The wrong figure

The Herald reports:

A bill targeting is a once-in-a-lifetime chance to reset social outcomes for the country’s most deprived children and their families, Children’s Commissioner Andrew Becroft says. …

In his submission, Becroft said one of the primary measures of child poverty must be either 60 per cent or 50 per cent of the relative, median income, after housing costs.

This is absolutely the wrong figure. It is a measure of inequality, not poverty.

Let’s say NZ made some huge discovery that led to a doubling of our economy. And let’s say that every family in New Zealand suddenly had twice the disposable income they had a year ago.

Under Becroft’s measure not a single family would have moved out of poverty.

And to go the other way. Let’s say we had an economic downturn and the economy shrank 25% and every income in NZ shrunk 25%. Again under this measure not one extra family would be in poverty despite having 25% less money to spend.

The only sensible measure is material deprivation.

If your measure is how many people earn under x% of the median income, then the only possible solution is to tax people more and hike welfare payments. Getting people off welfare into work won’t reduce the numbers.

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