The True State of our Nation
Which side of the track are you on?
Two reports were released this week, together they show the true state of our nation. The Ministry of Social Development released the official Household Income Report and the National Business Review (NBR) released the NBR Rich List.
Unsurprisingly, politicians rushed to put their spin on the reports. The National Party reacted to the report by saying it showed that:
“The Government’s focus on strengthening the economy is delivering for New Zealand families and household.”
Meanwhile the Labour Party responded saying:
“National claims to be delivering for New Zealanders. This report puts the lie to that.”
Wait a minute. Are they reading the same report?
Yes. But when they read it they’re looking for evidence, either that all is well in the world and the government can take credit for that, or that everything is terrible and it’s all this government’s fault.
The truth, as usual, is something different again and this morning I turned to some trusted commentators to find what that truth is.
Tl:dr The truth is that inequality soared in New Zealand in the mid-1980s and 1990s and it has shifted very little since then. Incomes have risen over the last 30 years, although income inequality has persisted. But household inequality after housing costs has risen in the last five years, real incomes for people earning the least in our country are a little lower than they were in the late 1980s and the worst-off people in New Zealand are people renting on a low income.
A Tale of Two New Zealands — Bernard Hickey
Bernard Hickey is the managing editor of Newsroom Pro. He writes about economics and politics and is generally the first person I read every day to get a solid, impartial take on economic policy and news.
Here are some key points from Bernard’s excellent summary of the household income report and the rich list.
What the household income report actually tells us:
- Income inequality before housing costs has been broadly unchanged for the last 20 years, having worsened substantially between the mid 1980s and the early 1990s.
- Inequality after housing costs was significantly worse than before housing costs, and has risen over the last five years versus the early 2000s.
- Real incomes for the bottom decile of income earners were still a little lower in 2016 after housing costs than they were in the late 1980s.
- The poorest rental households with children are in the worst position.
Meanwhile, on the other side of the track, NBR’s Rich List showed that:
- The wealth of New Zealanders worth more than $50 million (a ‘rarified group of 207 households’) each rose by 10 percent over the last year to $80 billion.
- A much larger group of New Zealanders who own their own and other homes (about 60 percent of households) are also doing very well. The value of New Zealand’s homes rose $141 billion in 2016.
The State of Our Nation in 10 Tweets — Jess Berentson-Shaw
Jess Berentson-Shaw is the Head of Research at the Morgan Foundation, she’s spent years studying low income families in New Zealand and yesterday she summarised the new Household Income report in 10 tweets:
1/ New MSD household well-being reports are out. They give us data on no. of people in various types of poverty. There is good, bad & no news.
2/ Good news is older people are still doing well internationally in terms of income and material deprivation (yay super & paid off houses)
3/ There’s income growth for many groups including the bottom, but that may reflect increases in, you guessed it, Super payments (yay Super!)
4/ Income inequality is the same same same as ever (and we still don’t measure wealth inequality)
5/ Housing is still super unaffordable & most unaffordable for those on the lowest incomes (also its damp, mouldy & cold for about 10% of kids)
6/ On housing still, rental sucks, because quality problems are mainly concentrated in rental (mainly private)
7/ Good news! Maybe a decline in income poverty & material hardship for kids since the GFC, but exact size is unclear (thats stats folks!)
8/ Bad news. We still remain pretty bad compared to similar countries on our child hardship rates (+65 doing well though, yay Super!)
9/ Work still not the solution to child poverty we would like it to be (1/3 to 1/2 of children in material hardship from working family)
10/ Progress on the UN Sustainable Development Goal to Reduce Poverty by a Half: Could do way better
11/ In Sum: Super is awesome, see also being over 65. Housing sucks, especially rentals, kids may be bit better, paid work not the solution.
Keeping Poverty & Inequality Stable isn’t Success — Max Rashbrooke
Max’s entire article is worth your time, but he sums it all up powerfully with these points:
- Just maintaining poverty and inequality at their current high levels is a colossal failure.
- Under the previous Labour government both were falling, albeit slowly; that progress has been lost.
- Poverty denies people a fair chance to succeed and leaves permanent scars on children.
- Every day poverty is left unchecked is a day lost, a day in which a child’s life is damaged.
- The fact that these problems have compounded for twenty years makes them worse than if they had sprung up yesterday.
So, now that we’ve cut through the political spin to the truth of the state of our nation, as revealed in these report, what are we going to do about it?
If the report tells us anything, it’s that the status quo isn’t working for people who are doing it tough in our country.
If — like me — you’re on the ‘property-owning’ side of this two-track system, then no matter how hard you are working, or how carefully you feel you have to watch your dollars, what this report also tells us is that we’re on the easy track in our country.
It’s time for us to ask ourselves whether we’re willing to live with getting quietly wealthier as our properties increase in value at the expense of the “poorest renters and their children” who “are struggling to cope with rents for their mouldy and cold private homes, that are rising much faster than wages”.
That’s not the future I want for Aotearoa New Zealand, and that’s why I care about politics so much.
Because this two-track system isn’t the result of ‘personal responsibility’ or ‘individual choices’, it’s the result of decisions made by politicians about our economic rules (including a tax system that ignores one of the biggest sources of wealth in our country).
This is not a new phenomenon — and it’s not all the fault of the current National government (as Max points out, we were on these tracks before they came to power, which is clear in the fact that little has changed in 30 years).
But the current government has been promising change for nearly a decade, and instead they keep delivering more of the same.
That might seem to be working for you and your family, it might even seem to be delivering for me. But it’s very clearly not working for nearly quarter of a million kids in our country. And in my book if it’s not working for them, it’s not working for any of us.
That’s why it’s time to send all the political parties a really clear message that all of us — the wealthy and the comfortable as well as the people who are doing it tough — want real change this election.
And that’s why we are creating Te Ira Tāngata: People’s Agenda for Aotearoa New Zealand: a crowdsourced, people-powered vision for our shared future.
For the past few months, all over New Zealand, people have been hosting meals with strangers, neighbours, friends and family to talk about the future they want for our country.
Starting next week, we’ll be drawing on the insights from those conversations, and working with independent policy experts, creatives, and tāngata whenua to fill in the details for our plan for a fair and flourishing Aotearoa.
If you have ideas about what should be in that plan, but haven’t been able to host or get along to a Kai & Kōrero meal, you still have time (this weekend) or you can watch this space for an invite to the next phase of the vision-process — a mass, online discussion coming up in a few weeks.