The Costs of Poverty for Children - Is the Solution to have Parents in jobs and children in care?

Report by Reg Ponniah

More than 200,000 New Zealand children are suffering from lack of sufficient food, warm housing and adequate health care with the kids not reaching their potential in school, Think Tank Analytica says.

The children’s poor educational performance leads to higher risk of unemployment, more ill-health, attraction to alcohol and smoking and greater likelihood of involvement in crime, Analytica’s John Pearce told ChildForum.

Mr Pearce advocates that parents’ ability to interact with their children in the first five years is the most crucial in their proper all-round development. 

How well parents interact with their children in those early years – while talking, listening, educating and caring for them - is the most important element in the child’s development, he says.

Mr Pearce has completed a two-year study entitled “An estimate of the national costs of Child Poverty in New Zealand”.  His study is an attempt to clarify the potential benefits in reducing child poverty in terms of education, justice, health and social welfare.

“Child poverty is a national economic issue deserving treatment as such, rather than being viewed - and largely addressed – only through the prism of moral and ethical considerations.

“Making policy choices is all about long term benefits and short term costs.”

Mr Pearce highlights the fact that for individuals, the consequences of poverty are more related to “Poverty of Experiences” because these are the factors that influence their future opportunities, rather than directly to low income.

“Income is only a surrogate measure of the likely poverty of experience and this is demonstrated because some children from poor families are very successful.”

The study estimates the costs of child poverty and the potential gains of its elimination in four categories: increased earning capacity; reduced costs and consequences of crime; reduced health costs; and savings in social welfare costs.

Child poverty damages children’s futures through its impact on health and education. Major benefits of eliminating child poverty accrue from improved educational success leading to better qualifications, better jobs and higher earnings, Mr Pearce says.

Poverty has a greater impact early in the life of a child and Mr Pearce wants the Government to devise and initiate policy action which focuses on family conditions prior to and during the first 5 years of the child’s life to have the maximum impact.

So what is the best way to increase the ‘cultural capital’ in households with babies and preschoolers (under 5s)?  Most commentary (and research) suggests that the middle class will always do better at school and in jobs later because they have books at home and parents who talk to their youngsters and take their children on outings etc.

Can “cultural capital” be lifted in households that do not have the money to buy books, whose parents have low-self-esteem and un-developed parenting skills or  is it a case, as our Government would have us believe, that the solution lies in children going into childcare and mothers on benefits being made to work?  Or will this reduce poverty of experience in the home?

The extent to which parents are able to interact with their children in those first five years and talk to them, listen to them, encourage them to respond and give them positive feedback appear to be the most important factors for the child’s development.

“Mostly it is what the children experience early with their parents – it’s a straightforward thing to understand from research literature but how you would translate that into a feasible intervention for change with children who do not have the benefits now is a much harder problem,” Mr Pearce says.

The extent to which eliminating child poverty would improve the health outcomes for children growing up in poverty is dependent on the particular policies that may be adopted to alleviate poverty.

The fact that different socio-economic groups experience quite different outcomes suggests that models for change exist. 

“Children are particularly at risk of poverty. At the end of 2009 around one in five New Zealand children were living in benefit dependent families.  For these children, the rates of poverty are significantly higher – with a recent report on hardship finding that child poverty rates are almost 75 percent for ‘work-less households’ compared to 11 percent where at least one adult is working-full time

Currently schools from lower socioeconomic areas achieve lower University Entrance pass rates, ranging from decile 1 at 15% to decile 10 at 66% 

The study estimates the cost of child poverty by assuming that if child poverty were eliminated, the results from decile 1-3 schools would improve to be equal to all the other (decile 4-10) schools. Current average UE pass rates would double from 24% to 48%.

Mr Pearce feels there is too much focus on remediation work for the disadvantaged in schools and tertiary education, and too little for the 15% of families with young children that need help.

So, does the solution lie in more children going into ECEchildcare?

In Mr Pearce’s opinion it seems the current welfare reform focus is on getting people on benefits into jobs.

“There are not sufficient jobs out there which create sufficient value in the community that they can be expected to pay sufficiently that people on the benefits would be better off taking those jobs than they would be on a benefit.

“You have got to find incremental money for childcare and incremental money for transport costs – and if you are going to be worse off personally in a financial sense by taking a job like that and secondly your child is likely to be worse off and deprived of his/her parent's care and attention in their formative years, then working may not be the best outcome for society.”

It is like looking at the wrong side of the coin, he says.

“We have got to ask ourselves - are we creating enough value-creating jobs to attract people to work? We have to maintain a balance between creating worthwhile jobs, and encouraging people to seek work.”

There is a lot of good research looking at the effect of education on young children’s lives and outcomes.

“However, any intervention has a lot of different consequences, so you have to think systematically across the whole society before we can decide which of the whole range of options might produce the best answer.

“Part of the difficulty at the moment is the policy that is created as far as I can tell –with the early educational people saying what is needed is more early childhood education, the medical people saying more early child medical care, housing people saying what is needed is to reduce housing costs, welfare people saying what needs to be done is to force people off welfare – so somebody needs to think about this in a global way – what is the best combination of these strategies?

“In the real world we are resource limited, so the question is which are the interventions that cost the least and have the most long-term impact and we can only make those choices, if you understand what is the cost of what you are doing, what is the cost of doing something different and what is the benefit you get if you make the change.”

Mr Pearce has challenged the Crown, politicians, and the public service, to produce its own comprehensive, professional estimate of the national lost opportunity cost of its present policies, and to continue to seek better ways of preventing child poverty.


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