Wealth split worse than most realise

19:13, Aug 24 2014

It may be time to remix Fred Dagg's We Don't Know How Lucky We Are, to We don't know how unequal we are.

That's because a survey conducted by AUT academic Peter Skilling shows the public underestimates the divide between rich and poor.

Economic inequality is one of the election themes, with Labour and the Greens promising to lift the minimum wage and tax the top 2-3 per cent more in a bid to build a more equal society (see sidebar).

Skilling's research indicates that debate is taking place against widespread voter ignorance about just how unequal our society has become.

He surveyed over 1000 people using the online Buzz Channel market research service.

Skilling found most people thought the top 20 per cent wealthiest New Zealanders owned just over half the wealth (51.8 per cent). The next 20 per cent richest were thought to own 18.3 per cent of the wealth.


The next three quintiles (the bottom three 20 per cent slices of the population by wealth) were thought to own 14.6 per cent, 9 per cent, and, the poorest quintile, 6.3 per cent.

The official figures are quite different.

Skilling says the most recent Statistics New Zealand data indicated the richest 20 per cent of us owned 70 per cent of the wealth, with 18 per cent in the hands of the second richest quintile, and 10 per cent in the hands of the middle quintile. Just 2 per cent was owned by people in the fourth quintile, while the bottom owned nothing.

Skilling then asked how respondents would ideally want wealth to be spread.

The aggregate answer was a split of roughly 30 per cent for the top fifth, roughly 20 per cent each for the second and third fifths, and the last 30 per cent split between the bottom two-fifths.

Skilling said: "The results are really quite simple. People would like it to be a far more equal society, but they also do not understand just how unequal it really is."

It's a conclusion that mirrors findings in similar surveys overseas.

While it seems most want a fairer society, many do not trust the Government to deliver it through policy or likely fear the impact of such policies on their own wallets.

Just over half of respondents (53.9 per cent) said they were concerned a fairer society would "probably come at the expense of higher taxes on middle income New Zealanders, who are struggling already".

But two policies had a fairly broad base of support - lifting the minimum wage and taxing those on "very high incomes" which most people saw as being $150,000 or more.

Both were supported by 65 per cent of respondents.

"People are generally quite in favour of taxing the richest more," Skilling said, "And people are interested in looking after the people at the bottom with a higher minimum wage."

Those surveyed were much closer in their estimate of the minimum wage. On aggregate, people said it was $14.30 an hour, at the time the survey was conducted it was $14.25 an hour.

Skilling also polled attitudes to the poor. A quarter of those surveyed admitted blaming the poor for their predicament, agreeing it was "usually" because they were lazy or made bad decisions. That was also roughly the number (25.3 per cent) who believed economic inequality provided an "incentive" to work hard.

But more than a third (34.1 per cent) believed people were poor for reasons beyond their control, and half felt people's wealth was often due to things like educational advantage.

However, 44.5 per cent felt the rich had usually got there through their own efforts. Most agreed economic inequality led to social problems for all, that while opportunities were not equal virtually anyone could get ahead if they really wanted to, and that the disadvantaged had to work harder than others to overcome obstacles.

Sunday Star Times