Purpose
This report is a resource to inform public discussion, policy development and research in relation to the material wellbeing of children and the households in which they live. Most of what is reported is about material hardship, low incomes and financial stress as these are matters of considerable ongoing public policy interest, but it also reports on how well the vast majority of children and their households are doing in terms of their material wellbeing. Children are those aged under 18 years.
MSD’s reports. including this one, provide several means for giving meaning to the poverty numbers:
- Being clear about which measure is being used at each step – this information on its own is not enough to make the use of a single measure sufficient to give a proper picture, but it is fundamental for clear communication.
- Comparing rates for other population groups using the same measure(s).Describing what poverty looks like in practical day-to-day terms for the different measures, using material deprivation items for which there is a broad consensus that they are ‘essentials’.
• Examining and reporting on the relationship between those identified as poor on the different measures (eg material hardship v AHC 50).
• Comparing with rates in earlier years.
• Comparing with rates in other countries when using measures that are valid for international comparisons.
Methodology
MSD reports use the income-wealth-consumption framework for thinking through the relationship between material wellbeing (or living standards), household income, financial and physical assets, and the role of other factors in determining material wellbeing levels.
- ‘Current’ household income7 and financial and physical assets together largely determine the economic resources available to most households to support their consumption of goods and services and therefore their material standard of living.
- For low-income households that have very limited or no financial assets, income is the main resource available to generate their standard of living (along with the stock of physical assets such as furniture, consumer durables, and so on). Such households struggle in varying degrees to meet basic needs, and are also very vulnerable to the negative impacts of ‘shocks’, such as even a small drop in income or an unexpected expense.
- The framework recognises that factors other than ‘current’ incomes and assets can also impact on material wellbeing.8 These factors are especially relevant for low-income / low-asset households, and can make the difference between ‘poverty/hardship’ and ‘just getting by’.
- The framework provides a high-level explanation for the observation that not all households with low incomes are in hardship, and not all in hardship have low incomes. There are many reasons for this mismatch, including differing financial and physical assets and ‘other factors’ as indicated in the lower box in Figure A.1.9
- This overlap or mismatch observation comes up in many contexts in this report and in MSD’s main Household Incomes and Material Wellbeing reports. As illustrated in the styliseddiagram below, the overlap between material hardship and income-based measures is limited, typically of the order of 45%, and as low as 30%, depending on the low-income
measure used.
The analysis in the MSD Child Poverty report is based mainly on data from Stats NZ’s Household Economic Survey (HES). As noted earlier, the increased sample size starting with the 2018-19 survey allows more detailed breakdowns for children in different contexts to be reported with greater confidence (for example, poverty rates by their household type, the tenure of their household, the labour market status of their households, their ethnicity, and so on).
The surveys gather information on the usually resident population living in private dwellings. The survey therefore includes those living in retirement villages, but not those in non-private dwellings such as rest homes, hotels, motels, boarding houses and hostels.20 Other sorts of surveys are needed to obtain a picture of what life is like for those in more transient accommodation or those ‘living rough’.
This does not mean that the survey does not reach households with very limited financial resources or those in more severe hardship. For example, in the 2018-19 HES: 724 of the households interviewed reported receiving help from a food bank or other community organisation more than once in the previous 12 months, 1698 households reported putting up with feeling cold ‘a lot’ in the previous 12 months because of needing to spend on other basics, and 25% came from the two most deprived NZDep13 deciles (ie the most deprived 20%).22 The achieved response rates for the most deprived NZDep13 deciles are similar to the overall response rate – for example, 75% for 2020-21 for deciles 8, 9 and 10.
Key Results
- Household income and liquid financial assets used together produce a more comprehensive and ‘unpacked’ picture of household material wellbeing / hardship than income alone.
- For a given household income, there is considerable variability in reported material wellbeing.
- Not all below an income poverty line are in hardship and not all above it are not in hardship.
- Persistent low income leads to higher material hardship.