4. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
How much did median weekly incomes for all people from all sources fall in the June 2010 quarter compared to the June 2009 quarter?
Hon BILL ENGLISH (Minister of Finance) Link to this
The member has, I think, found the only income measure he can in which there is a measurement drop. He should read the Statistics New Zealand warning about using these figures: “Movements in average and median income statistics are influenced by many factors. As well as changes in levels of income, movements are also influenced by the composition”—
Hon Darren Hughes Link to this
I raise a point of order, Mr Speaker. I have two points to make in respect of the answer the Minister is giving. One is that there was an implicit flick at the question, in saying that the member had found only a certain data series. Secondly, he is now employing the tactic used by the Prime Minister yesterday, which is to explain to us how the data series is compiled. We understand that. The question set down is very simple: “How much did median weekly incomes for all people from all sources fall …”. It is set out pretty simply and he should just answer the question.
Mr SPEAKERI hear the point of order. I say to the Minister that it would be helpful—it is a very straight question that is capable of answer, and the Minister should answer it. I was listening to see whether the Minister would answer it. I believe that an answer should be given, and then the explanation, perhaps, to follow. But it would be preferable to answer the question.
In order to explain this particular measure, I say that Statistics New Zealand states: “Movements in average and median income statistics are influenced by many factors. As well as changes in levels of income, movements are also influenced by the composition of the population from survey to survey.” The decline in median weekly income is $9, which Statistics New Zealand points out is not statistically significant. It could have dropped for any number of reasons, such as more children in the population, drops in interest rates—
An explanation like that at least was not critical of the question, but it was a very simple question and did not actually need quite such a long answer. I am sure there will be plenty of opportunity to explain it as supplementary questions come up.
Hon David Cunliffe Link to this
Does the Minister of Finance consider an income drop of $9 a week to be statistically significant to a family who, as Veda Advantage recently reported, are among the tens of thousands of New Zealanders who are finding they just cannot afford to pay their bills?
As the member well knows, the statistic he is using does not measure the change in the income of that family. It actually does not. All measures of the change in income of the family have gone up. The median income figure includes all sorts of stuff, including changes in the population, so the member should not use it to describe family incomes. He knows he is wrong.
Chris TremainThe best measure of wage growth has at least one characteristic: it has to be a measure of wages, which median income is not. It is not a measure of wages. The best measure is the one that determines the wage floor for New Zealand superannuation each year, and that is the movement in the after-tax average wage, which comes from the quarterly employment survey. This one is used because it is set out in the New Zealand Superannuation and Retirement Income Act, which was passed by the Labour Government in 2001. If we look at movements in the after-tax average wage, we see that from 1999 to 2008, after-tax wages went up by 33 percent but inflation went up by almost exactly the same amount. This means that when we take out the effects of inflation, in the 9 years under Labour after-tax wages went up by only 3 percent.
Hon David Cunliffe Link to this
What does the Minister think would be a more accurate indicator for a struggling family in, I do not know, perhaps the Mana electorate? Would it be the average, which is skewed by, say, National-voting millionaires in Remuera, or does he think it would be the median, which measures the position of the person who is in the middle of the income scale?
Again, the member is employing deliberate obfuscation. The median he is using is not the median wage. The measure he is using includes the interest income of his millionaire mates in Parnell, or Mission Bay, or wherever it is; it does not measure wages.
That is a very good question. If we use the wage measure legislated by the previous Labour Government, we see that in the 9 years it was in office that measure grew by 3 percent. In the 9-year period from 1990 to 1999—that is, the previous 9 years—real after-tax wages grew by 15 percent. Obviously, we have not had a 9-year period since 2008 to enable a full comparison, but in less than 2 years since September 2008 real after-tax wages have gone up by 9 percent.
Hon David Cunliffe Link to this
Does the Minister consider it realistic or statistically significant to quote a measure of income that takes the average, not the median, and excludes the impact of Working for Families, paid parental leave, childcare, and the other factors that make up the social wage, and does he think it fair and appropriate to include in National’s figures the effects of Labour’s 2008 tax cut?
Hon David Cunliffe Link to this
In that case, based on the fall in median income of $9 a week, how long does he think it will take a person on the median income to save for a deposit on a home in Auckland, or has Auckland now become a place where, as Bernard Hickey said, “You can buy a house … but you can’t afford to have a family.”?
As I have explained, the measure the member is using for income is not relevant to families who are trying to save for a deposit on a house in Auckland. Those families have had a significant increase in their real after-tax wages. One of the reasons for that is pretty simple: they have had two rounds of tax cuts since this Government came into office. If they earn $48,000 or less, their top statutory tax rate is 17.5c. If they do another hour of overtime, they keep 82.5c, and that is a strong incentive for them to get ahead. The tax on their savings has been lowered as well.