November 11, 2016 3:00pm by David Farrar

NZ Initiative on inequality

The NZ Initiative has highlighted 21 major points from their research into inequality. Here’s a few of them:

  • Increased housing costs are hitting those on low incomes hardest, and to a very severe degree. (Figure 28.) Getting more houses built is a critical issue, regardless of economic inequality.
  • There is substantial material hardship in New Zealand households.  Specifically, around 4% of the population are “doing without” to a severe degree and 11% to a less severe degree.  For children the proportions are higher, at 8% and 18% respectively.  For the elderly they are lower, at 1% and 3% respectively. The overall proportions are similar to an average for a group of EU countries.
  • Claims that quarter of a million of children or more (25%+) are living in poverty because they are in relatively low income households are gross exaggerations.
  • Current income is a poor indicator of hardship. Specifically, only around 40-50% of those experiencing relatively low current incomes are also experiencing hardship, and some on higher incomes are experiencing hardship.One reason is that low income is a temporary situation for a considerable proportion of households, another is that the elderly can be asset rich but income poor.
  • Contrary to what the public is continually told, disposable income inequality has not trended up since the mid-1990s on the most commonly cited measure (the Gini coefficient). Market income inequality has actually trended down. (Figures 4 and 5.) The paradox is that newspaper headlines featuring inequality have risen more than 8-fold in the last decade.
  • One response to the call that the rich should be “asked” to pay more in tax is that they already do. Indeed, on Treasury numbers the top 40% of households by income are the only ones that pay any income or GST over and above what they receive in return through the welfare system and health and education benefits in kind.
  • It is very important that market incomes are fairly earned and are seen to be fairly earned.  Anything else corrodes community trust and cohesiveness. There should be a strong presumption against corporate welfare, including bail-outs for bankers.

Well worth reading the full report.