MSD household incomes report

Written By: - Date published: 9:34 am, August 18th, 2015 - 7 comments
Categories: equality, labour, national, poverty - Tags: , , , , ,

While we devote acres of pixels to flag distractions and “celebrity” nonsense, the health of the nation goes largely unremarked. Was there any MSM coverage of the latest Ministry of Social Development report – Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2014?

It’s a rich and complex document. While left and right could quote from it to support their views (things are getting worse vs. everything is fine), the left has the stronger case. Author and poverty campaigner Max Rashbrooke summarises some highlights:

KEY POINTS FROM THE 2015 HOUSEHOLD INCOMES REPORT

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 claimGini coefficient 2015s 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 (at left) 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.

Poverty

When housing costs are taken into account, the above trends and figures are roughly the same [roughly flat], 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.

Reading the original report one thing that comes through strongly is the significant impact of the policies of the last Labour government, particularly Working for Families (which Key called “communism by stealth”):

On this measure, the population poverty rate more than doubled in a very short period from the late 1980s to early 1990s, reflecting rising unemployment, demographic changes (more sole parent families) and the 1991 benefit cuts. It then steadily fell through to 2007 with improving employment, the introduction of income-related rents and Working for Families. This means that the AHC incomes of many low-income households were rising in real terms from the mid-1990s to 2007.

Policy changes (eg policy changes around benefit rates, income-related rents, the AS [Accommodation Supplement] and WFF [Working For Families] all had clear impacts on the child poverty rates for children from working and workless households, and on the relativities between the two groups).

The Working for Families (WFF) package, progressively introduced from 2004 to 2007, put an additional $1.6b per annum mainly into low- to middle-income families once fully implemented. Although a little of the new money went to families at or above the median, the bulk went to families below the median and especially to those well below it. The shape of the bottom end of the income distribution was changed by the WFF package, and child poverty rates were reduced from 2004 to 2007 as a result, even on moving line measures.

From 2004 to 2007, the poverty rate fell strongly from 19% to 13% – the WFF impact.

National could have built on those trends and continued bringing poverty down. They chose tax cuts for the rich instead.

7 comments on “MSD household incomes report ”

  1. Joe Jones 1

    Tax cuts for the rich. I got one. Thanks for letting me know i am rich because i had not noticed it myself!

  2. Joe Jones 2

    Tax cuts for the rich. I got one. Thanks for letting me know i am rich because i had not noticed it myself!

  3. Draco T Bastard 3

    What has the last thirty years of RWNJ policies proved? That RWNJ policies produce higher poverty and decreased development from over investment in asset bubbles.

  4. Michael 4

    The most significant finding in the report is one that is reported in previous issues: that inequality increased most rapidly during the late 1980s and early 1990s. We all know who was in power during the first phase and we all know who did nothing at all to repair the damage when in power from 1999 to 2008. Until Labour has the honesty to acknowledge the harm it did to the people during its fourth government it remains unfit for office.

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