Academic journal article Australian Journal of Social Issues

Gauging New Zealand's Success at Poverty Reduction in the New Millennium

Academic journal article Australian Journal of Social Issues

Gauging New Zealand's Success at Poverty Reduction in the New Millennium

Article excerpt


In 1991 New Zealand's Finance Minister, Ruth Richardson, announced a Budget that she signalled "the Mother of All Budgets" (Louisson 1991), featuring benefit cuts, market rents on state houses and the introduction of a range of new user charges. The Budget led to financial difficulties for low-income households, who were already under pressure from a period of rising unemployment and economic restructuring. In 1999, the Labour-Alliance coalition came into office promising new social policies that would begin a process of substantial poverty reduction in Aotearoa New Zealand.

This paper presents the summary results of the New Zealand Poverty Measurement Project's (NZPMP) analysis of the incidence and severity of poverty during the 1990s and assesses the available evidence of the impacts on that poverty of the social and economic policies introduced by the Labour-led coalition governments since 1999. (1)

Poverty Measurement during the 1990s

Most modern definitions of poverty in OECD countries are relative in the sense that they relate to the living standards of that society. The definition of poverty adopted by the NZPMP is also relative: poverty is a lack of access to sufficient economic and social resources that would allow a minimum adequate standard of living and participation in that society.

Poverty is and always will be a contested concept. Even when there is broad agreement on a high-level definition there remains considerable debate over how best to measure poverty. One of the main reasons for the lack of consensus is the need for judgements to be made as to what constitutes a minimum adequate income or standard of living. (2) As neither the income nor the living standards data can tell the researcher or analyst where to "draw the line", some external way to assess adequacy is needed. The NZPMP's measure of poverty is income based, but in contrast to approaches that simply set a poverty line at an arbitrary fraction of the mean or median household income, the NZPMP has sought to address the issue of assessing adequacy in an explicit and transparent way. The approach involves the use of focus groups to draw on the knowledge and practical experience of low-income householders (i.e. on their judgement) to estimate minimum adequate household expenditure in a full range of household expenditure categories.

Following the introduction of the 1991 benefit cuts, the NZPMP began a comprehensive research programme into poverty measurement. From 1993 to the present, NZPMP has undertaken focus group sampling of low-income householders, in differing regions, cultural groups, family structures and employment categories, in urban areas, middle-sized cities and small towns throughout New Zealand, seeking information about minimum adequate budgets. The total weekly household estimate is intended to be minimal, but sufficient to live on independently--without having to resort to a food bank or Special Benefit. Furthermore, the estimate is grounded in the everyday experiences of low-income households. These estimates have proved to be remarkably similar in the same regions and years. They have also proved to be sensitive to economic changes in regions (Waldegrave et al. 1996). From these resource-based estimates, an income poverty threshold was set--a realistic poverty line for use in social and economic policy.

The unit record data in the Household Economic Survey (HES) have been used to extract national quantitative data on the numbers in poverty, the types of households involved and the depth of poverty (Stephens et al. 1995, 2000, Stephens and Waldegrave 2001, Waldegrave et al. 1996, 1997, Waldegrave and Stephens 2000, Waldegrave 2000). Surveys and numerous qualitative studies have sought information on the consumer behaviour, methods of budgeting, survival strategies and unaffordable expenditures of low-income households.

The NZPMP produced a number of measures of poverty in New Zealand, but the poverty threshold of 60% of median, equivalent, disposable, household income emerged from the focus group sampling of low-income households) The NZPMP produced data both before and after housing costs had been paid, and the preferred focal measure was 60% of median, equivalent, disposable, household income after adjusting for housing costs. …

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