Poverty levels down since 2001

Thursday, 9 June 2005,

Poverty levels down since 2001

The latest findings on poverty levels in New Zealand are evidence of a steady improvement in social wellbeing under the Labour-led government, Social Development and Employment Minister Steve Maharey said.

"The findings - derived from Statistics New Zealand's 2004 Household Economic Survey - show that poverty rates have declined in New Zealand since 2001 as a result of a rise in real incomes for lower-income families," Steve Maharey said.

"After tax and housing costs, low income families now have more money in their pockets each week than they did in 2001, and income levels continue to improve across the board.

"The results are an endorsement of this government's continued investment in New Zealand families through policies like income-related rents, paid parental leave, low cost primary health care, and a focus on reducing unemployment."

Highlights from the data include: The proportion of children in households below the benchmark of 60% of the 1998 median income fell from 27 percent in 2001 to 21 percent in 2004 The proportion of low-income households spending more than 30 percent of their income on housing costs fell from 42 percent in 2001 to 35 percent in 2004.

The biggest growth in incomes was among the middle 60 percent of New Zealand households, with after-tax incomes increasing by 5.3 percent in real terms between 2001 and 2004 The rate of growth in income inequality has slowed since the 1990s As the survey was conducted in 2004 the results could not take account of Working for Families, estimated to reduce poverty levels by 30 percent by 2007.

Steve Maharey said poverty levels had risen under the National government in the 1990s and the Labour-led government had worked hard to reverse this trend through a greater investment in families and children.

"National's policy of slashing core services to pay for tax cuts, and halting the implementation of Working for Families, would do nothing to improve income levels for the majority of families", Steve Maharey said. "The choice is between continuing prosperity under Labour, or a return to the bad old days of spending cuts in critical areas, of privatisation, of mounting food bank queues, and of more New Zealanders living below the poverty line."

The measures will be included in the Social Report 2005, to be published later this year.

Additional Information

How do we know poverty rates have dropped? Poverty rates have dropped as a result of a rise in real incomes for lower-income households In addition, reduced accommodation expenditure for some households since the introduction of income-related rents has improved their after-housing-costs income (which is the Social Report measure)

How has household income changed from 2001 to 2004? The disposable (ie after-tax) income of the median (middle) household increased by 12% from $33,500 in 2001 to $37,400 in 2004. In real terms, after adjusting for inflation, the increase in disposable income from 2001 to 2004 for the median household was 5.3%

How does the Social Report measure differ from the OECD measure? The Social Report measures whether the incomes of low-income households are rising in real terms – it is the more fundamental measure The OECD only measures poverty in relative terms i.e. how low income households are faring compared to the middle households

What is the analysis based on? This incomes analysis is based on data from Statistics New Zealand’s Household Economic Survey (HES). It provides an update of the low-incomes and inequality indicators to be used in The Social Report 2005 using data from the HES for the year ended 30 June 2004. Statistics New Zealand’s HES was an annual survey up to 1998. Since then it has been run every three years, with the latest results being available for the 2003-2004 year.

ENDS