A full-time job is no longer enough to keep thousands of New Zealand households from wallowing in debt, with children bearing the brunt, writes Colleen Brown.

‘If you are really unhappy with it [school lunches], for god’s sake, go make a Marmite sandwich and put an apple in a bag just like you and I had,” said a frustrated Christopher Luxon in an interview on Newstalk ZB in March, amid criticism of the government’s revised school lunches programme.

The Prime Minister’s sentiment is shared by some, who speculate on why families can’t make a simple school lunch and question the role of the state in even providing lunches. Much of their ire is aimed at beneficiaries needing government support, but the issue goes much deeper. Families with one or more full-time workers are doing it hard, struggling to make it from one payday to another, let alone making that simple Marmite sandwich.

Welcome to the lives of the “working poor”.

South Auckland resident Alan Johnson is a former Salvation Army public policy analyst, now community activist. He uses what he considers the most reliable information source, the Dep-17 (for deprivation) index of material hardship developed by Stats NZ, to explain who makes up this group that’s so short of money, time and wherewithal to put together sandwiches in the morning.

Johnson says an analysis of poverty based on income alone doesn’t convey the complexities of people’s lives: Dep-17 provides insight into living conditions and charts what families go without, even if working full-time. The index draws on data from Stats NZ’s annual Household Economic Survey.

“It is a measure of material hardship using 17 examples of what a household lacks, usually on a frequent basis,” says Johnson. “If a household with at least one full-time worker experiences at least six of those deprivations they are defined as suffering material hardship.”

It asks if people have meals with fish or meat, buy fresh vegetables and fruit, own good shoes or suitable clothes, can give gifts or afford to run a heater. In the most recent index, for the year to June 2023, 74% of those meeting the material hardship criteria reported putting off dentist visits, 60% limited buying clothes or shoes; 56% cut back on local trips; 37% borrowed to meet costs and 22% could not pay utility bills.

Johnson calculates that about 7% of households with at least one full-time worker meet the Dep-17 threshold for material hardship: that’s up to 90,000 working households living on “struggle street”. These households know that having a full-time job doesn’t provide them with financial security.

A 2019 Human Rights Commission report, “In-Work Poverty in New Zealand” put the in-work poverty rate at 5.2% for homeowners and 9.2% of renters.

Constant trade-offs

The working poor are often found in low-wage employment – aged care, hospitality, other service industries, security or agriculture. Typically, they include women, Māori, Pasifika, sole parents or migrants juggling multiple part-time jobs.

In brief, their pay hasn’t kept pace with the rising costs in health, housing, food and transport (see Going Under, below). These families’ lives are financially precarious; they often have little job security. If their income rises even marginally, they face significant cuts to their accommodation supplement or Working for Families tax credits. There are constant trade-offs in covering the basics: an either/or between food, rent, petrol or utilities.

Dep-17 doesn’t measure child poverty specifically, but the impact on families with school-age children is clear. Pete Jones is principal of South Auckland’s Manurewa High School, which is bursting at the seams with more than 2330 students (its official maximum capacity is 2200). Contributing to the pressure is a record number of returning Year 12 and 13 students, in part due to the job market.

The cost-of-living crisis from 2022-24, when annual inflation peaked at 7.3%, and rent increases over the past five years have deeply affected the school community – one where many are in low-paid jobs and reliance on shift work is high.

“We must remember that many families have not been able to return to the same level of income they enjoyed prior to Covid,” says Jones. “They are hard-working people but many are in insecure jobs, some juggling several part-time positions along with their wider family commitments of children, ageing parents and whānau obligations.”

He estimates about 70% of his Year 12 and 13 students have part-time jobs to contribute to the family income.

It’s a youthful community: the 2023 Census found the median age in the Manurewa local board area was 31 (seven years below the national average); median income for adults was $37,300 (compared with $41,500 nationally); just 48.7% owned their own home or had it in a trust (66% nationally) and 5.2% were unemployed (nearly twice the national average). Those in full-time (49.2%) and part-time (8.4%) work were below the national average and numbers had dropped slightly since the previous Census in 2018. The rest of those over 15 were either in education, retired or at home – usually in a caring role or with a disability.

Food insecurity is a big issue for families. The school provides breakfasts, paid for by agencies including KidsCan, and school lunches. “It’s not a high cost overall. The Scandinavians have been investing in their children for years with positive health and educational outcomes,” says Jones.

“Investment” is part of Jones’ mantra. He is invested in the school’s māra – fruit and vegetable gardens laid out in an enormous koru design on Te Whatu Ora land backing on to the school. The aim is to boost the ingredients for the more than 3000 school lunches prepared daily on site for his school and three local primary schools, which have not opted into the government’s new cut-price school lunch programme.

Tensions at home

Leisha Byrnes is principal of Lincoln Heights, a full primary school in West Auckland, recipient of school lunches prepared by the School Lunch Collective, the government’s new cut-price model. The school community’s employment base is similar to Manurewa High’s.

“We have amazing parents who are facing rises in rents, fuel and food and are barely staying ahead of bankruptcy,” says Byrnes. “While our parents take responsibility for feeding their children at night, if you are between shifts or time-poor, the food you put on the table is quick, like noodles or chips, but not necessarily nutritious.”

Byrnes knows many families exist from payday to payday, often relying on loans and advances to survive the week. She has also noticed her students displaying greater levels of stress and anxiety – a reflection, she feels, of tensions at home. Anecdotally, she is hearing of more people needing support from community agencies, which appear less able to provide it due to a slump in donations and a loss of contracts.

Like some other principals who have been critical of the new school lunch programme – both Byrnes and Jones spoke to the Listener for “No free lunch” – she has been targeted by keyboard warriors labelling the parents as “ungrateful”, “dole bludgers”, “lazy” and instructing them to “have only as many children as you can feed”.

This outrages her. “How can people talk about others like this? These are good, loving, patient people who are doing the best they can in lives so fragile that a parking ticket can destroy a finely balanced budget.”

Byrnes says what many people in New Zealand think of as “going without” is nothing like her students’ reality – having no blankets at home, lacking heating and missing meals, especially during school holidays.

Child labours

Motueka, “gateway to the stunning Abel Tasman National Park”, population 8500 and surrounded by orchards, is far removed from the dense suburbs ringing Manurewa High or Lincoln Heights primary.

John Prestidge has been principal at Motueka High School for 11 years. With a roll of 724, the school may be a third of the size of Manurewa High but Prestidge has the same concerns as his city colleagues. He ticks off his list: housing is first.

“With the tourist influx [post-Covid], people have opted to use their investment properties for Airbnb lets rather than long-term rentals, making finding accommodation challenging, especially for those requiring social agency support,” he says. “Local council planning regulations restrict housing intensification, so we are seeing families moving out of town to access affordable housing but then having to pay travel costs for work.”

Census data shows Motueka has an older-than-average population, with an average of 43% of people in full employment. There is low unemployment, but wages are low and rents significant (an average $526 a week last year).

Prestidge says many of his senior students work up to 30 hours a week during term to bolster family budgets and full-time in the region’s seasonal jobs during their summer holidays. He worries about the impacts on 15- and 16-year-olds of mixing in an adult world.

If their parents are doing shift work, older children become responsible for younger siblings’ needs, which can affect their own school attendance. Prestidge knows even with fully employed parents, many of his students still go without food, school necessities and sports items.

Like his city counterparts, he plugs as many gaps in his students’ lives as possible with donations from Fonterra and local supermarkets to cover breakfast, KidsCan-funded school lunches once a week and snacks given out as stop-gap measures.

Prestidge has his own measure of how life has changed over a generation – the 64ha pastoral and horticultural farm he grew up on near Motueka supported three families and employed seasonal workers. It has recently been sold by the one family that remained due to rising costs and diminishing returns.

Not adding up

If a parking ticket can destroy a budget, what is being done to help wage earners manage their household financial obligations?

Budget advisory services are moving away from the old volunteer-based model due to the complexity of accessing financial help and many are now aligned to umbrella group FinCap, a charitable trust that trains and supports professional financial mentors and advocates for policy reforms.

Senior policy adviser Jack Lilley says FinCap supports over 700 mentors throughout the country. The Ministry of Social Development (MSD) provides contributary funding for about 180 positions. Lilley says demand for services is rapidly growing. Some mentors report extremely high caseloads, managing 35-75 households.

FinCap works on the principle of financial wellbeing, which starts with a person’s income being able to cover costs associated with all their needs, not just the basics of housing, food, utilities and transport, but also their social, moral and cultural obligations and, most importantly, freedom from debt. Getting to that point is increasingly difficult for many New Zealanders.

“Financial mentors are telling me that paying a person in a full-time position $24 or $25 an hour when they’re supporting a larger family just doesn’t cut it,” says Lilley. “Families are becoming more and more reliant on food banks so they have money to pay their bills and debts.”

FinCap’s second annual “Voices” report for 2023, features data and interviews based on feedback from across the motu. It is stark, stating any increase in income for clients was overridden by the cost-of-living crisis. It found clients’ median weekly deficit, or income shortfall compared with costs, had risen from 4% to 6%.

It highlighted escalating debt to government departments, banks, telecommunications companies and vehicle loan firms, and “irresponsible” loan contracts for car purchases – an essential in many towns and cities with inadequate public transport. It quotes an Auckland mentor: “… one who had a [vehicle lender] loan was borrowing money from Winz to pay the rent so she could pay the [vehicle lender].”

It isn’t a cost-of-living crisis, it is a drowning-in-debt crisis.

About 30% of clients seeking financial support have a vehicle loan; the median weekly income shortfall for those with a car loan is $104.66. It is a crushing debt that needs expert financial guidance to navigate. “Vehicle lending practices in Aotearoa have been causing an increasing level of harm to whānau,” said the report. “… we encourage continued enforcement work around alleged irresponsible lending in Aotearoa.”

Mentors were seeing the effects of debt on clients’ mental health “every single day” and physical and mental health issues were making whānau more vulnerable. “Whānau often delay treatments for health issues, both physical and mental, due to the cost.”

A Wellington mentor is quoted: “It isn’t a cost-of-living crisis, it is a drowning-in-debt crisis.”

Even among clients in full-time employment, 19% reported that they struggled.

The word “stigma” is repeated by Lilley: the stigma whānau feel having got into a financial mess; because they didn’t understand the small print in a car loan; over not being able to pay for a mortgage or rates instalment; or having to get a loan from MSD to pay for school essentials.

He says mentors focus particularly on helping whānau access food support so they can pay for essentials like rent and/or power. “Where there is less food support, it puts further financial pressure on people trying to get on top of spiralling debt.”

Reliance on food banks

Manutaki Auckland City Missioner Helen Robinson and her team provide food parcels that equate to 1.8 million meals to families and individuals in need each year. Although the mission doesn’t capture precise data on recipients’ financial status, it knows a substantial number of applicants are in employment.

“We know from the 2023-24 New Zealand Health Survey that 27% of children go without food often or sometimes, which will include many children in households with a working parent,” says Robinson. “With people paying high rents of 40-60% of income, they have only a small proportion [left] to buy all the other essentials.”

Last year, the government announced it would cease funding at the end of this month for a food distribution network that collects surplus food from growers and wholesalers and delivers it to food hubs.

However, a $15 million reprieve for one more year was announced in the Budget, with $100,000 of it earmarked for MSD, which manages the community food sector, to understand its impact.

Robinson, while pleased at the turnaround, would like the government to provide more support to address sustained demand, and to partner with the mission and other providers to develop a long-term solution.

“We all want to see children in Aotearoa thrive. But the growing number of working families who are unable to meet their basic needs tells us something is deeply wrong. Too many people are locked into low-paid, insecure jobs, and full-time work no longer guarantees stability – or dignity.”

As for the Prime Minister’s comment about a sandwich and an apple, Robinson says, “I’ve never met a parent who, if they had a sandwich and an apple, wouldn’t give it to their child to eat.”

Going under

In the five years to June 30, 2024:

■ Average household disposable income (after tax and transfer payments) rose 30.5%

■ Mortgage payments climbed 43.2% and rent payments 30.4%

■ Food costs rose 28%; health 18.5%, transport 16.5%, miscellaneous goods 21.6% and other expenditure 31.4%

■ According to the Reserve Bank’s inflation calculator, individuals’ purchasing power fell 18.9%

In the 2023-24 financial year:

■ Average household disposable income (after tax and transfers) increased from $57,795 to $60,982 (up 5.5%)

■ Average weekly expenditure rose 8.7% on home mortgage repayments and 9% on rents

■ 38.2% of households perceived their income as either “not enough” or “only just enough”, up 2.1 percentage points

■ 19.7% of all households and 28% of renters spent more than 40% of their income on housing costs. This is considered the upper threshold for struggling to meet everyday expenses – 31% of low-income households were in this category

Sources: Stats NZ Household Economic Survey; Reserve Bank.

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