Recent reports show that income inequality rose again in the year to June 2011, in New Zealand, Central Trade Union Economist Bill Rosenberg has said.
Quoting the latest Social Development Ministry Report, he said that income inequality is now at its highest level in New Zealand.
The annual report on household incomes, inequality and hardship showed that the median household income fell by 3% over the year.
“This is the first time that the median household income has fallen since the early 1990s. It is concerning that the changes in income were not evenly spread. The top third of households by income experienced increases while the bottom two-thirds experienced falling incomes,” he said.
Another report on inequality, released by the Treasury in June, showed extremely high inequality in market income (before taxes and tax credits such as Working for Families).
The Treasury’s estimates of inequality in disposable income (after tax) are higher than the estimates in the Social Development Ministry study.
Tax impacts
However, the Report confirms that the tax system plays a very significant role in reducing income inequality.
It also looks at ‘final income’ (including the benefits of public services) and shows that this lowers inequality further.
However, the tax system (including Working for Families) plays the biggest role.
The Reports also show that market income for the lowest income (50% of households) was no greater in 2010, compared to 1988, after taking into account inflation.
There were modest increases for the next 40% of households but large increases for the highest income, which received 30% of all market income in 2010.
Mr Rosenberg said the two Reports proved that inequality was rising in New Zealand and that it is one of the most unequal countries in the OECD.
Source: Tertiary Education Union
