Almost 700,000 New Zealanders are stuck in a cycle of disadvantage - a preventable "stain" on the country. Photo / 123RF
Are you jobless, or with no high school qualification? Are you renting, or a sole parent? Are you Māori or Pasifika, or living in Counties Manukau?
If you answered “yes” to any or more than one of these questions, you’re much more likely to be mired in the cycle of disadvantage that casts a shadow on almost one in five New Zealanders, according to an in-depth analysis by the Productivity Commission.
And those chances skyrocket to two out of three if you’re an unemployed sole parent, or three in five if you live in a South Auckland Pasifika household, or if you’re Māori and renting.
These are among the data points the commission has been crunching for more than two years for its inquiry into persistent disadvantage in New Zealand, a country that’s considered to have a level playing field.
That would mean everyone in the country, regardless of where they live or their background or circumstances, had access to everything they need to lead a decent life. More than just having enough money, it means a decent home, good health and social connection, cultural identity and belonging, job opportunities and stable families.
But there are deep pockets of persistent disadvantage, the commission says, defined as any one of three types of disadvantage over a prolonged period, whether for two years, a lifetime or intergenerational.
There’s being excluded (lacking identity, belonging and connection); being deprived (lacking the means to live a fulfilling life); or being in poverty (income poor).
Almost 700,000 New Zealanders, or 18.2 per cent of the population - defined as peak working age (25-64) households - are stuck in a cycle of disadvantage. About one in 20 (172,000 people) experience more than one type of disadvantage on an ongoing basis.
This is a preventable stain on the country, commission chairman Dr Ganesh Nana says, and one that can be removed with the right political will.
“It’s a wake-up call,” he told the Herald. “We’d all recognise there are going to be some who would be disadvantaged, but the numbers are quite stark. One in five don’t have the opportunity to pick themselves up from their own bootstraps because of barriers, whether it be in the public management system or in the broader system.
“We are not all starting from the same start line.”
The commission’s latest analysis, diving deeper into the numbers, shows that almost one in three (32.4 per cent) Pacific people experience ongoing deprivation, but this jumps to 46 per cent for Pacific households in Counties Manukau.
One of the factors is overcrowded households; 29.5 per cent of Pacific people live in a household with multiple families, which greatly increases the likelihood of being deprived, though it reduces feelings of exclusion.
Controlling for larger households, as well as how young and urban the Pacific population is, actually shows Pacific households are “no more likely than non-Pacific households to be persistently income poor or excluded”.
“In other words,” the commission says, “personal and household characteristics were of greater significance in explaining Pacific people’s experience of persistent disadvantage than ethnicity per se.”
The in-depth breakdown follows the recent release of the commission’s report, A Fair Chance For All, which looked at data from the 2013 and 2018 census as well as the 2016-2021 household economic survey.
It found that most New Zealanders live their lives free from disadvantage, and for the 60-odd per cent of us who don’t it’s only a temporary experience.
But Nana says the sheer number of those languishing in disadvantage makes a mockery of the notion that many could simply work harder, but choose not to lift themselves up.
“If it was a very small number, we could go with an argument that they may be making choices, but this is a very large group. For a chunk for a relatively large chunk of the population, they don’t have those genuine opportunities and choices.
“‘A fair chance’ is an illusory concept for many in Aotearoa New Zealand.”
The most common form of persistent disadvantage was being left out (8.8 per cent or 337,000 people), followed by being income poor (7.4 per cent or 283,000 people) and then doing without (6.9 per cent or 265,000 people). One in 250 people experienced all three in both census years.
The chances of experiencing one form are three and a half times higher than average if you don’t have a high school qualification or are renting a state house, two and half times higher if you’re Pacific, twice as high if you’re a sole parent, 1.7 times higher if you’re disabled and 1.5 times higher if you’re Māori.
“We haven’t made conclusions around why people are disadvantaged in the first place,” Nana says.
“The fundamental questions about what triggers people into disadvantage, whether it be a loss of job or [in a child’s] first thousand days - there are snippets of that there, but the data is just not available.”
It’s not the first report to flag similar demographics who are more likely to be struggling.
Stats NZ’s 2021 wellbeing report shows groups with life satisfaction below the average (7.7) rating include: disabled people aged 15-64 (6.4), solo parents (6.6), the unemployed (6.7), people with a household income of $30,000 or less (7.1), LGBT+ people (7.1), renters (7.3) and Māori (7.3).
And Treasury’s 2022 wellbeing report, Te Tai Waiora, identified disabled people, sole parents, and Māori and Pacific Peoples as “overrepresented in groups of people that experience low well-being in multiple areas”.
“Much income poverty and material hardship is recurrent, particularly for people without qualifications and people on benefits. On average, someone on benefit today can expect to spend 12 more years on benefit between now and when they turn 65.”
And it’s intergenerational, Treasury says.
“Children raised by parents with low wellbeing do less well at school and tertiary levels than children of more advantaged parents. Patterns of educational success help explain why children of rich parents are more likely to become rich themselves and the children of poor parents are more likely to become poor.”
Treasury identified a number of areas contributing to a crescendo of issues for younger Kiwis: an increasing number of children not attending school; growing numbers of children without basic literacy and numeracy skills; “rapidly increasing levels of psychological distress” among teenagers and young adults; and, with more and more people in their 30s and 40s without their own home, “rental housing among the least affordable in the OECD”.
In the sharp words of Treasury secretary Caralee McLiesh: “For the first time in recent history, there is a possibility that the next generation won’t be better off.”
McLiesh cites a 2018 OECD study that found New Zealand rated above average for life satisfaction, ahead of Australia and the UK.
“However, our ability to provide health, education and welfare services, fund institutions, invest in housing and preserve the natural environment all depend on the economy performing well. Compared with other developed countries in the OECD, our productivity rates are poor. Lifting our productivity is essential to improving services and protecting our environment.”
For Nana, improving productivity and lifting hundreds of thousands of people out of deprivation are intertwined - but unfettered market forces are not the solution.
“Economists make a lot of noise about choice because we believe if we make the choices, then the market will work out a way to meet those choices. But if we start from a position where some don’t have those genuine choices or opportunities, then we need to think carefully about the allocation decisions that the markets are making,” he says.
“That means we need to, for want of a better word, intervene.”
Successful intervention, he adds, would lift productivity because it would transform hundreds of thousands of people living a life well below their best into fully participating members of their communities and the wider economy.
There have been various attempts to do this across successive governments, from Helen Clark’s “whole-of-government” Reducing Inequalities policy to Sir Bill English’s “social investment“ approach targeting the most impoverished via early interventions and better use of data, to Dame Jacinda Ardern’s Wellbeing Budget in 2019 and child poverty reporting, which is required under legislation.
While acknowledging these efforts, Nana’s summation is of a “disturbing ... collective reluctance to shift the dial”.
“I do not hide my frustration that, despite their best intentions, successive governments have failed to successfully address persistent disadvantage. Well-meaning interventions and programmes ranging from the ad hoc and piecemeal to paternalistic directives with implied finger-pointing and victim-blaming have not succeeded. And, so, this stain stubbornly remains.”
The commission’s report identifies four main barriers in the public service and government - power imbalances (those who are relatively well-off looking after themselves), siloed and fragmented ministries and agencies (top-down, single-focus, risk-averse), short-termism (blind to the bigger picture), and institutional racism and discrimination, including the ongoing impact of colonisation.
“Demographic and geographic inequities are evident across our education, housing, justice, welfare and health sectors. These social and economic differences have a significant and direct influence on the extent to which particular groups of people are more or less likely to experience disadvantage in their lives,” the commission’s report says.
The report was released at the same time as the political brouhaha about the merits of the “equity adjuster score” for surgery waiting lists. The score was used in an algorithm to prioritise patients according to clinical priority, time spent on the waitlist, geographic location (isolated areas), deprivation level and ethnicity. In the latter category, Māori and Pacific were top of the list.
The political posturing was unfortunate and a sign of the looming election, Nana says, but the existence of inequities in health, education and justice is nothing new.
The barriers can be smashed down, he says, by first defining what the level playing field should look like. That includes setting minimum standards to alleviate poverty, vulnerability and social exclusion.
What that looks like is up to the government of the day, but he sees merit in a minimum income “as part of that social floor”.
“Whether you use the living standards framework or whether it’s human rights obligations - a right to shelter, a right to food - it would make sense to make that explicit so that we recognise that, whatever it is, we don’t take it for granted and we need to work towards it.”
And that is best done by centrally-supported, locally-led, place-based solutions that honour Te Tiriti o Waitangi - which is also a central tenet of the future of local government report, released at the same time as A Fair Chance For All.
“Te Tiriti o Waitangi is a foundational constitutional document and we all have a responsibility to honour the Crown’s obligations under te Tiriti,” says Nana. “We are not advocating for one dominant approach to be replaced by another. We are arguing for a more pluralistic and multicultural approach.”
Given the general contention over co-governance, is New Zealand ready to take such a step?
“We need to be able to have more mature conversations, a national conversation about our values, which might sound like an airy-fairy talkfest, but we think it’s necessary to get the conversation out of the toxic comments on articles and social media and into face-to-face discussions across a wide range of society.”
The commission highlighted the work of particular programmes, including Manaaki Tairāwhiti and the Southern Initiative in South Auckland, which both put whānau at the centre and provide multi-agency support to meet complex, interrelated needs.
“Those are the programmes that we need to scale up even more, and we need to give licence to continue that innovation, to actually fund them a lot better because one of the downsides, as the Office of the Auditor-General points out, is that they’re funded for the short term,” says Nana.
“They’re inevitably underfunded and under-resourced despite what they are doing in terms of designing new innovative programmes and engaging with their communities.”
Government accountability mechanisms also need an overhaul, he says. Currently they mean “the appearance of doing something is often more important than the reality”.
The commission recommends a Social Inclusion Act, which would require future governments to have short- and long-term objectives to reduce persistent disadvantage. This would complement similar requirements in the Child Poverty Reduction Act.
It also calls for cross-party consensus for reducing persistent disadvantage, and a Wellbeing of Future Generations Act with a parliamentary commissioner, which would ensure an ongoing advocate for intergenerational equity.
Nana is acutely aware of the possibility of the commission’s report being consigned to gather dust on a shelf somewhere. It wouldn’t be the first time such a report met such a fate; his report even notes how many of the recommendations for transformational change in the welfare, justice and mental health and addiction sectors have been ignored.
There is also a perception the commission is too left-leaning, which the report does little to dispel. A social floor is akin to the Greens’ policy of a basic minimum income. Incorporating Māori values of wellbeing could be dressed up as co-governance. And the report’s “wellbeing” tone has strong Ardern vibes. Nana was also involved in costing Labour’s 2017 manifesto policies, while productivity commissioner Dr Bill Rosenburg was the policy director for the Council of Trade Unions for over 10 years.
When Nana was appointed as commission chairman, Act leader David Seymour called him an outspoken critic of capitalism, adding: “We’re not going to be able to afford better pharmaceuticals or a cleaner environment if we simply ignore it and decide to measure nebulous concepts like loneliness, inclusion and identity.”
Seymour told the Herald the latest report was “a good example of why the Productivity Commission needs to go”.
“It recommends more of the ‘whole of Government’ approach that has failed for the past six years. The report focuses on identity politics, the kind of metastasised postmodernism where identity matters more than common humanity. Everyone and no one ends up being responsible for their actions.”
National Party leader Christopher Luxon did not respond to a request for comment.
Nana says future governments of any colour would do well to consider the report’s details.
“Some might see it as tainted, but I would push back quite strongly on that. Well-being is unfortunately a politically-tainted word in the New Zealand vocabulary, but it’s being used across the world in terms of objectives for economic and social policies,” he says.
“The OECD uses wellbeing. The IMF uses wellbeing. New Zealanders are being maybe a little bit naive in thinking that wellbeing is just a hobby horse for the left. It goes across the political spectrum.”
In any case, he says, the status quo has done little and will continue to do little to shift the dial.
“As policy advisers, it’s incumbent on us to make these recommendations and make a very strong case for why they need to be picked up. Many of our recommendations in terms of past inquiries have not been picked up immediately. But what we find is they are picked up eventually.”
The next government will formally respond to the report, but Finance Minister Grant Robertson appeared lukewarm about the prospect of a Social Cohesion Act that would bind future governments in a similar way as the child poverty reduction law.
“As a general comment, I would say legislation is helpful. But we’ve also got to make sure - with the amount of time and energy we have - whether that’s the best approach or whether there are other policy initiatives we can take,” he told the Herald.
“We’re not ruling it out, but you’ve got to think about how much resource you’ve got and what the priority is.”
And his thoughts on the significant number of Kiwis stuck in a cycle of disadvantage?
“There are many different ways of measuring that number. For example, we use material deprivation within the child poverty settings [the latest figures show 120,000 children experiencing material hardship]. We are seeing that trending in the right direction [from 11.3 per cent to 10 per cent].
“One of the reasons I’m here, and many other of my colleagues are here, is to try to make a difference in giving people the opportunities they should have.”
Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery and is a former deputy political editor.
Expectations tempered around return to surplus in 2027/28.