The Government remains committed to meeting 2028 child poverty reduction targets, says Finance Minister Nicola Willis, despite forecasts released during this week’s Budget suggesting they’ll be badly missed.
The annual Child Poverty Report, released alongside Budget 2025, shows the Government is not on track to meet any of the three targets, despite PM Christopher Luxon’s commitment on the campaign trail to lift 80,000 children out of poverty by 2028.
Treasury forecasts project the after-housing-costs measure will reach 18.4% by 2029, well above the 10% target for 2028. The before-housing-costs measure is forecast to be 11.9%, more than double the 5% goal, which was set in 2018.
Watch Jack Tame challenge the Finance Minister over a ”broken election promise’ on TVNZ+
Speaking to Q+A, Willis said “being on target to hit” the reduction levels signalled last decade depended “on how we go over the next few years”. But when asked directly whether she was committed to hit the 2028 figures, Willis replied: “Yes, we are.”
She conceded that Budget 2025 hadn’t “been able to improve the trajectory of them”.
“The most fundamental thing that will help those targets is if we have a faster-growing economy with lower unemployment, better wage growth,” Willis explained.
“My view is that the absolute best thing we can do to get children out of poverty is to support their parents into work and to better-paying jobs.
“Economic growth actually is the engine for getting kids out of poverty.”
Additionally, she said the Government’s push into social investment – a “fundamentally different” and targeted approach to welfare – would help to “change the lives of those who face many challenges”. It remains to be set up and factored into projections.
Asked again about forecasts showing that 2028 targets would be missed, Willis said: “Yeah, and look, the last government didn’t hit their targets either.”
Willis was also quizzed about her changes to Working for Families, where she defended the average of $7 a week extra that about 142,000 families would receive.
“Of course, we didn’t campaign on making that positive change for those low-income families, but we prioritised it nonetheless,” she said on Q+A. “In the absence of those changes, those families wouldn’t be getting any additional income in this Budget.
“In fact, you might see that the child poverty results would be different.”
The Child Poverty Action Group wants targeted interventions to improve child poverty rates — but it may come with a huge price tag. (Source: Q and A)
The boost came at the expense of means-testing the first year of Best Start payments to parents, which would leave around 61,000 families worse off.
When pressed about the average $7 weekly increase being modest and whether the Government could give more support, Willis said there were fiscal constraints.
“You’ve got concern for New Zealand’s debt levels, for our deficits – there is not actually a magic money tree that allows me to show such generosity that I can solve every problem at once,” she said.
“I could, in the short term, but the actual result would be that New Zealand would be so indebted that it would mean higher interest rates for everyone.
“It would mean future generations would have to get rid of all supports. That’s how austerity happens is when countries keep spending beyond their means and end up in a situation where they have to make radical changes to entitlements.”
Social policy analyst Ronji Tanielu addresses Salvation Army’s State of the Nation 2022. (Source: Breakfast)
Child poverty reduction targets featured at election
During a leader’s debate at the last election, Christopher Luxon was asked if he committed to 2018 material hardship targets and replied “absolutely”.
Earlier this week, Council of Christian Social Services chief executive Alicia Sudden said Budget 2025 would “leave thousands of children in poverty”.
“According to the Child Poverty Budget report, we are way off track. Budget 2025 is anticipated to have very little impact on child poverty rates for the future, and there is no major reduction in child poverty forecast in the coming years,” she said.
The latest child poverty statistics show material hardship increased from 12.5% to 13.4% in 2023/24, though the increase was not statistically significant.
As a result, intermediate targets weren’t met, reflecting “at least in part” the impact of high inflation on the cost of living.
While in opposition, the National had criticised the previous government for missing child poverty reduction targets.
National’s surplus promise not broken – Willis
In her Q+A interview, Willis also defended her “Growth Budget” despite forecasts showing that economic growth may be tepid in the next several years, amid a later return to surplus than promised on the campaign trail.
The Finance Minister appeared at pains to concede that the Government will now return to a budget surplus later than expected.
She rejected suggestions she had broken an election promise to return to surplus by 2027, despite Treasury forecasts now showing a return to surplus won’t occur until 2029 under the Government’s preferred accounting measure known as OBEGALx.
“No, I don’t consider that broken,” Willis said.
“What we presented was a fiscal plan, the broad parameters of which we have stuck to.”
By the traditional measure, known as OBEGAL, New Zealand isn’t expected to return to surplus until the 2030s at the earliest. OBEGALx excludes the costs of ACC.
“There have been two significant economic things that have happened that it is important to remember. The first is that the Treasury downgraded their optimism that they had previously had in the pre-election books,” Willis said.
“So any government sitting where we are would have faced smaller forecasts, and that affects your books. The second thing is there was this thing called Liberation Day, and the Trump tariffs and the response around the world led to a direct downgrading in New Zealand’s economic forecast, which has an impact on our business going forward.”
In the Q+A interview, Willis was also pressed about whether the “centrepiece” of her Growth Budget – Investment Boost – would actually contribute to significant growth, the state of Government borrowing, and the coalition’s overhaul of the pay equity system.
Q+A with Jack Tame is made with the support of New Zealand On Air
