KEY POINTS:
More than half of New Zealand's total net worth is now owned by the richest 10 per cent of the population.
A new survey by Statistics NZ suggests that the distribution of wealth has become even more unequal in 2003-04 than in the previous survey in 2001, when the richest 10 per cent owned only 48 per cent of the country's total wealth. They now own 52 per cent.
This forum debate has now closed. Here is a selection of your views on the topic.
Goby
Come on NZ don't knock it, if you want a piece of the pie you have got to give it ago. If you like where you are don't grizzle, give admiration to these people who have taken a risk. Lets not pull everyone down who sticks their head out.
Dwayne
It interesting that this discussion has quickly deteriorated into a slagging match between the far left and the far right. I am all for capitalism. It gives people choices and the freedom to determine their lives, has allowed many great products and service to be developed, and is the most efficient means by which the relative value and supply of goods and services are determined. It is also a great money spinner – which is an advantage to socialists wishing to tax this activity to ensure social goals are met. Capitalism is a socialist government's best friend. There will always be a disparity between what people earn – those that take risks and undertake enterprise, or have some advantage that allows them to earn more should be rewarded for their efforts. Differences in wealth should be expected and accepted. Society should also ensure that all of its members are able to live decently – not equally – but of a decent fashion. Massive excesses of wealth and poverty should never be allowed to exist. Everyone has there own limit as to where they think the line should be drawn. For me, we are approaching that line.
Lw
Some people assess material wealth as riches - some of us dont. Happiness, health and shelter are some of our goals - not just the pointless acquisition of money and assets. Hhow much does one person actually need to be able to enjoy the many wonderful experiences available in NZ? You dont need a $100k launch to enjoy the sea - a dingy and a couple of rods is plenty. Climbing to the top of Tongariro doesnt cost a lot - just a pair of sturdy legs (and shoes) nor does watching the All Blacks, reading the best books from the public Library, visiting Art Galleries or listening to world class music. Talk to your grandparents about what they have really valued in their lives ... its probably not the new car - he tangata he tangata.
Evan Barlow
What is really shocking is that the median net worth at retirement is only $150k, and that seems to include property! That means the average person (median net worth) probably doesn't own their own home. The distribution of wealth doesn't seem unusual. Perhaps it is a little unusually evenly distributed. In these types of statistics, you would expect the 80/20 rule to apply, where 80 per cent of the wealth is owned by the top 20 per cent. It wouldn't surprise me if the wealth is inefficiently evenly distributed, and holding back the median.
Lee
This is no surprise to me. I returned to New Zealand recently, for the first time in many years, and the disparity of wealth struck me immediately. Of course, this is the result of deliberate economic policy over the last two decades, and not some "law of nature" that we must conform to, even though proponents of neoliberalism do their best to hide this fact. As anyone who has bothered to investigate knows, the Nordic economic model (e.g. the Swedish system) is the best way to raise the overall standard of living. Countries that follow this model of organization have consistently ranked at the top of the UN's Human Development Index. Of course, critics have argued that such a system is unsustainable, but the fact that they have been predicting imminent doom for decades demonstrates how laughable such claims are. If we want to raise New Zealand's standard of living, then that is the best way to go. Of course, a minority of New Zealanders would do less well under that system than the current system, and it is that vocal minority which is responsible for much of the misinformation on the topic. Nevertheless, New Zealand ought to be run for the benefit of the majority of New Zealanders and not for the privileged few. If we want to improve things, the Nordic model is the only proven way of doing so.
David
Person A earns $100k. He invests 5 per cent of it for a year at an annual rate of 10 per cent.Person B earns $50k. He invests 5 per cent of it for a year at an annual rate of 10 per cent. At the end of the year, person A will be richer than person B. Do this for several years and person A will be a lot wealthier than person B.Our current government believes this is wrong and person A should not be able to invest the 5 per cent. Instead, he should give some or all of it to person B.
Raki Hutcheson
Good grief I've never seen so much dribble and diarrheic comments about the "rich getting richer and the poor getting poorer". Who cares. Most well to do and successful NZer's have succeeded because of calculated risks, passion for their product and the ability to "think outside the square". I applaud them quite frankly.
Angela
The gap between the rich and the poor is not so big like other developed countries. Hence it is not too bad.
Karl Rohde
You are what you think you are. Being poor is a state of mind; where as being broke is a short term financial position. The difference between a financially independent person and a broke person is generally the first person held on just that much longer, and did not let the hard knocks beat them down. Be grateful every single day for what you have, and tell yourself every single day you are achieving your goals and it will happen. If you wake up every day and say I am "poor", you will remain "poor".
Kiwi Teetee
Anyone can be rich. This just means 90 per cent of NZ'ers like to spend more than they have.
P Annand
I don't quite see how this has come as a surprise as society has been becoming much more materialistic and self centered since the "greed is good" days of the late 80's. We have been steadily watching the assets of the country being sold offshore, by government and private sector, to the highest bidder in the name of making a quick short term buck for many years now. This has resulted in increased utility bills and profits heading off shore. Coupled with privatisation of education and health, low wages to cost of living ratios, increased housing costs, increased taxes etc then peoples disposable incomes have further diminished. Add in positive immigration, where financial position has been key critera, then the problems are further exacerbated as wealthy immigrants push up prices in the housing market.
At the end of the day, if you are wealthy then you will have access to accountants and financial advisors who specialise in tax minimisation so it is likely you will be paying less tax than low and middle income earners.So how about starting to look at higher tax bands for the very high earners, reducing tax bands for the middle/low income earners, closing tax minimisation loopholes, stricter policies on offshore ownership of property and businesses, stricter immigration policies and putting more money in health and education then we may start getting somewhere!
Anthony
Until we see and understand how these statistics were derived, this published output is meaningless.
Garry
Considering the high taxes, the government's socialist policies and the New Zealand way of knocking winners we are lucky to have any talented people. It should be remembered that in other countries they could become even wealthier because these people are in demand. People should stop thinking like victims. In NZ with extremely low unemployment there are opportunities for all able people. So instead of following the government's lead of waiting for handouts go out and make the most of the opportunities that are available for all New Zealanders.
C Rout
I think a lot of people miss the point of the widening gap and use it as an excuse to complain. Having a secure job, working for someone else is not the path to riches. And in contrast to what people think, simply having a University education and getting a job that pays 100, 200 or 300k pa will not get you rich either. In future NZ will close in on the US where 10 per cent of the people control 90 per cent of the money. I think everybody has the freedom to change theire situation. Unfortunately too many people lack the self belief and faith to be able to succeed in a capitalist economy. The rich people are the ones who are prepared to learn, take a risk, be creative and start a business that probably takes at least three or four attempts before it gets off the ground and eventually becomes one of the one out of ten successful start-up companies. Simply if you are either not prepared to take the risk, or simply too lazy to do so then do not complain about the gap between the rich and the poor.
Daniel
If you always do what you have always done than you will continue to head in the same direction. I'm sure this article for many will give people a reason to some how feel short changed, that this is the way that New Zealand is heading and it is someone elses fault.It is precisely this victim type mentality that is causeing this growing gap. The reason the rich are getting richer is because they see the world differently they have an attitude of abundance. This way of thinking is available to everyone who is willing to challenge their old way of thinking. Unfortunately this takes a lot of work, courage and responsibility. And will not happen for us as New Zealanders on a larger scale until we stop seeing the world happening to us. As New Zealanders we have a natural entitlement to abundance just go for a drive thru our landscape to see the lushness of our environment. I know this change is not easy. "It is safer to be poor and looked after" But we are kiwis, we don't have the historical baggage of nearly all other countries. A fundamental change in thinking is coming. I ask who is going to help drive it?
Leanne Li
There is no way to change it. very simple, If we divide the whole country's wealth and give each one a equal share, in a few years time (say 5 years), the gap will create, some people will become richer than the others.
Raj Subramanian
The rich poor ratio is always in a cycle. It is changing - it is not that the previously poor hold on to their tag. The Statistics is not showing how many poor moved into Rich status and how many Rich moved into poor status within those ranges. The nuances of life is constant changes taking place everywhere. World and the whole solar system are moving at rapid speed. People who caught up with the speed of what is happening elsewhere in the world are contributing to the economy. In capitalism, capital and entrepreneurship creates newer products and services, so that we advance further. Without Microsoft how can we have uniform computing systems. Newer medicines and newer curing techniques come up everyday. Just inventions or innovations cannot directly give us cure or newer computers. Capital and entrepreneurship are needed, so as workers. In essence whoever is understanding the pulse of the people and their needs and deliver them through their business or service or through their work and sustaining competitions by improvement are getting richer. I agree there are monopolistic forces which act against this rule, but they are on the decline world over. Whoever don't contribute to the country/world are getting less. Communism failed because there was no incentive in it for growth of individuals.Capitalism in its purest form would constantly award understanding of people and delivering what is needed for them.
Therefore, rich getting richer is not our problem, poor not moving into rich category is our problem.Large Govt and private initiatives are needed for that.
Leon Tan
Well this is not surprising as this is simply the inevitable logic of advanced capitalism materialising in New Zealand. Already critiqued by Fredric Jameson as the "cultural logic of late capitalism", this distribution is as outrageous as the wider global capitalist distribution split roughly along the lines of "developed" and "developing" worlds. It also goes hand in hand with the rise of a sharper class divide, with an underclass that is no longer even within society but exists on the Outside, suffering third world diseases, homelessness, and serious malnutrition within NZ itself.
Maria G.
Comparing New Zealand to developed wealthy nation such as the US and Canada is hardly illuminating for many reasons, but first we must reconsider whether NZ could reasonably be considered a "developed" nation. No other nation in this category has the extraordinary amount of emigration and "brain drain." NZ spends huge amounts of money begging others in Commonwealth nations to please, work in NZ and fill the skilled workers gap. Something like 600,000 NZers live in Australia, and the number of NZers living abroad may be as high as 1 million in a nation with a population of a little over 4 million. There are other reasons to debate the "developed" category, among them poor infrastructure, extremely low wages, poor housing, low standard of living in general, very high rates of respiratory illness, unclean water, and let's not forget, substandard journalism. The rich are getting richer, most of them leave NZ, and the rest are taking what they can while they still can. In the meantime, the typical NZer has a higher rate of debt than those in other OECD nations. I suspect the ones that are reaping profits have learned to move beyond the Jurassic business practices and poor work ethic of the typical Kiwi concern. Beyond everything else, NZ is a nanny welfare state that has been successfully churning out for generations, a large underclass that lives on public funds.
XK
Reading through some of the views, I find an interesting assortment of old patriarchal attitudes, that are fear based, and suggest that "success" (a relative term at best) is a province of those who are willing to make the sacrifices (including often moral and ethical at times), get an education, work hard (as measured by some standard that someone set sometime in the distant past. Not only that but within that there is also the assumption that those that have not achieved this success must in some way be substandard, lazy, and inferior in some way. What an antiquated way of looking at the world. It is the basis of such thinking that has led to many of the environmental and societal problems that we have developed in the western world.
If the gap between the rich and not so rich is getting bigger, then there is something we need to do better. In my opinion, two of the foundation pillars for any evolved society are education and health - every citizen within that society should have access to great quality of both of these regardless of their socio-economic status. Until such time as that becomes the most important priority within NZ and the rest of the western world, these gaps are not going to improve, irrespective of any personality variables.
John Macassey
Unfortunately this a natural result of "free" capitalism all over the world the end result being obvious. More to the point would be a serious effort to limit the accumulation of property ie; residential, and get serious about home ownership for all NZ families. Surely it makes sense to limit home ownership to two or even three homes only. Some people own dozens- I personally know one individual who owns in excess of 500 residential properties while, for example my three hardworking offspring and their families, have to go without while they struggle to even pay their rents.
Chris
Another reason why the Labour government needs to go. They have slowly crippled the average New Zealander over the past 7-8 years by increasing taxes, rising fuel, house, rates, mortgage and food prices combined with weak salary increases is causing the average/medium salary earner to live week to week and go further into debt. Those wealthy people are no doubt debt free and able to live week to week with a savings plan, therefore they can afford to purchase more assets. The govt needs to stop stealing tax payers money and give some of the ten billion dollar surplus back to the medium income earners by means of a tax cut, the working for families package has done nothing for the majority of the country and how does that help non-family couples or single earners to get ahead.
Linda
I read a report a number of years ago, which I think may have been called the Foresight Report. It was a 20 year forecast. Among many other things the widening of the gap between the haves & havenots was clearly predicted. How sad. My parents (in their seventies) never doubted that they could have a freehold home by their retirement. This was on a single income. Our mother had the ability to be a stay at home parent while we were younger without seriously compromising their standard of living. We went to the local schools and did well. We are just in our fifties. We both work. We will not have a freehold home by retirement. We pay more than 45 per cent of our net income to put a roof over our heads. Unhappy with the standards of secondary education we pay more in GST on our school fees than the school receives for our child from state funding. Never mind that our taxes fund education.
Our 2 older children don't yet have their own homes, have student debt they are paying off and are working hard to secure their futures. The younger ones see moving overseas once they are qualified as the only way to ensure financial security for their futures. And we think we are quite comfortable compared to many! The fact is that most people want very simple things from their lives. To have a comfortable home, good health, the freedom to care for their families without struggling for every dollar, and to have a little left over to enjoy. Not looking too good for my grandchildren!
Keith
This trend of greater and greater differences in wealth distribution in NZ is caused in part by the Employment Contracts Act. An act that should have been quickly abolished in my opinion. It is an Act that never would have become law in Australia. I think it likely this is why so many disillusioned people (i.e. good Workers) are leaving NZ and going to Australia for a much better income and standard of living. Aussi for myself is looking better and better each year as my employer gives me no increase each year for inflation or for my newly aquired skills. The Employment contracts Act has allowed employers to misuse their power, and many of them have unfortunately. Greed is a bad and powerful thing. It will continue until the Government does something about it and does not merely rename the Act the Employment Relations Act. Come on Labour, stop being pathetic and fix this problem now!
Bo Li
Description of NZ as a last paradise in the world comes different prospective, but I just mention one of its attribute that plays important part in -egalitarian society. People keep asking what is New Zealand's identity or culture or icon or uniqueness, I think egalitarian is a part of any one of those. If it fades out, I mean this country becomes unegalitarian, the description or the definition of the paradise could loss its content. I'm not commenting on its good or bad, just telling the fact.
M Thomson
The idea that the top half has this 95 per cent distribution because they produce more is rubbish. We cannot all go to university and be a nation of 3 million CEOs. Every company needs its workers at the bottom to exist. It is very difficult to say exactly who earns what in an economy where many people work together to produce a good or service. Although people who work harder and smarter should be rewarded more, the unfortunate case is that those who work at the top get to decide exactly how much more, by setting wages and paying out to share holders etc. And when the decision is made to pay out shareholders millions, and leave the cleaners on $11 an hour, the typical rhetoric is to explain that this is simply reflecting what goods and services people themselves earnt.
Chris
Last time I checked we weren't a communist country. Its always been the case that the rich will get richer . My advise to those who aren't rich get off your backsides and do something about it instead of bleating on and on about it.
Simon Hepple
The biggest problem with this country is the fact that there seems to be a perception that if you are rich, you have impoverished others. This nonsense has to stop, the reason why the rich are rich is simply because they have either taken risks and been rewarded or through good money management. I find it very hard to believe that in other countries they will not have similar results to ours in New Zealand.
Raj
It is too bad for any nation.It should be discouraged.
Michael Bruce
Its creating a greater social divide in NZ. The Government needs to change the rules for capital gains in NZ. The economy is out of sync.
Dave
Does an executive on 300,000 a year really contribute ten times more to the country than a teacher who earns 30,000 a year? A major proportion of the increase in the gap between the rich and the poor is the result of growth of asset values in an overheated housing market, how does this reflect on what the rich produce for the economy? What do share price and currency speculators produce for our economy? What this report tells us that it is not the bottom half who are not sharing in the wealth but the bottom nine-tenths of the population, including most of New Zealand's workforce.
GD
It is these kind of reports written in this way that educate the uninformed, and make it seem necessary for the government to intervene and tax successful people more, and give hand-outs to the people who do not produce. Who are these bottom halves that are not sharing in the nation's wealth? Are they people who are already on hand-outs, on the dole, living in state houses? If you do not produce for the country, you should not be sharing in its wealth. Sharing the country's wealth is not a right just because you were born here. You earn it but giving back.
Wealthy people produce and contribute more to the nation on a per person basis and it is awesome that New Zealand seem to have more of those compared to the last survey. They build companies that create jobs for other Kiwis and provide Kiwi consumers with goods and produce. If everybody was good at doing this then more people would be wealthier. The marketplace rewards those who produce most using the least resources. Does this report also highlight anything about charitable foundations set up by wealthy people to give back to the community?
The millions of donations that are made without the press knowing about it? What is the definition of "wealth" in this report? And does it take into account life stages? Most people start to accumulate wealth at later stages of their lives. Be fair to everyone including those who produce millions for the country. If you think that the Robin Hood approach of redistributing income is the way to create a fairer statistic, then think again as you will be robbing Kiwis of the incentive to produce more for the country, produce more jobs and keeping New Zealand in the "developed nations."
Dan Jones
Is this the "trickle down effect"? Is "a rising tide lifting all boats?" Hmm. This is the line that the extreme right-wing economic theorists have been pushing for my entire life. Looks like reality has crashed the party. Note to economists: if your theories do not correspond to reality, it must be time to discard reality and get a new reality eh?
Dave
Bad news for small business owners, bad for society in general and time for some serious tax distibution for hard working NZrs. Tax the very rich.
Tim
We are not all equal so there is always going to be those more successful than others. Besides the top 50 per cent own 95 per cent of everything, that seems a good share.
Richard
With the divide between the rich and the poor or the haves and have nots steadily growing, you can understand why the crime rates are on the up. NZ being a classless society is unfortunately a thing of the past!
Grace
The rich are only getting richer because they know how to earn money and they strive hard, whereas most of the poor lack the innovation and the motivation to do so.
Leonard Lee
The top 50 per cent also bear most, if not all of the tax load - the article is biased if it has opted not to include those statistics. The top 50 per cent are also likely to be the most educated group. A very small percentage obtained their money the old fashioned way - by inheriting it. The rest work and save their way to where they are now. While there is increasing wealth inequality, the average standard of living has very likely increased across the board - given the assistance packages offered by Work and Income NZ. Any change in the distribution of wealth needs to be accompanied by a change in the mindset of the bottom 50 per cent - hard work and study will eventually raise the level of wealth. It won't happen overnight, or even in a single generation - it's a long way to the top.
Elizabeth
They are probably baby boomers who had free university education, bought their houses for $15,000 at 3 per cent interest and enjoyed one of the highest standards of living in the OECD while most 20 and 30 somethings will never be able to afford property in Auckland, but can not seem to get jobs outside of the city.
Warren
The truism "money makes money" is evident. One of the concepts behind capitalism is basically that the charity and good works of the rich will alleviate the plight / inequality suffered by the poor. Most (human applicable) concepts do not sufficiently take into account human realities. When the concepts are brought to life they are altered (by e.g. greed, powerlust). The biggest long-term drawback of capitalism is that money makes money (thus it is not a meritocracy). When the point is reached where the poor have nothing to lose you have revolution. But to what? The same human realities altered the application of communism to make it worse than capitalism, and the old models of dictatorships (which includes religious states) and monarchies etc have proved themselves ridiculous. When Cromwell lopped off the head of Charles the II they didn't quite know what to do next, monarchy being the control method then and without monarchy what do you do?! The drawbacks of capitalism will cause it to stand on the brink of that chasm one day. Exciting times will ensue.
Mel Stewart
This really does not surprise me; most of the home owners are in debt so if you take away the expense of furnishing the mortgage, their net worth would be in negative figures. We are the worst, when it comes to savings and many may not agree with me, but giving tax cuts will do nothing to encourage people to save; they will just buy new items - like TV, PlayStations and etc. For me it definitely suits if we have compulsory saving scheme so that when our kids grow up and want to further their studies, we do not have to depend on the Government of the day, we can pay our own medical bills etc in old age. The one thing I can forsee is if we have a change of Government to National, we could see us getting worse of - National's policy of wealth distribution will never suit the majority of NZers. Unfortunately the current government is not doing much either. If only they tweak some aspects of financial management and look at how our social policies are interpreted, then only we can move forward and increase our fortunes.
Tom
This report evidences the antisocial effects of capitalism and the free market policies, which have been espoused by our governments since the 1980s. Ending your article on the quote by Andrea Blackburn that "its typical of developed countries" does not automatically mean that a huge unequal distribution of wealth is okay or should be accepted. It is a major threat to our plural society in that it gives more and more power and wealth to business to lobby governments to implement favourable business policy (to make themselves even richer), and it causes social friction as resentment of this wealth will also increase, as so will crime. Not only that, but the majority of New Zealanders are getting poorer. That means more and more families relying on welfare, and probably having a generally shitter life.
Martin
That the top 50 per cent of NZers has 95 per cent of the wealth can partially be explained by the unequal distribution of attributes such as intelligence and good work ethic. Bright, enterprising people will always do better in a developed society than the not-so-bright.
Skpp
NZ Society turning into a capitalist society. Not good from a long-term perspective. Wide gaps creates imbalance which in turn will have adverse effect.
