“No Poverty” in Oceania
Adam MacRae 
February 2, 2024
Adam MacRae
February 2, 2024 As we begin 2024, let’s revisit a topic we have already covered, the goal of “No Poverty”. When we first covered the Goal, we discussed how poverty has many causes and effects, how financial constraints have real-life consequences, and how due to population growth and a changing climate, there will be increased pressure in the years ahead.
If you want to learn more about what we wrote last time, you can read it here: “No Poverty” in Africa.
When looking back at the first target within the Goal, it was a simple metric of eradicating extreme poverty – which has one measurement of US $1.90 a day. As we turn our attention to Oceania, things are a bit more complex. The target this time is to reduce poverty by at least 50%, measured by the proportion of the population living below the national poverty line.
The difficulty here lies in two main factors. First, it is measured by national poverty lines, so each country has its own definition. Second, we are dealing with a wide range of countries including two of the richest on earth which skews things quite a bit. In contrast, some of the others in Oceania are some of the poorest micro-states on earth. It is with these nuances and complexities in mind that we try to look at the region as a whole.
When looking at the nationally determined measurements of poverty within the region, it’s a bit of a mess.
Due to the enormous variety and number of communities to cover, we will do our best by quickly going through 6 identified factors that are most causal to poverty in the region.
Cut off from the rest of the world, many of the countries in Oceania struggle to engage with the global economy. When they manage to, there is generally a hefty premium added to both imports and exports. In Nauru for example, it imports 90% of its food, most of which provides low nutritional benefits. As a result, Nauru has the highest rate of type 2 diabetes in the world.
As Benjamin Franklin said, “an investment in education gives the best returns”. Unfortunately, for many countries in the region, that is a dividend they have been able to capitalise on yet. In many countries in the region across the region, the rate of those completing high school is especially low. This leaves them with less of an ability to enter careers providing more of an economic dividend to future generations.
Industry is a particular concern in Oceania for two reasons: industry concentration, and unemployment. For the most part, the island nations generally rely on one dominant industry (New Caledonia: mining, Palau: Tourism, etc.). This concentration leads to large swings in economic fortunes following commodity or tourism booms which makes long-term economic management and investment more difficult. Another related issue is unemployment. For those not lucky enough to be working in the dominant local industry, they generally find themselves devoting their efforts in subsistence farming, which is far from enough. Many are locked out of the job market entirely, such as in the Marshall Islands with 40% unemployment.
Income inequality is another economic blight in the region. New Caledonia, a mining hub with one of the world’s largest supplies of nickel, an element that will be critical in the years ahead towards a green transition, has an income inequality ratio 2.4x greater than France.
Another politically charged and sensitive issue is that of race. In New Zealand, Pacific people and Maori are found to experience much higher levels of poverty than other groups. In fact, nearly 40% and 30% of the two groups respectively are living in poverty, compared to the national rate of 15%.
An already all too real threat for these communities is that of climate change. Were tropical storms not destructive enough already (Cyclone Harold in 2020 caused over $200M in damages), these low-lying countries are at risk of disappearing as sea levels continue to rise. Kiribati, at 6 feet above sea level, may disappear by 2100.
The Cook Islands provide us with a fascinating case study of what economists call the “Middle Income Trap”. Tucked away in the middle of the pacific ocean and over 1,000 km away from its nearest neighbour and with a population of 17,583, the country has for many years been considered to be a relatively successful country in the region.
What makes this all the more curious is that in 2018, the island nation found itself to be on the cusp of being redefined by the Organisation for Economic Co-operation and Development as a “High-Income Country”.
For most nations, this would be a point of pride. For the Cook Islands, it became an imminent national economic risk. That is because the country relies heavily on foreign assistance to support its local economy, something it would no longer be eligible for should it graduate to that higher economic threshold.
Fortunately for the Cook Islands, New Zealand, its main source of international foreign aid, pledged to continue to support the island despite its new economic status. In fact, New Zealand has gone much further than just matching their previous levels. After the shocks of the pandemic, New Zealand increased its commitment from NZD$75 million to NZD$174 million.
All told, this serves as a cautionary tale for the rest of the region. We have to look past the numbers, and focus on sustainable growth. We have to ensure that we do not rush ahead without taking into consideration the wider picture.
Given the multitude of definitions relating to poverty, and its often country specific origins, it only makes sense for us to highlight a series of solutions that are being put into practice now across Oceania so they may serve as templates and inspiration on how to continue to address poverty alleviation in the years ahead.
In Australia, the government began experimenting with direct cash transfers to the poor. From 2009, the poorest in Australia received an increase of AUD$32 per week, equivalent to 3% of the national poverty line. While not revolutionary, even marginal support can lead to substantial outcomes. For example, in Canada, the government rolled out a national child benefit scheme leading to a reduction of the nation’s poverty levels by 5%.
To help the most vulnerable, international charities and humanitarian organizations have been expanding their services to keep up with local demand. For example, the International Red Cross has opened five new social grocery stores and increased its domestic volunteer base.
Kiribati is not only the poorest country in the region, but also the most vulnerable from the effects of climate change. To address this long-term vulnerability, the country has developed a coastal security arrangement with New Zealand and is simultaneously investing in elevated bridges across its territory, supported by China. While not directly targeting poverty, it will reduce associated risks from rising sea levels which will go a long way towards reducing the risks of potential future disasters.
To say New Caledonia’s economy is dominated by mining is an understatement. With a population under 300,000, this lucky few find themselves sitting on 10% of the world’s proven reserves of Nickel. This abundance of resources has been the main driver in its economic development and naturally led to the sector dominating the economy – both in terms of GDP and the share of wealth. To off-set this concentration of wealth in an industry that is susceptible to commodity booms and busts, New Caledonia has been investing in the hospitality and tourism sectors to diversify its economy.
In New Zealand, the government introduced the Child Poverty Reduction Act in 2018 which created a 10-year strategy to reduce childhood poverty through a series of measures, including increasing parental leave, and increasing the minimum wage.
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