Hobson Article – June 2015

Monday, June 1, 2015

Reading the Herald one morning over my Weetbix, I was surprised to find an article written by Steve Howie, an Auckland paediatrician. He was at Grammar and med school with my older brother, and by all accounts an excellent man, so I took special notice.

His theme was that lucky Kiwis need to keep making a lot of noise about child poverty, not just in faraway places such as Africa, but also in New Zealand, where according to Ministry of Social Development figures, 17 per cent of our children are living without basic needs being met.

He’s right. Kiwis are generally fortunate, but we shouldn’t cease to push for improvement, particularly for our most vulnerable.

That’s one of the things that motivates me to be in politics. The key question, however, is what to do about it?

The instinctive answer of many is that we have to redistribute wealth more. But I’m not sure that many New Zealanders understand just how much we already redistribute.

Treasury estimates that this year households earning over $150,000 a year – the top 15 per cent of households by income – will pay 49 per cent of income tax. But when benefit payments, Working for Families, paid parental leave and accommodation support are taken into account, these 15 per cent of households are expected to pay 74 per cent of the net income tax.

By contrast, households earning under $60,000 a year – which is just under half of all households – are expected to pay 9 per cent of income tax. When we take income support payments into account, as a group they will actually pay no net income tax at all. 

So, is the answer yet more redistribution?

Surely the issues are deeper and so are the solutions. A strong economy, creating jobs. A first class education system that provides opportunities for all. And genuine progress requires doing a better job delivering public services to the people who need it most.

The Government is now using better information about the people who need social support to drive spending decisions in the public sector. We have identified factors in the life of a child that predict how dependant they are likely to be on government services as a teenager and adult.

For example, a child aged under five who was known to Child Youth and Family Service, had at least one person in their household on a benefit and had one parent who had had contact with Corrections was, by the age of 21, seven times more likely to have been in prison and by the age of 35, five times more likely to have been on a benefit.

We are focusing on using the data and our front-line knowledge about the people we serve to intervene earlier to help people lead more fulfilling lives.

We call this social investment. We are willing to pay a bit more upfront to secure long-term results for the most vulnerable New Zealanders.