Max Rashbrooke talks to Joanna Wane about his groundbreaking father-and-son research into New Zealand's damaging wealth divide.
You could say it all began around the dinner table. Politics, socialism, inequality, the environment … no topic of conversation was out of bounds in the Rashbrooke household, where the old black and
white TV was always switched off at meal times.
Max Rashbrooke, who's just turned 40, was the baby of the family. Now a noted author and advocate for social change, one of his Ted talks on the flaws in democracy has had more than half a million views. But as a young kid with two opinionated big sisters, he rarely got a word in, unless he and dad Geoff were talking about football.
Instead, he learned to listen and observe – skills that have proved useful in his work as a writer and researcher who's exposed some uncomfortable truths about inequity in New Zealand, a country where people still like to think everyone gets a fair go.
It also gave him plenty of practice at calling out "fake news". Whenever someone challenged the accuracy of a historical fact, or the definition of a particular word, out would come the reference books for what Max describes as a moment of reckoning.
"Even when my parents were renovating, a bookshelf was maintained by the dining-room table so that, in the event of a dispute, there was something on hand to settle it. It never felt combative, but the meaning of words, in particular, was always a great source of debate," he says.
"Growing up in a household where there was a lot of empathy and concern over social issues and about whether or not the world was fair – that was really important. We definitely understood we were lucky to have the upbringing we did, and that in a fair world, those differences would be evened out."
His parents, Geoff and Felicity, still live in the family home in Eastbourne, one of Wellington's lovely seaside suburbs. But it's at Max's urbane Art-Deco apartment in the central city where Canvas sits down with father and son over a meal of spicy Thai takeaways to look back on those formative years and talk about the research project on wealth inequality they've been collaborating on for the past six years.
Their findings tell a disturbing story of an economic divide in New Zealand that's becoming wider and more entrenched with each generation.
An analysis of the most recent data available, from the 2017-18 Household Economic Survey, shows a massive disparity between the top 10 per cent (aged 15 years and over), who have a collective $800 billion in wealth, and the bottom 10 per cent, who owe a combined debt of $13 billion. The richest 1 per cent (about 38,000 people) are worth 68 times more than a typical New Zealander and have a total of $141 billion tucked away in trusts.
Max, whose original research drew from the 2014-15 survey, says the poorest now have essentially the same disposable income after housing costs that they did in the 1980s, while incomes for the richest have doubled. Public perception, however, has yet to catch up.
"People are startled when I point out that the distribution of income and wealth [in New Zealand] is identical to that of the UK. We're still feeding off the good times, in a sense, and running down the reserves of that social cohesion we built up when we had a more egalitarian society because it doesn't look and feel like living in the UK."
Personal wealth isn't the money you earn, but your "net worth". That's calculated by adding up your assets (house, car, KiwiSaver, investments, etc) and subtracting any debts (mortgage, student loan or credit card, etc).
Often, people underestimate where they sit on the scale, assuming they represent the "typical Kiwi", but there are more paper millionaires than you might think. Individual net worth of more than $92,000 puts you above the midpoint; $860,000-plus and you've made it into the top 10 per cent.
To put that into perspective, the median house price in Auckland tipped $1 million for the first time last September, and property prices nationwide have been predicted to rise by as much as 13-16 per cent in the next few months.
Max is a strong supporter of some kind of capital gains or wealth tax but points out that housing is only part of the picture. His latest research shows the wealthiest 10 per cent of New Zealanders hold 59 per cent of all the country's assets. The rest of those in the top half have around 39 per cent, leaving the poorest half of the country with just 2 per cent.
"What I was struck by [in the original research] – and this is coming up and surprising me again in the newer data – is that this is a story about control of the economy," he says. "At the time, there was a lot of talk about housing and that conversation is at fever-pitch right now, which is completely explicable because of how important housing is.
"But the bit of analysis that almost no one had really done before is to look at how different kinds of assets are distributed. And what you discover is that housing is in fact the most evenly distributed of the major kinds of assets. About 65 per cent of the population owns their own house, even though that's being eroded.
"In contrast, assets that come from controlling the actual active economy are almost exclusively the preserve of the wealthiest 10th of the country. Ownership of successful businesses, direct ownership of shares, financial investments, bonds and term deposits – the graph is basically flat as you go up the spectrum. Then with the wealthiest 10 per cent, it goes up like a skyscraper.
"What that shows you is that for all the advances of the past 100 years in human development and the sophistication of modern life, control and ownership of the productive economy has remained vested in a small group of people – which raises real questions about wealth and equality, people's ability to control their lives, and where the proceeds of the economy flow."
The Rashbrookes work closely with Statistics NZ, which provides the raw data. Geoff, an actuary with many years of experience in both the government and private sector, deciphers the data – creating tables of statistics that Max draws on to frame his reports. He plans to release a new book on wealth and the growing divisions in New Zealand society this year.
In his years as a journalist, Max has seen firsthand the realities of life for families falling through the cracks. "I've interviewed people in those situations. It's really grim and it affects multiple generations," he says. "Children are growing up in quite extreme poverty; their lives are very, very difficult – problems at school, problems with debt, damp and cold housing that makes them sick. I look at all those overlapping problems and it really worries me.
