Children: The Nation’s Greatest Asset

Ian Shirley

As we approach the annual Budget in May it is an appropriate time to review our public policy priorities and especially investments that need to be made to advance this nation’s greatest asset, its children. Writing at the end of the 1950’s J.B. Condliffe suggested that “a baby born in New Zealand [had] a better chance than in most countries of living and thriving” – a conclusion he rated as “the most important fact to be recorded in any survey of the Dominions resources”.

Many reasons lie behind New Zealand’s reputation as a great place to raise children with a central element being our distinctive approach to the provision of a ‘family wage’ and the associated investment in education and health services with access to good quality housing especially for those who were unable to buy a home of their own. Today of course these circumstances have radically changed and two budgets can be identified as signposts of a new order in which children emerge as the most disadvantaged sector of the population.

In 1985 the Lange-Douglas Government introduced a wide range of economic reforms that effectively undermined the productive sector of the economy and set New Zealand on a neo-liberal trajectory of market fundamentalism. As one of the consultants to the Budget ’85 Task Force I raised my concerns with the assumptions on which the budget papers of that year were based including the introduction of GST and the tenuous relationship between personal income tax and social security. But Finance Minister Douglas and the Treasury officials who excused themselves from the open meetings that the Task Force conducted around the country were not interested in outcomes or projections – they were preoccupied with short-term outputs claiming that social policy would be ring-fenced and protected.

This artificial distinction between economic and social policy was one of the enduring myths of the ’85 budget as traditional social policy departments in health, education, justice and social welfare were subjected to a series of task force reviews dominated by committed devotees of the Chicago School of Economics. While little empirical research existed to support the conclusions reached by the review teams, they generally advocated a reduced role for government and a declaration of faith in market forces as the means of increasing efficiency and accountability.

These reforms paved the way for the Bolger-Richardson government in the 1990’s to address ‘the crushing burden of government spending’, a burden that had been ironically expanded during the late 1980’s by an economic experiment that promoted a significant decline in manufacturing and regional development and a major increase in structural unemployment. As welfare roles expanded in the wake of economic fundamentalism, Finance Minister Richardson took the New Right experiment to its illogical conclusion. The 1991 ‘Mother of all budgets’ was aimed at addressing ‘the drift from work to welfare’ and whereas the previous ACT-style government under Labour attempted to draw an artificial distinction between economic and social policy, the new ACT prototype under the National banner extended the same commercial principles and practices to social policy in general and to health, industrial relations and social welfare in particular. Not only did these reforms represent a major shift in New Zealand’s health policy but they also undermined a significant component of the social wage by shifting substantial costs from the tax-funded public health system to individuals and families, especially households with children. A similar strategy with equally damaging results was promoted with the introduction of market rentals for state housing.

One of the most far-reaching policy initiatives of the 1991 Budget was the welfare benefit-cuts that widened income differentials and effectively redefined poverty in absolute terms. Benefit levels were set with reference to a minimum budget required for subsistence thereby increasing the level of hardship for many families and at the same time the government established the most punitive set of measures adopted by any OECD country designed to make the claiming of benefits less attractive. As a direct consequence of these reforms the tax and benefit cuts (along with the introduction of user pays) favoured those in full-time employment over those on benefits, the healthy over the sick, childless households over households with children and those with accumulated wealth over those with few assets.

At the turn of the century, 15 years after the programme of economic fundamentalism was launched, government called for a review of children’s policies and especially the evidence on which its public policies were based. It was apparent at that time that of all our population groups, children had become the most seriously disadvantaged sector of society and thus there was a desire to advance public policy research which would effectively address the core issues. Although a broad spectrum of research programmes emerged dealing with the symptoms of child behaviour and performance there was a major push to focus on childhood rather than individual children and pathology and to advance research that addressed the major impediments to developing the potential of the nation’s children.

The increasingly persistent calls to address child poverty emerged at this time and over these past 15 years, as the scale and implications of our social deficit has increased, so various solutions have been promoted and debated.

Whereas many community and voluntary groups have called for measures to alleviate the symptoms of child poverty such as school lunches, budgeting services and support for Kids Can, successive governments have dithered and then found excuses as to why the time for action was not right! Closing the gaps was launched in rhetoric but not in practice. Working for Families rescued a significant number of working and middle class families but excluded our most vulnerable children. And then of course there were the predictable side shows orchestrated by politicians over poverty line measurements, the scale of children going to school without lunch and debates over whether or not child poverty in New Zealand was comparable with poverty rates in other countries.

One of the groups that has continued to address the state of child poverty in New Zealand is the Child Poverty Action Group (CPAG). Along with agencies such as UNICEF and the Salvation Army and in collaboration with a number of researchers who have been working on research to address this country’s increasing social deficit, CPAG has advocated a series of public policy initiatives aimed at addressing the systemic issues underpinning child poverty today. Some of their policy prescriptions in terms of income, health services, education and housing are among the next set of Briefing Papers that seriously challenge government to address poverty and inequality rather than dithering and prevaricating any longer. All are advanced as measures that should be seriously considered in Budget 2015. They are designed to support and enhance the potential of this nation’s future and its greatest asset, our children. As the Chilean poet Gabriela Mistral (the 1945 Nobel prize-winner in Literature) once suggested:

Many things we need can wait. The child cannot. Now is the time his bones are formed, his mind is developed. To him we cannot say tomorrow, his name is today.



Ian Shirley
About the author

Ian Shirley

Emeritus Professor – Auckland University of Technology
Ian Shirley is a former Professor of Public Policy at AUT, and founder of The Policy Observatory. He has led major research programmes both in New Zealand and overseas the most recent being an international study of economic and social development engaging 15 research teams in the major metropolitan cities of Asia, the Pacific and Latin America. Professor Shirley has led ministerial councils for both Labour and National administrations in New Zealand. He has acted as a consultant to the Minister of Finance and a Budget taskforce on Income tax and Social Security. He continues research on New Zealand as a social laboratory and Auckland city governance.