About inequality

New Zealanders have many things to be proud of: good living standards, increasing tolerance and diversity, and a relaxed, ‘can do’ attitude to life.

But as the American billionaire John Paul DeJoria said, “Success unshared is failure.” To be able to take part in the things that make New Zealand a great country, people need a reasonable income; but in the last 30 years, most of the income growth has gone to our richest people.

Inequality key facts:

  • New Zealand has become a much more unequal place – in terms of income and wealth – over the last 30 years.
  • Income is what people earn on a weekly or monthly basis, and helps them meet day-to-day needs, whereas wealth is what people own, such as houses and cars and money in the bank, and helps people plan for the future and ride out rough patches.
  • From the mid-1980s to the mid-2000s, New Zealand had the developed world’s biggest increase in income inequality, according to the OECD.
  • Since 1984, the after-tax income of the typical person in the richest 10th of the country has doubled, increasing by around $60,000, from $59,600 to $120,500. Meanwhile the income of the typical person in the poorest 10th of the country has only risen by around 25% or $2,500, from $10,300 to $12,900. In other words, someone in the richest 10% used to earn 5-6 times as much as someone in the poorest 10%, but now they earn nine times as much.
  • When it comes to wealth, according to Statistics New Zealand, the wealthiest 1% of individuals own 22% of the country’s net wealth, the wealthiest tenth own 60%, and the poorest half of the country has less than 5%.

Has inequality increased recently?

It is sometimes argued that income inequality has been stable for the last 15 years. And it is true that the biggest increase came in the 1980s and 1990s. But official reports show that inequality only fell in the 2000s because of specific policy changes, largely Working for Families; that is, it did not fall of its own accord.

In addition, virtually all the measures of inequality show a slight increase in income inequality since the global financial crisis. Consequently, while income inequality is at roughly the same level now as it was in the early 2000s, it has not been “stable” but has risen and fallen in line with policy changes. And it appears that the progress of the early 2000s is being reversed.

In terms of wealth inequality, things like the housing price boom – concentrated among the half of the population who are home-owners, and within that the quarter of the national population who are Auckland-based home-owners – appear to be worsening already large wealth imbalances.

Analysis provided to the Equality Network by Max Rashbrooke, author of Wealth and New Zealand.

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