Auditor-General's overview
E ngā mana, e ngā reo, e ngā karangarangatanga maha o te motu, tēnā koutou.
In New Zealand, an estimated 13.4% of children (156,600) live in material hardship.1 Māori children, Pasifika children, and children affected by disabilities are over-represented in child poverty statistics. Nearly one in four Māori children and children affected by disabilities experience material hardship, and more than one in four Pasifika children experience material hardship. Inequities in the rates of child poverty can lead to inequities in school achievement, adult employment, income levels, and behavioural, health, and cognitive outcomes.
Addressing child poverty is fundamental to improving social outcomes in the longer term, but it has multiple and complex causes, and many public organisations contribute to responding to it. There are no simple solutions.
Legislation is in place to ensure that there is public accountability for reducing child poverty. The Children's Act 2014 requires the Government to adopt a strategy to reduce child poverty and mitigate the impacts of socio-economic disadvantage.
The Child Poverty Reduction Act 2018 sets out responsibilities and measures for reducing child poverty. It requires the Minister for Child Poverty Reduction to set targets for reducing poverty against four primary measures: three income-based measures and a measure of material hardship.2 It also requires the Minister to identify indicators that relate to the wider causes and consequences of child poverty.
I wanted to look at the effectiveness of the governance and management arrangements in place to reduce child poverty to see whether they were providing the necessary structure and support for agencies to effectively co-ordinate efforts to achieve the targets. My staff focused on four public organisations which, at the time of our audit, had responsibility for overseeing progress towards the child poverty targets – the Department of the Prime Minister and Cabinet, the Ministry of Social Development, the Treasury, and Statistics New Zealand (the agencies).
What we found
Some important foundations are in place
The 10-year targets (to 2027/28) for the three primary measures in use are ambitious, aiming to reduce the proportion of children in poverty by more than half.
To achieve this, the agencies need to work collectively. They need to plan and provide a co-ordinated and coherent response that includes the interventions agreed by Ministers and considers how these work with services provided by both public organisations and non-government organisations. There needs to be strong governance to provide robust monitoring and oversight to ensure sustained focus that produces results.
We have seen positive action. Successive governments have been clear on what they want to achieve. Roles and responsibilities among Ministers and agencies are clear. The agencies have worked well together to provide advice to Ministers about what is required to reduce child poverty, to support specific initiatives, and to monitor impact. The recently updated Child and Youth Strategy (the Strategy) includes reducing child material hardship as one of three priorities.
Measuring and reporting on child poverty is done well. There are a range of measures and indicators, and regular reporting. Both public and non-government organisations value and use the child poverty reports published by the Ministry of Social Development, the Treasury, and Statistics New Zealand.
This attention to measuring and reporting is something that I would like to see more often. It provides a basis for the Government to make informed decisions about how to prioritise public sector efforts and provides information to Parliament and the public about whether those efforts are having impact.
Current initiatives are unlikely to be enough to meet targets
Although measures show child poverty rates reduced between 2018 and the year ended 30 June 2022, five measures show significant increases since then. None of the three targets for 2023/24 were met.
In 2024, the Government set intermediate targets (for the three-year period to 2026/27) for the three primary measures in use. Two of these were less ambitious than the targets for the previous intermediate period (to 2023/24).
The 10-year targets through to 2027/28 remain unchanged. However, the Treasury's modelling indicates that current initiatives are unlikely to be enough to meet two of the income-based targets.3
Although the agencies have provided information to decision-makers on the nature and scale of the interventions needed to reach the targets, it is not yet clear how the Government intends to close the gap.
Implementation planning needs strengthening
It is also not clear how the many current and planned initiatives should be sequenced or co-ordinated with each other, or with relevant frontline services (such as health and/or housing services) to support efficient delivery and maximise benefits.
In my view, what is needed is an integrated implementation plan for reducing child material hardship that clarifies this. Without such a plan, neither Parliament nor the public can be confident the Government's goal to reduce child material hardship will be achieved.
There also needs to be regular cross-agency reporting to governance on progress implementing child poverty initiatives. Until recently, there had been regular progress reporting on the overall work programme for the Strategy, including child poverty. That reporting no longer happens, and there is currently no reporting on implementation of the work programme to reduce material hardship.
I understand that officials are finalising new monitoring and reporting arrangements for the updated Strategy. I encourage the Ministry of Social Development to regularly report on milestones and risks across the work programme as initiatives proceed, to assist those responsible to identify and manage dependencies and to reprioritise efforts when necessary.
Efforts to reduce disparities need to be strengthened
One of the principles in the updated Strategy is that investment will seek to address disparities in outcomes. I acknowledge that interventions such as raising benefits or minimum wages reach many Māori, Pasifika, and children affected by disabilities because they are over-represented in poverty statistics. However, my staff saw limited evidence of targeted action planned to address inequities for disproportionately disadvantaged groups.
The Ministry of Social Development will need more consistent engagement with Māori, Pasifika, children and families affected by disabilities, and relevant community groups to understand what works and achieve a sustained and effective response to child material hardship.
Much hard work will continue to be done in communities by non-government organisations, iwi, hapū, and whānau. The Ministry of Social Development needs to strengthen relationships with these groups and work in ways that complement their efforts.
My staff frequently heard from public organisations and non-government organisations that frontline services relevant to reducing child poverty are not co-ordinated or integrated sufficiently to meet the needs of the most disadvantaged. In my view, this needs to be a specific focus for cross-agency governance in the next phase of work.
There are opportunities to improve communication with the public
The different child poverty reports serve the agencies and Ministers well. However, because the multiple measures are complex, they are not always easy for the public to understand.
I encourage the agencies to continue efforts to support public understanding of the differences that the government's efforts are making to reduce child poverty, socio-economic disadvantage, and inequities in the rates of child poverty. This is important for the public to know what value is gained for the money invested.
What I recommend
I have made three recommendations for the agencies and Ministers to consider as the updated Child and Youth Strategy and the work programme to reduce material hardship are implemented. My recommendations are focused on improvements to strengthen cross-agency governance and management, to support efficient and co-ordinated delivery of the work programme and make sustained progress in meeting the needs of New Zealand's most disadvantaged children.
Acknowledgements
I thank the many people who spoke to my staff during the fieldwork for this report. They include people working in public and non-government organisations, Māori and Pacific peoples, academics, and advocates for children and families affected by disabilities. I greatly appreciate the time they took to contribute to our work.
Nāku noa, nā
John Ryan
Controller and Auditor-General | Tumuaki o te Mana Arotake
28 March 2025
1: These are Statistics New Zealand figures for one measure of child poverty, material hardship, for the year ended June 2024. The estimated number of children living in poverty ranges from 5.4% (62,900) to 29.9% (351,000), depending on the measure of child poverty used.
2: The income-based primary measures include a measure of income before housing costs are considered, one after housing costs are considered, and persistent poverty. The persistent poverty measure has recently been defined and had targets set, but results are not being reported yet.
3: The Treasury's model cannot forecast material hardship or persistent poverty.