Child Poverty measures, targets and indicators

Measures

The legislation establishes a balanced suite of measures to measure and report on child poverty. The measures will track progress towards the targets, allow some international comparison, and provide a good picture of the impact of policy decisions on the lives of children.

There are four primary measures of poverty and hardship for which the Government must set targets:

• Low income before housing costs (below 50% of median income, moving line)
• Low income after housing costs (below 50% of median income, fixed line)
• A measure of material hardship (reflecting the proportion of children living in households with hardship rates below a standard threshold)
• A measure of poverty persistence (currently being developed, reflecting the proportion of children living in households experiencing poverty over several years, based on at least one of the measures above). (The Act requires reporting on persistent poverty from 2025/26 on.)

There are also six supplementary measures set out in the Act. These allow further international comparison, and ensure that trends at different levels of severity can be monitored and reported on.

The Government Statistician is responsible for defining a number of concepts and terms under the Child Poverty Reduction Act, such as material hardship

Targets

The Act requires the Government to set and review targets for child poverty reduction based on the primary measures. The Act requires 10-year targets to be set, as well as 3-year intermediate targets that support the 10-year long-term targets.

Following the release of the baseline rates as reported by Statistics New Zealand in April 2019, the Government officially set its long-term targets for the three primary measures for which data is available, along with the first three year targets (for 2018/19 to 2020/21). The second set of three-year targets (for 2021/22 to 2023/24) was set in June 2021.

The longer-term targets seek to at least halve child poverty within ten years.

Ten year longer term targets:

By 2027/28, the Government aims to reduce the proportion of children in:

• low income households on the before housing costs primary measure from 16.5 percent of children to 5 percent – a reduction of around 120,000 children.
• low income households on the after housing costs primary measure from 22.8 percent of children to 10 percent – a reduction of around 130,000 children.
• material hardship from 13.3 percent of children to 6 percent – a reduction of around 80,000 children.

First set of three year intermediate targets:

By 2020/21, the Government aimed to reduce the proportion of children in:

• low income households on the before housing costs primary measure from 16.5 percent of children to 10.5 percent 
• low income households on the after housing costs primary measure from 22.8 percent of children to 18.8 percent 
• material hardship from 13.3 percent of children to 10.3 percent.

Second set of three year intermediate targets:

By 2023/24, the Government aims to reduce the proportion of children in:

• low-income households on the before-housing-costs measure to 10 percent
• low income households on the after-housing costs measure to 15 percent
• material hardship to 9 percent.

Third set of three year intermediate targets:

By 2026/27, the Government aims to reduce the proportion of children in:

• low-income households on the before-housing-costs measure to 12 percent
• low-income households on the after-housing costs measure to 14 percent
• material hardship to 11 percent.

Reporting

Regular reporting requirements provide a high level of transparency and accountability. The reports include:

• an annual report on nine child poverty measures by Stats NZ
• a report each Budget day on progress toward the targets, and how the Budget will reduce child poverty
• an annual Government report on child poverty related indicators – measures related to the broader causes and consequences of child poverty.

Data time-lags

A challenge with measurement and reporting is that there are time-lags between data collection and reporting timeframes, meaning the impacts of policies are often not visible in the reporting for some time.

The child poverty data used in the child poverty report produced by Stats NZ is drawn from the Household Economic Survey (HES), which surveys adults (aged 15+) in more than 20,000 households.  The survey is conducted over a 12-month period, from July to June, and collects annual income information for the 12 months prior to the interview. These collection timelines mean a significant lag in data reporting, of up to two and a half years at the time of the report’s release.

For example, the numbers reflected in the child poverty report for the 2018/19 year, released in February 2020, cover annual incomes from mid-2017 to mid-2019.  As a result, the impact of the Families Package was only partially captured.

Child Poverty Related Indicators

As outlined above, the legislation requires the Government to report annually on one or more ‘child poverty related indicators’ or ‘CPRIs’. These are measures related to the broader causes and consequences of child poverty, and/or outcomes with a clear link to child poverty.

The Government has identified its CPRIs, which are:

• housing affordability – as measured by the percentage of children and young people (ages 0-17) living in households spending more than 30 percent of their disposable income on housing. 
• housing quality – as measured by the percentage of children and young people (ages 0-17) living in households with a major problem with dampness or mould.
• food insecurity – as measured by the percentage of children (ages 0-15) living in households reporting food runs out often or sometimes.
• regular school attendance – as measured by the percentage of children and young people (ages 6-16) who are regularly attending school.
• avoidable hospitalisations – as measured by the rate of children (ages 0-15) hospitalised for potentially avoidable illnesses.

Changes to the CPRIs from the 2023 financial year

The Act requires that the CPRIs be reviewed every three years. The first review of the CPRIs was completed in August 2022 and found that, overall, the current CPRIs are working well.  A key change recommended as part of the CPRI review is that the current Housing Affordability indicator should be more focused on children in low income (quintile 1 and quintile 2) households. The Government has agreed to this change, which will come into effect in the data reported in 2024 for the 2022/23 financial year.  There are no other changes to the CPRIs.  The CPRIs reported for the 2022/23 financial year onwards are:

• housing affordability – as measured by the percentage of children and young people (ages 0-17) living in households in the bottom 40 percent of the income distribution who spend more than 30 percent of their equivalised disposable income on housing.
• housing quality – as measured by the percentage of children and young people (ages 0-17) living in households with a major problem with dampness or mould.
• food insecurity – as measured by the percentage of children (ages 0-15) living in households reporting food runs out often or sometimes.
• regular school attendance – as measured by the percentage of children and young people (ages 6-16) who are regularly attending school.
• avoidable hospitalisations – as measured by the rate of children (ages 0-15) hospitalised for potentially avoidable illnesses.