Poverty data leaps after OECD finding Friday, 28 February 2014

Source: NZ Herald

Mistake means 20,000 children and 32,500 people over 65 left off NZ figures.

Statisticians have discovered thousands more children and the elderly living in poverty than have been reported previously.

Revised figures have found an extra 20,000 children, and about 32,500 more people 65 and over who rent their homes, who are classed as in poverty because they live in households earning below 60 per cent of the national median income after housing costs. The revisions lift the number of children in poverty from 265,000 to 285,000, or from 25 per cent to 27 per cent of all children.

The changes are even more dramatic for the country's 147,000 elderly who did not own their own homes in last year's census. Last year only 28 per cent of them, or about 41,000 people, were counted as being in poverty - a figure now revised to 50 per cent, or 73,500.

The revisions are mainly because the accommodation supplement was double-counted in all estimates of after-tax income reported by Statistics NZ, Treasury and the Social Development Ministry since 2009-10.

Treasury and Statistics NZ said the figures were produced jointly by the two agencies and "neither agency had an overview of the complete process to ensure the anomalies, once identified, were properly explained".

"Statistics NZ and the Treasury have changed their quality assurance and communications processes to ensure this problem doesn't happen again," they said.

Labour Party deputy leader David Parker said the mistake, picked up by the Paris-based OECD, was "a billion-dollar bungle" because the Government spends $1.2 billion a year paying the accommodation supplement to 308,000 people.

"Most Kiwis knew they weren't getting ahead but now it turns out many more were falling behind," he said.

Finance Minister Bill English said the revisions reinforced "our strong focus on helping get people off welfare benefits and into work, and our policies of practical assistance to improve people's lives such as home insulation, increased immunisations, reducing the incidence of rheumatic fever, and implementation of the Children's Action Plan".

Children's Commissioner Dr Russell Wills said the revised child poverty rate was significant.

"With 25 per cent it was already pretty important. At 27 per cent it's still important. Really, the message is the same, and it's that child poverty is too common and we need to plan for it," he said.

He said there were signs that child poverty had dropped since the revised figures, which relate to 2012.

"I have been pleased to see that the number of children in benefit-dependent households has fallen. There are more parents in work," he said.

Child Poverty Action Group economist Dr Susan St John said the previous figures were "a puzzle". They pointed to only a small effect from the recession on child poverty, and actually showed a drop in poverty for elderly renters from 47 per cent in 2009 to 24 per cent in 2010 and 28 per cent since then.

The poverty line is 60 per cent of an "equivalised" median income after housing costs of $26,300 per adult in 2012, making the poverty line $15,780 or $303 a week after tax and housing costs. Equivalising allows for economies of scale so the poverty line is about one-and-a-half times this for two adults, or $24,300, and is $34,240 for two adults and two children.