Monday, May 5, 2008

Families on a fast track to disaster

Yesterday's news was unsurprising, but still appalling in its implications: A New Zealand family on the average wage now spends $15 a week more than it earns, as a result of skyrocketing living costs.

The situation has thus changed dramatically since 2004, when the same family earned $23 more than it spent on its bills.

The findings are by Bernard Hickey, the managing director of financial website, and show that the Government would have to deliver a tax-cut package of $4 billion to restore household budgets to 2004 levels.

Needless to say, neither Labour nor National is promising relief of such magnitude.

Mr Hickey shows that weekly expenses for a household on the average income have risen by $193 since April 2004, while net income has increased by just $156 a week. (During the same period, the calculation is that gross incomes have risen from $63,400 to $72,000 a year.)

Mr Hickey says families are either tapping into the equity in their homes or accumulating debt on their credit cards as they struggle to make ends meet.

But how much longer can this go on for? How soon will we be seeing people living in shacks, tents, and packing crates?

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