Investment hit closes gap between NZ rich and poor

The gap between the rich and poor has closed slightly in the first half of the recession as the well-off took a sharp hit on their investments.

Real household incomes for the top income group dropped by $2000 (3.1 per cent), from $63,700 to $61,700 per adult, in the 12 months to June last year.

Median income earners crept up by 1 per cent in real terms, from $31,300 to $31,600 per adult, and incomes at the bottom of the heap rose by 2.5 per cent, from $15,800 to $16,200 per adult.

The result was the sharpest closing of the gap between rich and poor since the gap started widening in the 1990s.

The gap widened further in New Zealand than in any other developed country in the 20 years to the mid-2000s, but the Working for Families package and now the recession have closed it slightly since then.

New Zealand is now the 10th-most-unequal of 34 developed countries, slightly more equal than Australia and Britain and much more equal than the United States.

The figures, contained in an annual Ministry of Social Development report due to have been published later this week, were posted on the ministry's website at 2pm yesterday to coincide with the reopening of Parliament after a two-week recess.

Labour leader Phil Goff's opening question to Prime Minister John Key, circulated to MPs in the morning, asked whether Mr Key had seen any reports on "the growing gap between rich and poor". Mr Key trumpeted the new report, saying: "The distribution of income in New Zealand is more even now than it was at any time under the previous Labour Government".

The report was surprising because the unemployment rate jumped from 3.9 per cent to 6.7 per cent in the two years to June last year, so about 3 per cent of the workforce must have dropped steeply down the income scale.

Poverty rates were unchanged, with 15 per cent of all households and 22 per cent of children living on less than 60 per cent of the median household income per person, exactly the same as in 2009.

Child Poverty Action Group economist Dr Susan St John said the static picture "does not reduce the enormity of the social disaster that we have in those figures".

She said growing use of foodbanks suggested the gap may have widened again in the year since June last year.