The gap between NZ's rich and poor

Last updated 05:00 18/11/2011
Kirk Hargreaves

Though it is often lauded overseas as an egalitarian society, New Zealand's income inequality statistics are much worse than those of most other developed nations.

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The richest 1 per cent of the population owns three times more than the combined cash and assets of the poorest 50 per cent.

Though it is often lauded overseas as an egalitarian society, New Zealand's income inequality statistics are much worse than those of most other developed nations. More than 200,000 Kiwi children live below the poverty line.

The income gap between rich and poor has been highlighted by the global Occupy Wall Street movement, which is rallying for a more just society and an end to corporate greed.

The movement's Wellington protesters warned yesterday that, if inequality was left unchecked, riots such as those seen in London in August were inevitable.

"We feel pretty comfortable in New Zealand because the issues aren't as bad here as other places, but it is only a matter of time," demonstrator Richard Bartlett, 26, said.

The Dominion Post has investigated the group's claims to measure just how big the gulf is here between the haves and have nots. A Statistics New Zealand report says the richest inhabitants' net wealth runs into tens of millions of dollars, but is "likely to be underestimated".

The report's 2004 data – the latest available – reveals the richest 10 per cent collectively possess $128 billion in wealth, with median individual wealth of $255,000. In contrast, the poorest 10 per cent collectively possess $17.2b, with median individual wealth of $3200. While the richest 1 per cent held 16.4 per cent of the country's net wealth, the poorest 50 per cent owned just 5.2 per cent.

Data from the Organisation for Economic Co-operation and Development shows New Zealand's income inequality climbed dramatically in the 1980s and 1990s after sweeping economic reforms and deregulation of labour markets.

Disparities have plateaued since 2000, largely thanks to Working for Families tax credits, bigger pay packets for middle and low-income earners and declining investment returns for the rich.

But the gap between rich and poor still ranked ninth worst in the developed world in 2008.

Child Poverty Action Group chairman Mike O'Brien said there was enormous disparity.

Parents were turning to food banks and poverty-stricken children were more likely to miss out on doctors' visits because of the cost and to suffer income-related health conditions. "The experience of children in those bottom deciles is, quite frankly, pretty bloody bleak."

NZIER principal economist Shamubeel Eaqub agreed there were pockets of extreme hardship but said New Zealand did not have the same inequality problems as many countries.

"I don't think we have the same abject poverty. I guess that's why the protests have been so small in New Zealand."

Mr Eaqub said there was little point comparing the wealth of the poor to that of the rich, as those with money would always possess more. "The big issue isn't in terms of [whether] low-income people have assets, but if they have enough income to live decently."

Thrift permits modest pleasures and personal pride

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Cecilia Vilimanu works full-time as a caregiver, earning about $25,000 a year.

Careful with money, the 53-year-old does not have a credit card, and the thought of using an instant finance company horrifies her. "I don't have any debts. I never buy anything I can't afford. I save up and then I buy it."

Her clean Housing New Zealand flat speaks of her personal pride, but her pleasures are modest.

She drives an old Toyota Corolla worth about $200.

A keen walker, she recently saved up for a pair of $89 shoes. "They were on special."

Education has always been the key for her family, and she supported her son through a science degree course at Victoria University.

"I made sure he had a roof over his head and food in his tummy, so all he had to worry about was studying."

What the leaders say


John Key says he has always been aspirational for New Zealanders. "New Zealanders should have opportunities to succeed, no matter what their background ... We're focused on growing the economy and creating better jobs with higher wages, so New Zealand families are better placed to get ahead."


Phil Goff says he is not surprised by the figures. "I think most New Zealanders know that New Zealand has become a much more unequal place." Labour would address inequality through its proposed changes to the tax system, which include a new top tax bracket for people earning over $150,000 and a $5000 tax-free threshold.


Co-leader Metiria Turei is unsurprised but dismayed by the figures. "It's families living on the very bare bones, not having enough to feed their kids, and all the social issues that tend to follow." The Greens planned to lift 100,000 children out of poverty by raising the minimum wage, improving Working For Families, insulating houses and increasing access to training.


Don Brash says he is not surprised by the figures but how wealthy someone was did not have a practical effect on what was important day to day. "What's important is having opportunity to make tomorrow better than today through our own efforts. Children should be able to take their share of state education funding to any school of their choice, public or private, thus reducing the inequality between students ..."


Co-leader Tariana Turia says the significant level of income inequality between groups of New Zealanders is well established. "Persistent inequalities are compounded for Maori and Pasifika populations; and are particularly entrenched in an unacceptable incidence of hardship amongst children ... Our focus is ... on restoring our own ability to care for ourselves."

- Wellington


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