Editorial: Economic tide lifting all boats

During its years in Opposition the Labour Party called constantly for a "social audit" of the population to balance the picture presented by economic growth. In office it has instituted an annual report from the Ministry of Social Development that monitors our collective wellbeing on the basis of everything from personal incomes to local television content.

If the Social Report is making less impact than economic indicators in national discussion the breadth of its material is probably to blame. That and the fact that like most social research it largely confirms what economic events would lead us to expect.

But the 2006 report, published last week, is particular notable. It is the first to delve back further than 10 years for comparisons with the present. It traces the trends of 20 years, almost from the beginning of the economic reforms.

As many remember, the period immediately after the mid-1980s was one of considerable pain as previously protected industries closed and monetary clamps were applied to the inflation that had surged after its release from the freeze. In the early 1990s government spending was cut, including social welfare, which helped squeeze remaining inflation very quickly and made the adjustment shorter and sharper than it might have been.

From the mid 1990s employment levels recovered and by the end of the decade unemployment was rapidly dropping to the point that labour shortages would soon be felt. Previous social reports, monitoring trends only since then, have found a predictably improving picture on most counts. The latest report offers a better measure of the social impact of economic change.

It finds that while our incomes, converted to constant dollars, are now well above their level in the mid-1980s, the gap between the richest 20 per cent and the poorest 20 per cent is greater. That is an extreme measure of equality. A more interesting measure is the number of people receiving less than 60 per cent of the median family income. At last count 19 per cent of the population was in that category, compared with 12 per cent in 1988. The report states, however, that the proportion peaked in the mid 1990s and has been declining ever since.

An economy geared to market forces of supply and demand is unlikely to match the income equality of a more regulated society but the tide seems to be lifting all boats. The poor have not got poorer, they have got richer but relatively poorer.

Relative poverty is real of course; people's health, happiness and social participation depend on whether they can afford prices that reflect the incomes of most in their community. A government can do much to help those on the lowest incomes receive a comparable living standard but only by helping them selectively. When it casts its benefits too widely, as the present Government is doing in primary health services and family income subsidies, it does nothing to close the gap.

Just under 8 per cent of us are now living in what the ministry calls severe hardship, a 3 per cent increase since 2000. But there has been a reduction in the numbers in lesser categories of hardship, suggesting again that the picture overall is brighter.

It is easy, and defensible, to focus concern on even a diminishing hole in the doughnut. Every person matters, and the fewer of them found to be in severe need, the more we can do for them. But the complete picture should be presented too. Overall we are better off than 20 years ago, living longer, better educated, less likely to be killed on the roads but finding it less easy to buy a house and medicine says more of us are "obese". An audit that finds nothing worse can only be welcomed.