Wages have not followed increases in food and essentials. Photo / File
Wages have not followed increases in food and essentials. Photo / File
In the lead-up to the election we’re taking a look at some of the issues people care about and how political parties aim to tackle them. Today Michael Botur looks at the lot of people who live between the bread line and the middle class.
There is no such thing as a middle class in this country - well, not according to Statistics New Zealand.
Our egalitarian society doesn't officially record the concept of class. What we do have is a middle: averages, medians and means applicable to our 2,328,000 workers.
Millions of Kiwis have mortgages, careers, own cars and can afford insurance and vacations. They're sensitive to capital gains tax, rates and income tax. Their votes are coveted.
"Pakeha and Asian families are much more likely to be middle class than Maori or Pasifika families," University of Waikato's Martin Thrupp said in a lecture about how middle-class advantage disadvantages low-decile schools.
Edward Haddon published a University of Auckland paper which analysed how New Zealanders saw their own class position. Just over half, 51.5 per cent, of us saw ourselves as middle class, with 28.5 per cent calling ourselves lower or upper middle class.
In total, 80 per cent of us claim middle-class status. The paper was informed by the 2009 Social Inequality survey and considered attitudes around everything from union membership to occupation, household structure, ethnicity, voting, church and even the number of books in the household.
Over the past five years, Consumer Price Index rises have occurred in the cost of home insurance (up to 130 per cent), the price of many foods (around 20 per cent) and electricity and rates (both up roughly 20 per cent). The latest CPI quarterly figures saw electricity rise the most, followed by housing. There have been statistical wobbles in seasonal vegetable and dairy product prices. Package holidays, vehicles and booze have fallen in price in the last quarter.
The CPI continues to report climbing prices for many essentials: health, education, and petrol. Then again, downward prices have been felt in communication, clothing, recreation, second-hand cars and telecommunications.
POWER TO THE PEOPLE
Kiwi households are spending $1111 a week, on average. We spend an average of $192.50 on food, $29.50 on alcohol, tobacco and drugs, $31.60 on clothing and footwear, $158.30 on transport, $107.20 on recreation and culture. There are other costs, of course. The biggest by far? An average $272.90 on rent, mortgage, and power bills.
Labour promises to bring electricity prices "back under control" using its NZ Power concept. "NZ Power will bulk buy electricity from all the generators and pass the savings on to New Zealanders," leader David Cunliffe pledged.
Power prices are a big concern for Kiwis struggling to make ends meet. Photo / File
Power prices for the average household would drop by $230 to $330 a year, businesses would see prices drop by between up to seven per cent, and the policy could create 5000 jobs and boost the economy by $450million per annum. One budget adviser, Diane Bruin of Tauranga, said the policy could benefit hundreds of people in her patch. She said power was the highest cost commodity for many people.
Labour Minister Simon Bridges disagreed. "Labour's complex, costly and bureaucratic proposal will kill competition, threaten security of supply, and do nothing to lower power prices."
SAVER OF KIWIS
The working age population is 3.579 million, of whom 2.328 million are employed. All are expected to save.
The median weekly income from wages and salaries alone is $844 (up 4.8 per cent) according to the NZ Income Survey of June 2013. That weekly amount works out to $43,888 for a 52-paid-week year. Median hourly earnings are $21.58.
The minimum KiwiSaver contribution rate is three per cent, so the median KiwiSaver contribution per week would be $25.32 going into savings - that's $1316.64 saved per year, based on a 52-paid-week year.
Employer contributions double that.
The Household Economics Survey to June 2013 mostly matches this. Average annual household income from all sources has risen by 11.5 per cent to $84,462.
National promises to replace the KiwiSaver First Home Deposit Subsidy with a KiwiSaver HomeStart Grant, doubling the support for buying a new home and increasing house price limits to enable larger KiwiSaver First Home withdrawals.
HOUSE IN ORDER
A home will always be the biggest purchase in the lives of most New Zealanders. Home ownership rates are the lowest they've been in 50 years, according to National.
Home ownership rates are the lowest they have been in 50 years, according to the National Government. PHOTO/FILE
Average weekly mortgage payments since 2011 have remained about $356 a week.
National plans to increase HomeStart Grant house price limits to $550,000 in Auckland, $450,000 in Wellington and Christchurch, and $350,000 for the rest of the country.
Welcome Home Loans require a 10 per cent deposit on the mortgage value instead of the new normal 20 per cent. The loans are available to households with a combined income of less than $120,000.
Deposits to secure these loans can come by cashing in KiwiSaver.
HomeStart grants differ depending on whether somebody is buying a new or existing home: $20,000 grants are for new houses, $10,000 for existing home purchases.
Governments are prepared to lend billions to keep the middle class contributing.
After all, 80 per cent of the population can't be wrong.
PARTY POSITIONS
Some party positions on middle-class housing include:
National - Help 90,000 lower and middle-income first-home buyers into their own home within five years.
Labour - Build 100,000 starter homes for Kiwi families; capital gains tax to take pressure off house prices.
Greens - Under climate protection plan, recycle all carbon charge revenue to families through a $2000 income tax-free band; benefit households $319 with the climate tax cut.
United Future - Allow families to capitalise Working For Families entitlements as a lump sum to help purchase their first home.
NZ First - Reduce the cost of house sections by selling those under long-term agreements under 25 years, or on a cost-recovery basis.
Conservatives - Exempt residential homes from the RMA; ease zoning restrictions; notify those with large "land banked" holdings they should begin building homes or risk the government acquiring the land; no tax for first $20,000 of income; flat tax thereafter.
Maori Party - Devolve state housing to Maori and Pasifika community groups; involve Maori organisations in managing rental agencies.
Act - Abolish the Municipal Urban Limit in Auckland; no subsidies for home buyers.
Mana - Guarantee government provision of shelter; ensure better rental housing; stop the sale of state houses.
