Rich and poor in election focus

TRACY WATKINS
Last updated 05:00 25/01/2014

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The divide between the haves and have-nots is shaping up as a battleground issue at the election.

With the political year barely past its first week, Prime Minister John Key and Labour leader David Cunliffe are painting two starkly different pictures of New Zealand.

In Key’s New Zealand, household incomes have been rising faster than the cost of living across the board and income inequality has been declining.

"Despite what our political opponents try to claim, it is simply not true that the rich are getting richer and the poor are getting poorer," Key told a business audience during his state-of-the-nation speech on Thursday.

But Cunliffe’s reply next week will talk about a very different New Zealand – one where the poor are being left behind by the economic recovery.

According to Labour’s figures, the top 1 per cent of income earners own 16 per cent of the total wealth, worth around $77 billion,  while the bottom 200,000 income earners are, in contrast, $4.7b in debt.

No-one in the bottom 20 per cent owns more than $6000 in assets, its figures show.

Labour’s figures also suggest that incomes at the top have increased while those in the middle and bottom have stagnated 30 years on from the 1984 election that installed the fourth Labour government and unleashed a wave of economic reforms.

After-tax incomes for the bottom 10 percent were $9700 in 1984 and had only increased by $11,000 in 2011 – a 13.4 per cent increase, according to Labour.

But incomes for the top 10 per cent had increased 78 per cent to $100,200 over the same period.

However, the Government points to the annual study by the Ministry of Social Development, Household Incomes in New Zealand, to support Key’s claim that the gap is diminishing, rather than widening.

The Government says that while there is no doubt some families are in difficult circumstances, the income survey shows there is no evidence of rising income inequality over the past two decades. It argues that inequality is actually lower now than a decade ago according to internationally accepted measures.

It also argues that income inequality in New Zealand is around the middle of the pack of developed nations measured by the OECD.

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- Fairfax Media

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