Gap between rich and poor still growing

The gap between rich and poor continues to grow, data released by the Government today shows.

However, the Ministry of Social Development (MSD) said fewer New Zealanders are living in poverty.

While many poor families are earning more in real inflation-adjusted terms than three years ago, middle-income families have also done well -- extending the gap between the two groups.

The gap is also continuing to grow between those in the top 20 per cent of income earners and those in the bottom 20 per cent. As a result, the poor are not relatively any better off than three years ago.

Despite that trend, the situation was improving for many people on low incomes, MSD deputy chief executive Marcel Lauziere said.

"When you look at... how much low income people have in their pocket the situation is improving for people at the lower end. That's great," Mr Lauziere said. "But the inequality issue is something we will follow very closely."

According to the MSD analysis of three-yearly Household Economic Surveys, the proportion of New Zealanders living in families earning below 60 per cent of the median income has fallen from 22 per cent in 2001 to 19 per cent in 2004.

The median annual household income increased 13 per cent -- from $40,600 to $46,000 -- from 2001 to 2004.

That means the MSD draws its poverty line at household income of $27,600.

After tax median income increased from $33,500 to $37,400 from 2001 to 2004.

The MSD said it preferred median income, which is the middle figure from the complete range of incomes, as a measure opposed to the average income, which tended to be skewed upwards by those on high incomes.

It also shows:

* the proportion of dependent children below the poverty line has fallen from 27 per cent to 21 per cent

* the proportion of children in sole parent families below the poverty line fell from 61 to 43 per cent

* the number of poor households spending more than 30 per cent of their income on housing had fallen from 42 per cent to 35 per cent

* income inequality increased slightly between 2001 and 2004 in line with a trend starting in the 1980s

Steve Maharey, Social Development and Employment Minister, said: "The results are an endorsement of this government's continued investment in New Zealand families through policies like income-related rents, paid parental leave, low cost primary health care, and a focus on reducing unemployment."

But National finance spokesman John Key said tax cuts would increase money in people's pockets, helping everyone.

The party's policies would help move people out of poverty, through stronger wage growth, while limiting penalties imposed on others through excessively high tax. The Government was more focused on wealth redistribution, he said.

"Their aspiration and record is one of robbing Peter to pay Paul. I would rather have Peter and Paul both doing well in their own right,"  he said.

NZ First MP Barbara Stewart said the figures were a farce when so many New Zealanders remained in poverty.

The proportion of households in poverty that included at least one Maori had dropped from 31 per cent to 21 per cent and with one Pacific Island adult 41 per cent to 23 per cent.

Mr Lauziere said the improvement in the income-based poverty indicators were largely the result of more people in jobs as a result of the recent economic boom and income-related rents for state housing.

He expected the trend to continue in the next three years as the Government's Working for Families package delivered targeted help to lower and lower-middle income families.

He said the trend of people moving out of poverty was positive and contrasted with the 1998-2001 figures which showed little movement.

- NZPA, HERALD ONLINE STAFF