The widening gap: perceptions of poverty and income inequalities and implications for health and social outcomes.

• Author: Carroll, Penelope
• Position: Report

Abstract

This paper looks at New Zealand perceptions of poverty and inequality and the implications for health and social outcomes. Changes in economic and social policies have contributed to increased economic and social inequalities in Aotearoa New Zealand over the past 20 years. Research shows that such inequalities have strong implications for health and social outcomes. The New Zealand Values Survey data (collected by computer-assisted telephone interviewing from New Zealanders 18 years and over in two random samples [n = 1,226 and n = 1,272] from December 2004 to March 2005, and later fused into one data set) provide insights into how New Zealanders feel about inequalities and what they are prepared to do about them. The majority of respondents stated they were prepared to pay increased taxes to provide better health services and a better standard of living for the elderly and the disabled. However, less than half were in favour of increased taxes for subsidised mortgages or government-owned houses for those in housing need, or to reduce student debt. Around two-thirds believed people were poor because of personal deficits and they were generally not in favour of any increase in government assistance to the poor. These findings have implications for government policies aimed at reducing underlying inequalities to achieve more equitable health and social outcomes.

INTRODUCTION

How well and how long one lives one's life is powerfully shaped by one's place in the hierarchies built around occupation, education and income. (Graham 2000:3)

Socio-economic factors are widely acknowledged as important determinants of health and social outcomes (Public Health Association of New Zealand 1992, Macintyre 1997, Crampton 1998, Howden-Chapman 1999, Graham 2000, Howden-Chapman and Tobias 2000, Lynch et al. 2000, Ministry of Health 2000, Tobias et al. 2009).

This article is concerned with New Zealanders' perceptions of the socio-economic circumstances feeding into inequalities and government responsibilities in responding to disparities. In a democracy, government policies are to some extent reliant on public opinion. The previous Labour-led Government had a stated aim to reduce underlying inequalities to achieve a more equitable distribution of overall outcomes within society (Ministry of Social Development et al. 2007); the current National-led Government has not yet made it clear whether it is a policy priority for them or not. Do New Zealanders want a more level playing field? Is there a willingness to pay increased taxes to reduce socio-economic inequalities in order to improve health and social outcomes?

There has been plenty of evidence of socio-economic differences in health and social outcomes since the mid-nineteenth century (Dew and Kirkman 2002, Graham 2000, Regidor 2004). These historical insights about the importance of relative social and economic position to the health of individuals and the wellbeing of society have been rediscovered across the OECD (Dew and Kirkman 2002, Galobardes et al. 2006a, 2006b, Graham 2000, Howden-Chapman and Tobias 2000, Mackenbach et al. 1997, Regidor 2004).

Although life expectancy has been improving in New Zealand across all socio-economic groups, the socio-economic and ethnic gap in population health has remained, with systematic differences between sectors of the population (Blakely et al. 2007, 2008, Crampton 1998, Howden-Chapman and Tobias 2000). Those with higher socio-economic status (SES) continue to have lower morbidity and mortality rates than those with lower SES (Blakely et al. 2004). Inequalities in mortality between Maori and non-Maori persist within socio-economic strata (Ministry of Health 2006). Furthermore, geographical inequalities in health, along with inequalities in area-based social and economic deprivation, increased in the period up to 2001 (Salmond and Crampton 2002, Pearce and Dorling 2006). There is some indication that between 2001 and 2007 the ethnic inequalities may be slowing or reversing (Tobias et al. 2009).

"SES" is an umbrella term for a range of interacting socio-economic indicators of health status and social outcomes (Galobardes et al. 2006a). Indicators such as insufficient money for medical care or adequate food (Cheer et al. 2002, Waldegrave et al. 2004), or educational opportunities and neighbourhood characteristics (Crampton et al. 1997, Ellaway et al. 2001, Lochner et al. 2003, McCulloch 2001), may affect health and social outcomes directly (for instance, there are higher rates of hospitalisation among people living in more deprived areas [Crampton 1998]) or indirectly; while household conditions such as cold and damp (Howden-Chapman et al. 2007) or overcrowding (Baker et al. 2000, McNicholas et al.2000) may affect health directly and social outcomes indirectly.

If SES is key to understanding inequalities in health and social outcomes (Galobardes et al. 2006b), income level is the key SES indicator. As Howden-Chapman et al. (2002) noted, the most pronounced indicator of social inequality in New Zealand over the preceding two decades was the growth in income inequality.

There is contested evidence that in addition to absolute levels of income, relative differences are also important determinants of inequalities in health and social outcomes and that these have cumulative effects throughout the life course (Kaplan et al. 1996, Kawachi and Kennedy 1997, Wilkinson 1997a, 1997b, Lynch et al. 2000, Osier et al. 2002). Adverse living conditions in childhood, and particularly the effects of inadequate income, are strong indicators of adult illness, irrespective of adult SES (Coggon et al. 1993, Dedman et al. 2001, Dewilde 2003, Galobardes et al. 2006b, Wadsworth 1997). Countries that minimise economic inequalities are societies where children are more likely to be able to develop to their full potential. These factors are essential prerequisites for greater prosperity for the country as a whole (Howden-Chapman et al. 2002).

Kawachi and Kennedy (1997) suggest that it is the lack of social cohesion / social capital (cooperative social interaction among individuals, groups and institutions (Spoonley et al. 2005) that is the mediating factor between income inequality and poorer health and social outcomes. Studies have shown that high levels of social cohesion are associated with lower mortality rates, and higher mortality rates with less social cohesion (Lindstrom et al. 2002, Reidpath 2003, Wilkinson 1999). Although there is evidently an interaction between material and psychosocial factors (Szreter and Woolcock 2004, Veenstra 2002, Wilkinson 1997a, 1997b), material factors such as adequate income and affordable, warm housing remain crucial for good health and social outcomes (Lynch et al. 2000, Smith 1996). Socially cohesive societies thrive because people are well housed, well fed and well educated, as well as not belittled, cowed or made to feel inadequate (Wilkinson 1999).

Whatever the mediating factors, it would appear that socio-economic inequalities have an adverse impact on population health and social outcomes. It is also clear that, by definition, these inequalities are at least in part socially produced. As such, they are potentially avoidable (Whitehead 2007). For instance, an increase in income inequality is not the inevitable consequence of social and economic change (Szreter and Woolcock 2004); in countries with redistributive fiscal and social policies (progressive taxation and social security benefits pegged to average incomes), poverty and inequality have not increased inexorably with the rise in unemployment (Graham 2000).

In New Zealand, income inequalities have increased since the neo-liberal reforms and benefit cuts of the late 1980s and 1990s, although the rate has slowed this decade (Blakely et al. 2007, Ministry of Social Development 2006, Ministry of Social Development 2007). The New Zealand Living Standards 2004 report showed a million New Zealanders living in some degree of hardship, with a quarter of these in severe hardship. Despite the buoyant economy and falls in unemployment levels, not only was there a slight increase in the overall percentage of those living in poverty between 2000 and 2004, but those with the most restricted living standards had slipped deeper into poverty (poverty defined as exclusion from the minimum acceptable way of life in one's own...