Skip to main content.

Household Consumption Expenditure

Environmental Report Card
April 2009; INFO 400

This document is also available in PDF (745 KB)

Summary

Household consumption expenditure measures the volume of expenditure on goods and services by New Zealand households. Household consumption expenditure is a key component of the New Zealand economy, accounting for around 60 per cent of all expenditure on goods and services in New Zealand each year (ie, GDP expenditure) and represents a pressure on the environment.

In general, as household consumption expenditure increases, so too does the use of natural resources (eg, land and water), energy and transport; the generation of waste and greenhouse gas emissions; and air, water and soil pollution.

Although recognising the economic and social aspects of household consumption expenditure, the information in this report card is assessed from an environmental perspective. For example, an increase in household consumption expenditure can be considered positive from an economic and social perspective (eg, a growing economy and an increased standard of living). Conversely, an increase in household consumption expenditure can be considered negative from an environmental perspective (eg, a depletion of natural resources).


CURRENT SITUATION: In the year ending March 2008, real household consumption expenditure in New Zealand was $82.1 billion (ie, in real or volume terms with the effect of inflation removed). On average, real household consumption expenditure per household was about $53,950, and real household consumption expenditure per person was $19,350. The top three household consumption expenditure categories were food and beverages, housing, and transport.

Getting worse

TREND: Two more years of real data are available since we last reported on household consumption expenditure. In that time, New Zealand’s total household consumption expenditure continued to increase, as did expenditure per person and per household. However, the increases were not as large as in previous years.


While increases in total household consumption expenditure are driven in part by population growth, the increases in expenditure per person and per household show New Zealanders are buying a greater volume of goods and services than in the past. This trend is similar to other developed countries.

Rating 3

INTERNATIONAL COMPARISON: In 2006, New Zealand had the 8th lowest household consumption expenditure per person out of 29 Organisation for Economic Co-operation and Development (OECD) countries. New Zealand’s household consumption expenditure per person was 11 per cent less than the OECD average.

FUTURE WATCH: While we don’t yet have data for the year ending March 2009, real household consumption expenditure is expected to decline, following a fall in the June 2008 quarter, and a flat performance in the September 2008 and December 2008 quarters.

Real GDP expenditure is also expected to fall in the year ending March 2009 (NZIER, 2009). Contributing factors include the global recession, drought (reducing dairy production and export volumes), and high mortgage interest rates in the 2008 calendar year dampening household consumption expenditure.

For the year ending March 2010, household consumption expenditure is predicted to increase modestly due to the recent reduction in interest rates, relatively high wage inflation, tax cuts in April 2009, and growing immigration (NZIER, 2009). However, this increase in expenditure may be offset in part by rising unemployment, and resulting caution around increasing household expenditure.

In the longer term, recovery from the recession, population growth and an increase in the share of one-person households (which, on average, use more goods and services per person than larger households) are predicted to drive an increase in total, per household and per person household consumption expenditure.

Introduction

Consumption is the purchase and use of goods and services. Household consumption includes the goods and services we buy and use on a daily basis in our homes, from furniture to household appliances, and the electricity to run them. Household consumption also includes the food and beverages we consume and the transport we use to make our daily trips to and from home.

What is household consumption expenditure?

Household consumption contributes to a large proportion of New Zealand’s total consumption of goods and services. However, it is difficult to measure the physical volume of good and services consumed by New Zealand households. Instead, we measure the expenditure on goods and services by New Zealand households. This is called household consumption expenditure.

There are two ways household consumption expenditure can increase or decrease over time:

  • by changes in the average price of goods and services purchased (ie, inflation or deflation)
  • by changes in the volume of goods and services purchased.

This report card is concerned with changes in the volume of goods and services purchased by households. To report this, the report card uses ‘real’ household consumption expenditure data, which has had the impact of inflation (or deflation) removed. This is why the report card uses 1995/96 prices to report the volume of expenditure on goods and services by New Zealand households. This also allows comparisons to be made through time.

As described in Environment New Zealand 2007, household consumption expenditure can be broken down into nine categories (table 1). For more information about household consumption expenditure see chapter 3 of Environment New Zealand 2007 (Ministry for the Environment, 2007).

Table 1

Household consumption expenditure categories

Category

Description

Food and beverages Retail food and alcoholic and non-alcoholic drinks.
Clothing and footwear Clothing, footwear, and clothing and footwear repairs.
Housing1 Rent, imputed rent of owner-occupied dwellings, rental expenses and maintenance of rental dwellings.
Household goods and services Fuel and electricity for the home, furniture, major appliances, floor cover laying, curtains, textiles and tableware.
Transport New and used vehicle purchase, vehicle repair, maintenance and operation, and purchased transport.
Hotels and restaurants Food and beverages purchased in restaurants, takeaways and accommodation.
Recreation and education2 Government education, private education, holiday recreation, retail recreational goods and gambling.
Health and medical2 Medical services, charges, goods and insurance.
Other goods and services Personal goods and services, post and telephone, and services not classified elsewhere.

Notes:
(1) Housing excludes house purchases and mortgage payments, but does include an estimated rent for owner-occupied dwellings.

(2) The recreation and education category and the health and medical category shown in table 1 are not discussed in depth in this report card, because complete data sets for each category are unavailable. Where they are reported, the two categories are combined.

Source: Statistics New Zealand.

Text box 1: What are environmental report cards?

Environment New Zealand 2007, the country’s second national state of the environment report, provided information from around 115 national-scale environmental data sets. Its primary focus was to report on the 66 national data sets that constitute New Zealand’s core set of 22 environmental indicators. These indicators cover 10 domains: four ‘pressures’ on the environment (consumption, road transport, energy and waste), and six ‘states’ of the environment (air, atmosphere, land, fresh water, oceans and biodiversity).

A key focus of the Ministry for the Environment’s national environmental reporting programme is to produce a series of ‘report cards’ to provide updated information on the indicators reported in Environment New Zealand 2007. This is one such report card.

back to top

About this report card

This environmental report card provides information on recent trends in household consumption expenditure – one of New Zealand’s core environmental indictors. Two more years of data are available since we last reported on this issue in Environment New Zealand 2007.
This report card looks at:

  • real household consumption expenditure on a total, per household and per person basis
  • real household consumption expenditure by consumption category.

The data in this report card is reported in 1995/96 prices. This removes the impact of price change (ie, inflation and deflation), and allows comparisons to be made through time.

Why is household consumption expenditure important?

Households are a major driving force in New Zealand’s economy. Household consumption expenditure is the largest contributor to expenditure on gross domestic product (a measure of economic activity) in New Zealand – in the year ending March 2008, expenditure by households accounted for around 60 per cent of gross domestic product (GDP) expenditure (see figure 1).1

Figure 1
Real household consumption expenditure as a share of real GDP expenditure, 1992–2008 (year ending March, 1995/96 prices)

Real household consumption expenditure as a share of real GDP expenditure, 1992–2008 (year ending March, 1995/96 prices)
Source: Statistics New Zealand, 2008a; Statistics New Zealand, 2008b.

Text description for figure 1.

Household consumption expenditure is widely recognised and used internationally as a good indicator of the pressures that consumption can put on the environment (see next section). It is also easily assessed across countries, allowing international comparisons to be made (see below).

Although recognising the economic and social aspects of this indicator, the information in this report card is assessed from an environmental perspective. For example, an increase in household consumption expenditure can be considered positive from an economic and social perspective (eg, a growing economy and an increased standard of living). Conversely, an increase in household consumption expenditure can be considered negative from an environmental perspective (eg, a depletion of natural resources – see next section).

Environmental impacts of household consumption

As incomes rise so does consumption and demand for more food and beverages, for larger, warmer and more convenient living spaces, for appliances, furniture and cleaning materials, for clothes, transport and energy (European Environment Agency, 2007, p266).

The demand for goods and services by households “is a major source of pressure on resources and the environment” (European Environment Agency, 2001a). Our purchasing choices directly and indirectly involve the consumption of natural resources and the generation of waste, as goods and services are produced and delivered. The purchase of goods and services can also be directly linked to harmful environmental effects (for example, air pollution produced in manufacturing processes).

Generally speaking, as household consumption grows, environmental pressures also grow (Organisation for Economic Co-operation and Development, 2001). Increasing household consumption can reflect:

  • an increasing demand for consumer goods (eg, computers, mobile phones, televisions, kitchen appliances, cars)
  • an increasing demand for the products (eg, detergents) and services associated with those goods
  • an increased use of natural resources (eg, land, water, minerals, plants and animals)
  • an increase in energy use
  • an increase in transport use and a demand for more roads
  • an increase in packaging waste, and overall waste generation
  • air, water and soil pollution, and greenhouse gas emissions associated with increased energy and transport use, and waste management (European Environment Agency, 2001b; Organisation for Economic Co-operation and Development, 2001; Organisation for Economic Co-operation and Development, 2002).

However, the volume of expenditure on goods and services by households is not necessarily a direct measure of the environmental impacts of these goods and services. This is because the links between consumption, economic growth, and environmental impact are not straightforward, for example:

  • producers and consumers can reduce the environmental impact of household consumption by making and purchasing more resource-efficient and lower-waste goods
  • while economic growth can impact on the environment, it can also provide the means to fund public environmental protection expenditure.

Other actions to reduce the environmental impacts of consumption include:

  • specific controls at sites of production, use and disposal
  • transferring demand from higher to lower impact consumption categories
  • improved environmental information and labelling
  • green public procurement
  • market-based instruments (European Environment Agency, 2007).

In Europe, consumption categories identified as causing the greatest environmental impacts when their full life cycle is considered are food and beverages, private transport and housing (including energy consumption and construction) (European Environment Agency, 2007).

Closer to home, New Zealand households:

  • accounted for a third of electricity used in New Zealand in the March 2007 year (and this doesn’t include the electricity used to produce the goods and services that households consume) (Ministry of Economic Development, 2008)
  • are buying an increasing number of electronic goods – in 2006/07, 74 per cent of households had a computer,2 up from 47 per cent in 2000/01,3 and 73 per cent of households had a mobile phone, up from 59 per cent in 2000/01 (Statistics New Zealand, 2001a; Statistics New Zealand, 2007a).

Because New Zealanders also purchase imported goods and services, our household consumption patterns can contribute to environmental impacts in other regions of the world (eg, deforestation, biodiversity loss, impacts on flows of materials, and depletion of fish stocks) (Organisation for Economic Co-operation and Development, 2001).

Although developed countries have made some progress in reducing the environmental impacts of their consumption, environmental pressures from consumption continue to grow in Organisation for Economic Co-operation and Development (OECD) member countries (Organisation for Economic Co-operation and Development, 2001).

Text box 2: Factors affecting household consumption expenditure

Demography and household consumption expenditure

A number of demographic factors affect household consumption expenditure in New Zealand. Household consumption expenditure tends to increase with an increase in:

  • population size
  • the number of households
  • the number of one-person households.

The more people and households there are, the higher the consumption of goods and services. Household size is also important – on average, one-person households use more goods and services per person than larger households (European Environment Agency, 2001b). For example, it takes the same amount of electricity to heat a living room for three people as it does for one person.

Between 1992 and 2008, the population of New Zealand increased by 21 per cent (see the dark blue line in figure 2). In this same period, the number of households increased by 27 per cent (see the light blue line in figure 2) and the share of one-person households also increased (between 1991 and 2006, the share of one-person households increased by 14 per cent) (Statistics New Zealand, 2004; Statistics New Zealand, 2007b). Consequently, between 1992 and 2008, the average number of persons per household in New Zealand decreased by 5 per cent, to 2.79 (see the orange line in figure 2).

Figure 2
Households, population and persons per household in New Zealand, 1992–2008

Households, population and persons per household in New Zealand, 1992–2008

Source: Statistics New Zealand, Unpublished a; Statistics New Zealand, Unpublished b.

Text description for figure 2.

Other factors affecting household consumption expenditure

Other factors affecting household consumption expenditure patterns include:

  • increasing incomes and growing wealth
  • globalisation and the availability and affordability of goods and services
  • new technologies (eg, the internet and mobile phones)
  • individual choices (Ministry for the Environment, 2007; European Environment Agency, 2007).

For more on this, see Environment New Zealand 2007 (Ministry for the Environment, 2007).

In the March 2008 year, on average, real household consumption expenditure was $53,943 per household and $19,350 per person.

Key findings

Household consumption expenditure (total, per household and per person)

Current situation

In the year ending March 2008, real household consumption expenditure in New Zealand was $82.1 billion (table 2).4 On average, real household consumption expenditure per household was $53,943, and real household consumption expenditure per person was $19,350.

Table 2
Real household consumption expenditure (year ending March 2008, 1995/96 prices)

Category Total household
consumption expenditure
(million $)
Household consumption
expenditure per household
($)
Household consumption
expenditure per person
($)
Food and beverages 13,989 9,195 3,299
Housing1 13,586 8,930 3,203
Transport 12,542 8,244 2,957
Household goods and services 10,970 7,211 2,587
Other goods and services 9,241 6,074 2,179
Hotels and restaurants 5,989 3,937 1,412
Clothing and footwear 4,406 2,896 1,039
Recreation and education and health and medical combined2 12,860 8,453 3,032
Net tourist expenditure3 -1,518 -998 -358
Total4 82,065 53,943 19,350

Notes:

  1. Housing excludes house purchases and mortgage payments, but does include an estimated rent for owner-occupied dwellings.
  2. The recreation and education category and health and medical category are combined because complete data sets for the individual categories were unavailable.
  3. Many of the categories include expenditure in New Zealand by non-residents but exclude expenditure overseas by New Zealand residents. However, this is adjusted for in net tourist expenditure, which is expenditure overseas by New Zealand residents less expenditure in New Zealand by non-residents.
  4. Due to rounding, figures may not add to totals shown.

Source: Statistics New Zealand, 2008a; Statistics New Zealand, Unpublished a; Statistics New Zealand, Unpublished b.

Trend

Long-term trends (1992–2008)5

Long-term real data shows that between 1992 and 2008, New Zealand’s total household consumption expenditure increased by 76 per cent. In this time, household consumption expenditure per person increased by 46 per cent, and household consumption expenditure per household increased by 39 per cent (table 3 and figure 3).

Table 3
Real household consumption expenditure, 1992 and 2008 (year ending March, 1995/96 prices)

Household consumption expenditure 1992 2008 Percentage change between 1992 and 2008
Total expenditure ($ million) 46,549 82,065 76%
Per household ($) 38,829 53,943 39%
Per person ($) 13,278 19,350 46%

Source: Statistics New Zealand, 2008a; Statistics New Zealand, Unpublished a; Statistics New Zealand, Unpublished b.

Household consumption expenditure per person

Getting worse

Between 1992 and 2008, real household consumption expenditure per person increased by 46 per cent.

In the period 1992–2008, New Zealand’s population increased by 21 per cent (see figure 2). Although this increase in population accounts for some of the increase in total household consumption expenditure noted above, it does not account for all of it.

Between 1992 and 2008, per person real household consumption expenditure increased by 46 per cent (or $6,072) (table 3 and the orange line in figure 3). This means that, on average each New Zealander is consuming a greater volume of goods and services than in the past. This is consistent with what has happened in other OECD countries – according to the OECD, “per capita private consumption has increased steadily in OECD countries over the last two decades, and is expected to continue to follow GDP growth in the period to 2020” (Organisation for Economic Co-operation and Development, 2002).

Household consumption expenditure per household

Between 1992 and 2008, the number of households in New Zealand increased by 27 per cent (see figure 2). Again, this trend accounts for some of the increase in total household consumption expenditure, but not all of it.

Between 1992 and 2008, real household consumption expenditure per household increased by 39 per cent (or $15,114) (table 3 and the light blue line in figure 3). This means that, on average, each household in New Zealand is consuming a greater volume of goods and services than in the past.

Figure 3
Real household consumption expenditure, 1992–2008 (year ending March, 1995/96 prices, 1992 = 100)

Real household consumption expenditure, 1992–2008 (year ending March, 1995/96 prices, 1992 = 100)

Source: Statistics New Zealand, 2008a; Statistics New Zealand, Unpublished a; Statistics New Zealand, Unpublished b.

Text description for figure 3.

Household consumption expenditure and GDP expenditure

Economic growth and household consumption expenditure are closely linked – as described in the introduction, household consumption expenditure is a large component of GDP expenditure (see figure 1).

Between 1992 and 2008, real GDP expenditure and real household consumption expenditure both increased, but at different rates – real GDP expenditure increased by 73 per cent, while real household consumption expenditure increased by 76 per cent (see the solid light blue and dashed light blue lines in figure 4). As expected, household consumption expenditure increased as GDP expenditure increased, but since 2005, household consumption expenditure has increased at a faster rate than GDP expenditure. This is seen in figure 4 where the three solid household consumption expenditure lines (total, per household and per person) cross the three dashed GDP expenditure lines.

Not only are New Zealand households on average consuming a greater volume of goods and services than in the past, they are accounting for an increasing share of GDP expenditure than in the past (see figure 1).

Figure 4
Real household consumption expenditure and real GDP expenditure, 1992–2008 (year ending March, 1995/96 prices, 1992 = 100)

Real household consumption expenditure and real GDP expenditure, 1992–2008 (year ending March, 1995/96 prices, 1992 = 100)

Source: Statistics New Zealand, 2008a; Statistics New Zealand, 2008b; Statistics New Zealand, Unpublished a; Statistics New Zealand, Unpublished b.

Text description for figure 4.

Recent trends (2006–2008)

Two more years of data are available since we reported household consumption expenditure in Environment New Zealand 2007 (see the new data presented in figure 3). Over that time, total household consumption expenditure in New Zealand continued to increase, as did household consumption expenditure per person and per household.

The rate of increase has slowed, however – figure 3 shows the rates of increase in total, per household and per person household consumption expenditure all easing off in the past two years, compared to the two years before. For example, between 2004 and 2006, total household consumption expenditure increased by 9.8 per cent, while between 2006 and 2008, it increased by 6.1 per cent.

Household consumption expenditure is also reported quarterly by Statistics New Zealand – in the March 2008 quarter, total household consumption expenditure decreased by 0.5 per cent, the first quarterly decline since the June 2004 quarter (Statistics New Zealand, 2009a).6 For more on this and quarterly changes in household consumption expenditure beyond March 2008, see the Future watch section below.

Household consumption expenditure by category

Current situation

Table 4 provides a breakdown of household consumption expenditure by category in New Zealand for the year ending March 2008.7 Again, the data are reported in 1995/96 prices to remove any inflationary effect, and allow comparisons to be made through time. The top three consumption categories for the year ending March 2008 were food and beverages (accounting for 16.7 per cent of household consumption expenditure), housing (16.3 per cent),8 and transport (15 per cent) (see figure 5). As noted above, in Europe, these three consumption categories are identified as causing the greatest environmental impacts when their full life cycle is considered (European Environment Agency, 2007).

Figure 5
Real household consumption expenditure (year ending March 2008, 1995/96 prices)

Real household consumption expenditure (year ending March 2008, 1995/96 prices)


Note: Due to rounding, figures do not add up to 100 per cent.
Source: Statistics New Zealand, 2008a.

Text description for figure 5.

Trend

Long-term trends (1992–2008)

Between 1992 and 2008, household consumption expenditure in New Zealand increased across all categories (table 4 and figure 6). During this time, food and beverages, housing and transport have consistently been the top three expenditure categories. In 2006, the food and beverage category overtook the housing category for the top place, where it has remained since (table 4 and figure 6).9 This trend may reflect greater discretionary income and an increase in expenditure beyond that of basic necessity to ‘luxury’ food and beverage items. It may also reflect increased incomes in low income households, enabling increased expenditure on basic necessity food and beverage items.

Table 4
Real household consumption expenditure by category, 1992 and 2008 (year ending March, 1995/96 prices)

Categories

1992
(1995/96 $)

2008
(1995/96 $)

Percentage change
between 1992 and 2008

Food and beverages
Expenditure (million $) 8,045 13,989 74%
Per person ($)  2,295  3,299 44%
Per household ($) 6,711 9,195 37%
Housing
Expenditure (million $) 10,704 13,586 27%
Per person ($) 3,053 3,203 5%
Per household ($) 8,929 8,930 <0.5%
Transport
Expenditure (million $) 7,034 12,542 78%
Per person ($) 2,006 2,957 47%
Per household ($) 5,867 8,244 41%
Household goods and services
Expenditure (million $) 4,948 10,970 122%
Per person ($) 1,411 2,587 83%
Per household ($) 4,127 7,211 75%
Other goods and services
Expenditure (million $) 5,307 9,241 74%
Per person ($) 1,514 2,179 44%
Per household ($) 4,427 6,074 37%
Hotels and restaurants
Expenditure (million $) 3,172 5,989 89%
Per person ($) 905 1,412 56%
Per household ($) 2,646 3,937 49%
Clothing and footwear
Expenditure (million $) 2,208 4,406 100%
Per person ($) 630 1,039 65%
Per household ($) 1,842 2,896 57%

Source: Statistics New Zealand, 2008a; Statistics New Zealand, Unpublished a; Statistics New Zealand, Unpublished b.

Figure 6
Per person real household consumption expenditure by category, 1992 and 2008 (year ending March, 1995/96 prices)

Per person real household consumption expenditure by category, 1992 and 2008 (year ending March, 1995/96 prices)

Source: Statistics New Zealand, 2008a; Statistics New Zealand, Unpublished a.

Text description for figure 6.

There has been a shift in expenditure patterns across the household consumption categories between 1992 and 2008. The volume of expenditure in some categories has grown at a faster rate than others (table 4 and figure 7). For example, between 1992 and 2008, expenditure per person increased by:

  • 83 per cent on household goods and services (eg, electricity, home appliances, furniture) (see the dark blue line in figure 7)
  • 65 per cent on clothing and footwear (see the light blue line in figure 7)
  • 56 per cent on hotels and restaurants (eg, restaurant meals and hotel accommodation) (see the orange line in figure 7).

Figure 7
Real household consumption expenditure per person by consumption category, 1992–2008 (year ending March, 1995/96 prices)

Real household consumption expenditure per person by consumption category, 1992–2008 (year ending March, 1995/96 prices)

Source: Statistics New Zealand, 2008a; Statistics New Zealand, Unpublished a.

Text description for figure 7.

The proportion of household consumption expenditure in some categories also changed from 1992 to 2008:

  • in 1992, housing accounted for 23 per cent of household consumption expenditure per person; by 2008 it had dropped to 16 per cent
  • in 1992, household goods and services accounted for 10 per cent of household consumption expenditure per person; by 2008 it had risen to 13 per cent
  • there was also a 3 per cent increase in the share of expenditure per person in the combined ‘recreation and education’ and ‘health and medical’ categories (from 12 per cent in 1992 to 15 per cent in 2008)10 (Statistics New Zealand, 2008a).

The share of household consumption expenditure for the other five categories (food and beverages, clothing and footwear, transport, hotels and restaurants, and other goods and services) remained largely the same between 1992 and 2008 (Statistics New Zealand, 2008a).

The shifts in expenditure patterns across the consumption categories over this period may reflect higher levels of income and therefore higher levels of discretionary expenditure (eg, on hotels and restaurants and certain household goods and services, such as non-essential appliances).

Recent trends (2006–2008)

Two more years of data are available since we last reported this indicator in Environment New Zealand 2007. In these two years, total household consumption expenditure increased across all consumption categories (Statistics New Zealand, 2008a). In these same two years, household consumption expenditure per household and per person increased in all except two categories – hotels and restaurants and transport (see figure 7 for per person changes).

The rate of per household and per person expenditure on hotels and restaurants slowed in the year ending March 2007 compared to the previous five years (the orange line in figure 7). In the following year (ie, the year ending March 2008), per household and per person expenditure on hotels and restaurants dropped very slightly.

In the year ending March 2007, per household and per person expenditure on transport fell (the red line in figure 7). This fall in expenditure on transport is reflected in the decrease in the distance travelled (also known as vehicle kilometres travelled, or VKT) per person by road in the 2006 calendar year (Ministry of Transport, 2008).

However, per household and per person expenditure on transport increased in the year ending March 2008 (figure 7). In the 2007 calendar year, VKT per person also increased (Ministry of Transport, 2008). For more on the VKT environmental indicator see the Ministry for the Environment’s 2009 Vehicle Kilometres Travelled by Road Environmental Report Card (Ministry for the Environment, 2009).

back to top

International comparison

In 2006, New Zealand had the 8th lowest household consumption expenditure per person out of 29 OECD countries.

Household consumption expenditure is widely recognised and used internationally as a good indicator of the pressures that consumption can put on the environment. It is also easily assessed across countries, allowing international comparisons to be made.

Latest OECD data for 2006 shows that New Zealand’s household consumption expenditure was US$15,300 per person, 11 per cent less than the OECD average of US$17,000 (Organisation for Economic Co-operation and Development, 2008). Figure 8 shows New Zealand’s per person household consumption expenditure ranking in the OECD, along with the top and bottom three ranked countries. Overall, New Zealand had the 8th lowest household consumption expenditure per person out of 29 OECD member countries. The United States had the highest household consumption expenditure per person in the OECD, at more than twice that of New Zealand.

Countries with similar per person household consumption expenditure to New Zealand in 2006 included Sweden and Finland. Looking to our closest OECD neighbour, Australia’s household consumption expenditure per person in 2006 was 29 per cent higher than that of New Zealand, and Australia had the 8th highest household consumption expenditure per person in the OECD.

While having the 8th lowest household consumption expenditure in the OECD may be considered good from an environmental perspective, it may not be considered good from a social perspective (in terms of people’s standard of living) or from an economic perspective.

Figure 8
Household consumption expenditure per person among OECD countries, 2006 (current prices)

Household consumption expenditure per person among OECD countries, 2006 (current prices)

Note: Numbers on the x-axis represent a ranking among 29 OECD countries.
Source: Organisation for Economic Co-operation and Development, 2008.

Text description for figure 8.

Case study

Weekly household expenditure in the regions

A Household Economic Survey is carried out by Statistics New Zealand every three years. The 2006/07 Household Economic Survey sampled approximately 4500 households from urban and rural areas throughout New Zealand. The survey collects income, expenditure and demography information on households and individuals (Statistics New Zealand, 2007a).

The results of the survey are broken down into five regions: Auckland, Wellington, the rest of the North Island, Canterbury, and the rest of the South Island. Information was gathered across 12 expenditure groups: food, alcohol and tobacco, clothing and footwear, housing (eg, rent and mortgage payments) and housing utilities (eg, household energy), household contents and services, health, transport, communication, recreation and culture, education, miscellaneous goods and services, and other expenditure (Statistics New Zealand, 2007a).

For the year ending June 2007, the survey found that New Zealand’s average weekly household expenditure was $956. New Zealand’s average weekly household income for the June 2007 quarter was $1445, therefore on average each household spent two-thirds of its income (Statistics New Zealand, 2007c).

Of the five regions, Wellington had the highest average weekly household expenditure at $1103, which was 15 per cent higher than the national average, followed by Auckland at $1046. The ‘rest of the North Island’ had the lowest average weekly household expenditure at $818 (figure 9).

In this same period, average weekly incomes per person for these five regions in New Zealand followed the same pattern as regional weekly household expenditure shown in figure 9 (ie, Wellington had the highest weekly income per person followed by Auckland, and ‘rest of the North Island’ had the lowest)(Statistics New Zealand, 2008d). The more you earn, the more you spend, therefore it is reasonable to expect Auckland and Wellington to show the highest levels of spending of the surveyed regions (Statistics New Zealand, 2001b).

Figure 9
Average weekly household expenditure in New Zealand, year ending June 2007

Average weekly household expenditure in New Zealand, year ending June 2007

Source: Statistics New Zealand 2007e.

Text description for figure 9.

The three largest components of weekly household expenditure in 2006/07 were housing and household utilities (ie, household energy) (23 per cent on average), food (16 per cent on average), and transport (14 per cent on average) (Statistics New Zealand, 2007a). As might be expected these top three weekly household expenditure groups echo the top three household consumption expenditure categories for the year ending March 2008, as reported above (ie, food and beverages, housing and transport).

Of all the regions, Wellington spent the most on housing and household utilities, a third higher than the national average, followed by Auckland (Statistics New Zealand, 2007d). The Auckland region spent the most on food (13 per cent higher than the national average), followed by Wellington (Statistics New Zealand, 2007d). The Auckland region spent the most on transport (9 per cent above the national average), followed by the rest of the South Island (Statistics New Zealand, 2007d). Although it had the highest average weekly household expenditure, the Wellington region spent the least on transport (7 per cent below the national average) (Statistics New Zealand, 2007d).

back to top

Future watch

Household consumption expenditure and recession

This section draws on Statistics New Zealand’s most recent quarterly snapshots of the performance of the economy, and a recent NZIER economic forecast for New Zealand (Statistics New Zealand, 2009b; NZIER, 2009).

New Zealand’s real GDP fell 0.3 per cent in the March 2008 quarter, 0.2 per cent in the June 2008 quarter, 0.5 per cent in the September 2008 quarter, and 0.9 per cent in the December quarter,11 placing New Zealand’s economy in recession (Statistics New Zealand, 2009c).12

Contributing factors include:

  • the global recession
  • drought, reducing dairy production and export volumes
  • high mortgage interest rates in the 2008 calendar year dampening household consumption expenditure (NZIER, 2009).

The last time the New Zealand economy contracted for four consecutive quarters was in 1989/90 (Statistics New Zealand, 2009d).

Reflecting these recent contractions in real GDP, real household consumption expenditure fell by 0.5 per cent in the March 2008 quarter,13 by 0.2 per cent in the June 2008 quarter, and remained flat in the September 2008 and December 2008 quarters (Statistics New Zealand, 2009a).

Given these quarterly results, real household consumption expenditure is expected to fall in the year ending March 2009. New Zealand’s real GDP expenditure is also forecast to fall, by 1.5 per cent for the year ending March 2009, due to falls in real household consumption expenditure, investment and net exports (NZIER, 2009).

For the year ending March 2010, household consumption expenditure is predicted to increase modestly due to the recent reduction in interest rates, relatively high wage inflation, tax cuts in April 2009, and growing immigration (NZIER, 2009). However, this increase in expenditure may be offset in part by rising unemployment. Although New Zealand entered the recession with the lowest unemployment rate on record (3.4 per cent), the unemployment rate is predicted to rise above 6 per cent by March 2010 (NZIER, 2009). This is a conservative estimate, and other forecasters predict a higher rise in unemployment (NZIER, 2009). This trend, along with concerns about job security, is likely to lead to caution around increasing household expenditure (NZIER, 2009). If unemployment rates rise beyond that predicted, households may choose to increase their precautionary savings levels, and exercise further caution around expenditure.

In line with predictions for household consumption expenditure, real GDP expenditure is forecast to resume growth for the year ending March 2010, albeit slowly (NZIER, 2009). It is estimated that the New Zealand economy will take four years to recover from recession and return to an annual GDP growth of 3 per cent (NZIER, 2009).

Household consumption expenditure, population and changing demography

New Zealand’s population is projected to increase by 12 per cent between 2008 and 2021 (Statistics New Zealand, 2007e).14 The number of households in New Zealand is also projected to increase over this period (Statistics New Zealand, 2005). Total household consumption expenditure is likely to increase in line with these increases, however, in the short term this may be offset by households exercising caution in expenditure due to the recession (see the previous section).

The trends in the increasing share of one-person households and reducing household size are also projected to continue. By 2021, the share of one-person households is projected to rise to 26.5 per cent,15 and the average household size is projected to drop to 2.4 persons per household (Statistics New Zealand, 2005). If these trends do continue, household consumption expenditure is likely to continue to increase on a per person basis.

back to top

Further information

For further information on household consumption expenditure see Environment New Zealand 2007 at: www.mfe.govt.nz. For information on practical steps to reduce your household consumption visit: www.mfe.govt.nz/publications/ser/enz07-info-sheets-jun08/enz07-household-consumption-info-sheet-jun08.pdf.

Statistics New Zealand releases three-monthly snapshots of the performance of the economy, including household consumption expenditure at: www.stats.govt.nz/methods_and_services/information-releases/gross-domestic-product.aspx.

back to top

Technical notes

Limitations of the indicator

The recreation and education category and the health and medical category are unable to be discussed in depth in this report card, because complete data sets for each category are unavailable. Where they are reported, the two categories are combined.

The volume of expenditure on goods and services by households is not necessarily a direct measure of the environmental impacts of these goods and services. This is because the links between consumption, economic growth and environmental impact are not straightforward, for example:

  • producers and consumers can reduce the environmental impact of household consumption by making or purchasing more resource-efficient and lower-waste goods
  • while economic growth can impact on the environment, it can also provide the means to fund public environmental protection expenditure.

However, household consumption expenditure is widely recognised and used internationally as a good indicator of the pressures that consumption can put on the environment. It is also easily assessed across countries, allowing international comparisons to be made.

back to top

References

European Environment Agency. 2001a. Environmental Signals 2001: European Environment Agency Regular Indicator Report. (Retrieved 28 October 2008).

European Environment Agency. 2001b. Indicator Fact Sheet Signals 2001 – Chapter Household: YIR01HH03 Household number and size. (Retrieved (22 October 2008).

European Environment Agency. 2007. Europe’s Environment: The Fourth Assessment. Copenhagen: European Environment Agency. (Retrieved 9 March 2009).

Ministry for the Environment. 2007. Environment New Zealand 2007. Wellington: Ministry for the Environment.

Ministry for the Environment. 2009. Vehicle Kilometres Travelled by Road Environmental Report Card. Wellington: Ministry for the Environment. (Retrieved 9 April 2009).

Ministry of Economic Development. 2008. New Zealand Energy Data File June 2008. Wellington: Ministry of Economic Development.

Ministry of Transport. 2008. Transport Volume / Vehicle Fleet. TV003 Road VKT per capita. (Retrieved 12 November 2008).

NZIER (New Zealand Institute of Economic Research). 2009. Quarterly Predictions March 2009. Media release, Monday 2 March 2009. (Retrieved 3 March 2009).

Organisation for Economic Co-operation and Development. 2001. OECD Environmental Outlook. Paris: OECD Publishing.

Organisation for Economic Co-operation and Development. 2002. Towards Sustainable Household Consumption? Trends and Policies in OECD Countries. Paris: OECD Publishing.

Organisation for Economic Co-operation and Development. 2008. HCPC: Per head, US $, current prices, current PPPs. P31S14: Final consumption expenditure of households 2006. (Retrieved 15 October 2008).

Statistics New Zealand. Unpublished a. DPEA.SEEC: Population of New Zealand, Year ended 31 March, 1992–2008. Data set provided by Statistics New Zealand for the purpose of this environmental report card, 24 September 2008.

Statistics New Zealand. Unpublished b. National Accounts Household Population, Year ended 31 March, 1987–2008. Data set provided by Statistics New Zealand for the purpose of this environmental report card, 24 September 2008.

Statistics New Zealand. 2001a. Household Economic Survey. Year ended 30 June 2001: Highlights. (Retrieved 6 April 2009).

Statistics New Zealand. 2001b. Average Weekly Expenditure by Income Group of Household. Year Ended 30 June 2001. (Retrieved 1 April 2009).

Statistics New Zealand. 2004. One-person Households in Private Occupied Dwellings by Dwelling Ownership Status. Table 6.0. (Retrieved 13 November 2008).

Statistics New Zealand. 2005. Subnational Family and Household Projections 2001 (base) – 2021Update. (Retrieved 22 October 2008).

Statistics New Zealand. 2007a. Household Economic Survey: Year ended 30 June 2007. (Retrieved 12 November 2008).

Statistics New Zealand. 2007b. QuickStats About Housing: 2006 Census. (Retrieved 13 November 2008).

Statistics New Zealand. 2007c. New Zealand Income Survey: June 2007 Quarter – All Tables. Table 9. (Retrieved 5 March 2009).

Statistics New Zealand. 2007d. Household Economic Survey: Year ended 30 June 2007 – All tables. Table 3. (Retrieved 6 April 2009).

Statistics New Zealand. 2007e. National Population Projections: 2006 (base) – 2061. All Tables. Table 1. Projected Population of New Zealand 1991–2061 (2006-base). (Retrieved 6 April 2009).

Statistics New Zealand. 2008a. Gross Domestic Product: September 2008 Quarter – QGDP(E) Chain-volume. Table 1B2: Household Consumption Expenditure by Purpose, Actual Chain-volume Series Expressed in 1995/96 Prices. (Retrieved 2 March 2009).

Statistics New Zealand. 2008b. Gross Domestic Product: September 2008 Quarter – QGDP(E) Chain-volume. Table 1A1: Expenditure on Gross Domestic Product, Actual Chain-volume Series Expressed in 1995/96 Prices. (Retrieved 2 March 2009).

Statistics New Zealand. 2008c. Gross Domestic Product: September 2008 Quarter – QGDP(E) Current Prices. Table 2B2: Household Consumption Expenditure by Purpose, Actual Current Prices. Retrieved from .

Statistics New Zealand. 2008d. New Zealand Income Survey: June 2008 Quarter – Supplementary Tables. Table 6. (Retrieved 13 November, 2008).

Statistics New Zealand. 2009a. Gross Domestic Product: December 2008 Quarter – QGDP(E) Chain-volume. Table 1B4: Household Consumption Expenditure by Purpose. Seasonally Adjusted Chain-volume Series Expressed in 1995/96 Prices. (Retrieved 1 April 2009).

Statistics New Zealand. 2009b. Gross Domestic Product: December 2008 Quarter – Hot off the Press. (Retrieved 1 April 2009).

Statistics New Zealand. 2009c. Gross Domestic Product: December 2008 Quarter. Table 1.1 Gross Domestic Product: Revisions Summary. (Retrieved 1 April 2009).

Statistics New Zealand. 2009d. Gross Domestic Product: December 2008 Quarter – QGDP(P) Chain-volume. Table 1P1: Gross Domestic Product by Industry, Seasonally Adjusted Chain-volume Series Expressed in 1995/96 Prices. (Retrieved 3 March 2009).

back to top


 

1. Other categories of GDP expenditure include central and local government expenditure, capital accumulation by producers, and expenditure by private non-profit institutions serving households (eg, sports clubs; art and culture organisations; education providers such as kindergartens; social service providers; churches; environmental lobby groups; trade unions; and charitable trusts).

2. This includes desktop computers, laptop computers and hand-held computers.

3.Note that the 2001 Household Economic Survey asked about ‘home computers’ only, rather than desktop, laptop and hand-held computers.

4. Note that in current prices, household consumption expenditure in New Zealand for the year ending March 2008 was $101,143 million, household consumption expenditure per household was $66,483 and household consumption expenditure per person was $23,849 (Statistics New Zealand, 2008c; Statistics New Zealand, Unpublished a; Statistics New Zealand, Unpublished b).

5. Trends are described from 1992 onwards, as this is when Statistics New Zealand’s ‘estimated resident population’ data set starts.

6. This fall in the March 2008 quarter was offset by increases in the previous three quarters, which resulted in an overall increase in household consumption expenditure for the year ending March 2008 (figure 3).

7. The recreation and education category and the health and medical category are excluded from detailed discussion because complete data for each category is unavailable.

8. Housing excludes house purchases and mortgage payments, but does include an estimated rent for owner-occupied dwellings.

9.When the 2008 household consumption expenditure data is not adjusted for inflation, housing is the top expenditure category for 2008.

10. We cannot report any more detail than this because complete data sets for each category are unavailable.

11.These quarterly percentage changes are based on production-based real GDP. This, rather than expenditure-based GDP, is the preferred measure for quarter-on-quarter change because it has historically shown less volatility (Statistics New Zealand, 2009b).

12. The common definition of recession is two consecutive quarters of economic contraction.

13. This fall in the March 2008 quarter was offset by increases in the previous three quarters, which resulted in an overall increase in household consumption expenditure for the year ending March 2008 (figure 3).

14. This population projection is the fifth (ie, middle) of nine population projections by Statistics New Zealand. It assumes medium fertility and mortality rates, and a net annual migration of 10,000.

15. In 2006, the share of one-person households was 23 per cent (Statistics New Zealand, 2007b).