Willis Admits Child Poverty Targets Will Be Missed as Government Prioritizes Fiscal Discipline
Finance Minister Nicola Willis has acknowledged that the Government will fall significantly short of its child poverty reduction targets, describing the gap between current levels and the legal requirements as a “very difficult gap to close.”
Under the Child Poverty Reduction Act 2018, the Government is legally mandated to meet specific three-year and ten-year targets. The primary measure—the proportion of children living in households with incomes less than half the median after housing costs—has a 2028/2029 target of 10%. However, Willis stated that the Government is not on track to achieve this, with the actual figure expected to sit closer to 18%.
“Well, the reality is that we’re not on track to achieve that, and by a long shot.”
The Significance of the Fiscal Pivot
The admission highlights a fundamental tension in the Government’s economic strategy: the decision to prioritize debt reduction and inflation control over immediate social benchmarks. Willis argued that failing to return the books to surplus and allowing the “debt mountain” to climb would “hurt every man, woman, and child in the country materially.”
Rather than providing direct cost-of-living relief—which Willis characterized as “spraying election bribes around in a way that drives up inflation”—the Government is banking on long-term economic drivers. This includes a forecast of 220,000 more jobs being created over the next few years and changes to the in-work tax credit, which Willis claims will make a “materially statistically significant difference” to poverty levels.
Warnings Over Superannuation Sustainability
Beyond child poverty, Willis issued a stark warning regarding the future of New Zealand Superannuation. With costs projected to rise from $20 billion currently to $30 billion a year by 2030, she stated that the country cannot afford the system in its current form.
“The honest answer is no. Something will have to change,” Willis said, noting that the conversation must include the role of KiwiSaver to ensure younger Kiwis are not left with a disproportionate tax burden. She criticized both New Zealand First and Labour for resisting reform, stating that mainstream parties cannot pretend that superannuation settings will never require change.
Key Budget Allocations
While social targets may be missed, the Budget includes several significant funding commitments:
- Health: $5.8 billion in new operating funding, including hospital upgrades in Whangārei, Tauranga, Hawke’s Bay, and Palmerston North, and lowering bowel cancer screening eligibility from 58 to 56. New mothers will also be entitled to a three-day hospital stay, phased in initially for first-time mothers.
- Corrections and Police: $447 million to manage a rising prison population and $50 million for frontline police.
- Infrastructure and Education: $1.773 billion to extend the Waikato Expressway from Cambridge to Piarere, and $69 million to double Trades Academy places to 20,000.
- Fuel Price Buffer: A $450 million fund set aside for temporary, targeted responses to fuel price pressures.
What May Happen Next
The economic trajectory of the country remains tied to Treasury’s forecasts. If these forecasts hold, the Government’s books may return to surplus in 2028-29, a year earlier than previously expected. If fuel prices spike or remain high for an extended period, the $450 million fund could be utilized for timely, temporary interventions. If the focus on employment and education succeeds, these measures may eventually help break the poverty cycle as wages begin to grow faster than inflation.
