Improving Educational Performance: Why Tackling Child Poverty Must be

Part of the Solution

Jonathan Boston

Co-Chair, Expert Advisory Group (2012)Professor of Public Policy, VUW

Director, Institute for Governance and Policy Studies

24 May 2013

1. Summary of argument2. Measuring child poverty3. Child poverty in New Zealand4. The relationship between child poverty

and educational performance5. Implications for policy6. Conclusions

Outline

1. Children from disadvantaged backgrounds (low SES) perform less well educationally than those from advantaged backgrounds; there are large attainment gaps

2. Low family income impacts negatively on educational performance

3. There are various reasons why family income matters4. Reducing child poverty needs to be a policy priority –

especially if the aim is to improve average educational performance, enhance equality of educational opportunity and reduce the current attainment gaps

5. The policy tools exist for reducing child poverty; the main issue is whether there is the political will

Summary

http://www.nzherald.co.nz/poverty/news/article.cfm?c_id=286&objectid=10854672

1. Poverty can be defined in various ways:– deprivation or lack of material resources:

• to satisfy basic human needs (food, shelter, health care) and/or• to participate fully in economic, social and political life c.f. poverty of spirit, lack of aspiration, social/cultural deprivation

2. Different degrees/kinds of poverty:– abject poverty (lack of basic necessities, regular hunger and starvation)– relative poverty (missing out on things that most people regard as

necessary for a fulfilling life)– best to think in terms of a continuum, from very severe …– most measures of poverty are relative in some way or other– both the severity and persistence of poverty matter in terms of

outcomes

Measuring Poverty

3. In developed countries there are two main ways of measuring poverty:

– low income – material deprivation

4. There are different ways of setting the relevant benchmarks – complex area; many technical issues (e.g. equivalence scales, before or after housing costs, etc.); a range of approaches possible; no international consensus, but some common approaches

5. Only a few countries have official poverty measures (e.g. US, UK, etc.); NZ does not

Measuring Poverty

Main points:1.Poverty rates depend on the precise measure used2.Poverty rates on some measures are higher now than in 1980s3.Poverty rates for children are much higher than for most other groups, especially those aged 65+4.Poverty rates are particularly high for sole parents and those on welfare benefits5.Income poverty rates are around the OECD average or slightly above this on most measures6.Material deprivation rates for children are higher than comparable rates in Western Europe

Child poverty in New Zealand

Proportion of all individuals in low-income households by age, 60% REL threshold (AHC)

0%

10%

20%

30%

40%

50%

1980 85 90 95 00 05 10 2015HES year

Pro

port

ions

bel

ow th

e th

resh

old

0-17

18-24

25-44

45-64

65+

Moving line (REL) threshold, 60% of BHC median, less 25%

BHC AHC

BHC ‘moving line’ 60%

AHC ‘moving line’ 50% AHC ‘moving line’ 60% AHC ‘fixed line’ 60%

(07 ref)

2001 250,000 215,000 310,000 380,000

2004 270,000 200,000 290,000 320,000

2007 210,000 170,000 240,000 240,000

2009 210,000 190,000 270,000 230,000

2010 215,000 170,000 270,000 230,000

2011 200,000 170,000 270,000 230,000

Numbers of poor children in New Zealand

Proportion of children below selected thresholds (AHC):fixed line (CV) and moving line (REL) approaches compared

(Perry 2012)

0%

10%

20%

30%

40%

50%

60%

1980 85 90 95 00 05 10 2015

HES year

Pro

po

rtio

n o

f ch

ildre

n in

low

-in

com

e H

Hs

Constant value (CV) or 'fixed line' thresholds are based on the BHC median in a reference year. The

current reference year is 2007. Up to 2007, the reference year was 1998.

60% REL

50% REL

60% 98 CV60% 07 CV

Identifying Deprivation

Australia -- Overall Changes in Deprivation, 2006 to 2010 (weighted %)

Essential items 2006 2010Warm clothes and bedding, if it's cold 0.3 0.4Medical treatment if needed 2.1 1.7Able to buy medicines prescribed by a doctor 4.5 3.5A substantial meal at least once a day 1.2 0.9Dental treatment if needed 14.5 13.1A decent and secure home 7.1 6.7Children can participate in school activities and outings 4.9 4.3A yearly dental check-up for children 13.2 11.0A hobby or leisure activity for children 7.8 6.8Up to date schoolbooks and new school clothes for school-age children 5.9 4.7A roof and gutters that do not leak 4.8 7.4Secure locks on doors and windows 5.0 5.8Regular social contact with other people 4.7 6.2Furniture in reasonable condition 2.8 2.2Heating in at least one room of the house 2.1 2.5Up to $500 in savings for an emergency 19.6 17.8A separate bed for each child 2.2 2.1A washing machine 1.1 1.0Home contents insurance 11.1 9.5Presents for family or friends at least once a year 6.8 5.5Computer skills 4.6 2.9Comprehensive motor vehicle insurance 9.8 9.1A telephone 1.9 3.8A week's holiday away from home each year 23.6 19.8Average deprivation rate 6.7 6.2

Deprivation Rates: 3+ enforced lacks, using 9 item EU index (%), 2007

Children 0-17 Aged 65+ Total Population

New Zealand 18 3 13

UK 15 5 10

Ireland 14 4 11

Germany 13 7 13

Sweden 7 3 6

Netherlands 6 3 6

Spain 9 11 11

Italy 18 14 14

Czech 20 17 20

A large and growing body of research highlights:A. The negative impacts of family poverty on children, including:1.Greater likelihood of death in childhood2.3x higher incidence of ill-health, including 2x greater likelihood of hospital admission for acute infectious diseases3.5-6x higher incidence of hospitalisation from assault4.Lower participation in ECE and higher school absenteeism5.Negative impact on cognitive development and educational attainment 6.Higher residential mobility, poor housing and homelessness7.Lower family resilience – higher parental stress and separation rates

B. The negative impacts of childhood poverty on the wider society, including:1.Higher unemployment and lower productivity growth2.Higher fiscal costs: health care, benefit payments, criminal justice system, etc.3.Significant overall economic and social costs

Reasons for concern

1. The educational attainment gap between children from different SES backgrounds – international and local evidence

2. The impact of family income on educational performance

3. The reasons why child poverty affects educational achievement – three main pathways:

– The parental stress pathway– The biological pathway– The economic pathway (economic models of child

development

The relationship between child poverty and educational performance

1. Policies matter; governments can make a difference

2. Prevention is better than cure3. Alleviating child poverty needs to be part of the

solution4. There are compelling reasons for reducing child

poverty aside from the educational grounds5. Direct measures to alleviate child poverty need

to be complemented by efforts to mitigate its worst impacts

Implications for policy

1. Acknowledge policy complexity, trade-offs and tensions2. Draw on the best available international evidence regarding

what works3. Draw on a range of principles and considerations to guide

policy development4. Develop a strategic approach:

– Need official poverty measures and child poverty-related indicators– Set specific targets: e.g. reduce child poverty rates by 30-40% and

severe and persistent poverty by well over 50%– Embody relevant poverty measures and reporting obligations in

legislation to enhance political accountability

5. Need to raise the disposable incomes of many low-income households by at least $100 per week (or more)

Expert Advisory GroupSolutions – Overall Approach

Policy approaches

How to increase family incomes?1.An employment strategy2.A social assistance strategy3.EAG – need a mixed approach, drawing on (1) and (2) plus other measures (e.g. changing child support and housing policies)4.Assistance should be targeted particularly to low-income families with young children and more than two children5.Need a range of other policy measures (e.g. improved access to quality ECE, enhanced parental education, etc.)6.Achieving a substantial and durable reduction in child poverty will be fiscally costly, but worth it

Conclusions

1. Child poverty is a serious issue in NZ, with significant long-term economic and social implications

2. Child poverty contributes to the lower educational performance of children from low SES backgrounds

3. We have the means to make a difference4. Fundamentally, we need to increase the incomes of

low-income households (especially families) – this requires a combination of measures

Supplementary Slides

1. Principles for policy design2. Specific EAG proposals3. The global picture4. Supplementary figures5. Acknowledgements

Principles for policy design for addressing child poverty

The following principles and considerations should guide policies:1. The rights enunciated in the UN Convention on the Rights of the Child2. The best interests of the child, including the child’s developmental needs3. The provisions and principles of the Treaty of Waitangi4. A ‘social contract’ that recognizes:

The mutual responsibilities of parents, the community and the wider society for the care and wellbeing of children

The requirement to provide social assistance to those unable to work or secure paid employment sufficient to meet the basic needs of children

The importance of parental employment in reducing child poverty, but in a context where the developmental needs of children are protected (e.g. through accessible, affordable, high-quality childcare, ECE, etc.)

The vital role of housing, high-quality education, and equitable access to health care

5. The desirability of a strong future focus, and hence an investment approach6. The desirability of selecting policy measures that are simply, effective,

efficient and fair7. The need for fiscal responsibility

Priorities

1. Greater accountability via a Child Poverty Act – specifying poverty measures, and requiring targets, CPRIs, monitoring and reporting

2. Changes to FTC in short-term; longer-term reforms to family assistance including a Child Payment

3. Increase the supply and quality of affordable housing4. Free child health care from birth to 18 years5. Establish hubs in low-decile schools6. Develop a national strategy for food in schools (especially

for year 1-8 students in low-decile schools)7. Pass-on child support to custodial parents on DPB8. Establish a micro-financing fund

Need at least 5 poverty measures (should be official/authoritative):

a. Moving line – 60% of median equivalized household disposable income, annually adjusted, AHC and BHC

b. Fixed line/constant value – 60% of median equivalized household disposable income, adjusted every 10 years, AHC and BHC

c. Material deprivation – material wellbeing index score in levels 1 or 2 out of 7

d. Severe poverty – mix of (a) and (c); and poverty gap (distance of median income of the poor from the moving-line measure)

e. Persistent poverty – at least 3 of 4 years, using both (a) and (c)

•Supplementary measures: inter-generational transmission, life-cycle, and geographic

Specific Proposals: Measuring Poverty

Specific Proposals:Income and Employment

Short- term proposals:1.Improve tax/welfare system:

Rebalance Family Tax Credits to favour young children and larger familieso Lift all payments to rate of eldest child aged 16+ ($101.98 per week);

implies an increase of about $10 per week for eldest child under 16, and close to $40 per week for additional children under 13

o Subsequently, raise rates incrementally for children aged 0-6

Index all child-related benefits annually Monitor and publish annual take-up rates Establish performance incentives to encourage high take-up rates Appoint a person to the Work and Income Board with child well-

being and development expertise

Specific Proposals:Income and Employment

Short- term proposals:

2. Amend the Child Support Act to require: Pass on a proportion of payments to custodial

parents who receive a sole-parent benefit Government underwriting of payments

oThese changes would benefit over 130,000 children, close to 90,000 of whom live in povertyo$159m was withheld from these children in 2011 by IRD; if all this were passed on, the average per child benefit would be $1,200 per annum or $23 per weekoThe proposed changes would have many other benefits

Specific proposals:Income and Employment

Longer-term policy framework:

1.Focus on children’s developmental needs, tilt assistance to young children, and incentivize paid employment that is appropriate to age of child2.Establish a Child Payment – universal for the first 6 years, targeted thereafter; higher rate during infancy and declining gradually in steps3.Undertake an independent review of all child-related benefits, including In-Work Tax Credit4.EAG doing further work on income support regime for our Final Report

Specific proposals:Income and Employment

Rationale for universal element to the proposed child payment:

1.Need a pragmatic approach to the debate over universality versus targeting; various criteria need consideration2.There is a good case for universal funding under certain conditions3.NZ has universal funding of ECE, compulsory education, aspects of tertiary education, most of health care, old age pension, etc.4.21 of 34 OECD countries have a universal child payment as part of their child assistance policies

Specific proposals:Income and Employment

Rationale for universal element to the proposed child payment:

1.Reduces labour market disincentives (by reducing EMTRs)2.Recognizes the wider social benefits of raising children and the high costs of younger children3.Recognizes the complexity of contemporary families4.Simpler and more transparent, with lower transaction & compliance costs5.Ensures high take-up rates 6.Potentially provides an alternative to more extensive paid parental leave, and would be fairer than current paid parent leave arrangements7.Supports a parent to stay at home during infancy (with positive child development impacts)8.Provides a population database (for use by health and social service agencies)9.Provides a symmetry with the universal nature of National Superannuation10.Enhances political commitment for, and long-term stability of, the policy (political economy reasons)

Specific proposals:Income and Employment

Employment policies:

1.Weak case for raising the minimum wage2.Little scope for further reduction in employment regulation3.Job subsidy schemes may have merit, but only under strict conditions4.Need to ensure adequate incentives for paid employment and support for parents of younger children via subsidies, accessible and good quality child care, ECE, OSCAR, holiday programmes etc.5.Need appropriate support for training/up-skilling/tertiary education for parents, especially beneficiaries6.Need to encourage child-friendly workplaces 7.Need strong incentives for welfare agencies to place parents with children into sustainable, child-appropriate forms of employment

Specific Proposals:Housing

• Improve the quality and quantity of housingo Prioritize housing in the National Infrastructure Plano Establish a Warrant of Fitness for all rental accommodationo Extend subsidies for insulation and heating

• Enhance the supply of social housing• Re-focus the Accommodation Supplement and Income-

Related Rent subsidies• Enhance opportunities for home ownership

Specific Proposals: Health

Short-term:•Support free primary health care for all children from 0-6 years especially after hours•Establish a common assessment framework and pathway for all children from before birth to identify and respond to needs, shared by all health practitioners •Apply principle of ‘proportionate universalism’

Longer-term:•Expand free primary health care progressively to all children (0-17)•Improve information systems via a unified enrolment system•Develop a national plan to improve child nutrition•Establish youth-friendly health and social services in all low-decile secondary schools

Specific Proposals: Education

• Continue to implement ECE work programme• Develop a national strategy for food in schools• Incentivize schools and ECE centres in disadvantaged

areas to become ‘full service schools’ or ‘community hubs’

• Improve access to after-school care and holiday programmes

• Expand the Teen Parent Units

Specific Proposals: Pasifika

• Develop measures and indicators using Pasifika understandings of identity and success

• Focus on making progress in Auckland especially– Overcrowding– Employment– Education– Health promotion– Justice

• Ensure government services have effective links with Pasifika community and church groups

• Encourage high-quality research to drive innovation & responsiveness in public services for Pasifika children

Specific Proposals: Māori

• Develop measures of Māori well-being and set targets to eliminate the disparities in rates of poverty for Māori children

• Better outcomes in education, health, employment & justice

• Develop a strategy to prevent Māori homelessness • Better integrated health & social services for Māori

children, including parenting programmes • Support trusted workers and develop integrated service

hubs

Specific Proposals: Other

Other specific proposals cover:•Community & local initiatives•Debt•Substance abuse•Gambling•Research needs

1. Around 1 billion people (around 15% of the world’s population of 7 billion+) experience regular hunger

2. Many millions die of poverty-related causes each year

3. By NZ standards, most people in the world are poor – about half live on less then US$2.50 per day

4. In relative terms, things are improving globally, but many future risks, including the impact of climate change and political instability

The Nature of Poverty: The Global Picture

Long-term Trends in Child Poverty in Australia

Child Poverty and Overall Poverty in OECD Countries

Child Poverty among Couple and Sole Parent Households in OECD Countries, 2008

Australian data -- Are Identified Essentials Robust?(unweighted percentages)

Australian data -- Are Children’s Needs Universal?(unweighted percentages)

Acknowledgements

Expert Advisory Group, Solutions to Child Poverty in New Zealand: Issues and Options Paper for Consultation, August 2012

Expert Advisory Group, Solutions to Child Poverty in New Zealand: Evidence for Action, Final Report, December 2012.

Bryan Perry, Household Incomes in New Zealand: Trends in indicators of inequality and hardship, 1982 to 2011, Wellington, Ministry of Social Development, 2012)

Peter Saunders, Presentation for IGPS Workshops, 19 and 21 September 2012