Rising inequality largely a myth

NZ Herald 18 July 2013
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.

But as Mark Twain said: “It’s not what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.”

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.

What it has to say about child poverty and about the impact of housing costs among those on lower-middle incomes, makes pretty sobering reading.

A standard measure of income inequality is a thing called the Gini coefficient; the higher it is, the greater the inequality.

Since the global financial crisis New Zealand’s has whipped around – it fell in the latest survey, reversing a jump in the one before – but the trend line through it is flat at a value of 33.

That is similar to the Gini scores of Australia, Canada and Japan, which ranged from 32 to 34, well below the United States’ 38 and a little above the OECD median of 31.