Rich and Poor in New Zealand today, or why the wealthy may have to put up bigger fences in the future

Jurriaan Bendien bendien at
Sat Jul 19 03:52:59 MDT 2003

(note: 1 NZ dollar = 0.57 US dollar)

Down and out on the Poor List

New Zealand Herald, 19.07.2003
The annual parade of elite wealth hit the streets yesterday as the business
weekly National Business Review published its latest list of the country's
wealthiest 183 individuals and families.

With the list came the usual homilies, explicit and implied - that these
people have succeeded in the eyes of society, should be a source of
inspiration for the rest of us, and should be celebrated.

Many, certainly, are creating jobs, products and national income to the
benefit of us all. Each has shown financial acumen, and such lists provide
some sort of picture of just what that acumen has gained them.

We are left with the impression of increasing prosperity, as the NBR's
estimation of the list's total net worth has risen from $5.3 billion in 1986
to $18.358 billion this year.

As the wealth of those on the Rich List grows - we had our first individual
billionaire in Graeme Hart last year, which was interpreted as a significant
step for the nation as a whole - it's easy to forget just how many New
Zealanders never get to stand on the same street as the wealth parade, let
alone join the procession. At best, they hear the distant strains from the

Even the middle classes are struggling to keep up; the poorest are nowhere
to be seen.

In offices tucked between panelbeater yards and the motorway in South
Auckland, staff at the Manukau branch of the Salvation Army's Community and
Family Services Centre are reading a different report. Director Gerry Walker
and service centre manager Ross Richards have the latest quarterly Poverty
Indicator Project report from the Council of Christian Social Services, and
there's not a lot to celebrate in it.

This is New Zealand's Poor List, and while there are no names here, the
reality it's describing is grim and extends far beyond 100 people.

"It takes a lot to walk through our doors, because you're subconsciously
saying, 'I've failed and I'm at the bottom'," says Walker. "And we get 5000
people a year. That's people, most of them with a family, so multiply that
by three or four at least and then you're starting to talk about the numbers
we're dealing with."

Where New Zealand's median household income is $713 each week, for the
families who came to the Sallies' Manukau foodbank in the first quarter of
this year it was $300 - less than half the national median and $20 down on
last year.

Take away housing costs, and all these folk had left in their hands each
week to pay for their food, power, clothing, everything, was $161. That's $7
less than last year.

At the other end of the scale, Craig Norgate, the highest-paid salary-earner
before he was dumped from Fonterra last month, earned $38,000 a week last
year. And he wouldn't have been close to making the Rich List. "To manage on
what they do is remarkable. It's amazing they do as well as they do," says
Richards. Most find a way of managing, until a sudden cost appears.

"If the washing machine breaks down, for example, there's never any money
left to repair it. So they have to go into debt. They go to Winz to get a
debt and then they just have to pay that back."

If repayments are set at $10 a week, their $161 can become $151 for months.
Even that can be managed. But what if the car or the fridge breaks down at
the same time?

"They're sunk," Richards continues. "I saw a lady the other day, hadn't had
a fridge for six months. It broke down and she couldn't afford to repair it.
When that happens they have to go down to the dairy all the time and
groceries cost nearly double what they'd cost at the supermarket. Once
things start going badly it's a real downward spiral, and that's where we
pick them up and try to get them back on to some sort of footing."

Susan St John, senior lecturer in economics at the University of Auckland
and a member of the Child Poverty Action Group, has an economist's word for
what Richards is seeing: cumulative. Everyday costs increase and their
incomes - be they from benefits or casual labour - aren't growing at the
same rate. So the degree of poverty is getting worse.

Take housing costs. Forget home ownership - that's so far above those on the
Poor List as to be farcical. Consider the impact of the booming rental
market. Inflation-adjusted benefits and the accommodation supplement are not
keeping up. The very growth being celebrated by those owning investment
properties is forcing others on to the street.

"That kind of economic growth makes their participation in society even less
possible," says St John. The same goes for so many everyday costs, from
groceries to movie tickets, taking the social interaction many of us take
for granted out of reach.

What concerns St John most is that for tens, if not hundreds of thousands,
of New Zealanders, the music from the wealth parade is getting further away.

Statistics on elite wealth in this country are severely limited. We know
that the wealthiest 10 per cent of the population own 53 per cent of the
nation's wealth, but not how much of that is owned by the top 1 or 0.1 per

However, we can do some calculations from the NBR's figure that the top 183
individuals and families have an estimated net worth of $18.358 billion, out
of the nation's total net worth of $363 billion. We can say that this
wealthiest 0.0045 per cent of the population owns something over 5 per cent
of the nation's wealth.

Child Poverty Action Group's latest report shows the change in the medial
real equivalent disposable income between 1982 and 1998. The income of those
in the poorest 10 per cent of the population has actually fallen nearly 20
per cent in those 16 years, while the richest 10 per cent's has increased 36
per cent.

"It's two different worlds," says St John, "and both ends are moving away
from each other."

Further, average real incomes for the bottom 80 per cent of New Zealanders -
that's the vast majority of us - have fallen. Or as St John puts it, "The
bottom and middle are falling away".

So who is on the Poor List? The composite picture is sadly predictable.

"Those in the worst poverty," says Richards, "would be families who have
multiple issues. Not only on a benefit but they would have physical health
or mental health issues. The others are the solo parents with large
families. They're the ones at the bottom of the heap."

Adds Walker, "there are also likely to be addiction issues. Drugs, alcohol,
gambling, which is becoming more prevalent."

And literacy and numeracy will be an issue. Of the people they see, most are
families with three or more children and about 75 per cent are Maori or

"Politicians or the media talk about family rather glibly. We're talking
about children. No one deserves poverty, but least of all a child."

Scan the Rich List and you'll get snippets of information about the
lifestyles of these uber-wealthy. Here's an equivalent glimpse at the lives
of those on the Poor List.


Our solo mum is likely to be on a benefit, receiving - if she's aged 20-24
and has two or more children - $252.60 after tax. There will probably be an
accommodation supplement on top of that, but don't assume she's getting
everything she's entitled to. The Sallies' staff spend a lot of time in
advocacy work.

Of the people coming into their centre, 46 per cent are spending more than
half of their income on housing. Walker and Richards say the typical
disposable income of the people they see is about $120 a week after housing


People on the Poor List don't own a house. Most won't be renting either. In
Auckland, the bottom few hundred could well be homeless. In Manukau
homelessness is pretty rare. Those they see on the streets are mostly young

"With them there's an element of choice, but it's usually wrapped up with an
addiction," says Walker.

It's more common they're living in a car or a garage. Or Walker can tell you
about the three-bedroom house with 16 people living in it. Overcrowding is
run of the mill.

"It's slowed down a little bit," he says, "but just after Christmas we were
averaging 10 families a week with nowhere to go. Nowhere."

What it means is a high rate of transience, which does terrible damage to a
child's education. Pre-schoolers miss out on kindergarten and start school
already a year or two behind. "They very rarely catch up and the gap just
widens. They get disillusioned, their confidence goes and the cycle starts
again," he says.

"You get the 7-year-old who's been to seven or more schools."

Shocked? "That's low level," Walker says. "I can cite the case of a
7-year-old who's been to 18 schools. That's not uncommon."

The secret of making the list

Take that 7-year-old, that transience and the poor education and health that
go with it. You're well on the way. Then add a lack of aspiration or work
ethic because they've never known an adult who is paid well or owns a house.

"They may be third-generation unemployed, so their expectations are low,
their quality of life is poor and their choices practically nil," says


Almost all families will have a car and television, although the poorest are
probably still paying them off. Most will have a fridge and washing machine,
but by no means all.

"People might say they shouldn't have a TV and no fridge, but at least it
keeps the kids occupied and might stimulate them. It's a release and it's a
bridge to the outside world for a sole parent in a box," says Walker.

However, there's not much point in owning any appliances if the power's been
switched off. "There are families today who have not had power on for two,
three, four months and are washing clothes in the bath." They see at least
one new case a week.

While many banks try to fend them off, most will have a bank account. There
just won't be any savings in it.

"I met one family last week who had money in the bank and that surprised me.
The mother was saving for a bond to get into a rental house."

Social life

The Louis Vuitton ball might as well be in a different country for Poor List

"To go to the movies or have a holiday are not options," says Richards.
"People say every day's a holiday because they're not working, but these
people don't know what a real holiday is. They have a very boring

"We're running a camp this week at Hunua. This is the first time many of
these kids have been to the country. We can take you to children in South
Auckland who have never seen the ocean.

"We run a life-skills course for sole parents and they feel lonely," he
continues. "They don't have, in many instances, anywhere to turn because
they've had a tiff with their family, which can happen in any family, and
they're on their own with three or four children."


As our richest urge New Zealand to plunge into the Knowledge Wave and ponder
whether high-tech stocks are on their way back, Walker says computer skills
are irrelevant if you can't read and write. He wants New Zealanders to think
about some more fundamental places to put their money.

"In terms of investment capital, the return on investment with these people
is going to be huge."

And don't forget the opportunity cost. He points out that 40 per cent of
Manukau's 281,000-strong population is under 25.

"If we don't do it, I don't have to paint the picture of how it's going to
look in the next generation ... If you talk about the 100 or so richest
people, they might just have to put up bigger fences."

More information about the Marxism mailing list