In anticipation of Cunliffe's speech

Tomorrow David Cunliffe will bombard us with statistics about growing inequality.

That can be measured in various ways - household income, individual income or wealth.

The best source of data is the Household Income Survey.

Just to provide an alternate view I've pulled out some of the graphs that show a rosier picture than the one Cunliffe is going to paint.

The first compares the ratio of household incomes  between those in the 11-20th percentile (low) to those in the 71-80th percentile. Inequality fell between 2004 and 2010 and became volatile with the GFC.

Going on to look at individual incomes here's the gini coefficient for NZ over the same period.

Then we can compare NZ's trend to the rest of the OECD

The rest of the developed world is becoming more unequal whereas NZ is becoming less.

Another representation of NZ's lower inequality is shown in the next graph which depicts the share of income received by the top 1% 1920 - 2010

Back to NZ. Child poverty and population poverty rates have declined since 2001 by every measure.

Child poverty rates (%) on four measures

	AHC			BHC
	AHC ‘fixed line’ 60%	AHC ‘moving line’ 60%	AHC ‘moving line’ 50%	BHC ‘moving line’ 60%
1998	-	28	20	20
2001	37	30	21	24
2004	31	28	19	26
2007	22	22	16	20
2009	22	25	18	19
2010	22	26	16	20
2011	21	25	16	19
2012	21	25	17	18

(The formatting has blocked the report-highlighted column - the AHC 'fixed line' 60% measure - where the numbers fall from 37 in 2001 to 21 in 2012)

Population poverty rates (%) on four measures

	AHC			BHC
HES year	AHC ‘fixed line’ 60%	AHC ‘moving line’ 60%	AHC ‘moving line’ 50%	BHC ‘moving line’ 60%
2001	25	20	13	18
2004	22	20	14	21
2007	18	18	13	18
2009	15	18	13	18
2010	15	18	11	18
2011	16	19	13	17
2012	14	17	12	16

(The formatting has blocked the report-highlighted column - the AHC 'fixed line' 60% measure - where the numbers fall from 25 in 2001 to 14 in 2012)


Overall, if it is possible to generalise such a complex period of change with many factors contributing to income and wealth, a few stand out for me.

The one I rail against so much is the enormous growth of one parent families since the sixties. They are the poorest families and NZ has many of them.

Since the mid nineties real household incomes have grown across all percentiles but faster for those in the higher range. And they have grown faster than wages and salaries. The reason is many more parents - especially partnered parents whose labour force participation rates are higher - work today. But relationship breakdowns make parents poor.

Compared to the sixties - when inequality was lower - reliance on benefits is much, much higher. It was just a given that the welfare state would eventually drive up inequality. The least able would become more so as the disincentive to choose education, work and marriage grew. Yes, the large increase in inequality through the 80s and early nineties was mainly driven by a recession worse than the one just experienced. But even when employment improved dramatically during the 2000s, workless families with dependent children remained so.

That's the problem that needs solving. Getting society to structure itself in ways that are most conducive to building incomes and wealth. Strong families.

I suspect that whatever Cunliffe comes up with won't do the job.