Saturday, February 24, 2018

One year on

A year on. Who'd have thought it'd take so long. But how much we have learned. Probably the most educative year of my entire life. Would I recommend it? Not if making money is the goal.


Some before and after shots:








More

Friday, February 23, 2018

Bravo Bryce

Bryce Wilkinson from the New Zealand Initiative writes:

When I was a lad, Treasury was a home for bean counters. Many a fine public servant did an accounting degree part-time at evening classes at Vic. Full-time study was unaffordable; they needed a day job for income.

They knew their day job. It was to run a surgical eye over departmental spending proposals. Noes were more satisfying than Ayes. Noes could help a minister of finance keep the budget healthy. Noes saved ‘the country’ money.

The proportion of Noes that won the day in Cabinet was a measure of one’s batting average.

They wrote short, incisive reports with recommendations based on a few well-chosen facts, knowledge, and experience. Cabinet deadlines were tight. A succinct one-page report was good. It would be read. A longer one might not be.

Looking back, one has to feel sorry for these investigating officers. The poor chaps never had a chance in these short reports to muse about such lofty matters as intergenerational wellbeing.

Happily, today’s Treasury is not so constrained by cold-hearted value-for-money considerations. Your and my wellbeing and that of our children and their future children are ever closer to its throbbing heart.

This week it added to the warming embrace by releasing four discussion documents on its wellbeing framework. Treasury wants “government agencies to be more cohesive so public policy on wellbeing, spending and other government interventions is aligned with improving intergenerational wellbeing”.

At long last the public service will overcome its silo tendencies. We look forward to seeing agencies graciously deferring to each other: “No, please cut our budget to help you expand yours, what you are doing is more important for intergenerational wellbeing”.

The Treasury old-timers probably never conceived that this might be possible.  One can almost imagine them applauding in unison from their graves.

It is comforting to know that the public service will be focusing on how much you want to cut back on your spending to bequeath more to the next generation. You won’t need to think about that for yourself as much.

Perhaps the day will come when the sign outside Treasury, coined from a Christchurch art exhibit, reads: The House of Wellbeing, Resilience and Sustainability: All Welcome, bar Bean Counters.

Tuesday, February 20, 2018

Renovation completed

It seems a life time ago (yet only a year) when I asked readers whether I should keep the fireplace in our recently purchased renovation property:



We didn't.

Here is how the room looks today with brand new bay window featuring original leadlights, additional ceiling batons ...


...and en suite:


Sunday, February 18, 2018

Why child poverty targets make no sense

Published in NBR, Friday, Feb 9, but behind a paywall:

Why child poverty targets make no sense

The new coalition government intends to set targets to reduce the proportion of children living in low income homes, and impose them on future governments. It's feel-good stuff from a fledgling Prime Minister who's made fighting child poverty her own personal crusade.

It's feel-good but definitely fraught, and probably futile and foolish. Let me explain by way of example.

My family is 2,2 (two adults, two dependents). That's the coding description used in the Household Incomes Report, the official  source of child poverty statistics.

For argument's sake, our income could be $100,000.  Because, according to the report, "... a larger household needs more income than a smaller household for the two households to have similar standards of living... " a process called equivalisation is applied. That means  $100,000 is scaled down to $50,000 for comparative data purposes.

Equivalised incomes provide the median from which thresholds are set. Children in poverty are usually deemed to live in households with incomes under the 60 percent threshold of the equivalised median.

Your eyes are glazing over.

But the point to make is that in 2017 our 2,2 family reduced to a 2,1 group after 1 left home to study in Dunedin. Immediately we got 'richer' due to the equivalisation process artificially bumping up our income.

In fact we got 'poorer' because 1 in Dunedin required more financial support than when part of our 'official' household.

The current statistical measurement does not capture what is actually happening in our household. We apparently got richer but actually got poorer. Of course this is just a one-off example of how surveyed statistics can't accurately measure what is happening in individual households.

At the macro level, let me pose a circumstance whereby children in poverty could also apparently get 'richer'.

The ageing population and reducing home ownership means that increasingly, more elderly will rely solely on Super. That means more will be poorer. As they move into statistical ranks of poverty, fewer children can occupy those ranks (remembering all measured poverty in New Zealand is relative).

The Household Incomes Report - a meticulous and honest piece of work -  highlights how various circumstances can throw up misleading outcomes:

"...in times of good economic growth with rising real wages, rising employment and reducing unemployment, median income (and therefore the poverty lines which are simply a proportion of the median) can rise more quickly than the incomes in the lower parts of the income distribution. In these circumstances a REL measure would report increasing poverty even if those in low-income households were experiencing real income growth.

This counter-intuitive result was observed in Ireland in the 1990s: the poor became ‘richer’ in real terms, but because the income growth of the middle income households was even greater, poverty rates grew considerably as measured using a REL threshold. This also happened for New Zealand from 1998 to 2004, albeit on a more modest scale.

The reverse is also possible. It was observed in the Czech Republic, Hungary and Poland in the early 1990s when each of these nations experienced large falls in national income. Real incomes fell, but poverty was reported as declining as measured by a REL approach as a result of the falling median and therefore the lowering poverty thresholds."

Under this scenario, a government which drove the local economy into recession could still argue it had met its child poverty reduction targets!

Then we have another problem. The statistics apply in any given year (and are always lagging). But incomes are very fluid. Especially for the contracted and self-employed. Also, parental relationships and living arrangements change more frequently than in the past. A child recorded in poverty in 2017 might not be in 2018. The economic fluidity of parents in New Zealand is much greater than in lesser economically developed countries. Poverty is not generally persistent.

The minefield that is measuring and setting poverty reduction targets has already been exposed. The United Kingdom tried and failed. Aware of this, the National government nevertheless kept a close eye on every available social indicator. Anyone who doubts this should refer to the work of the Ministerial Committee on Poverty (https://www.dpmc.govt.nz/publications/ministerial-committee-poverty).

They concluded that a small group of children were in persistent and chronic poverty. They targeted efforts at this group (which in part explains their support for whanau ora). For example the strongest correlate for child poverty is welfare dependence. A goal of reducing the number of children in benefit-dependent households was set as part of the Better Public Service goals. Real progress had been made seeing a reduction of 61,000 between 2011 and 2017, yet Labour has scrapped the goals.

Most voters didn't have a clue what English was up to. But he had studied the problem for decades.

New kid in town hasn't had the time or experience to draw conclusions vital to effective action.

Re-resorting to hiked income redistribution to lift children above artificial and arbitrary thresholds is senseless.

Worse, there is a very real prospect of the deep-seated problems connected with parental state dependency - diminished or relinquished responsibility for their own children -  will worsen.

Tuesday, February 06, 2018

Quote of the Day

Paul Meredith writes, "Sorrenson (Ngata et al.1986, 258) cites a letter from Sir Peter Buck to Eric Ramsden who states:

'I am with you as an advocate for miscegenation. It is an inevitable process which has taken place down the ages and the blending of the two races into New Zealand citizenship should do away ultimately with the bickering between pakeha and Maori.' "

Source


Thursday, February 01, 2018

Some positive poverty news

There is NZ research from the SOFIE (now discontinued) data that mirrors the findings below recently published by the University of Queensland. It's out of step with the leftist discourse so little is heard about it:

Poverty is not a life sentence in Australia
January 24, 2018, University of Queensland

"Researchers say almost half of Australian families tracked in a 30-year study have experienced poverty at least once.


University of Queensland researcher Emeritus Professor Jake Najman said the study found little evidence of a persistent 'underclass,' suggesting that for many families poverty was a transient stage in life.

"It was common for families to move in and out of hardship, due to a change of circumstances such as loss of employment or marital breakdown."

"However, there was evidence of substantial economic mobility – the ability of a family or individual to improve (or experience a decline) in their economic status – both within a single generation and across generations."

Emeritus Professor Najman said it was not surprising those most likely to suffer poverty were single mothers, the unemployed and aged pensioners.

"The study suggested that poverty in Australia could be split into two groups – a relatively small group who experience chronic, long-term poverty and a much larger group who experience shorter periods of hardship."

"Interestingly, adversity experienced early in the child's life course does not independently predict poverty when the child reaches adulthood. "

He said that meant those who experienced high levels of poverty and/or adversity in early childhood rarely went on to experience persistent poverty and adversity such as unemployment as adults, and other factors were more likely to lead to adult poverty.

The study of more than 2000 Brisbane families measured family income when the child was born, and at five, 14, 21 and 30 years.

Emeritus Professor Najman said future research would investigate the health and behavioural consequences of the different forms of poverty."




Wednesday, January 31, 2018

First child poverty reduction target

"Reduce the proportion of children in low income households (before housing costs) from roughly 15 per cent of all children to 5 percent. This reduces the number by more than half from 160,000 to 60,000."

The threshold used to measure the proportion below is the median (the middle whereupon half fall below and half fall above).

The next  measure, which establishes "low income",  is arbitrary. It might be 50% of the median or - most commonly used internationally -  60% of the median.

The easiest way to reduce the proportion of children from "15 to 5 percent" is to lower the median.

With Labour's new workplace policies, that's not an unrealistic prospect.

This might also be naturally achieved with an ageing population who have increasingly not owned their own homes and will rely solely on Super.

If more childless families  are poorer then the child poverty problem will reduce.

This target is bunkum.

Having children makes you poor

Clearly children are a cost on a household economy but my statement goes beyond that.

What most people don't appreciate is how the government measures household income and the effect  the presence of children has on the result.

It's called equivalisation.

It's the application of a formula to adjust income for the number of household members.

Here is the relevant table from last year's report:


"The first row of figures identifies the family or household type: (1,2) is a one adult, two child household, and so on. The second row gives the values of the equivalence ratios used. The body of the table indicates, for example, that a (2,2) household needs around $28,000 to have the same purchasing power as a (1,1) household with an income of around $18,000. Each has an equivalised income of $13,000 (or, to put it another way, each household has an income of $13,000 per equivalent adult). "

The way child poverty is measured is derived from the median equivalised household income.

So from the example a 2 adult, 2 children household has their income more than halved before it is entered into the calculation.

So we have this crazy conundrum.

The mere fact of having children drives households into 'poverty'. Or the way poverty is measured creates a greater problem than might otherwise present.

Monday, January 29, 2018

Heather Du Plessis - oxygen for the suffocating

Heather du Plessis-Allan is now the morning talk host at Wellington NewstalkZB.

I've never understood why the station doesn't just can the Wellington programme and let Leighton Smith blast us. But demand for localism  prevailed. This combined with a moderate host stopped me listening.

Now Heather, I am going to disagree with plenty of times but at least she takes a position with conviction. After years of not participating I was compelled to ring and express a view this week.

At only 33 she has clearly avoided the offence and victimhood virus most prevalent and contagious  in young adulthood.

If you are in Wellington - or the NewstalkZB listening area -  I can commend her to you.