Income gap static, latest data shows

Lower earners were hit hardest by the recession, but riches from the recovery were more evenly spread. Photo / Thinkstock

Growing income inequality is largely a myth, according to the latest household income figures, though the pockets of the poor are hit the hardest by rising housing costs.

Income inequality is a major political issue this election, as the Labour and Green Parties have tried to paint a picture of a widening gap between the haves and the have-nots under the National-led Government.

The 2014 Household Incomes Report, released yesterday, showed income inequality had mostly remained the same since the mid-1990s, and is slightly higher than the OECD average.

Household incomes had rebounded by 4 per cent from 2011 to 2013, making up lost ground after the Global Financial Crisis and the Canterbury earthquakes. The report showed:

Lower earners were hit hardest by the recession, but riches from the recovery were more evenly spread. Overall from 2009 to 2013, average incomes were stagnant for the bottom half of earners, but grew by 5 per cent for the top half.

In 2011, the top decile earned eight times the income of the lowest decile. Although the top decile earned a quarter of all income, it held half of all household wealth.

Over the past seven years, benefit levels declined in real terms, while median household incomes and superannuation rose by 5 and 12 per cent respectively.

"There is evidence that there is a growing gap between the incomes of those heavily reliant on the safety net provided by main working-age benefits, and the rest," the report said. It said the proportion of households that spend more than 30 per cent of income on housing costs (mortgage payments, rents, rates) was an important measure, as it showed the pressure on a family to cover basic needs such as food, clothing and transport.

In 2013 the proportion was highest among the poorest fifth of households at 43 per cent, while for the second-lowest fifth, it was 36 per cent. Both figures were slightly lower than in 2012.

See the key findings of the research here:

Read the full report here: