Average NZ household worse off now than 20 years ago

The average New Zealander is worse off now than two decades ago, and the gap between high and low-income households is widening, according to the Ministry of Social Policy.

A ministry report, Distributions and Disparity - New Zealand Household Income, outlines household income trends from 1982 to 1998.

It shows that the average annual disposable income per household has dropped by almost 10 per cent. The 1998 average disposable income was $31,470.

Ministry knowledge management general manager Nicholas Pole said average incomes fell during the 1980s and into the 1990s, before recovering and, by 1998, reaching levels approaching those of the early 1980s.

Mr Pole said the drop in income was caused by New Zealand's recession, in the late 1980s and early 90s, that led to a rise in unemployment, and an increase in numbers on benefits.

In the 1980s, unemployment sat at 4 per cent, before reaching a high of 10.6 per cent in 1992, and falling to 6.8 per cent in 1998.

Changing social trends, including higher numbers of households, and a growing number headed by a single adult, also accounted for a drop in household income.

Between 1981 and 1991, the number of adults and children in a household dropped from an average of three people to 2.7, and since 1991 household size had changed little.

Mr Pole said while the average household income had dropped, households with two adults and children had disposable incomes that were 10 to 15 per cent higher in real terms.

But households with two adults receiving superannuation and those consisting of three or more adults with children had disposable incomes that were, in 1998, 8 to 9 per cent worse off than in 1982.

The report showed that the number of sole parent beneficiary households was increasing.

Households that included children and those with one Maori or Pacific Island adult, a superannuitant or a beneficiary had incomes 60 to 90 per cent below the mean.

Between 1988 and 1998 the gap between rich and poor widened by 17 per cent. In 1988 the top 20 per cent of households earned 2.3 times more than the bottom 20 per cent, and 10 years later they earned 2.7 times more.

The gender gap in wage statistics affected household incomes, with households where all adults were female having an income 23 per cent below the average.

The proportion of households in which wages and salaries were the main income source dropped from 64 per cent in 1982 to 53 per cent in 1992, before rising to 58 per cent in 1998, as the economy recovered.

Benefits were the main source of income for 6 per cent of households in 1982, before reaching a high of 15 per cent in 1994, and dropping to 11 per cent by 1998. Those on superannuation or self-employed made up the balance.

Three-quarters of households lived in houses they owned. Of the quarter in rental accommodation, more than half paid more than 30 per cent of their disposable income on housing, compared with a quarter in 1982.

This compared with 20 per cent of households with mortgages paying more than 30 per cent of their disposable income on housing in 1990, and 30 per cent in 1998.

- NZPA