1. Inequality Economic—Household Incomes ReportCHRIS BISHOP (National) to the Minister of FinanceORAL QUESTIONSQUESTIONS TO MINISTERSInequality Economic—Household Incomes Report1. CHRIS BISHOP (National) to the Minister of Finance: How is the growing economy which is delivering higher employment and rising wages helping to reduce hardship and child poverty in New Zealand?Hon STEVEN JOYCE (Acting Minister of Finance): Earlier today the Ministry of Social Development (MSD) released its annual household incomes report on the material well-being of New Zealand households. Across a large range of measures the report finds that household incomes have been growing solidly since 2011 in real terms—that is after inflation—with slightly higher gains for lower-income households. The report also finds there is no evidence of increasing hardship or child poverty; in fact there is evidence pointing to falling hardship and child poverty rates. The report also points to the cost of housing and housing quality as significant issues. However the report covers the year to 30 June 2015 and so does not take into account recent increases in benefits and Working for Families.Chris Bishop: How are rising household incomes helping to reduce poverty for New Zealand households and families?Hon STEVEN JOYCE: Although we have seen reasonably significant wage growth under this Government—up 25 percent since 2008—the report by MSD says household incomes are growing faster than wages in part due to rising total hours in paid employment per household. This reflects rising female workforce participation. Higher household incomes are translating into moderating or improving household poverty rates. The report by MSD concludes: There is no evidence of any rise from 2008 (just before the GFC) in income poverty either before or after deducting housing costs." It also says there is no evidence of any increasing depth of relative income poverty over the last two decades and there is no evidence of any sustained rise or fall in household income inequality before housing costs in the last 10 to 15 years using a 90:10 incomes ratio or in the last 20 years using a Gini measure or in the last 25 years using the top 1 percent share of incomes.Grant Robertson: Does table D.9 on page 84 of the report show that the top 10 percent's incomes in New Zealand are a record 9.82 times larger than the incomes of the bottom 10 percent?Hon STEVEN JOYCE: I cannot in the short time available locate that exact graph for the member although I note it took him until page 84 to find the thing that he was looking for to point out that things were possibly getting worse when most of the report says that things are getting better.Chris Bishop: What are the main drivers of falling hardship as reported in the household incomes report particularly since 2011?Hon STEVEN JOYCE: The household incomes report says the impact of the global financial crisis (GFC) on New Zealand was relatively muted and New Zealand's recovery from the GFC has been relatively strong. MSD says the effects of the recovery from the GFC on hardship are clear with a substantial fall in hardship between 2011 and 2015. The report says: "The general state of the economy (wages and employment especially) has a rapid and noticeable impact on those in lesser hardship and those just getting by." However the report goes on to say the effects for those in deeper hardship are less noticeable and that is why the Government is taking steps to increase support for the most vulnerable New Zealanders such as by insulating every State house that is possible to do delivering free GP visits for under-13s and increasing childcare assistance for low-income working families alongside benefit increases.Chris Bishop: How do New Zealand rates of poverty and inequality compare with other OECD countries?Hon STEVEN JOYCE: The household incomes report says New Zealand compares reasonably well with other OECD countries across a range of measures particularly since the global financial crisis. Real household incomes in New Zealand have grown by around 12 percent since 2011. Income gains have been right across the income spectrum and in fact are slightly higher for lower income households. By comparison the UK's median household income fell through the GFC and has only just returned to its pre-GFC level. Incomes in Italy Spain France and Germany were flat through the GFC and have remained so and the US median household income has been flat for many years.Grant Robertson: Does page 15 of the summary document—which I am sure the Minister has read—say "There is evidence of higher after - housing cost income inequality in the last few years as compared with the mid-2000s and earlier." and along with the fact that the top 10 percent of incomes are now 10 times higher than the bottom 10 percent does it not show that under National the rich are getting richer and everyone else is getting poorer?Hon STEVEN JOYCE: No I do not agree with the member's contention. If he looks at the graph on page 19 he will see that housing costs as a proportion of income for the bottom quintile have been rising steadily since around 2000. Nobody is arguing that the issue of housing costs is not an issue which is why the Government has a comprehensive housing plan that is lifting the supply of housing. In reference to the member's earlier question I note that table D.9 in the incomes report is in fact a before - housing costs measure. The average since 2008 is 8.5 not 10 and the ministry would note that you should not take 1 year alone as the report warns against doing exactly that."