The richest 10 per cent own $436 billion of New Zealand's wealth: research
The elite and high-income earners of New Zealand have increased their wealth by almost $200 billion while debt among the poorest has climbed to $7b, a new study of inequality says.
Since the 1980s, inequality has drawn closer to levels seen in more unequal countries such as the United States.
Researchers Max Rashbrooke, Geoff Rashbrooke and Wilma Molano set out to update the the data used to inform the picture of wealth here, burrowing into official statistics.
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Rashbrooke said a 2007 study, itself based on data from the early 2000s, was updated and more analysis was planned for next year.
The net wealth of the top 10 per cent has increased dramatically while the bottom 10 per cent of Kiwis face increasing levels of debt in the billions of dollars, according to apreliminary report for the Institute for Governance and Policy Studies at Victoria University of Wellington.
The net worth (the sum of total assets minus total liabilities) for the country was $815b in 2010, compared to $471b in 2003/4.
That in itself isn't that surprising, but Rashbrooke says the preliminary research showed a widening gap between rich and poor, a large increase in the net wealth of the richest tier and an increase in the debt owed by the poorest.
Research on wealth differs from income because the latter is easier to measure.
Unlike in other countries, the Government does not tax, for example, inheritance or capital gains, so extracting information from the tax system is not done in New Zealand.
Researchers are trying to plug those gaps.
When the official study was started in the early 2000s, the bottom 10 per cent owed $5.7b.
The update shows that figure climbing to $7.4b.
At the other end of the scale the top 10 per cent's wealth has increased massively, from $258b to $436b.
Rashbrooke said part of the reason for the increased wealth at the top was probably the housing boom from 2004 to 2010, and the associated drop in prices post-global financial crisis contributing to debt at the bottom.
Another possible reason was an increase in the income gap, with the richest earning more and a larger accumulation of wealth over time.
HIGH INCOMES NOT ENOUGH
The global financial crisis hit the rich too, but the wealth of those at the very top has continued to grow.
New Zealand, on a global scale, continues to surge ahead of other countries in terms of wealth, but the increases tend to accumulate among top and middle income earners.
"That's a huge increase in wealth at the top end. But people are getting further and further into debt at the other end. To know why that's happened we would need to drill into the next level of detail [next year].
"At the two ends of the spectrum people are moving further apart," Rashbrooke said.
Household debt in New Zealand increased since the 1990s but now, for many, incomes were not high enough to match household expenses and, instead, they relied on loans and credit cards, he said.
"We know from other surveys that most people on the spectrum have some kind of housing wealth. It's the most evenly distributed asset. For a lot of people housing is about all they have.
"New Zealanders massively over-invest in property. But investing in the stock market is difficult, and people in New Zealand have quite poor financial literacy.
"What's interesting is there has been a massive increase in wealth but relatively evenly spread.
"A lot of people think we are more equal than others.
"That's a myth. We like to think of ourselves as being a very egalitarian country but it's not true."
University of Auckland Business School professor of economics Tim Hazledine said the research suggested one in eight Kiwis have zero net worth - they don't own anything.
New Zealand was not all bad though.
Poverty rates among the elderly were low and the means-tested pension system was reasonably humane, he said.
"Wealth is more evenly distributed than annual income, which just reflects income is less equally distributed than assets.
"That's quite impressive, that change at the top.
"Middle and lower incomes have stagnated while top incomes have gone up a lot. Since about 2010 and the recovery from the GFC, some very large proportion, has gone to the top."
Researchers interrogated recently available data gathered by Statistics New Zealand, which spanned several years, on family circumstances, income and employment.
Some of the figures point to a slight reduction in wealth among the richest people in the country, although the super-wealthy are unlikely to have been captured.
"Naturally, despite best efforts by the interviewers, and best practice survey design, respondents may not always be completely accurate, for various reasons.
"It is likely, based on international work, that the very wealthy may be somewhat under-represented," the paper says.
The researchers aim to present in-depth findings in 2016.