Indicator 7: Official poverty line

Although there is no official national poverty line, the Ministry of Social Development (MSD) monitors relative disadvantage among older people using the following indicators under the New Zealand Positive Ageing Strategy:

Goal 1 – secure and  adequate income for older people

• The proportion of older people in households with after-housing-costs incomes below a low-income threshold.^[1]
• The proportion of older people experiencing material hardship, which is more directly measured using the Economic Living Standards Index, or ELSI (see the Background information section).

Goal 3 – housing affordability

• The proportion of people within households spending more than 30% of their disposable income on housing.

In more economically developed nations such as New Zealand, a common approach to measuring poverty and hardship is to identify where there is relative disadvantage. This means setting a threshold (which can sometimes be called a "poverty line") at which households and individuals have a day-to-day standard of living or access to resources that falls below a minimum acceptable community standard.^[2] 

People who are below the threshold might be described as poor, in poverty, or at risk of poverty.^[3]

For a large proportion of older people, New Zealand Superannuation provides the bulk of their income.^[4] New Zealand Superannuation is adjusted annually to keep pace with the net average wage and consumer price index. This means that income levels in the working population and the pension-age population keep relativity within a certain range.^[5]

The material wellbeing of older people is determined by more than their income. Physical and financial assets are important too, as are any special demands on someone’s budget, such as high health-related costs.^[6]

Affordable housing is also an important factor in older people’s wellbeing. Housing costs need to be at a level where the costs of other basic needs, such as food, clothing, transport, and health care, can be met comfortably. 

Older people spending more than 30% of their income on housing might have difficulty meeting these costs.

The statistics to measure economic living standards were reviewed in 2011. The report of the review is intended to provide a framework for the development of income, wealth, and expenditure statistics over the following 10 years.^[7]

Living standards are measured using Economic Living Standard Index (ELSI) scores, which range from zero (low living standard) to 60 (high living standard) and are grouped into seven levels. Ratings are self-reported and people can vary in how they describe their circumstances. The levels are often combined into groups:

• Severe and significant hardship – levels 1 and 2.
• Some hardship – level 3.
• Comfortable standard of living – levels 4 and 5.
• A good standard of living – levels 6 and 7.

MSD’s report for goal 1 of the New Zealand Positive Ageing Strategy is available at http://www.msd.govt.nz/what-we-can-do/seniorcitizens/positive-ageing/progress/secure-and-adequate-income-for-older-people.html. It shows that older people have the most favourable distribution of living standards of all age groups (see Figure 1 of MSD’s report).

MSD’s report for goal 3 is available at www.msd.govt.nz/what-we-can-do/seniorcitizens/positive-ageing/progress/affordable-and-appropriate-housing-options-for-older-people.html. It shows that a relatively low proportion of older person households spent more than 30% of their disposable income on housing compared to younger age groups. However, the proportion increased from 3% in 1988 to 8% in 2009.

We have selected some other data from a 2010 report by MSD on the material wellbeing of older New Zealanders to include in this report. Figure 1 shows the proportion of the population aged 65+ by level of living standard and ethnicity for 2008. Figure 2 shows the proportion of non-partnered households by level of living standard and gender (for 2000, 2004, and 2008). Older people living in residential care, or who were not owners of the house they are living in, were not surveyed. Therefore, the report did not represent the full range of older people’s circumstances.

Figure 1 shows that older Pakeha are more likely to have higher living standards than other ethnic groups and that older people who are non-Māori and non-Pakeha (that is, other) have a mean ELSI that is lower than the total population’s mean. Figure 2 shows that the mean ELSI scores were similar for men and women.