July 26, 2017 12:00pm by David Farrar

The 2016 Household Incomes Report

MSD has released their annual income report based on Stats NZ and other data. The findings are very different to what many would have you believe. A summary:

  • median household incomes rose 3% in real terms last year
  • median household incomes have risen 3% (real) on average every year since 2011
  • New Zealand’s net gains from HES 2009 to HES 2016 are better overall than for many OECD countries (we had better income growth than most)
  • The share of income received by the top 1% has declined slightly from a peak of 9% in the mid 1990s and is lower than most OECD countries
  • There is no evidence of any sustained rise or fall in BHC household income inequality in the last 10-15 years (90:10 ratio) or the last 20 years (Gini for 99% plus top 1% share) or the last 25 years (top 1% share from tax records).
  • in 2015 households in the top decile paid one third (35%) of all income tax collected, and received 5% of all transfers
  • single-earner families with two children can earn up to around $60,000 pa before they pay any net tax
  • Around half of all households with children receive more in welfare benefits and tax credits than they pay in income tax
  • the total income tax paid by each of the bottom four deciles is less than the total transfers received
  • On average over HES 2015 and 2016 29% of households had high OTIs – that is, housing costs of more than 30% of their disposable (after tax) income. There has been little change in this rate since HES 2009.
  • There is no evidence of any rise in recent years in low-income (income poverty) trends using anchored line measures, either BHC or AHC. The trends are either flat or falling, depending on the start point or measure used.
  • For the standard or less severe hardship measure, the impacts of the GFC and the recovery are very clear, with the rate first rising to 13% in HES 2011 then falling to 7-8% over the last two surveys, lower than before the GFC (10%).
  • There is no evidence of any increasing depth of relative income poverty over the last two decades

The report has a wealth of data about which NZers are doing okay and which ones are struggling. And few would dispute that some families are struggling. But it is very clear that overall incomes are increasing in real terms, and inequality is at best static and even dropping according to some measures.