Modest but Adequate: An Appraisal of Changing Income Circumstances in New Zealand

Vasantha Krishnan

Recently poverty alleviation has emerged as a topic of public debate. Embedded within this debate has been controversy about how best to monitor and measure the existence of financial hardship.

This focus on poverty has occurred at a time when the rationale for New Zealand’s welfare state has shifted from an objective of providing beneficiaries and low-income earners with a standard of living approaching that of the majority and enabling “participation and belonging”, to a system intended to provide a safety net or a “modest but adequate” standard of living.

This paper uses low-income or poverty thresholds to investigate whether financial hardship has increased and whether there have been changes in the composition of the population experiencing financial hardship. The paper also investigates what difference various measures of poverty (eg, the Benefit Datum Line) make to findings of who is and who is not “poor”. The results show that in the late 1980s and early 1990s the proportion of households below each of the various measures increased significantly.

Although the measures differ in the size of the change, all agree about its direction. These trends have disproportionately affected certain households, including those characterised by beneficiaries, sole parents, dependent children, Maori and Pacific peoples.