I've spent some time today reading the Ministry of Social Development's New Zealand Living Standards 2004 report. The results of the survey were compared to a version done in 2000, and the comparison was unfavourable, to say the least. You've probably already read the highlights in the paper, but I think they bear repeating, just so their full impact can be felt. Firstly, here's how the overview report [PDF] characterised the economic changes between the two surveys:
Between 2000 and 2004, New Zealand showed a pattern of broad-based growth. Real Gross Domestic product grew at an average 3.7% per year. Unemployment fell from 6.1% in June 2000 to 4.0% in June 2004, the lowest rate in 17 years... Overall, the number of income-tested beneficiaries fell by 44,000 (12%). The number of Unemployment Beneficiaries halved...
Median incomes rose 6.6% over the period and income poverty [defined relative to 1998 median equivalent family income - I/S] fell from 22% to 19% of the population between June 2001 and June 2004...
Given all this good news, you would have expected New Zealanders' living standards to have improved, and for there to be fewer people living in poverty. However, the 2004 survey [PDF] found that the opposite had occurred. Over this period:
- the average living standard of all New Zealanders fell slightly;
- the proportion living in conditions categorised as "severe hardship" rose from 5% to 8%;
- the proportion of children in "severe hardship" rose from 7.9% to 14.1%;
- the proportion of Maori in "severe hardship" rose from 7.5% to 16.9%;
- the proportion of Pacific Peoples in "severe hardship" rose from 15.2% to 27.3%;
- the proportion of those on low incomes (in the bottom third of the income distribution) in "severe hardship" increased from 10.1% to 16.9%; and
- the proportion of those on income-tested benefits in "severe hardship" increased from 16.7% to 26.1%.
And all of this happened under a Labour government.
To head off the usual complaints about poverty statistics from the right, this is not a relative poverty measure. The Economic Living Standard Index (ELSI) used here asks people basic questions about whether they can afford food, clothing, medicine, or "social participation" - things like whether they have warm bedding or can heat their houses, whether they've put off buying food or medicine because they can't afford it, or whether they can afford to give their kids birthday presents or have their family round for a meal every so often. It is regarded as an extremely robust tool for the measurement of absolute deprivation. While there is some self-rating involved, this does not seem to have distorted the results in any way; neither was there any discernable effect from "consumerism" or changing expectations about access to consumption (though given the goods involved, this was unlikely). In short, this is a real decline in living standards, manifested as a real increase in the number of people who are cold, sick, and hungry.
The government has attempted to spin this by arguing that the survey data predates the introduction of the Working For Families package, and that this will have resulted in a measurable improvement. And they're almost certainly right about this to some extent - greater access to childcare and the accommodation supplement will make a difference. But the vast bulk of Working For Families is focused on the working poor and the middle classes, not those on benefits. Labour's "solution" to the hardship faced by beneficiaries is for them to get a job - something which, to their credit, they've made a lot more worthwhile by improving the minimum wage and enabling unions to fight for pay increases. But while this works for those on the unemployment benefit (at least if you ignore the fact that we have a monetary policy which commits us to a certain level of unemployment), it does nothing to help those on the sickness and invalids benefits, who by definition cannot work. These people - and thanks to the stresses of modern society, there are an increasing number of them - are being effectively left behind, and suffering a decline in living standards as a result.
(The same could be said of beneficiaries more generally. While Labour has shared the fruits of growth far more broadly than National did in the 90's, those on benefits have been effectively excluded, and there has been a significant erosion in benefit levels relative to minimum-wage jobs. And the difference is even worse when you consider the enormous increase in housing costs.)
The only conclusion that can be drawn from this is that Labour has failed the poor. While it has delivered a lot to a great many people, it has failed in its most basic duty to work to improve the lot of those at the bottom of our society. I have no doubt that National would have been worse (hell, National wouldn't even be collecting these statistics), but this is still an indictment of Labour's term in office, and one it will take a long time to live down.