Households continue to spend more than they earn

For the fifth year in a row, New Zealand households have spent more than they’ve earned, Stats NZ said today.

“The amount of money households have on hand has been going up since 2014, but as a group, they’ve spent more than half a billion dollars each year above that,” national accounts senior manager Gary Dunnet said.

“That’s the equivalent of each occupied household, numbering 1.66 million in New Zealand, spending about $340 more a year than they make.”

Household net disposable income is the amount of money a household has once all incomes such as wages, interest, and child support, and outgoings like taxes have been accounted for. It represents the money available to a household to spend, save, or invest.

Provisional estimates of household net disposable income increased 4.9 percent, to $169.6 billion for the year ended March 2019. Household final consumption expenditure was $170.2 billion, up 5.1 percent compared with the previous year.

Household saving, the balance of household net disposable income and final consumption expenditure, was negative $566 million in 2019.

Year Household saving ($)
2005 -3039000000
2006 -5093000000
2007 -3719000000
2008 -259000000
2009 -2040000000
2010 1636000000
2011 2698000000
2012 3196000000
2013 809000000
2014 498000000
2015 -1325000000
2016 -797000000
2017 -196000000
2018 -302000000
2019 -566000000
Year Saving ratio (%)
2005 -3.6
2006 -5.8
2007 -3.9
2008 -0.3
2009 -1.9
2010 1.5
2011 2.3
2012 2.6
2013 0.6
2014 0.4
2015 -1.0
2016 -0.6
2017 -0.1
2018 -0.2
2019 -0.3

From 2005, saving for the household sector was positive only from 2010 to 2014, peaking at $3.2 billion in 2012.

“The shift to positive household saving occurred shortly after the global financial crisis in 2008,” Mr Dunnet said.

On the income side, employees’ pay, perks, and other compensation increased 5.9 percent to $129.6 billion in the year ended March 2019, reflecting both pay rises and more people employed. Provisional estimates of the income of self-employed business owners and partnerships increased 2.6 percent to $31.3 billion. $6.6 billion of this entrepreneurial income is from agriculture businesses and $24.6 billion from other industries such as property operators, construction and professional services.

Household spending on housing, power, and gas (household utilities), contents and services, clothing and footwear, and restaurants and hotels all increased in 2019. Income tax payable by households increased 5.5 percent to $38.7 billion.

Household adjusted net disposable income

“In 2019, the government and other non-profit groups topped up disposable incomes by the equivalent of about $7,700 per person,” Mr Dunnet said.

Adjusted net disposable income of households is calculated by adding social transfers in kind received either free of charge or at reduced prices. These are goods and services, including healthcare, education, and housing, that are usually provided and paid for by the government or non-profit institutions such as charities, religious organisations, and sports clubs.

Household net disposable income per capita was $34,866 for the year ended March 2019. Adjusted for social transfers in kind, this income increases to $42,628 per capita or a spending of $7,762 per person made directly by the government and non-profits on behalf of the households.

Year “Social transfers in kind “Net disposable income “Adjusted net disposable income
2005 per capita” per capita” per capita”
2006 4505 20399 24905
2007 4839 21106 25944
2008 5092 22521 27612
2009 5534 24407 29941
2010 6085 24543 30627
2011 6268 25927 32195
2012 6339 27034 33374
2013 6561 28490 35051
2014 6593 28667 35260
2015 6778 29590 36368
2016 6978 29832 36809
2017 7058 30808 37866
2018 7094 32508 39602
2019 7277 33775 41053

Household investment and net lending

“In addition to consumption of goods and services, households are also investing more in their homes,” Mr Dunnet said.

Households’ investment was $14.9 billion in 2019, most of which was spent on new homes and major home improvements.

The shortfall between saving and new investment is funded by borrowing from other sectors, including from the rest of the world. Households’ net borrowing in the year to March 2019 was $10.5 billion or just over $2,000 for every person in New Zealand. This represents new borrowing for the March year 2019 and is not an accumulated total of previous years’ borrowings.

Year Net lending per capita
2005 -2140
2006 -2614
2007 -2261
2008 -1426
2009 -1317
2010 -237
2011 4544
2012 1324
2013 -614
2014 -1194
2015 -1562
2016 -2027
2017 -1979
2018 -2200
2019 -2149

/Stats NZ Public Release. View in full here.