Household Economic Survey (Income) 2022

Methodology Information on New Zealand households’ income, housing costs, and material well-being is based on data collected as part of the Household Economic Survey (HES) 2021/22. Changes made to HES questionnaire in 2021/22 Only minor changes were made to the survey we collected data in HES 2021/22 compared with HES 2020/21: The response options for the question on relationships in the household were changed from gendered terms to non-gendered terms. For example, “son or daughter” was changed to “child”. A new option for wages and salaries was added to the overseas income module Partway through collection, phone interviewing was deployed as an option for completing the survey in a COVID-19 restricted environment. After the end of COVID-19 restrictions it was kept as an option, and will continue to be utilised. COVID-19 impact on collection period For a full history of alert level changes, see History of the COVID-19 Alert System (covid19.govt.nz). Data collection for the 2021/22 HES was significantly reduced due to COVID-19 alert level restrictions, lockdowns, and other disruptions, meaning that Stats NZ was unable to conduct face-to-face interviewing for much of the collection period. Phone-based data collection was introduced from February 2022 and face-to-face interviewing resumed in April 2022. Due to the disruption of COVID-19 restrictions to interviewing, we decided to halt the ‘full expenditure’ component of the HES 2021/22. This content will be collected in the HES 2022/23. Household expenditure statistics: Year ended 30 June 2023 will be released in early 2024. During the data collection period, the achieved sample size was reduced from a target of 20,000 households to 10,000 households to better focus the data collection specialist workforce toward collecting a representative sample for the 2021/22 HES, including following up with harder-to-reach households. Interviews occurred in four distinct periods: from July to mid-August 2021, using face-to-face interviewing only for a brief period in January 2022, using face-to-face interviewing only from late-February 2022 to the end of March 2022, using phone-based interviewing only from April 2022 to the end of June 2022, using both face-to-face and phone-based interviewing. At the end of data collection in June 2022, the 2021/22 HES had achieved a sample size of 8,900 households, compared with the reduced target of 10,000 households or the targeted 20,000 households as designed. This smaller-than-designed number of households was further complicated as data collection was not evenly spread across months, or across New Zealand, and was also collected via different collection modes – factors less present in previous years. While the data collection period for both the 2019/20 HES and the 2020/21 HES were also disrupted by COVID-19 alert level restrictions, there was a more significant impact on the 2021/22 HES. For both the 2019/20 HES and 2020/21 HES, the data collection period was reduced from 12 months to nine months, and both collections achieved sample sizes of over 16,000 households. Auckland was especially impacted from September 2021 onwards, as they remained at alert level 4 when other regions moved to lower levels. When the COVID-19 Protection Framework (traffic lights) was introduced in December 2021, Auckland and other parts of the North Island were moved to the Red setting, while the rest of the country moved to Orange. Impact on data quality Impacts of disrupted data collection on statistics produced from the 2021/22 Household Economic Survey details our investigation of the impact of disrupted data collection related to COVID-19 on data quality for the 2021/22 HES. It outlines the analytical approach used to investigate data quality for the year ended June 2022, key results from the analyses undertaken, and limitations that data users should be aware of. Stats NZ determined that the data is fit-for-purpose to support official statistics on household income, housing costs, and child poverty at the national level. However, users should be aware that the reduction in sample size means that the statistics are subject to higher sampling error. Caution is advised in interpreting statistics for subpopulations, where the sampling error and risk of bias is higher. This affects the statistics published in Household income and housing costs: Year ended June 2022 and in Child poverty statistics: Year ended June 2022. Reference and collection period We collect HES data over the course of a year, from 1 July to 30 June. At the interview, the respondent is asked about their income in the previous 12 months. For example, an interview in November 2021 would collect the household’s income and wellbeing in the 12 months from November 2020. This means that households interviewed for the HES 2021/22 survey in 2021 will include some 2020 income, while those interviewed in 2022 will include some 2021 income. Linking admin data The use of admin data in HES requires linking individuals in HES to the IDI spine, a secure dataset to which all datasets in the IDI are linked. This link uses address, address history, name, and date of birth. The ‘link rate’ refers to the proportion of individuals in the HES sample that are successfully linked to the IDI. A high link rate ensures high quality data. The link rate of the overall HES sample in October 2022 to the IDI was 94.1 percent (with a false positive rate of 1.8 percent). The link rate for children is lower than for adults because we do not collect date of birth for children in the HES (although we do ask about age), and there is therefore less information that can be used to successfully link to the IDI. However, this does not affect the child poverty measures because these are determined from household income, which is based on adults in the household. Linking to the IDI enables us to assign admin income data (salaries and wages, and benefits) to all in-scope and eligible individuals aged 15+ from responding households, even if they themselves did not respond to the survey. This increases the number of usable responses in the dataset. Records unable to be linked to the IDI have wage and salary and benefit income imputed to reduce potential bias. External influences Changes in income and housing costs may be influenced by one-off real-world events. Events that could have influenced the HES 2021/22 data are: the COVID-19 pandemic impacted Stats NZ’s ability to conduct face-to-face interviews in respondent’s homes and no other means of interviewing were available. Therefore, interviewing for the HES 2021/22 was not conducted evenly over the whole year. Consequently, the sample size was reduced to 8,900 households from the planned 20,000 households. Users are advised to keep this in mind when analysing year-on-year or changes over time minimum wage had two increases during the reference period, the first being from 1 April 2021 from $18.90 to $20.00, and the second from 1 April 2022 from $20.00 to $21.20. In our data there will be full capture of the 2021 increase, and partial capture of the 2022 increase increases in the starting out and training wage from $15.12 to $16.00 from 1 April 2021 and then to $16.96 effective 1 April 2022 changes to benefit system as part of Budget 2019 that came into effect on 1 April 2020 o section 192 deductions (formerly section 70A) were removed – these had applied to the benefits of sole parents who did not identify the other parent of their child and apply for Child Support o main benefits began to be indexed by adjusting rates annually in line with any upwards percentage movement in the net average wage, rather than the consumers price index o abatement thresholds for main benefits were increased policies implemented as part of government’s response to COVID-19 o increase of $25 in main benefit rates effective 1 April 2020 o Winter Energy Payment for 2020 doubled o the Winter Energy Payment for 2020 was doubled. For 2021 and 2022 it was reduced back to 2019 levels. Some households will have the doubled 2020 payment evident in their income o hours test for the In-work Tax Credit removed effective 1 July 2020 o introduction of COVID-19 Income Relief Payment which was a temporary short-term (up to 12 weeks) support for people who lost their jobs from 1 March to 30 October 2020 because of COVID-19 o introduction of the wage subsidy scheme of which there were five separate iterations implemented over the period of March 2020 – December 2021. These schemes were available to employers and self-employed people who would otherwise have had to lay off staff or reduce their hours due to COVID-19 changes to benefits for 2021 financial year included the following: o Jobseeker Support, Supported Living Payment, Sole Parent Support, NZ Super, Veteran’s Pension, and other main benefits increased 3.1% in line with average wage increase o Supplementary assistance and the Student Allowance increased 1.15% in line with the Consumers Price Index o all main benefit rates increased by $20 per week (after-tax) o paid parental leave increased from $606.46 per week to $621.76 changes to benefits for 2022 financial year included the following: o Jobseeker Support, Supported Living Payment, Sole Parent Support, and other main benefits increased 4.71% in line with average wage increase. o NZ Super, Veteran’s Pension, Student Allowance. Orphan’s and Unsupported Child’s benefit and other supplementary assistance increased 5.95% in line with the Consumers Price Index o all main benefit rates also increased by $15 per week for families with children o Student Allowance increased by $25 per adult, per week o paid parental leave increased from to $621.76 per week to $661.12 o Working for Families tax credits increased o Orphans Benefit and Unsupported Childs Benefit increased by between 12 and 26 percent per week the labour cost index has been increasing. For the year to the March 2022 quarter, it increased 3.0%, (unadjusted 4.2%) unemployment remains at record lows for the reference period of HES 2021/22. In the June 2021 quarter unemployment was at 4%, falling to 3.4% in the September quarter and fell again to 3.2% in the December and March quarters, it rose slightly to 3.3% for the June 2022 quarter introduction of a new tax rate of 39% for those earning over $180,000 effective 1 April 2021 to combat inflation, the Reserve Bank’s Monetary Policy Committee have been increasing the Official Cash Rate throughout the reference period. The remit of the Monetary Policy Committee is to keep inflation between 1% - 3%. The timeline for increases are as follows: o 6th October 2021 increased from 0.25 to 0.50 o 24th November 2021, increased to 0.75 o 23rd February 2022, increased to 1.00 o 13th April 2022, increased to 1.50 o On the 25th of May 2022, the OCR is 2.0. Response rate for HES 2020/21 We set a target achieved sample rate of 70% and aim to achieve at least 20,000 responding households from 28,500 households that are initially selected. However, for HES 2021/22 due to COVID-19 restrictions we were unable to conduct face-to-face interviews for part of the collection period. In the periods we could conduct interviews we achieved complete responses from 8,900 households (overall achieved sample rate of 62 percent). The response rate for HES 2020/21 was 72 percent. Response is also monitored at regional level and by NZDEP2018 status. For the 2021/2022 HES, the disrupted collection meant that there was greater variation across subgroups, and lower achieved sample rates overall. Impacts of disrupted data collection on 2022 Household Economic Survey statistics details further investigation of the response rates in the 2021/2022 HES and how well low response rates were mitigated by weighting. Achieved sample rate compared with the response rate The achieved sample rate (ASR) is calculated as the number of eligible households that responded divided by the total number of dwellings sampled. Essentially, it tells us what percentage of the sample responded to the survey. Eligible responding ASR = ____________________ Ineligible sample + eligible responding sample + eligible nonresponding sample The response rate is effectively an estimate of the proportion of the whole population that would have responded, from those that were eligible. It is calculated as the weighted number of eligible households that responded to the survey divided by the estimated number of total eligible households in the population. Eligible responding population Response rate = ___________________ Eligible responding population + eligible nonresponding population Besides being calculated using the sample, rather than the estimated population, the ASR differs from the response rate because it includes the ineligible dwellings in the denominator. This difference means that the ASR is less sensitive to the classification of household eligibility and is more stable over time than the response rate. Imputation for HES 2021/22 Imputation in HES replaces missing values with actual values from similar respondents. For HES 2021/22, we imputed missing values for the following variables: Income o employment earnings and government transfers where a respondent has not been linked to the IDI o self-employment income where respondent is known to have such but has not provided a value o investment income where respondent is known to have such but has not provided a value. Housing costs o local and regional authority property rates for primary property Person demographics o age o gender o sex at birth o ethnicity o disability status for people over the age of 2 years Sample errors Sample error is a measure of the variability that occurs by chance because a sample rather than an entire population is surveyed. We can calculate the level of uncertainty around a survey estimate by exploring how that estimate would change if we were to draw many survey samples for the same time period instead of just one. This allows us to define a range around the estimate (known as a “confidence interval”) and to state how likely it is that the real value that the survey is trying to measure lies within that range. Confidence intervals are typically set up so that we can be 95% sure that the true value lies within the range – in which case this range is referred to as a “95% confidence interval”. We calculate sample errors using the jackknife method which is based on the variation between estimates of different subsamples taken from the whole sample. The tables below summarise the sample errors between 2016/17 and 2021/22 by income source and housing-cost type. The tables also indicate the variability of the estimates between the six surveys. Customers should take care when interpreting income or housing-costs estimates with sample errors greater than 20 percent – they are statistically less reliable than estimates with sample errors less than or equal to 20 percent. Sampling errors for average annual household income, by income source (for households receiving that source of income) Year ended 30 June 2017-2022 Income source Level sampling error (%) 2016/17 2017/18 2018/19 2019/20 2020/21(R) 2021/22 Wages and salaries 3.9 3.5 1.5 1.6 1.5 2.0 Self-employment 12.8 11.3 8.7 7.0 4.4 5.7 Investments 25.0 27.2 11.4 6.8 6.1 8.7 Private superannuation 21.2 20.4 New Zealand Superannuation and war pensions 2.5 2.0 1.2 1.0 1.0 1.5 Other government benefits 6.3 6.1 2.3 2.8 2.3 3.7 Other regular sources 22.6 14.7 6.9 7.2 7.2 9.0 Total Gross income 3.9 3.7 1.6 1.3 1.1 1.5 R Revised Sampling errors for average weekly household expenditure, by housing cost type (for households with that type of expenditure) Year ended 30 June, 2017 -2022 Expenditure item Level sampling error (%) 2016/17 2017/18 2018/19 2019/20 2020/21(R) 2021/22 Property and ground rent 4.0 4.5 1.9 1.8 1.9 2.8 Other payments connected with renting 17.4 16.0 8.2 11.3 6.9 11.5 Total rent payments 4.4 4.8 2.0 2.0 2.0 3.0 Mortgage principal repayments 6.4 5.3 2.6 2.6 2.6 3.4 Mortgage interest payments 6.9 7.7 3.6 2.9 3.3 3.7 Application and service fees for mortgages 41.5 21.5 16.8 20.8 21.4 29.9 Total mortgage payments 5.4 5.8 2.3 2.3 2.4 2.9 Property rates 3.4 3.0 1.5 1.8 1.6 2.3 Building related insurance 3.8 3.4 2.1 1.7 1.7 2.1 Other housing costs 36.0 29.4 10.8 21.2 13.6 16.4 Total housing costs 3.6 3.9 1.7 1.6 1.9 2.1 R Revised en-NZ