old with no experience should earn at least 60% of the income of someone with 25 years experience.

“Contrary to popular belief, being brought up in a poor family does not mean increased rates of crime or mental health problems in adulthood,” he said.

So let us stop blaming crime on poverty. There may be a correlation but that is not causative.

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Samoan PM on poverty

January 25th, 2012 at 7:00 am by David Farrar

Michael Field at Stuff reports:

Samoans who claim they are poor are lazy, Samoan Prime Minister Tuilaepa Sailele says.

In a comment on the government website Savali, Tuilaepa says having no food, water, clothes, a home or access to medical treatment was poverty.

There was no poverty in Samoa. 

“Every Samoan has claim to land. There are plenty of mangoes, pawpaws, bananas and breadfruit falling off and rotting on the ground, plenty of fish in the sea,” he said.

“The problem is too many people are coming into town and loathing around. They are lazy and do not want to go back to their village to work the land. They should stay in their village where their lands are and develop it.”

Tuilaepa says that some Samoans think that not having car, a TV or a European house is poverty.

“Those are luxuries. Having none of those is certainly not poverty.”

Maybe the PM of Samoa should have been appointed to the Welfare Working Group!

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Child Poverty

January 8th, 2012 at 2:44 pm by David Farrar

Judy Callingham blogs:

Today  the Herald published a story lamenting the extra cost of local, free-range and organic foods, the very foods we’re being encouraged to buy and eat.  They estimate that the clean, green Kiwi options cost us on average 25% more. For people on a limited budget, that isn’t an option at all.

Indeed. So worth remembering that when people call for certain types of food (battery hen eggs, intensive pig farming) to be banned, the result hits the poorest in society the most.

The Taranaki Daily News got closer to the heart of the problem with a story headlined ‘Free food draws poor kids to class’.  It quotes principals from Taranaki schools who say that some of their students rely on their school to provide breakfast and even lunch, just to survive.

Poverty in New Zealand is a problem we often conveniently ignore, preferring to see our country as a land of milk and honey.  Unfortunately, milk and honey are off the menu for hundreds of thousands of Kiwis. More than 200,000 of our kids are living below the poverty line; over 48,000 of them go to school without breakfast. 

The poverty line is of course the relative poverty line. As the median income increases, the poverty line increases. A family may have their income increase more than the cost of living increase, but still fall below the poverty line because other people’s income has increased even further.

A relative poverty line is normally 50% or 60% of the median wage. I tend to think this is not that useful a measure of poverty – it is more a measure of income inequality – and they are not the same thing.

I find the most useful measure is the four-yearly Living Standards Survey by MSD. It actually asks a representative sample of 5,000 households questions such as whether they have stuff such as phones, cars, contents insurance, enough space, a computer, warm clothes, proper meals etc and whether they would like to have them if they could afford them. This measures actual deprivation over 42 criteria. They also ask if people do various things to save money such not filling prescriptions to save money, buying second hand clothing etc. It is (in my opinion) a far more sophisticated measure of families suffering deprivation due to low income, than merely comparing household income to the median household income.

This is a disgrace. No child in this country should go hungry. No New Zealand child should be cold or ill-clothed or living in an unhealthy or overcrowded house.  No child should be denied an education just because learning is too hard when you arrive at school cold, wet and hungry – if you get there at all.

I agree no child should go to school hungry. However the reasons why more children are going to school hungry is more complex than just assuming it is because they can’t afford it. Even using Judy’s figures, 3/4 of those with incomes below the poverty line do send their kids to school fed. So how do they manage to do so, yet not other families?

Over the last 20 years, the welfare state has given more money to those on welfare who have children. I don’t have exact data (yet), but the level of support has increased beyond inflation.

The government has prioritised a number of policies to stimulate the economy in an effort to get us out of the current recession. None of these policies, to my mind, tackles head-on the most urgent task of all – eliminating ‘child poverty’.

This should be the number one priority. Nothing is more important. Nothing is going to stimulate the economy better in the long run than having our kids grow up healthy and well educated.  It’s a damn sight more important than ultra-fast broadband and super-highways.

Without an growing economy, then we do not generate sufficient tax revenue to help lower income families.

So long as child poverty is based on the flawed relative to the median income measure, we will never “eliminate it” unless we wish to have an economy such as those of the old eastern bloc where doctors could only be paid so much more than parking wardens.

What we can do is use the more sophisticated measures of deprivation, such as the living standards survey and set out to reduce certain indicators within it (such as the proportion of families who say they miss certain meals because they can’t afford it).

‘Child poverty’  is a misleading term. It implies that the only people affected are the children.  But every child living in poverty is part of a household that is also living in poverty.  Whether that’s the result of generations of welfare dependency or a lack of jobs is not the issue.  The issue is how to break the cycle and get these kids into a situation where we can be confident they have a better future – by giving them a better present.

Breaking the cycle is the key. The problem is that it is a problem often that takes a generation or more to fix, as income is merely part of the problem. Education, child abuse, parenting skills are all part of a very challenging mix.

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The new front bench

December 15th, 2011 at 11:00 am by David Farrar

I like this photo (from Stuff) of the Ministers being sworn in. I like the fact that a third of the front bench are woman (and two are Maori women) and indisputably all there on merit – not on the basis of quota or factional appeasement.

I also likes this response from John Key to David Shearer’s call to be on the Ministerial committee on poverty:

Mr Key wished new Labour leader David Shearer all the best in what was a “thankless” job as leader of the Opposition.

Mr Shearer had been “quite quiet” as an MP so it was difficult to tell how he might perform.

However, he rejected Mr Shearer’s call to widen a ministerial group on poverty to all MPs.

“I’m more than happy for David Shearer to be a part of the ministerial committee if he’s happy to give the Government confidence and supply.”


On the serious substantive issue, both John Key and David Shearer would sincerely like to see less poverty in New Zealand. They agree on the aim, but the reality is National and Labour disagree strongly on the solutions. This is not always a bad thing – it means NZers get to choose whose policies etc they prefer.

For example National believes a key way to reduce poverty is to reduce the numbers on welfare. Labour however believes that you reduce poverty by paying those on welfare more.

One could argue shouldn’t we do both. Well, yes you can but the policies are not that compatible. The more you pay people on welfare, the harder it generally is to reduce the numbers on welfare.

Ultimately it is of course a bit of a balancing act. Few advocate abolishing the welfare state and having a Singapore system where families must support those not in work, rather than the state. And likewise few support having a welfare state where work is voluntary and you can just go on a benefit whenever you feel like it.

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A massive achievement

September 18th, 2010 at 7:45 am by David Farrar

The Herald reports:

The share of the population of developing regions whose people live in extreme poverty is expected to fall to 15 percent by 2015, down from 46 percent in 1990, according to the United Nations. The gains stem largely from robust economic growth in countries such as China and India, the world’s two most populous countries.

That is a huge drop for one generation.

As leaders will hear next week at a Un summit in New York, the overall success in cutting extreme poverty is patchy from region to region. According to the World Bank, much of Asia already has met or is on its way to meeting the goal, and Latin America is on track to more than halve its rate from 11 percent in 1990 to 5 percent in 2015; sub-Saharan Africa is likely to fall short at a projected 38 percent.

The problems in Africa often relate to poor governance.

Change came as it did to many villages in China – through an idea and a road. A local official thought the area’s forested mountains and waterfalls could draw tourists, so he drummed up funding to pave the dirt track that was the sole path in and out of Chongdugou. Today almost all the village’s 350-plus families are involved in tourism.

In the 1990s, “people could only feed themselves, and some even starved. Children could not afford to go to school, and many could not even finish primary school,” said Liu Jiandang, a 41-year-old former farmer. “Now, we’ve got paved roads, new houses, phones and vehicles. I run a hotel that can host 20 to 30 tourists and some rooms have TV sets, air conditioners, hot water and bathrooms.”

How selfish of the village. Do they have any idea what their carbon emissions should be. They should go back to starving in poverty.


Begging pays

May 18th, 2010 at 11:00 am by David Farrar

Dave Burgess at the Dom Post went begging:

Powerful yet unexpected emotions struck me just minutes into my stint as a beggar. I was feeling like a low-life who would surely be ignored, abused or humiliated by passing pedestrians.

It didn’t help that the people walking past towered above as I sat forlornly on the ground. They were largely reduced to a mass of knees and feet but held the moral and physical high ground.

While depressing messages were crashing around in my head, the reality presenting itself was surprisingly uplifting.

People really cared and showed a huge amount of compassion and generosity to someone who had apparently hit rock bottom.

By caring people, I mainly mean women, of all ages and races. Over the combined four hours’ begging I received $126.20 from 32 people – but only five donations came from men.

The IRD said my begged money is considered a gift and does not attract tax. That is unlike street buskers, who are supposed to declare their earnings.

$126.20 over four hours is a very nice $31.55 an hour. And that is tax free. But with the donated food it comes to $164.70 or $41.18 an hour.

But if you compare it to pre-tax income, to see how much one would have to earn to receive the same amount in the hand, it equates to $60.01 an hour or an equivalent annual salary of $125,000 a year.

So maybe next time you see a beggar, you should ask him or her for a donation!

Work and Income deputy chief executive Patricia Reade says Wellington case managers have visited beggars on the street about 20 times over the past six months to find out if they need help.

“The majority of beggars have refused to speak to us and in fact only one person accepted an invitation to discuss their benefit entitlements.”

I’m impressed WINZ are proactive and regularly seek out beggars to see if they need help. The fact that almost none ever take up the offer of assistance confirms that their presence on the streets is not a matter of poverty or necessity – but normally a reflection of mental health issues and/or addiction problems.

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Laws on Welfare

September 20th, 2009 at 11:00 am by David Farrar

Michael has avoided the “h” issue in his SST column and insteads talks welfare:

LAST week 70 NGOs – mostly voluntary and welfare agencies – met in Auckland to declare war on child poverty. But not in the Cameroon nor Colombia, Niue nor Nicaragua.

In good old New Zealand.

According to their later communique, chaired by Barnardo’s chief executive Murray Edridge, more than 220,000 Kiwi kids live in direct poverty as a result of their parents being dependent upon a welfare benefit. And because the value of a benefit “is way below the poverty level”, the NGO summit demanded an immediate increase, plus tertiary training incentives, and the provision of breakfast in all decile 1 and 2 schools.

The best thing is for a parent to move off the welfare benefit and into the workforce. New Zealand has a huge fiscal deficit and the notion that we can afford to pay people more money to not work is madness. We need more people in work.

“We want our kids to be barristers, not baristas!” declared chairwoman Ani Pitman. They didn’t want them doing “menial jobs”.

All that is wrong with New Zealand, the welfare system and NGOs was probably summarised in that last point. Better to be on the dole than in a menial job. Better being a criminal defender than a skilled worker. And if none of these options are immediately at hand then just give us more money.

Almost any job will make you better off than being on welfare. And not just about the money. I’ve worked as a cleaner to earn $1.99 an hour.

This calculated and continuing attack on the taxpaying workers of this country demands reply, not simply to respond to the silly sophistry of this latest gimme summit, but because it refuses to address the real cause of all child deprivation in this country: their parents.

There is not one child in this country who should be going to school without breakfast. If there is, then that is a mandatory call to CYF. Clearly, the parent or parents are unworthy of the name.

Similarly, if the welfare benefit is not enough to house, feed and clothe your kiddies then there are two possibilities. First, the parents in the equation are smoking, drinking, gambling or huffing the taxpayer money intended for their children. Or, second, that their boyfriends are. Either way, it is testimony of child abuse and neglect, not child poverty.

Laws over-generalises here, but his point is basically sound. There are times when a family does get hit with an exceptionally large one expense such as a medical or dental bill. However there are grants and loans from WINZ to cover such situations. The welfare system does not give a life of luxury, but it is certainly enough for the vast majority of families on it to give their kids breakfast. Breakfast does not cost a lot. it is about priorities.

Except for those permanently incapacitated by injury or mental illness, the welfare benefit is a bridge. From independence to independence, not from sob story to lifestyle. That the summit NGOs don’t get this is the reason why NGOs exist: to create a need and then to amplify it.

And for those permanently incapacitated, I don’t think we do enough.

Yes, it’s true that New Zealand has more unskilled labour than we have jobs. But even those unskilled and I use my council’s litter and graffiti teams as an example perform valuable community service. They are probably of greater value to my city than the entire legal fraternity. But, according to the summit, these are unworthy and menial occupations.

Heh. Poor lawyers. Always picked on.

This country’s welfare system does not deliver poverty. Rather it rescues people from it. It is generous on any international scale and probably to a fault. And it is neither the cause nor the solution of our country’s underprivileged, undernourished and underloved children.

That exclusive responsibility rests with the people who brought them into the world, and the people responsible for their ongoing “care”. This country has too many crap parents. End of story. Until we start facing that reality, we will continue to blight the lives of those we most profess to care for.

Hard to disagree with that conclusion, even though I am sure many will try.

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“Poverty” wages

March 26th, 2009 at 12:00 pm by David Farrar

The EPMU has said Air NZ strike attendants are striking over their poverty wages.

Air NZ has said the cabin crew could earn between $40,000 and $60,000 per annum for just 30 hours of week a work.

If Air NZ is correct, then the EPMU is saying a wage of up to $38.35 per hour is a “poverty” wage.

The 4.5% pay increase offered has been rejected as it does not meet the EPMU’s demands of a 26% increase in salaries and 70% in allowances. So they are striking over Easter – the time designed to cause maximum hassles for passengers.

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Will the Churches be sent to jail

May 21st, 2008 at 9:25 am by David Farrar

Despite advice from the Electoral Commission that they should register as third parties, six churches are funding a $100,000 campaign on “social justice” and refusing to register, and presumably refusing to put authorisation statements on the campaign advertisements.

They are lucky to only be spending $100,000 as if they spent more than $120,000 and they were deemed to be election advertisements, it would be an automatic corrupt practice [s66(1)].

The Herald reports:

The churches’ leaflet urges local churches to act directly by “supporting activities at a lower decile school in your area, volunteering your time to help with some form of family support or youth work, or being a good friend to families who may be isolated or in poverty”.

It also encourages them to ask politicians two questions: “Do they have explicit policies about lifting children out of poverty? Do they have clear policies about provision of social services to help children in need?”

Now the second part could be seen as advocating against parties and candidates that do not policies to lift children out of poverty.  And considering the churches use a definition of poverty which makes it basically impossible to have some families not in poverty (this is known as the poverty industry), it is a very loaded question that is promoting extreme income redistribution.

Now let us look at s5(1)(a)(ii) of the Electoral Finance Act:

In this Act, election advertisement … means any form of words or graphics, or both, that can reasonably be regarded as doing 1 or more of the following: …

encouraging or persuading voters to vote, or not to vote, for a type of party or for a type of candidate that is described or indicated by reference to views, positions, or policies that are or are not held, taken, or pursued (whether or not the name of a party or the name of a candidate is stated);

Does the pamphlet encourage people not to vote for a party which doesn’t have explicit policies to lift children out of poverty? I wouldn’t want to say without seeing the full pamphlet, but it is certainly arguable.  What is the point of encouraging people to ask politicians the question unless it is to then take that into account when voting? If anyone has a copy of the pamphlet, could they send one to me?

The Electoral Commission has said:

Electoral Commission chief executive Helena Catt said she gave the churches the same advice that she gave to any group planning election-related advertising – that the definition of an election advertisement was still “a large grey area” and it would be “safer to list [as a third party] than not”.

But Annette King said it was a law of common sense, so how can it be a “large grey area”?

As I said above, a copy of the pamphlet would be most useful.

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HoS on smugness

April 13th, 2008 at 11:06 am by David Farrar

The Herald on Sunday editorial labels Horomia’s assertion some kids are going without breakfast to stay trim, as symptomatic of smugness in the ranks:

Responding to such a serious and heartbreaking issue as child poverty with glibness is something Prime Minister Helen Clark should have stamped out well before election year. The sight of our most amply proportioned cabinet minister suggesting hungry children are simply dieting was reminiscent of a certain French consort’s exhortation to “let them eat cake”.

I think the TV footage would make an excellent political advertisement!

As subsequent reports revealed, recent surveys show half of Maori households are sometimes, or often, running out of food. One in five Maori families is sometimes or often using food banks. Forty per cent of Pacific children go to school without breakfast – and not for slimming purposes. Those figures will only increase in the current climate of rising food, mortgage and petrol prices.

Derek Fox will be happy Parekura is so out of touch.

The Minister’s gaffe, though, is symptomatic of Labour’s wider issues. The party of the left sounds increasingly smug or out of touch with its core constituents. During its three terms in power, a number of its MPs have forgotten who put them there.

No different to a year ago when they denied there was an underclass.

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