Inequality in New Zealand 1983/84 to   2013/14 New Zealand Treasury Working Paper 15/06

Inequality in New Zealand 1983/84 to   2013/14 New Zealand Treasury Working Paper 15/06

MSD report on Household incomes up to and including 2014.   You can read the original paper at     http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/monitoring/household-incomes/index.html

But read on for two summaries of this report

  Income inequality

• there was a large and rapid rise in household income inequality from late 1980s to early 1990s
• there is no conclusive evidence yet of a rising or falling long-run trend since the mid 1990s ….
• but another survey with a Gini score at or above the level in the 2014 HES will provide evidence of a rise since the mid 2000s
• the share of pre-tax income received by the top 1% was steady for New Zealand at around 8-9% over the 20 years to 2012 (latest figures), a low to middle proportion for OECD countries
• in all OECD countries wealth inequality is higher than income inequality – wealth inequality in New Zealand is around the middle for OECD countries.

 Figure J.5

Inequality in New Zealand and the OECD trend: the Gini coefficient

Income inequality can also be looked at in terms of the income share received by individuals on very high incomes.  For example, the top 1% in New Zealand received around 9% of all taxable income in 2012 (the latest available figures for NZ). This is a little more than in Denmark, Finland, Norway and Sweden (6 to 8%), similar to France and Australia, a little lower than Ireland (11%) and Canada (12%), and much lower than the UK (13%) and the US (18%).

• For NZ, the proportion in 2012 (9%) is the same as it was in the mid 1990s, and has been steady at 8-9% over almost all of the intervening years.
• For almost all OECD countries, the latest figures are all higher than in the 1980s (eg 10% higher for France, 40% higher for NZ and Japan, 60% for Ireland and Canada, 90% for the UK and Australia, and 120% higher for the US).

Wealth inequality is usually around double the level of income inequality (using the Gini measure). The most wealthy 10% hold around 50% of all household wealth, whereas the top 10% of income earners receive a 25% share of all income. NZ’s wealth inequality is about average for the OECD

The above is all before housing costs.

Ongoing housing costs relative to income

• outgoings for housing costs relative to income (OTIs) increased strongly from the mid 2000s
• the proportion with high OTIs has now stopped rising for the lower two quintiles (bottom 40%), albeit the rates are at an historical high
• these are national average figures – there are regional differences that a relatively small sample survey like the HES cannot capture

High outgoings for housing costs relative to income (high OTIs) are often associated with financial stress for low- to middle-income households. Low-income households especially (Q1 and Q2) can be left with insufficient income to meet other basic needs such as food, clothing, basic household operations, transport, medical care and education for household members.