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Household Economic Survey: Year ended 30 June 2007
Embargoed until 10:45am  –  30 November 2007
Commentary

Introduction

Changes to the survey

Between 2003 and 2006, the Household Economic Survey (HES) underwent significant redevelopment, with major changes to the collection methodology and classifications used. The key changes were:

  • The survey has moved from paper-based collection to Computer Assisted Interviewing (CAI).
  • The population weights are now based on 2006 Census data.
  • The Economic Living Standard Index (short-form version) questionnaire has been included.
  • The HES 2006/07 uses new expenditure and storetype classifications.

The new expenditure classification was developed to meet the need for a common household consumption classification that is more aligned with the Consumers Price Index, National Accounts and international standards. Consequently, there is no expenditure time series in this release, as 2006/07 expenditure data is not directly comparable to previous years.

More information on these and other changes are detailed in the Changes to the Household Economic Survey paper on the Household Economic Survey web page, and also in the Technical notes.

Notes for this release

The information in this release is for the year ended 30 June 2007. The Household Economic Survey primarily collects information on household expenditure and income.

When interpreting information from this survey, all factors impacting on the data must be considered. Factors influencing a household's expenditure or income include household size, household composition, geographic location, and employment-related factors.

Expenditure figures refer to gross expenditure unless otherwise specified. All income figures refer to gross (before tax) income.

The five broad regions reported on are based on regional council areas. They are the Auckland, Wellington and Canterbury regional council areas, Rest of the North Island, and Rest of the South Island.

Figures in this release from 2003/04 have been revised using updated population weights. This is indicated by an R in the tables.

More information including definitions can be found in the Technical notes. 

Household expenditure

The average weekly household net expenditure was $956 in 2006/07.

The housing and household utilities group was the largest component of household spending, making up 23 percent of total household net expenditure. This group comprises expenditure on rent, mortgage principal repayments, property maintenance and improvements, property rates, and household energy. Food and transport were the next largest expenditure groups, at 16 percent and 14 percent respectively. 

Expenditure group     Average weekly household expenditure ($) Proportion of total net expenditure (%)
Food 156 16
Alcoholic beverages, tobacco and illicit drugs  27 3
Clothing and footwear   33 3
Housing and household utilities 224 23
Household contents and services 51 5
Health 23 2
Transport 136 14
Communication 31  3
Recreation and culture 97  10
Education 13  1
Miscellaneous goods and services 94  10
Other expenditure 97  10
Total gross expenditure  980  
Sales, trade-ins and refunds -24 -3
Total net expenditure 956  

Note: All figures in this table are independently rounded. All figures in this table are independently rounded.

Expenditure by region

Of the five regions, the Wellington region had the highest average weekly net expenditure, at $1,103. As with the national figures, spending on housing and household utilities ($298) was the largest component of household expenditure in this region, followed by food at $171. The proportion of spending on housing and household utilities was 27 percent, slightly higher than the national proportion of 23 percent. For the remaining regions, average weekly net expenditure was as follows: Auckland $1,046, Canterbury $986, Rest of the South Island $940, and Rest of the North Island $818. 

Graph, Average Weekly Household Expenditure.  

Housing-related expenditure

Housing and household utilities expenditure group

Housing and household utilities was the largest component of total household net expenditure. Average weekly expenditure on this group was $224 in 2006/07. This group comprises expenditure on rent, mortgage principal repayments, property maintenance and improvements, property rates, and household energy.

The categories contributing most to expenditure on the housing and household utilities group were rent at 30 percent and home ownership at 28 percent. The home ownership category consists of mortgage principal repayments and property improvements (materials and services).

The third largest contributor was household energy at 16 percent. On average, households spent $36 per week on household energy. This consisted of expenditure on electricity ($31), gas ($4) and other domestic fuel ($1).

Expenditure on household energy as a proportion of total net expenditure tends to decrease as income increases. Household energy costs for households in the bottom quintile made up 7 percent of their total expenditure, while for households in the top quintile it was only 3 percent.

Income quintiles divide the population into five groups by ranking households in order of the amount of income received. In 2006/07, the top quintile (quintile 5) comprised those with annual household incomes of $98,800 or over, while those in the bottom quintile (quintile 1) received annual household incomes of less than $25,800

Graph, Household Energy as a Proportion of Total Net Expenditure.  

Home ownership costs

In 2006/07, 70 percent of households either owned the dwelling they lived in or held that dwelling in a family trust, with 57 percent of households owning the dwelling they lived in, and 12 percent of households holding the dwelling in a family trust. These proportions are very similar to those from the 2006 census where 55 percent of households owned the dwelling they lived in and 12 percent held the dwelling in a family trust.

Thirty-two percent of households own their own house with a mortgage. These households spent an average of $271 per week on mortgage payments in 2006/07. This made up 22 percent of their total net expenditure. Mortgage payments include mortgage-interest payments, mortgage-principal repayments and interest on revolving credit mortgage/loans.

Renting costs

In 2006/07, 29 percent of all households did not own the dwelling they lived in and made rent payments. For these households, average weekly household expenditure on rent was $220 per week. This accounted for 28 percent of their total net expenditure. Rent payments include rent paid for primary property, rent paid for other properties, and other payments connected with renting – ie bonds, ground rent and easements.

Housing costs by region

Households in the Auckland region spent on average $156 per week, or 15 percent of their total net expenditure, on housing costs. This was the highest of the five regions. The Rest of the South Island region had the lowest proportion with 12 percent. Housing costs include rent payments, mortgage principal repayments, mortgage interest payments, rates payments, and other local authority payments.

Food and alcohol expenditure

The average weekly household expenditure on food in 2006/07 was $156.

Graph, Proportion of Total Food Expenditure.  

Grocery food made up 44 percent of expenditure on food. On average, households spent $68 a week on grocery food. This food group comprises: bread and cereals, milk, cheese and eggs, oils and fats, food additives and condiments, confectionery, nuts and snacks, and other grocery food. The other grocery food category made up the largest proportion of total grocery food expenditure at 37 percent. It should be noted that within this category, food items that were not sufficiently described have been classified to residual codes. These codes comprised the majority of expenditure in this category.

Restaurant meals and ready-to-eat food was the next largest component, making up 24 percent of total food expenditure ($38 per week).

Average weekly expenditure on alcoholic beverages was $19 in 2006/07. Fifty-five percent of households reported expenditure on alcohol. It should be noted that expenditure on alcohol is known to be under-reported in this survey compared with other data sources.

In general, average weekly food expenditure increased as annual household income increased. Households in the top income decile spent on average $285 per week on food, while households in the bottom income decile spent $68 per week.

Income deciles divide the population into ten groups by ranking households in order of the amount of income received. In 2006/07, the top decile (decile 10) comprised those with annual household incomes of $131,300 or over, while those in the bottom decile (decile 1) received annual household incomes of less than $17,600.

Transport expenditure

Households spent an average of $136 per week on expenses related to transport in 2006/07, making this the third largest household expenditure group. The largest contribution was private transport supplies and services, at $67 per week. Expenditure on petrol made up over half of this category, with an average of $38 per week.

The next largest contributor to the transport group was the purchase of vehicles. Just over one-third of expenditure on transport was on the purchase of vehicles ($48), with $35 of this amount on the purchase of second-hand motor cars.

On average, households in the Auckland region spent the most on transport per week ($149). The region with the least expenditure on transport was Wellington ($126). However, the Wellington region had the highest proportion of households reporting expenditure on public transport (28 percent). Public transport comprises short distance bus fares and urban train fares.

Region
Proportion of households reporting expenditure
Vehicle fuel (%) Public transport (%)
Auckland 82

12

Wellington 73  28
Rest of the North Island 76

4

Canterbury  79 13
Rest of the South Island 75

5

Total New Zealand

78

11

Note: Vehicle fuel includes petrol and diesel. Public transport includes short distance bus fares and urban train fares.

Expenditure on recreation and culture

The average weekly expenditure on recreation and culture was $97. This expenditure group covers a wide range of items and services, including purchases of audio visual equipment, subscriber television charges, purchases of pets and pet-related products, as well as admission charges related to cultural activities or events. Subscriber television charges was the largest single item within the recreation and culture group at $6.

Households in the Wellington region spent, on average, the most per week on recreation and culture at $120. This made up 11 percent of their total net expenditure. The Rest of the South Island region also spent 11 percent of their total net expenditure on recreation and culture ($106). The Auckland region had the lowest proportion of expenditure on recreation and culture at 9 percent ($95).

Forty-three percent of all households had expenditure on pets and pet-related products (including pet food).

Technology and communication costs

Technology items

Nearly all households have a television. In 2006/07, 99 percent of households had a television, up from 96 percent in 1995/96.

The percentage of households with a VCR dropped from 83 percent in 2003/04 to 76 percent in 2006/07. However, this decrease may be explained by the fact that in 2006/07, 77 percent of households had a DVD player.

Sixty-five percent of households had a desktop computer and 27 percent had a laptop computer, while 4 percent had a hand-held computer. One-fifth of all households had more than one of these types of computer.

Household access to cellphones has continued to increase, with 73 percent of households having access in 2006/07 compared with 59 percent in 2000/01. The increase was particularly noticeable in the bottom two income quintiles. In 2006/07, nearly half (49 percent) the households in quintile 1 had access to a cellphone, compared with just under a third (30 percent) in 2000/01. For quintile 2, the increase was even more marked, with the proportion increasing to 70 percent in 2006/07 from 44 percent in 2000/01.

Graph, Proportion of Households with Cellphone Access.  

Communication costs

Households spent an average of $31 per week on communication. The major component of this group was telecommunication services (such as telephone call charges, line rental, internet charges, and telecommunication packages), which made up 93 percent of total communication expenditure.

The largest components of expenditure on telecommunication services were home line telephone call charges, including toll calls (20 percent), and combined home line rental and other charges (16 percent).

Sixteen percent of households had expenditure on telecommunication packages. This is where combinations of telephone, cellphone, internet and subscriber television are packaged together.

Health expenditure

Expenditure on health made up 2 percent of total household net expenditure, with households spending $23 per week on average. Almost two-thirds of this spending was on outpatient services ($15). Outpatient services includes non-hospital related services such as fees for specialists, general practitioners (GPs), opticians, and dentists. Spending on GP fees and dental fees contributed the most to this category at $3 and $4 per week respectively.

Graph, Average Weekly Household Expenditure on Health.

Expenditure on health was highest for households comprising two people. These households spent on average $9 per week. In contrast, one-person households spent $3 per week. 

Income

Household income

The average annual income from regular sources for New Zealand households was $67,973 in 2006/07. This was an increase of 10.2 percent from 2003/04, driven primarily by wages and salaries (up 17.7 percent), investment income (up 17.4 percent) and other government benefits (up 5.7 percent).

The median annual household income for 2006/07 was $55,976, up 14.3 percent from the 2003/04 figure of $48,835. The median figure means half of the households receive more and half receive less than the stated amount. Medians tend to be less influenced by extreme high or extreme low amounts than averages.

---PDF BREAK---

Household income source
  Average annual household income ($)
Percentage change (%)
 2003/04  2006/07
Wages and salaries 42,685 R 50,235 17.7
Self-employment 5,581 R 4,213 -24.5 
Investments 2,605 R 3,057 17.4 
Private superannuation 587 R 617 5.1 
New Zealand Superannuation and war pensions 3,906 R 3,970  1.6 
Government benefits 3,539 R 3,740  5.7
Other sources 2,764 R 2,141 -22.6 
Total regular income   61,668 R  67,973  10.2

Symbol: R revised. The figures have been revised using updated population weights.

Wages and salaries continued to make up the largest proportion of total household income at 74 percent in 2006/07, up from 69 percent in 2003/04.

The average annual household income from self-employment decreased from $5,581 in 2003/04 to $4,213 in 2006/07. This decrease may be partly explained by an increase in those who have categorised themselves as self-employed, but have reported receiving wage and salary income.

The average annual household income from investments increased from $2,605 in 2003/04, to $3,057 in 2006/07. Income from investments made up 4 percent of total household income in 2006/07, unchanged from 2003/04.

Personal income

For those aged 15 years and over, average annual income from regular sources was $32,833 in 2006/07, up from $29,722 in 2003/04. This was an increase of 10.5 percent.

The average annual income for males increased 5.6 percent, from $37,408 in 2003/04 to $39,491 in 2006/07. The average annual income for females increased 18.2 percent to $26,593 in 2006/07. The increase in male income was primarily due to a $3,612 increase in wage and salary income, while for females the increase was driven by wages and salary income (up $3,781), investments (up $510) and other government benefits (up $362). Likely contributors to this increase in female income were increased female labour force participation, and the introduction of the Working for Families package.

In 2006/07, median annual personal income was $25,367. This represented an increase of 15.2 percent, from $22,019 in 2003/04. The increase in median annual personal income between 2003/04 and 2006/07 was 11.4 percent for males ($29,616 to $33,000), and 12.6 percent for females ($17,833 to $20,085).

Source of income

Proportion of total income (%)
Male

Female

Wages and salaries  77  69
Self-employment 8 3
Investments 4
Private superannuation 1
New Zealand Superannuation and war pensions 4  8 
Other government benefits 3   10 
Other sources 3  4
 

Wages and salaries was the largest source of income for males at 77 percent, followed by self-employment income (8 percent). For females, wages and salaries was also the largest source of income at 69 percent and other government benefits was the next largest source (10 percent).

Material standard of living

Questions on material standard of living were introduced into the survey in 2006/07. Among the information collected, people were asked how satisfied they were with their standard of living, and how adequately their income met their everyday needs.

Most people were satisfied or very satisfied with their material standard of living, regardless of geographic location or level of income. Nationally, 75 percent of households were satisfied or very satisfied with their material standard of living, while only 10 percent were dissatisfied or very dissatisfied. Only 6 percent of households in the Rest of the South Island region were dissatisfied or very dissatisfied with their material standard of living, while the proportion for the Auckland region was 12 percent.

Fifty-one percent of all households reported that their income was enough or more than enough to meet their everyday needs for such things as accommodation, food and clothing. For households with a total income less than $25,800, 31 percent reported that their income was enough or more than enough to meet their everyday needs. This compares with households with a total income of $98,800 and over, where the proportion was 79 percent.

Graph, Adequacy of Income to Meet Everyday Needs.

For technical information contact:
Caroline Brooking or Robyn Jaquiery
Wellington 04 931 4600
Email: info@stats.govt.nz

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