Inequality in NZ hasn't risen in 20 years, Treasury paper says

A new Treasury paper finds inequality is largely stable in New Zealand.

A new Treasury paper finds inequality is largely stable in New Zealand.

New Zealand needs to "change its tune" on inequality, think tank The New Zealand institute says.

The group, which is supported by many leading business people, made the call following the publication of a Treasury paper which found inequality in this country has, with some variability, largely remained constant for the past 20 years.

The Treasury paper follows close on the heels of an  OECD report which found income inequality in New Zealand was above average for the group, which includes many of the world's most advanced economies.

Inequality in New Zealand rose in the 1980s and early 90s but has been stable in the last 20 years, the report found.
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Inequality in New Zealand rose in the 1980s and early 90s but has been stable in the last 20 years, the report found.

Last December the OECD also said the Gini co-efficient - a broad measure of inequality - rose faster in New Zealand than in many other OECD countries between 1985 and 2011. Growing inequality meant New Zealand's economy had only grown by 28 per cent between 1990 and 2010, rather than the 44 per cent growth it should have had.

The new Treasury report acknowledged inequality in this country did rise from the late 1980s to the early 1990s. But it said that since then inequality had - with some variability - remained either constant or had fallen slightly. (Read the report in full here)

FROM THE ARCHIVES:
* NZ economy hard hit by inequality - OECD
* Income inequality: How NZ is one of the worst in the world
* Do Kiwis care about wage inequality?
* Social inequality worsens
* Inequality: Is it growing or not?
* Inequality is now at its highest level

In a statement on Friday, NZ Initiative head of research Eric Crampton said "New Zealand simply has no problem of rising inequality".

In contrast, income inequality had risen in may parts of the world and New Zealand seemed to have imported the narrative that the gap between rich and poor in this country had been widening to the same degree.

"The most striking finding in the latest Treasury work is that inequality in consumption is lower than it was before the reforms of the 1980s. While salary-based measures of income inequality have not declined as dramatically, a lot of work ignore the fact that the tax and transfer system already works to equalise incomes," Crampton said.

"In the end, it's consumption-based measures that give us a better picture of real differences in how people live."

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The Treasury paper also demonstrated that the rise in real incomes following the reforms of the 1980s more than compensated for the rise in income inequality that came during the reforms, Crampton said.

While saying that, he considered it made sense to think about policies to address poverty, specially about the effects of housing affordability for the poor.

The OECD report earlier this month noted rising housing costs had hit the poor hardest.

 - Stuff

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