Fallow says rising inequality largely a myth

Herald Economics Editor writes:

The idea that New Zealand has become one of the most unequal societies in the developed world is just not supported by the data. It is a belief that is in some danger of hardening into received wisdom.

The data being:

The Ministry of Social Development has just updated its comprehensive (200 pages) and careful report, Household Incomes in New Zealand: Trends in Indicators of Inequality and Hardship, to include the results of Statistics New Zealand’s 2011/12 household economic survey (HES).

While the report debunks the notion that New Zealand is conspicuous among developed countries for inequality, it is far from providing a defence of the status quo or grounds for complacency.

In terms of the top vs the bottom 10%:

Another way of measuring is to look at the income of the top decile or 10 per cent of households (when ranked by income) and compare it with the bottom decile’s.

The average over the past four household economic surveys is that the top decile have received 8.5 times the income of the bottom one, after tax and transfers.

That puts us in the middle of the OECD rankings, and lower than Australia and Canada (8.9 times), Britain (10 times) and the United States (16 times).



Between the 2008/09 HES and the 2011/12 survey market income for New Zealand households fell 2.6 per cent in real terms, similar to the declines seen in the US, Britain and Australia.

But the net change in median disposable income (after tax and transfers) was a rise of 0.5 per cent over that three-year period as tax cuts and increased New Zealand superannuation compensated for the decline in market income.

Called taking the edges off the recession.

“For many OECD countries, lower income households tended to lose more, or gain less, than high income families,” the report says.

For New Zealand, however, there was a small gain for bottom-decile households of 1 to 3 per cent and a net fall, of around 8 per cent, for the top decile.

Please remember this data when people go on about how the rich have done best under National. Simply not true.

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