On 25 January, as Radio NZ returned to it’s normal broadcasting schedule (and putting away it’s dumbed-down “summer programming” until next December/January), John Campbell had his first interview with John Key’s replacement, Bill English.
Campbell raised several issues with English; the US withdrawal from the TPPA; the Pike River mine disaster; and the housing crisis. At this point, English made this staggering claim;
“We’ve got a government actually with a good record on addressing, in fact, some of the toughest social issues. There may be disagreement over means by which we’re doing it, ah, but our direction is pretty clear. And you know over, certainly heading into election year we think that the approach the government’s developed around social investment, around increasing incomes is the right kind of mix – “
English’s bland assertion that “government actually with a good record on addressing, in fact, some of the toughest social issues” is at variance with actual, real, mounting socio-economic problems in this country.
Key indicator #1: Unemployment
The latest HLFS unemployment stats show an increase from 4.9% to 5.2% in the December 2016 Quarter. However, in all likelihood, the unemployment numbers are actually much, much, higher since Statistics NZ arbitrarily altered the way it calculated what constituted unemployment.
On 29 June 2016, Statistics NZ announced that it would be changing the manner in which it defined a jobseeker;
Change: Looking at job advertisements on the internet is correctly classified as not actively seeking work. This change brings the classification in line with international standards and will make international comparability possible.
Improvement: Fewer people will be classified as actively seeking work, therefore the counts of people unemployed will be more accurate.
The statement went on to explain;
Change in key labour market estimates:
Decreases in the number of people unemployed and the unemployment rate
Changes to the seasonally adjusted unemployment rate range from 0.1 to 0.6 percentage points. In the most recent published quarter (March 2016), the unemployment rate is revised down from 5.7 percent to 5.2 percent
Increases in the number of people not in the labour force
Decreases in the size of the labour force and the labour force participation rate
The result of this change? At the stroke of a pen, unemployment fell from 5.7% to 5.2% for the March 2016 Quarter (and subsequent Quarters).
If the “current unemployment figures” from Stats NZ are reported as “5.2%’, they may well be back to the original March 2016 figure of 5.7%, before the government statistician re-jigged definitions.
Key indicator #2: Housing
– Home Ownership
According to the 1984 NZ Yearbook, in 1981 the number of rental dwellings numbered 25.4% of housing. 71.2% were owner-occupied. Nearly three quarters of New Zealanders owned their homes.
Home ownership reached it’s maximum height in 1991, when it stood at 73.8%. Since then, it has steadily declined.
By 2013 (the most recent census survey), the numbers of rental dwellings had increased to 35.2% (up 33.1% in 2006). Home ownership had decreased to 49.9% (down from from 54.5% in 2006). If you include housing held in Family Trusts, the figure rises to 64.8% of households owning their home in 2013, down from 66.9% in 2006.
Whether you include housing held in Family Trusts (which may or may not be owner-occupied or rented out), home ownership has fallen steady since the early 1980s.
Renting has increased from 25.4% to 35.2%.
More and more New Zealanders are losing out on the dream of home ownership. Conversely, more and more of us are becoming tenants in our own country.
As Bernard Hickey from Interest.co.nz said in December last year;
Nearly two thirds of the 430,000 households formed since 1991 are tenants.
Think about that for a moment. It is a stunning revelation of how the young and the poor have been hit the hardest by the changes in New Zealand since the mid-1980s, and on an enormous scale.
It means two thirds of the kids born in those families grew up in rental accommodation, and more than 80% of those are private rentals (although the Housing NZ homes are often no better). That means they often grew up in mouldy, damp, cold and insecure housing. It’s true that some homes occupied by their owners are also below par, but it’s a much lower proportion and owners have the option to improve their homes through insulation and ventilation.
The NZ$696 billion increase in the value of New Zealand’s houses to NZ$821 billion between 1991 and 2015 means the 64% of owners in live-in houses have also had plenty of financial flexibility to improve those houses. Renters have had no access to that wealth creation and are not allowed to put a pin in the wall, let alone put in a ventilation system or some batts in the ceiling. The take-up for the Government’s home insulation and heating subsidies were vastly higher among home-owners than they were for landlords.
Those 284,000 renting households formed since 1991 have also often been forced to move schools and communities and all the roots that build families because New Zealand’s rental market is so transient.
It illustrates the scale of the fallout from that collapse in home ownership from 1991. Not only has it handicapped the education, health and productivity of a entire generation of New Zealanders, but it is set to magnify the likely growth in pension and healthcare costs of our ageing population. And that’s before the wealth and income inequality effects.
In 2016, the 13th Annual International Demographia International Housing Affordability survey rated New Zealand as one of the most unaffordable housing markets in the world;
The most affordable major housing markets in 2015 are in the United States, with a moderately unaffordable Median Multiple of 3.9, followed by Japan (4.1), the United Kingdom (4.5), Canada (4.7), Ireland (4.7) and Singapore (4.8). Overall, the major housing markets of Australia (6.6), New Zealand (10.0) and China (18.1) are severely unaffordable. (p2)
[…]In New Zealand, as in Australia, housing had been rated as affordable until approximately a quarter century ago. (p24)
A 2014 report by the NZ Institute for Economic Research stated the “the average house price rose from the long-run benchmark of three times the average annual household income to six times“;
The NZIER report refers to several reasons for increasing housing prices; slow supply of land; demographic demand (from ‘Baby Boomers’); and investor demand caused by lack of a capital gains tax. Interestingly, the Report also refers to an “over-supply of finance”;
The loosening of financial standards and rising household debt relative to income has happened over a long period of time. The increase in indebtedness has coincided with rising house prices relative to incomes. This suggests that increased household indebtedness has at least partly contributed to the increasing price of homes. (p14)
Prior to Roger Douglas de-regulating the banking/finance sector, New Zealand banks could only lend depositor’s funds as mortgages.
As a result, mortgage money was “tight”, and scarcity helped keep house prices down. Vendor’s expectations were kept “in check” by scarcity of bank funds. Prior to the mid 1980s, Vendor’s Finance (by way of a Second Mortgage) were commonly-used financial tools to assist house-owners to sell and buyers to complete a purchase.
Once the banking sector was opened up, and monetary policy relaxed, cheap money flooded in from overseas for banks to on-lend to house-purchasers. As property investor, Ollie Newland vividly explained in the 1996 TV documentary, Revolution;
“I got a phone call from my bank manager to say some bigwigs were coming up from Wellington to have a chat with me. I thought it was just one public relations things they do. I had a very small office, it wasn’t much bigger than a toilet cubicle, and those five big fellows crowded in with their briefcases and books and they sat on the floor and the arms of the chairs – I only had one chair in the place – and stood against the walls. Their first words to me were, we’re here to lend you money. As much as you want. For somebody like me, and I’m sure it’s the same for everybody else, to suddenly be told by the bank manager that you could have as much money as you want, help yourself, that was a revelation. We thought we had died and gone to heaven.”
Unfortunately, the side affect of this was to increase vendor’s expectations to gain higher and higher prices for their properties. Combined with recent high immigration, and a lack of a comprehensive capital gains tax, and the results have been troubling for this country;
As well as increasingly unaffordable housing, we – as a nation – are sitting on a trillion-dollar fiscal bomb.
Think about that for a moment.
Little wonder that in September last year, the Reserve Bank issued the sternest warning yet that we were headed for impending economic mayhem;
A sharp correction in house prices represents a key risk to the financial system, and one that is increasing the longer the current boom in house prices persists. A severe downturn in house prices could have major implications for the banking system, with over 55 percent of bank loans secured against residential property. Moreover, elevated household debt levels and a growing exposure of the banking system to investor loans could reinforce a housing downturn and extend reductions in economic activity, as highly indebted households are forced to reduce consumption and sell property.
As with many other individuals, institutions, organisations, business leaders, left-wing commentators, media, political pundits, political parties, the NZIER was (and still is) calling for a comprehensive capital gains tax to be implemented.
Even then, this blogger suspects we may be too late. National (and it’s predecessor, to be fair) have left it far to late and the economic horse has well and truly bolted.
Even a Capital Gains Tax at 28% – New Zealand’s current corporate tax rate – may be insufficient to dampen speculative demand for properties.
Meanwhile, the dream of Kiwis owning their own homes continues to slip away.
Depressingly, New Zealanders themselves have permitted this to happen.
– State Housing
If the Middle Classes and their Millenial Offspring are finding it hard to buy their first home, think of the poorest families and individuals in our communities. For them, social housing consists of packing multiple families into a single house; living in an uninsulated, drafty, garage; or in cars.
Last year, the story of mass homelessness exploded onto our media and our “radar” as New Zealanders woke up to the reality of persistent poverty in our cities;
Although on occassion, the mainstream media found them themselves in embarrassingly ‘schizophrenic’ situations as they attempted to reconcile reporting on our growing housing crisis – whilst raising advertising revenue by promoting “reality” TV programmes that were far, far removed from many people’s own disturbing reality;
According to UNICEF;
295,000 New Zealand kids are living beneath the poverty line, which means they are living in households where income is less than 60% of the median household income after housing costs are taken into consideration.
One way to alleviate poverty is to provide state housing, at minimal rental, to families suffering deprivation. Not only does this make housing affordable, but also strengthens a sense of community and reduces transience.
Transience can have deletarious effects on families – especially on children – who then struggle with the stresses of losing friends; adjusting to new neighbourhoods, and new schools.
A government report states that transience for children can have extreme, negative impact on their learning;
Nearly 3,700 students were recognised as transient during the 2014 year. Māori students were more likely to be transient than students in other ethnic groups.
Students need stability in their schooling in order to experience continuity, belonging and support so that they stay interested and engaged in learning.
All schools face the constant challenge of ensuring that students feel they belong and are encouraged to participate at school. When students arrive at a school part-way through a term or school year, having been at another school with different routines, this challenge may become greater.
Students have better outcomes if they do not move school regularly. There is good evidence that student transience has a negative impact on student outcomes, both in New Zealand and overseas. Research suggests that students who move home or school frequently are more likely to underachieve in formal education when compared with students that have a more stable school life. A recent study found that school movement had an even stronger effect on educational success than residential movement.
There is also evidence that transience can have negative effects on student behaviour, and on short term social and health experience
Writing for The Dominion Post, in April 2014, Elinor Chisholm and Philippa Howden-Chapman pointed out the blindingly obvious;
Continuity of education and supportive relationships with teachers are critical for children’s educational performance.
“Churn” is not good for educational performance or enrolment in primary health care, where staff can ensure children are properly immunised and chronic health problems can be followed up.
It was for this reason that, in our submission on the Social Housing Reform Bill late last year, we strongly recommended that families with school- age children should be excluded from tenancy review.
Secure tenure and stability at one school would allow children the best chance of flourishing. In high- performing countries such as the Netherlands, children are explicitly discouraged from changing schools in the middle of the school year.
The bill had announced the extension of reviewable tenancies to all state tenants (new state tenants had been subject to tenancy review since mid- 2011). However, the housing minister, as well as the Ministry of Business, Innovation and Employment, had made clear that the disabled and the elderly were to be excluded from tenancy reviews.
In our submission, we acknowledged the Government for recognising the importance of secure tenure.
People who are compelled to move house involuntarily can experience stress, loss, grief and poorer mental health. Housing insecurity is also associated with poorer physical health.
National’s policy of ending a state “house for life”; increased tenancy reviews for state house tenants, coupled with the sale of state houses, is inimical to the stabilisation of vulnerable families; the well-being of children in those families; and to communities.
In 2008, Housing NZ owned 69,000 rental properties.
By 2016, that number had dropped significantly to 61,600 (plus a further 2,700 leased). National had disposed of some 7,400 properties.
Between 2014 and 2016, at least 600 state house tenants lost their homes after “reviews”.
This, despite our growing population.
This, despite John Key’s own family having been provided with the security of a state house, and Key enjoying a near-free University education.
This, despite John Key, ex-currency trader, and multi-millionaire, admitting in 2011 that New Zealand’s under-class was growing.
Key indicator #3: Incomes & Inequality
In June 2014, Oxfam reported on New Zealand’s growing dire child poverty crisis;
The richest ten per cent of New Zealanders are wealthier than the rest of the population combined as the gap between rich and poor continues to widen.
Oxfam New Zealand’s Executive Director Rachael Le Mesurier said the numbers are a staggering illustration that the wealth gap in New Zealand is stark and mirrors a global trend that needs to be addressed by governments in New Zealand, and around the world, in order to win the fight against poverty.
“Extreme wealth inequality is deeply worrying. Our nation is becoming more divided, with an elite who are seeing their bank balances go up, whilst hundreds of thousands of New Zealanders struggle to make ends meet,” said Le Mesurier.
Figures for the top one per cent are even more striking. According to the most recent data, taken from the 2013 Credit Suisse Global Wealth Databook, 44,000 Kiwis – who could comfortably fit into Eden Park with thousands of empty seats to spare – hold more wealth than three million New Zealanders. Put differently, this lists the share of wealth owned by the top one per cent of Kiwis as 25.1 per cent, meaning they control more than the bottom 70 per cent of the population.
Oxfam New Zealand’s Executive Director, Rachael Le Mesurier, was blunt in her condemnation;
“Extreme inequality is a sign of economic failure. New Zealand can and must do better. It’s time for our leaders to move past the rhetoric. By concentrating wealth and power in the hands of the few, inequality robs the poorest people of the support they need to improve their lives, and means that their voices go unheard. If the global community fails to curb widening inequality, we can expect more economic and social problems.”
A 2014 OECD report placed New Zealand as one of the worst for growing inequality;
Not only was inequality a social blight, but according to the report it impacted negatively on economic growth;
Rising inequality is estimated to have knocked more than 4 percentage points off growth in half of the countries over two decades. On the other hand, greater equality prior to the crisis helped increase GDP per capita in a few countries, notably Spain.
According to the OECD assessment, income inequality had impacted the most on New Zealand, with only Mexico a close second;
The OECD Report went further, making this “radical” observation;
The most direct policy tool to reduce inequality is redistribution through taxes and benefits. The analysis shows that redistribution per se does not lower economic growth.
The statement went on to “qualify” any suggestion of socialism with a caveat. But the declaration that “analysis shows that redistribution per se does not lower economic growth” remained, constituting a direct contradiction and challenge to current neo-liberal othodoxy.
In August 2015, former City Voice editor, and now NZ Herald social issues reporter, Simon Collins revealed the growing level of child poverty in this country;
The Ministry of Social Development’s annual household incomes report shows that the numbers below a European standard measure of absolute hardship, based on measures such as not having a warm home or two pairs of shoes, fell from 165,000 in 2013 to 145,000 (14 per cent of all children) last year, the lowest number since 2007.
Children in benefit-dependent families also dwindled from a recent peak of 235,000 (22 per cent) in 2011, and 202,000 (19 per cent) in 2013, to just 180,000 (17 per cent) last year – the lowest proportion of children living on benefits since the late 1980s.
But inequality worsened because average incomes for working families increased much faster at high and middle-income levels than for lower-paid workers.
The net result was that the number of children living in households earning below 60 per cent of the median income after housing costs jumped from a five-year low of 260,000 in 2013 to 305,000 last year, the highest since a peak of 315,000 at the worst point of the global financial crisis in 2010.
In percentage terms, 29 per cent of Kiwi children are now in relative poverty, up from 24 per cent in 2013 and only a fraction below the 2010 peak of 30 per cent.
In September 2016, Statistics NZ confirmed the widening of income inequality from 1988 to 2015, between households with high and low incomes;
- In 2015, the disposable income of a high-income household was over two-and-a-half times larger than that of a low-income household.
- Between 1988 and 2015, the income inequality ratio increased from 2.24 to 2.61.
The neo-liberal “revolution” took place from the mid-to-late 1980s. Hardly surprisingly, the rise in income inequality takes place at the same time.
Income inequality dipped from 2004 when Labour’s “Working for Families” was introduced.
However, income inequality worsened after 2009 and 2010, when National cut taxes for the rich; increased GST (which impacts most harshly on low-income families and individuals); and increased user-charges on essential services such as prescription fees, ACC levies, court fees, etc. Increasingly complicated WINZ requirements for annual re-applications for benefits and complex paperwork may also have worsened the plight of the country’s poorest.
Despite all the promises made by the Lange government; the Bolger government; and every government since, our neo-liberal “reforms” have not been kind to those on low and middle incomes.
Key indicator #4: Child poverty
According to Otago University’s Child Poverty Monitor in 2014;
Child poverty has not always been this bad – the child poverty rate in the New Zealand many of us grew up in 30 years ago was 14%, compared to current levels of 24%.
Thirty years prior to 2014 was the year 1984. David Lange’s Labour Party had been elected to power.
Roger Douglas was appointed Minister of Finance. The Member for Selwyn, Ruth Richardson, was also in Parliament, taking notes.
The term “trickle down” entered our consciousness and vocabulary. It promised that, with tax cuts; privatisation; winding back state services; and economic de-regulation, wealth would trickle down to those at the bottom of the socio-economic ladder.
How is that working out for us so far?
So much for the “aspirational dream” offered to us by “trickle down” economics.
Key indicator #5: The Real Beneficiaries
In June last year, Radio NZ reported the latest survey of household wealth by Statistics NZ. It found;
“…the country’s richest individuals – those in the top 10 percent – held 60 percent of all wealth by the end of July 2015. Between 2003 and 2010, those individuals had held 55 percent. The richest 10 percent of households held half of New Zealand’s wealth, while the poorest 40 percent held just 3 percent of total wealth.”
Following hard on the heels of the Stats NZ report, Oxfam NZ made a disturbing revelation;
Three years after her previous public warning, Oxfam New Zealand’s, Rachael Le Mesurier, was no less scathing. Her exasperation was clear;
“The gap between the extremely wealthy and the rest of us is greater than we thought, both in New Zealand and around the world. It is trapping huge numbers of people in poverty and fracturing our societies, as seen in New Zealand in the changing profile of home ownership.”
National minister, Steven Joyce responded. He was his usual mealy-mouthed self when interviewed on Radio NZ about the Oxfam report;
“There’s always inequality but again you have got to look at those reports carefully because in that report a young medical graduate who has just come out of university would be listed as somebody who is in the poorest 20 per cent because they have a student loan.They’ll pay that student loan off in about four years and they’ll be earning incomes of over $100,000 very quickly.
So although they’re in those figures today, they won’t be in those figures in five years’ time.”
Which appears to sum up the National government’s head-in-sand attitude on child poverty and income inequality.
Economist, Shamubeel Eaqub, though, had a different “take” on the issue and warned;
“Every time we see a new statistic on inequality, whether it’s in terms of income, opportunities or wealth, it shows very clearly that New Zealand is being ripped apart by our class system.”
When economists begin to issue dire social warnings, you know that matters have taken a turn for the worse.
So where does that leave our New Dear Leader Bill English with his insistence that “we’ve got a government actually with a good record on addressing, in fact, some of the toughest social issues”?
English’s assertion to John Campbell on Radio NZ, on 25 January, (outlined at the beginning of this story) makes sense only if it it is re-phrased;
“We’ve got a government actually with a good record on addressing, in fact, some of the toughest wealth-accumulation issues. There may be disagreement over means by which we’re doing it, ah, but our direction is pretty clear. And you know over, certainly heading into election year we think that the approach the government’s developed around private investment, around increasing incomes for the wealthiest ten percent is the right kind of mix – “
Not a very palatable message – but vastly more truthful as income inequality continues to wreak appalling consequences throughout our communities and economy.
Otherwise, English appears to reside not so much in the Land of the Long White Cloud, but in the Realm of Wishful Thinking.
Statistics NZ: Owner-Occupied Households
International Demographia: 13th Annual International Housing Affordability
NZ Institute for Economic Research: The home affordability challenge
Monetary Meg: What is vendor finance?
Radio NZ: NZ immigration returns to record level
NZ On Screen: Revolution
NZ Herald: Homelessness rising in New Zealand
Radio NZ: Homeless family faces $100k WINZ debt
UNICEF: Let’s Talk about child poverty
Education Counts: Transient students
Dominion Post: Housing policy will destabilise life for children
Radio NZ: Thousands of state houses up for sale
Housing NZ: Annual Report 2008/09
Housing NZ: Annual Report 2015/16
NZ Herald: Key admits underclass still growing
NZ Herald: 300,000+ Kiwi kids now in relative poverty
Statistics NZ: Income inequality
Law Society: Civil court fee changes commence
Fairfax media: Prescription price rise hits vulnerable
Salaries.co.nz: ACC levies to increase in April 2010
Scoop media: Health Issues Highlighted in Child Poverty Monitor
Fairfax media: Damp state house played part in toddler’s death
NZ Herald: More living in cars as rents go through roof
NZ Doctor: Tackle poverty to fight rheumatic fever
Radio NZ: 10% richest Kiwis own 60% of NZ’s wealth
Fairfax media: Wealth inequality in NZ worse than Australia
Dominion Post: Kids dragged from school to school
Previous related blogposts
This blogpost was first published on The Daily Blog on 7 February 2017.
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“I won’t be wanting to see any hint of arrogance creeping in… One of the big messages I’ll be wanting to give incoming ministers and the caucus is that it is incredibly important that National stays connected with our supporters and connected with the New Zealand public.“ – John Key, 22 September 2014
It appears that Finance Minister, Bill English did not get the memo from Dear Leader Key’s office: “Dont get arrogant!”
On 29 June, near two years after Key’s warning, Bill English’s cockiness has landed him in deep, fetid water when he responded to a question from Labour’s Grant Robertson in Parliament;
Grant Robertson: “Does he agree with the statement of Pope Francis I that “Inequality is the root of social evil”, given that inequality has risen in New Zealand on his watch, and is it not time he got back to confession?”
Hon Bill English: “… There is no evidence that inequality in New Zealand is increasing. “
A day later, interviewed by an exasperated Guyon Espiner, English again denied that inequality was increasing in this country. English’s tortuous mental and verbal gymnastics to deny rising inequality was utterly unconvincing and judging by the tone of his own voice, he wasn’t convincing himself either;
English’s assertion that inequality in New Zealand is not rising beggars belief, when nearly every metric used has come precisely to that conclusion.
From the Salvation Army, last year;
The Children’s Commissioner reported on increasing child-poverty, rising by 45,000 over a year ago to now 305,000 children now live in poverty;
Statistics NZ’s report on the problem was unequivocal – “Between 1988 and 2014, income inequality between households with high incomes and those with low incomes widened“;
1988 – When Rogernomics began in earnest. What a surprise.
Interestingly, income inequality fell slightly in 2004, when Working for Families was introduced by the Clark-led Labour Government. Working For Families was the same policy derided by then-Opposition Finance spokesperson, John Key, as “communism by stealth“.
From the last bastion of “radical marxism”, the OECD, came this damning report on rising inequality in New Zealand impacting on our economic growth;
The Report stated that “rising inequality is estimated to have knocked more than 10 percentage points off [economic] growth in Mexico and New Zealand“.
And even our Dear Leader once admitted that New Zealand’s “underclasses” was growing;
So, is everybody – including Bill English’s boss – wrong?!
Is Bill English the sole voice-in-the-wilderness trying to spread The Truth, whilst everybody else – including faraway OECD – is wrong?!
Or has he run foul of Dear Leader’s prescient warnings not to become arrogant?
Enjoining the poor to ignore hunger and simply “Let them eat cake” did not work out well for a certain person 223 years ago. Bill English may not lose his head over his obstinate refusal to see the world around him – but he may lose the election next year.
So for Bill English, on behalf of those who are low-paid; homeless; unable to afford to buy a home; unemployed; poor; and will be spending tonight in a car or an alleyway, I nominate Bill English for a Foot In The Mouth Award;
Parliament Today: Questions & Answers – June 29
Fairfax Media: Child poverty progress ‘fails’, Salvation Army says
Radio NZ: A third of NZ children live in poverty
Statistics NZ: Income inequality
NZ Herald: Key admits underclass still growing
Office of the Children’s Commissioner:
Previous related blogposts
This blogpost was first published on The Daily Blog on 5 July 2016.
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In the last three years I have been truly outraged and sickened only twice when watching a current affairs/documentary programme. The first was Bryan Bruce’s “Inside Child Poverty“, broadcast back on 22 November 2011.
Bryan presented the viewer with a country of increasing child poverty, disease, low-quality housing; and growing inequality that few of us (except hardcore ACT and National supporters) would have believed possible in a wealthy country like New Zealand. Especially a country which once prided itself on egalitarianism, fairness, and looking after those less fortunate than the privileged Middle Classes.
The second time was just recent – watching TV3’s current affairs programme, The Nation, on 24 May. The one word that came to mind as I watched the episode was: revulsion. Not revulsion at the fact that our once proud egalitarian nation is now one of the most unequal on the face of this planet – but revulsion at the injection of humour in interviews; panel discussion, and levity between the hosts, Lisa Owen and Patrick Gower.
I am not even referring to Patrick Gower “interviewing” Ben Uffindell, editor of the satirical blogsite, The Citizen. Though one certainly has to question why this segment was deemed worthy of insertion? What was the point of suggesting that children living in poverty – many of whom go to school without food (or are given “food” that is of dubious nutritional value); no shoes; no rain coats; or lacking other items which Middle Class families take for granted – would find it funny to be given ice cream or a South American animal?
I recall a legend of someone else trying to “make light” of the plight of the poor. That person suggested cake, in lieu of ice cream.
The highly talented Mr Uffindell has never been invited to comment on other pressing issues and problems confronting our country. So why start with inequality and associated problems with child poverty? A question I posed to The Nation, via Twitter;
So why is levity suddenly the order-of-the-day when poverty and inequality is under the media microscope?
Because we are “just laughing at ourselves” some might say?
No. We are not “laughing at ourselves”. We are laughing at the thought of children, living in poverty, being given free ice cream and llamas.
We are not “laughing at ourselves”. We are laughing at children and families living in poverty – at their expense.
That is the difference.
Funnily enough, there was certainly no humour on The Nation (10 may) when ACT’s Jamie Whyte proposed a flat tax policy. Where was the mirth? The satirical hilarity? Where was the wink-wink-nudge-nudge repartee between The Nation’s hosts?
Any humour must have been lost amongst the rustling sound of $100 bills been eagerly counted…
On top of which, was Torben Akel’s piece on “fact checking” looking at whether or not inequality in New Zealand has increased;
“But first, a bit of good old fashioned fact-checking“, said Patrick Gower, as he introduced Torben Akel’s piece. A pity, then, that no one at The Nation bothered to “fact check” Akel’s reporting.
Bill English stated in the above video,
“Income inequality has not got worse. In fact we’re one of two developed countries where the OECD has recently as yesterday have said it’s stable since 1994. And in fact in the last few years there’s some indications it’s fallen slightly.”
Torben Akel asked for evidence to back up English’s claims;
“What we got was a page lifted from a new OECD report with a graph showing income inequality here in 2010 was less than it was in the mid nineties.”
So the “new” OECD report was based on data, taken in the midst of the Global Financial Crisis and resulting Recession?! Data that was four years old?!
Akel continued with this – and here is the relevant bit;
“As for what had happened in the last few years, we were directed to the Ministry of Social Development’s household incomes report, released last July. And specifically, this graph, which shows why the Beehive [is] so sure our income gap isn’t growing.”
A cover of the Report flashed on our television screens;
The document above is Bryan Perry’s Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011. It used data from Treasury to assess child poverty in this country;
“To calculate disposable income Statistics New Zealand uses the Treasury’s tax-benefit microsimulation model (Taxwell1) to estimate tax liabilities for individuals and benefit units. The resulting personal disposable incomes are summed to give disposable household income. Disposable household income is sometimes referred to as net income or after-tax cash income.”
“The Treasury has also developed a set of weights for use with its HES-based tax-benefit microsimulation model, Taxwell. The Taxwell weights include the number of beneficiaries as one of the key benchmarks, in accordance with Treasury’s primary use for the HES in the Taxwell model. Treasury’s Taxwell weights therefore provide a better estimate, for example, of the number of children in beneficiary families, although to achieve this there has been a trade-off with achieving other benchmarks…”
“We know that the estimates using Statistics New Zealand’s weights consistently under-estimate the number of beneficiaries compared with the administrative data. Generally, the estimates using the Treasury’s Taxwell weights are closer to the administrative data, but the sampling error from the HES can still lead to either or both weighting regimes under- or over-estimating the population numbers. “
The relevance of all this?
As reported back in February, Treasury had under-estimated the level of children living in poverty, as Bernard Hickey wrote on the 28th,
“Treasury and Statistics said in a joint statement they had double counted accommodation supplements in estimates of household disposable income between 2009 and 2012, which meant incomes were over-estimated by NZ$1.2 billion and the number of children in families earning less than 50% of the median income was under-estimated by 25,000.”
For those who want to read the actual Media Statement from Treasury, can be found here: Media Statement: Data error prompts process improvements. Refer to the table headed “Miscalculation – Scale – Key statistics affected”.
Bryan Perry’s revised report can be found here: Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2012 Revised Tables and Figures
27 February 2014. In it, he states,
“The revised trend-line figure is 32.9 compared with 32.7 [Gini Co-efficient] before the corrections. The trend line is still flat.”
(The Gini Co-efficient measures inequality, with the higher the value, the lower the equality in income.)
The”trend line” may still be “flat”, but I submit to the reader that for a family on low income; paying exorbitant rent; in a cold, damp house, with very little food in the pantry and fridge – it matters very little.
What does matter is that since 1984, before the Neo-Liberal “revolution”, the Gini Coefficient was only 28.
It is now 37.7.
We are going in the wrong direction.
So not only are National’s claims not backed up by evidence; not only has data been found to be incorrect; but also Torben Akel and The Nation’s research team missed the obvious; inequality has worsened since 1984.
Falling home ownership rates are another indicator which confirm increasing inequality in this country (and throughout the rest of the world).
The Nation’s comedic episode continued with this exchange between hosts Lisa Owen and Patrick Gower, and panellists, author Max Rashbrooke, and right-wing commentator and National Party cadre, Matthew Hooton;
Lisa Owen: “Let’s change to a lighter note. The Civilian Party. Let’s be clear. That was a bit of fun. It was tongue in cheek, if anyone’s confused about that out there. Do we need this in an election year. Do we need some humour?”
Max Rashbrooke: “Oh I think, absolutely. I mean it’s great to see Ben do his thing with the Civilian [Party].
If there’s a problem though, it’s that some of his policies which he puts out as satire, are actually quite close to reality. I mean he talks about we should tax the poor, more. Well actually, if you add up income tax and gst, people on low incomes are paying pretty much the same proportion of their income in tax as people at the top half. If you added capital gains into that story, the poor are probably paying a bigger chunk of their income than the rich are.”
Patrick Gower: “And, and, I, I agree with you there. Because llamas, in my opinion have been dodging tax for years and years, and until someone moves on that loophole, um…”
[general hilarity ensues]
Then Matthew Hooton had to go spoil it all by getting All Serious again, and witter on about Paradise in Scandinavia with more of his skewed ‘spin’ on those country’s taxation system.
Yup. Poverty and rising inequality. A laugh a minute.
What next on The Nation – point and laugh at people with disabilities?
“Jolly good fun”!
TVNZ’s Q+A on 25 May also had Ben Uffindell as a guest. As usual, his wit was on form. The big, big difference between Q+A and The Nation? On the former, he satirised and poked fun at politicians. On the latter, the targets for laughter were children in poverty.
Draw your own conclusions.
TV3: Inside Child Poverty
Twitter: Frank Macskasy/The Nation
Ministry of Social Development: Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011
Hive News: Inequality data error revealed
Wikipedia: Gini Coefficient
Statistics NZ: 2013 Census – Trend of lower home ownership continues
The Standard: Snapshot of a nation: inequality
Above image acknowledgment: Francis Owen/Lurch Left Memes
This blogpost was first published on The Daily Blog on 25 May 2014.
= fs =
A very insightful piece by Dr Deborah Russell, lecturer in taxation at Massey University, and Labour candidate for Rangitikei, raised a clear picture of the difference between equality and inequality;
There is little doubt that inequality has increased over the last thirty years. In February this year, a bungle by Treasury resulted in child poverty numbers being underestimated by twenty thousand. Income inequality was also underestimated.
Part of the reason has been one aspect of the neo-liberal “revolution”: tax cuts and increased user pays.
New Zealanders could do well to reflect that, since 1986, we have had no less than seven tax cuts;
1 October 1986 – Labour
1 October 1988 – Labour
1 July 1996 – National
1 July 1998 – National
1 October 2008 – Labour
1 April 2009 – National
1 October 2010 – National
At the same time we have had less revenue from SOEs as they were privatised or partially-sold off.
So it’s little wonder that more and more User Pays has crept into our economy/society, such as $357 million in “voluntary” donations for ‘free’ schooling, that parents have to cough up each year. That’s on top of school uniforms, text books, shoes, personal equipment, etc.
The neo-liberal revolution of the 1980s and 1990s didn’t stop, it just became more covert, with incremental increases, so we barely noticed. And when we did notice – such as the increase of prescriptions from $3 to $5 – public opposition was muted. Yet, once upon a time, prescriptions cost 50 cents each, and before that, were free.
An indicator of growing inequality is the level of home ownership in this country. This is a core statistic that cannot be fudged by National’s spin-doctors and their right-wing wannabes/sycophants.
According to the 1986 Census, home ownerships rates in New Zealand was 74.1%, with 23.1% renting.
By 2013, according to last year’s census, the figures had changed radically;
» 49.9% owned their own home (54.5% in 2006)
» 14.8% homes were owned by a Trust (12.3% in 2006)
» A total of 64.8% of households owned their home or held it in a family trust (66.9% in 2006)
» 35.2% were renting/did not own their own home (33.1% in 2006)
As the Census 2006 Housing in New Zealand report stated,
“Over the 2001 to 2006 period the incomes of the majority of private-renter households have for the first time since 1986 increased more quickly than owner-occupier households. This supports the contention that an increasing number of working households on what would previously be considered ‘reasonable’ incomes can no longer access home ownership.
The decline in home ownership rates over the 1991 to 2001 period was significantly greater for younger households than it was for older households. This trend would appear to have continued over the 2001 to 2006 period. The gap between the home ownership rates of couple-with-children households, who have historically had the highest home ownership rates, and other types of households, narrowed over the 1991 and 2001 period, and has continued to narrow over the 2001 to 2006 period. Conversely, the home ownership rate gap between couple-only households and other types of households has widened over both periods, in favour of couple-only households. Home ownership rates as would be expected increase with household income. There are, however, differences between regions, based we suspect, on differences in average house prices by region.”
The upshot is that whilst home ownership rates are in free-fall – unsurprisingly renting is steadily increasing.
National’s response to address our critical housing? To reduce demand – not by building more houses – but by restricting first home owners with a 20% Loan To Value Ratio (LVR). This measure forced a sizeable chunk of house-buyers from the market, whilst local and offshore speculators were allowed free reign.
This is most definitely not what was promised to this nation in the late 1980s, when “trickle down” was supposed to increase our wealth. To the contrary, as the decades slide by, it is more and more apparent that we’ve been cruelly hoaxed.
I am reminded of something John Key said in a speech, when he scathingly condemned the previous Labour government in an election speech on 29 January 2008;
Good question, Dear Leader. Good question.
Postscript – A tale of denial
# 6 – Acceptance?
Radio NZ: Govt disappointed by stats bungle
Fairfax media: Children in poverty vastly underestimated
NZ Herald: Parents fundraise $357m for ‘free’ schooling
NZ 1987-88 Official Yearbook: Table 6.4. TENURE OF DWELLINGS (6.1 Households and dwellings)
Statistics NZ: 2006 Census – Dwelling ownership
Centre for Housing Research: Census 2006 Housing in New Zealand
John Key.co.nz: A Fresh Start for New Zealand
Scoop media: You’re wrong John, there is a housing crisis in NZ
Fairfax media: Housing affordability getting worse
Closer Together-Whakatata Mai: New Zealand’s income inequality problem
This blogpost was first published on The Daily Blog on 21 May 2014.
= fs =
– Focus on Politics –
– Friday 21 February 2014 –
– Brent Edwards –
A weekly analysis of significant political issues.
Friday after 6:30pm and Saturday at 5:10pm
Disagreement about how to reduce poverty and inequality is looming as one of the big debates of election year.
Click to listen: Focus on Politics for 21 February 2014 ( 16′ 38″ )
= fs =
– Nine To Noon –
– Friday 7 February 2014 –
– Kathryn Ryan & Brian Easton –
Income inequality in New Zealand is set to become a central election issue, but is it really getting worse?
Brian Easton offers a solution how to address income inequality. Listen and find out what he suggests.
Click to listen: Brian Easton, Economist ( 13′ 37″ )
Acknowledgement: Radio NZ
(Hat tip: Murray Simmonds)
= fs =
Presenting a short video on economic inequality and implications…
“We feel instinctively that societies with huge income gaps are somehow going wrong. Richard Wilkinson charts the hard data on economic inequality, and shows what gets worse when rich and poor are too far apart: real effects on health, lifespan, even such basic values as trust.”
Note where New Zealand is positioned.
Hardly surprising, is it?
For a better New Zealand…
~ Cleaner rivers
~ No deep-sea oil drilling
~ Less on Roads - more on Rail
~ A Living wage at $20.20/hr
~ Marriage equality - Yay! Got that one!
~ Strong, effective Unions
~ No secret free-trade deals
~ Breakfast/lunches in our schools
~ Introducing Civics into our school curriculum
~ Cut back on the liquor industry
~ A fairer, progressive tax system
~ Fully funded, free healthcare
~ Ditto for education, including Tertiary
~ Fund Pharmac for Pompe's Disease medication & other 'orphan' drugs
~ No state asset sales!
~ Rebuild public TV broadcasting!
~ Keeping farms in local ownership
~ Reduce poverty, like we reduced the toll for road-fatalities
~ State housing for life
~ Jobs, Jobs, Jobs!
~ Stronger communities
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- Letter to the editor – Plunket and the slow strangulation of community organisations
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