International trends

According to OECD research, in more than three-quarters of OECD countries the gap between rich and poor has grown over the past two decades. The organisation’s October 2008 report Growing Unequal? concluded that the economic growth of recent decades has benefited the rich more than the poor. Social changes, such as the increase in single-parent households, have also had an impact on income distribution.

International sucesses

Some countries have fared much better than others in the poverty stakes and many are doing better than us. The OECD says the countries that do best combine high rates of social spending – including high benefits paid to jobless households – with an emphasis on facilitating access to work for those without it

The standout successes are Denmark and Sweden, which have the lowest poverty rates in the OECD. In 2004, spending on social-assistance programmes as a percentage of GDP was 28 percent in Denmark and 31 percent in Sweden. Our social spending was 18 percent of GDP in 2003 and we have a poverty rate twice that of Denmark or Sweden.

Reducing New Zealand poverty

The Ministry of Social Development’s latest household-incomes report credits the Working for Families tax package with helping to reduce the level of poverty here. According to the ministry, without the introduction of Working for Families in 2004 the proportion of the population with low income would be significantly higher than it is today (see Low-income households table).

But the package hasn’t managed to bring levels back to those seen pre-1990; and current economic conditions are likely to be placing new pressures on at-risk households. The Families Commission says those most likely to be struggling to make ends meet are single-parent families and two-parent families where only one is earning.

In contrast, those aged over 65 are least likely to fall below the poverty line. The commission says the 65+ age group continues to benefit from the social-assistance programmes of the post-war decades. Most now live in freehold houses with universal superannuation providing a guaranteed income.

Report by Jessica Wilson.