Introduction

A range of approaches has been used to measure the shape, extent and distribution of poverty in New Zealand over the last two decades. These approaches are summarised and reviewed here and are linked with the international literature on poverty definition and measurement. Because of the focus of this book, particular attention is given to recent work on the measurement of living standards and on child poverty. The discussion here provides an essential background to the review of the experiences of poverty and low living standards in the next two chapters and to the detailed work in Part Two on the changing directions of social security policy. While the major focus in this chapter is on New Zealand approaches to defining and describing the nature of poverty, it is useful to begin the chapter with a brief review of the changing patterns of income distribution in New Zealand over the last two decades.

Measuring and monitoring growing inequality

A range of work has reviewed the major determinants of these changes and it is not the intention here to repeat those discussions (Kelsey, 1993; O’Brien and Wilkes, 1993; Sharp, 1994; The Economist, 1994; Kelsey, 1995; Kelsey and O’Brien, 1995; Boston et al, 1999a; Jesson, 1999; New Zealand Council of Trade Unions, 1999; Blaiklock et al, 2002). In brief, rapidly increasing unemployment in the 1980s and 1990s, low wages arising from changes to industrial legislation, changes in housing policy, cuts in taxation for higher-income earners, the introduction of various forms of user pays for public services and the 1991 benefit cuts combined to alter the pattern of income distribution significantly and in the process of doing so significantly increased income inequalities. Indeed, the extent of the changes in inequality led commentators to the conclusion that inequality had widened further in New Zealand than in any other Organisation for Economic Co-operation and Development (OECD) country in the 1980s and 1990s, with the exception of the UK (Hills, 1995). That pattern of growing inequality has continued, with The Social Report noting that it has continued to increase since 2001 (Ministry of Social Development, 2006c).