Jamie Morton

Jamie Morton is science reporter at the NZ Herald.

Spend, spend, spend: how NZ habits have changed

Special report: Figures show that New Zealanders are buying 40 per cent more goods and services than they were 20 years ago and that only the recession has been able to stop the annual advance in expenditure.

Photo / Supplied
Photo / Supplied

The average Kiwi is buying more goods and services than in the past- and nearly 40 per cent more than when Shortland Street first appeared on our TV sets in 1992.

A newly released Government report card gauged what goods and services New Zealand households were buying in "real" expenditure terms, adjusted using 1995/96 prices to reflect a baseline volume enabling year-on-year buying comparisons.

It showed each Kiwi is now annually buying an extra $1000 worth of general household goods and services - electricity, fuel, furniture, appliances, curtains, tableware and textiles - than in 1992.

The study compared the volume of our household spend over two decades on everything from clothing and shoes to hotels and restaurants, with rates showing a steady increase - a trend which has been put down to boosted purchasing power.

Between 1992 and the year to March 2011, expenditure per person rose by 40 per cent, while spending per household grew by 35 per cent. However, spending over the last decade (2002 to 2011) increased by less than in the previous decade.

Increases were seen in all categories measured and over most, the amount had jumped by at least one third since 1992.

The biggest rise was in general household goods, followed by clothing and footwear, while the most marginal increase was in "housing", measuring rent, rental expenses and maintenance of rental properties, but excluding mortgage payments.

But housing still made up our largest spend - $3472 per person in the year to March 2011, followed by food and beverages ($3144) and transport ($2688). On average, the spend per person on all items in 2011 amounted to just over $19,000 - over $4000 more than in 1992 - while the average household spend totalled more than $50,000, over $13,000 up on 20 years before.

Nationally, household expenditure in 2011 topped $83 billion.

The annual upward march was only stopped by the recession, when spending over 2009 and 2010 was down in nearly every category measured - most noticeably in transport, food and beverages and hotels and restaurants.

The report cited lower levels of discretionary income and drops in incomes in low income households and spending even on items of necessity.

Expenditure bounced back but had failed to recover to pre-recession figures in some categories, such as transport, hotels and restaurants.

Kiwis were buying more goods than we were 20 years ago simply "because we can", NZIER principal economist Shamubeel Eaqub said.

"If you look at retail spending, what happened is it rose very steadily. Your standard of living is getting better, you are getting richer, you should expect it to rise over time.

"If your real incomes are rising you can consume more. And quite often it won't just be consuming more products - it could be trading up."

New Zealand's spending trend was similar to that of most developed countries.

The most recent figures showed our volume of goods bought was 26 per cent less than that of Australia, which had the seventh highest rate of household consumption expenditure per person in the OECD. The United States, Luxembourg and Switzerland had the highest rates, compared with Mexico, Estonia and Hungary with the lowest.

In the year ending March 2011, expenditure by households accounted for 59.2 per cent of GDP.

Data on education and health related spending was not available for the report card.

For a link to the complete report on household consumption click here.


What is household consumption expenditure

Household consumption expenditure is considered a key part of the economy and makes up a large part of the country's total consumption of goods and services.

It was difficult to measure the physical volume of goods and services consumed by households, so statisticians instead measured expenditure.

These figures are comprised of two components - price and volume.

Household consumption expenditure can increase because of a rise in the price of goods and services, even if the actual amount of goods and services produced remains the same.

"Real" consumption, the calculation method used for the report, is adjusted for changing prices, because of inflation for example, and is calculated by using the value of goods and services consumed for that year and the change in the price of that consumption from a base year. The year 1995-96 is used in the report card.

Household consumption expenditure generally increased alongside the heightened use of natural resources, energy and transport; the generation of waste and greenhouse gas emissions; and air, water and soil pollution.

Source: Ministry for the Environment.

- NZ Herald

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