Housing prices hurting low-income families, says report

The AM Show 12/10/2018

More than half of renting households receiving the Accommodation Supplement are spending over than half their income on housing, according to a new report.

That's up from 40 percent a decade ago, the latest Household Incomes in NZ report shows.

It also reveals after taking off the cost of housing, incomes for low-income families with children are still where they were in the 1980s.

"That's no surprise," Joseph Liava'a of Viola Budgeting Services told The AM Show on Friday.

"Since the '80s and '90s, we've seen that trend. Productivity per worker has increased, but the share of the profits has gone increasingly towards the owners of production, and... it's actually gone backwards in real-dollar terms for workers."

In contrast, those in the top 10 percent of earners have seen their after-housing cost income nearly double.

The report says while there is "no evidence of any sustained rise or fall" over the last 20 years in income inequality before housing costs are taken into account, the increased cost of housing has seen after-housing cost inequality rise.

Mr Liava'a says the report "doesn't really add more to what we already know".

The report suggests high rent is to blame for inequality.

"Things are tough. From the budget services perspective, we're seeing the trend move away from beneficiaries being sent in by [Work and Income]... to two-people working families coming in for help. That's a trend that's increasing... there may be more than two people in the house working, and they're still coming in because they're stressed about debts or covering the bills."

That's because while household incomes have been rising, so have housing costs - all while the share of profits going to workers has fallen, with more going to people with capital.

"The top 1 percent or 0.1 percent, it's fact they're sneaking away or walking away with the lion's share, and really leaving little for the workers and leaving it to the state to pick up the mess," said Mr Liava'a.

The share of total household income going to families in the bottom 40 percent has fallen from 24 percent in the mid-1980s to 19 percent last year.

If there's a silver lining to be found in the report, it's that New Zealand's growth in inequality is relatively flat compared to the US, where the share of income going to the top 1 percent has risen from about 12 percent in 1985 to more than 20 percent last year. New Zealand's top 1 percent have taken home between 7 and 9 percent of all income since the late 1980s. The share for the top 0.5 percent is steady at around 5 to 6 percent.

Social Development Minister Carmel Sepuloni said the "report shows this Government's spending priorities are focused in the right places".

"We've committed to raising the incomes of low and middle income families though our Families Package, lifting thousands of children out of poverty, providing more affordable housing and rebuilding the public services like health and education - that keep our people strong and give everyone a shot at success."

Watch the full interview with Joseph Liava'a above.

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