Cash Works Best For Children

Book Review – “Pennies From Heaven – why cash works best to ensure all children thrive”

by Jess Berenton-Shaw & Gareth Morgan

“Money works. It works when it is given unconditionally and it works best for those on the lowest incomes…” (p.203)

This new book published in March by the Morgan Foundation has done us all the service of focusing on the evidence of the effectiveness of cash assistance compared to “in-kind” assistance in lifting children out of poverty. The book re-visits many elements of the material already exhaustively covered in other publications such as the Children’s Commissioner’s Expert Advisory Panel on Solutions to Child Poverty, or Jonathan Boston & Simon Chapple’s book on Child Poverty in new Zealand or the many reports and publications generated by the child advocacy groups in NZ such as the Child Poverty Monitor, UNICEF,  Child Poverty Action Group or indeed NZCCSS own work on child poverty.

Money without strings attached

The distinctive feature of this book is the clear focus on outlining a cost-effective response to child poverty that is both effective and affordable.  The many options of support available to reduce child poverty are considered and the research evidence is carefully looked at, such as health programmes, food in schools, education programmes and other types direct and indirect assistance.

The conclusion after reviewing all the evidence is that direct cash payments to households with children work best. The best form of direct cash assistance is a payment that goes to ALL children under three years and without conditions attached (e.g. parents must be seeking employment), plus a basic income for low-income families. The reasons for the effectiveness of such payments are numerous but a vital reason is that it means no child misses out. A fundamental weakness of targeted support is that the support often misses the “target” and does not reach all children who need it.

We should do the same for children as we do for older people  – pay them a basic income that is set above recognised poverty lines. Our NZ Super ensures that New Zealand has one of the lowest rates of poverty among older people of any country in the world. We cannot say the same for children in this country.

Wealth Tax

The book also answers the question of how to meet the costs of such a child payment. Here the authors draw on another of the Morgan Foundation’s books, The Big Kahuna and its proposals for a wealth tax. A small annual wealth tax focused on those with high wealth is the means by which the enormous wealth gains that are going to a small group of people in this country could be harnessed to help all children in this country, with some additional payments to children in higher need.