2015 Household Incomes Report – key points

This page summarises the key information in the 2015 Household Incomes Report, published by the Ministry for Social Development.

Inequality

On most measures, income inequality is either at the highest level it has been since records began in 1982, or is very close to that level. It has also risen sharply in both the last two years.

The government generally claims that inequality is not increasing. The Household Incomes Report, which is quite rightly cautious, continues to say there is no “conclusive” evidence of rising inequality. But as the graph below of the Gini coefficient shows (in which 0 is perfect equality and 100 is perfect inequality), it is starting to look like an upward trend, and the Report says that one more year of data at this level will be enough for it to conclude that inequality is indeed rising.

Gini coefficient 2015

One way to look at what has happened with income inequality recently is to consider the contrasting fortunes of different groups, as in the table below.

Group Av. income 2009 ($) Av. Income 2014  ($) Change ($) Change %
Poorest tenth 12600 No information
2nd tenth 18800 19000 200 1.1%
3rd tenth 23000 23200 200 0.9%
4th tenth 27000 27700 700 2.5%
5th tenth 31100 32400 1300 4.0%
6th tenth 35600 38400 2800 7.3%
7th tenth 41000 44500 3500 7.9%
8th tenth 47700 52800 5100 9.7%
9th tenth 58700 64400 5700 8.9%
Richest tenth 102500 108400 5900 5.4%

As can be seen, since the crisis (and the beginning of the current government’s term in office), those in the poorest groups have seen average income increases of just $200, while the increases have been of the order of $5,000-6,000 at the richest end. (There was no information for the poorest 10th in 2014 because of problems with the way that benefits income was recorded.)

Poverty

Total poverty has been relatively steady since the global financial crisis, under the measures that look at how many households (HH) have less than 50% or less than 60% of the typical household’s income (adjusted for household size). However, poverty is far higher than in the 1980s.

Year       HH under 50%   HH under 60%

1986                       6%                          13%

2009                       10%                        19%

2014                       10%                        20%

On the under 60% figure, and assuming a population of 4.42 million, there are approximately 880,000 New Zealanders in poverty.

When housing costs are taken into account, the above trends and figures are roughly the same, with the difference that the under 50% rate has gone from 13% in 2009 to 15% in 2014, indicating that housing costs make the biggest difference among the very poorest, and are increasing. After housing cost poverty is roughly double its 1980s level, again pointing to housing’s growing role.

Child poverty

There are many different measures for child poverty, as the table below shows. However, the overall trend is for an increase in child poverty of somewhere between 10,000 and 45,000 children since 2009. The exception is the ‘anchored line’, which looks at how many children are under the 2007 poverty line (as opposed to how many are under today’s poverty lines). But even here, where one would expect poverty to decline consistently as the economy grows, the figures look static.

  Before housing costs After housing costs
  BHC ‘moving line’ AHC ‘moving line’ AHC ‘anchored line (2007)’ 
HES year 50% 60% 40% 50% 60% 60% (07 ref)
2001 120,000 250,000 115,000 215,000 310,000 380,000
2004 150,000 265,000 115,000 200,000 285,000 320,000
2007 135,000 210,000 115,000 175,000 240,000 240,000
2009 125,000 230,000 140,000 210,000 280,000 255,000
2010 150,000 250,000 120,000 210,000 315,000 275,000
2011 145,000 235,000 130,000 210,000 290,000 270,000
2012 130,000 225,000 135,000 215,000 285,000 255,000
2013 120,000 215,000 135,000 205,000 260,000 235,000
2014 150,000 250,000 220,000 305,000 245,000

Reference: Household incomes in New Zealand: Trends in indicators of inequality and hardship, 1982 to 2014, MSD

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