24 Jun 2017

Poverty, not inequality, the real problem - NZIER

10:36 am on 24 June 2017

Inequality is not the main problem for New Zealand, according to a new report from the New Zealand Institute of Economic Research (NZIER).

Income, inequality, poverty, housing, investment.

Photo: 123RF

The report said income inequality in New Zealand had changed little in the past 20 years, and had been at the current level before.

"What worries me isn't inequality per se, what worries me is a minority of New Zealanders who basically aren't getting a fair go," said Derek Gill, principal economist at NZIER.

Though surveys suggested New Zealanders were becoming increasingly concerned about inequality, the research said a bigger concern was relatively high levels of poverty among families with children compared to other OECD countries.

Low levels of reduced income mobility, meaning people in rich families tended stay rich and those in poor families stay poor, was also a problem.

The rising cost of houses had kept many people out of home ownership between 2001 and 2013. The worst affected age group was 30 to 44.

Read the report "Peak inequality - New Zealand's own false truth?" here.

"The data tells us that our current level of income inequality is actually the same as it was in the 1930s and 1940s, said Mr Gill.

It declined from the early 1950s, rose again from 1975 until the early 1990s and after that stabislied at levels not seen since the early 1930s.

Nor was inequality always a bad thing.

"It is hard to find any people who think inequality is good. Equally it is hard to find any anyone who thinks all inequalities are bad.

"Adding additional surgeons and other highly skilled people to the workforce would increase inequality. But most Kiwis would see that as a good thing."

The report also found income inequality was not high in this country compared with elsewhere.

Finland and Denmark scored better than New Zealand, but there was much more inequality in United States and United Kingdom.

NZIER carried out the research in conjunction with Victoria University of Wellington.

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