The Treaty, poverty, inequality and cohesion

The big news last week was the Waitangi Tribunal’s demand asset sales be delayed till a framework for dealing with iwi water claims is sorted. The deeper news was in two reports on inequalities, with two followups due this week.

The asset sales poser is soluble. It is part of the adjustment of law, administration and politics to the revival of the Treaty of Waitangi and our bicultural experiment which assigns equality to two deeply different cultures.

Mighty River Power and Contact have sorted deals with iwi on geothermal resources. There is co-governance of the Waikato River. A water claims framework should be achievable by iwi leaders and ministers: over the long term National needs Maori votes.

Thirty years ago, as Maori activism and court challenges generated an edginess not seen since the 1860s civil war, Treaty issues were a bigger challenge to social cohesion than income and wealth inequality. Now it is the other way round.

Last week two more reports highlighted inequality and “child poverty”. Social Development Minister Paula Bennett — scolded on August 16 by the Speaker for behaving like a 3-year-old in the House on this issue — brushed them aside. She said she was taking action on poverty and did not see its measurement as a priority.

This is at odds with the 1980s-2000s doctrine that to address a problem it must first be measured. It also begs the question of whether the action is enough and effective.

Last week’s first report was by the Every Child Counts coalition, which includes Business New Zealand. It was on what Holland, which has much better child outcomes than New Zealand but doesn’t break the bank doing it, could teach us. Every Child Counts distilled the relevant themes as: “preventing vulnerability, access to services and support, local solutions and responsiveness, parental choice and agency, effective coordination and measurement”.

Then came the Ministry of Social Development’s biennial household incomes report, drawing on Statistics New Zealand’s annual household economic survey. It recorded a rise in income inequality in 2009-11 to a record level in the wake of the global financial crisis: benefits and superannuation maintained the lowest two deciles’ incomes but the next four deciles’ incomes fell while the four highest deciles’ rose.

That shift does not promote social cohesion.

It also entrenches poverty. Today Bennett will be back in focus when an “expert advisory group” convened by the Children’s Commissioner reports on child poverty. Business New Zealand’s Phil O’Reilly is a member of the group. His presence on this and in the Every Child Counts coalition is because children who grow up in poverty are less likely to get usefully educated and be skillable for work in a modern economy. Investing in those children is investment in the future workforce. Leaving them in poverty risks consigning them to the not-workforce. That is a long-term economic cost.

The good news is that the proportion of children in poverty fell in the mid-2000s and from 2007-11 was stable on three of the four standard measures, including the one the European Union (EU) officially uses (household income below 60 per cent of the national median). On that New Zealand’s score was 19-20 per cent, the same as in the EU.

The bad news is that on the fourth measure it rose. And the figure for “material hardship” — lacking at least six of 16 “essentials” — rose by 5 to 6 percentage points from 2007 to 2011.

Bennett skipped over the figures in Parliament, saying that “children move in and out of poverty pretty much on a daily basis”. She meant that over time households’ income and non-income factors change. But large numbers of children do stay in poverty through most or all of their years up to workforce age.

The Children’s Commissioner’s group wants the EU poverty measure made official here and, among a long list of “solutions”, “an investment approach, particularly in the early years of a child’s life”. This chimes with Every Child Counts’ urging “that the state’s role is provide what families need to bring up their children well”, including “investment in services, certification of quality, ensuring policies and programmes do not harm children and equitable regional distribution of services”.

That points towards Thursday’s Wellington launch by the Service and Food Workers Union and around 75 other organisations of the campaign for a “living wage”, defined as enough to provide a family with the basic necessities of life. Phil O’Reilly is not on board this bus.

Calculating a living wage is complicated by varying household mixes and needs but a rough estimate by economists is around $18 an hour, $4.50 above the minimum wage. Around 36 per cent of wage earners are below $18. Governments, their contractors and willing businesses could sign up, the campaign argues.

Easy? No. But the alternative is to risk an economy-sapping lack of social cohesion. In that context asset sales are small beer.