Auckland shows government’ policy failures writ large

By   /   September 2, 2016  /   17 Comments

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Auckland is a two speed city ‘Real Housewives of Auckland’ at one end and desperately poor families living in cars in the middle of winter at the other. The affluent of Auckland are immune to the price system- it just doesn’t matter what things cost. At the other end, lives are spent economising on miserable and insufficient disposable incomes where every last 10 cents and every price rise matters.

Auckland is a two speed city  ‘Real Housewives of Auckland’ at one end and desperately poor families living in cars in the middle of winter at the other.  The affluent of Auckland are immune to the price system- it just doesn’t matter what things cost. At the other end, lives are spent economising on miserable and insufficient disposable incomes where every last 10 cents and every price rise matters.

Child Poverty Action Group, for the last 17 years has run post-budget breakfasts up and down NZ and each year the news is a little bit worse.  We keep an eye on indicators such as trends in 3rd world diseases, overcrowding, dental extractions for children under 3, and use of foodbanks.

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In Auckland one of the key barometers of social distress is the demand for food parcels at the Auckland City Mission. Since the early 1990s the growth has been steadily upwards doubling over the last 6 years. Looking at the figures for the month of December we see a steady rise year on year- but last Christmas saw an unprecedented massive spike of 50% higher than for the previous year. People, and not just those on benefits, were queuing for hours, spilling onto the street. Some queued all through the night just to get the basics of life at Christmas.  We can expect more of this misery this year.

The state of the homelessness in Queen St is in grave danger of becoming normalised. Overseas papers like the Guardian UK are having a field day exposing the extremities of what we are allowing to happen in Auckland and how we are treating our families and children. See for example, New Zealand’s most shameful secret: ‘We have normalised child poverty’

An unfettered property market drives inequality.   Wealth disparity exists even allowing for age structure and is exemplified in Auckland. The latest figures for median net wealth of individuals for European individuals is $114,000; Asian people $33,000; Māori people $23,000; and Pacific people just $12,000.

How did we get this 2 speed city?   My life as a researcher into family incomes began in the 1980s when the Rogernomics revolution was beginning.  

The essence of the policy was reliance on competition to drive down wages to make us competitive, low tax, small government, user pays, and social assistance to be ‘only for the poor’—known as the targeting of social provision. Such targeting worried Treasury greatly because of the EMTR problem when there are overlapping clawbacks—ie when a dollar extra earned after tax and entitlement to education, health, and income transfers and subsidies leaves almost nothing in the hand.

The policy reached its zenith in the 1991 budget where it was claimed that the nasty side-effects of high EMTRs had a technocratic solution. Social welfare benefits were cut and families were supposed to have their social provision aggregated and bled away at a manageable rate against their income by the use of a smart cards. As a young researcher I was deeply troubled by this and not surprised when the technocratic card proved unworkable and was abandoned. But what was shocking, was that the reforms of low tax, low benefits and tight targeting were never revisited instead we were left with vicious EMTRs on the poor and an explosion in family poverty and a rapid rise in foodbanks.

In 1992 I was asked along with others including Ruth Richardson, Michael Cullen and Rodney Hyde to write an article for the Dominion Post on where I expected the country to be at the beginning of the new century in a series called towards 2000.  Rodney predicted that government would be a pip squeak at 3 % of GDP. My article titled ‘Omens of further social stress’ was described as unduly pessimistic.  I predicted huge social stress by 2000 and ‘high and arbitrary marginal tax rates on low and middle income people.’ ‘A fundamental challenge would be the changed nature of labour market, fall in wages share and concentration of ownership of productive assets…with no policies to moderate another share market and asset boom’    Sadly that was what happened by 2000 and now 25 years a large part of the Auckland population is paying a very heavy price for the disastrous policy of 1991. Where we will be in 10 years’ time?

Many families on low wages with high rents are repaying large student debts at 12%, and losing Working for Families and subsidies such as child care and accommodation supplement- leaving very little disposable income when they have extra earnings.

To live happily in the city people must have enough money and enough time. The older population do manage better than young families. The supportive programmes for the old in the form of wage-linked NZ Super, and travel perks through the gold card are good for an inclusive city. National policies for families are not. There is a continual erosion of benefits and programmes like working for families, housing subsidies, student incomes. These require far more support if Auckland is to function better not worse in ten years’ time. We must also tackle wealth disparity with proper tax reform.  Time is running out.

 

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About the author

Co-director retirement policy and Research Centre, CPAG management committee

17 Comments

  1. Mike in Auckland says:

    Great post, thanks, Susan.

    • Susan says:

      Thanks Mike. I wish we had the old system of thumbs up and thumbs down to respond to comments. Maybe it was too hard to administer.

  2. CLEANGREEN says:

    Bloody good picture Susan of a city in decline as I saw through my young 23yr old eyes NY, Chicago and Detroit was heading in 1968 until they set about some resemblance of sharing of the wealth of the state.

    This sharing (as far as it is in the US) was when I first saw the destitution and hopelessness in the USA in 1968, the average wage for the poor class was very low wages $3 or $4 an hour, while in Ontario where as a kiwi I was getting $10 to $12 an hour.

    The wages in Auckland’s “underside” is likely to be very low especially with new immigrant labour who generally don’t complain as I wouldn’t have in Canada if I got less because we were all happy to get a job.

    Now we well see this city spill into what you rightly claim as; ‘Real Housewives of Auckland’ at one end and desperately poor families living in cars in the middle of winter at the other.”

    • Jono says:

      Yeah Cleangreen, this is what Robert Reich talks about. He says the end game of inequality can go two ways. It either breaks apart of snaps back. If nothing is done one of these options is inevitable. I think a lot of people is society have blinkers on and can’take see this. Especially those living in a bubble.

    • Susan says:

      So right about the wage rates. And the costs of living is just not measured for many by the CPI any more.

  3. LOSTRELIC says:

    “To live happily in the city people must have enough money _and enough time_.”

    Modern distractions such as media consumption, iphones, tv, videogames etc, and in general lifestyle, are also heavily contributing to the removal of time. Wealthier people often live in a binary state of chronic dissatisfaction: get enough money, and use it to distract oneself endlessly. Getting money is often the distraction, and not having anything less than complete authoritarian control results in temper tantrums.

    I wonder if, in general, the older generations may have it easier with respect to this, as younger generations are more inseparable from technology. And yet, that technology is a necessity to “keep up”!

    It’s no mystery that our society of “faster-faster” is having effects on our empathy and compassion; even neuroscience has shown this. The question is always, how do we get wealthier people detoxing from the propaganda that “money is happiness” and set on a new course. We desperately need a shift in the direction of our culture towards conscious consumption and an active focus on those in need. The “Real” Housewives of Auckland contributes to the rot, while actions like yours here Susan, contribute to the solution. Thanks! 🙂

  4. This article is all to true, thank you.

    But how on earth are we going to correct the situation we find ourselves in ?
    This National Govt wont, or cant .
    They do not seem to have the collective brain power to find a better and fairer way.

    All the opposition parties seem to lack enough support, which I find bemusing, as there are so many New Zealanders struggling like hell to makes ends meet.

    Politically, we are living in strange times indeed.

    • Mike in Auckland says:

      Many New Zealanders live like a hamster in a hamster wheel, they run and rush to keep up, to keep their jobs, to compete with others for work and rewards, and some struggle day in day out, they have NO time to even think about politics and greater things. So they never see the possibilities there may be, to change their fate and situations. Back through the hamster wheel, like every day, also brain washing occurs en masse, so after a day like that, they sink into their couch, watch the real housewives, keep dreaming, fall into bed, and the next day the same happens again.

    • Afewknowthetruth says:

      ‘But how on earth are we going to correct the situation we find ourselves in ?’

      It is not possible to ‘correct the situation we find ourselves in’. Current living arrangements are a short-term aberration in the grand scheme of things, and will collapse fairly soon because the fossil fuels required to maintain living arrangements do not exist, and because the global environment is collapsing as a consequence of overconsumption of fossil fuels. Also, the financial system is founded on fraud.

      The strange times are about to get a lot stranger, economically, environmentally and socially.

      http://energyskeptic.com/2016/limits-to-growth-is-on-schedule-collapse-likely-around-2020/

      People will start to get it when collapse has proceeded a little further -probably in 2018 or 2019. At the moment delusions still prevail.

  5. Theodore says:

    “Auckland is a two speed city ‘Real Housewives of Auckland’ at one end and desperately poor families living in cars in the middle of winter at the other. The affluent of Auckland are immune to the price system- it just doesn’t matter what things cost. At the other end, lives are spent economising on miserable and insufficient disposable incomes where every last 10 cents and every price rise matters. ”

    And when the Have Nots begin to really take notice of the Other Side, the Haves, then see real civil unrest take place. And then the idiots like Mike Hoskings will wonder why we have violence in society.

    Unfortunately, that will give the “tough on crime” rightwingers in National more justification to crack down on the citizenry.

    It’s a steady spiral downward.

    As for Rodney Hide and his Act cronies, the only “trickle down” was the steady stream of urine from the 10% onto the poorest in society.

    • Jono says:

      I think we could see revolution in our time. Inequalitu will devide this country once it gets more extreme.It will not take much look at French Revolution exactly the same scenario just different times.

    • CLEANGREEN says:

      Now with the end this year of Martyn Bradbury’s 5th estate current affairs show ending tonight for the year we need to prepare for the early election we hear may be a really early snap election in April/may 2017 now we need to muster a money raising “Give a little” to mount a legal claim to place a writ in court to get back our half of the TVNZ/Radio NZ back for Martyn to get all his panel and investigative Journalist’s back on the media now to prepare for the mounting of educating the masses to get out and vote for Labour/Greens/NZ First, and other parties who will join to take back our government again for the betterment of all.

  6. Castro says:

    There is, indeed, a civil war coming. It’s IF, not when. I wonder how many of the No Zealand “lefties” with mortgages and jobs (heaven forbid freehold property in Auckland) would really let the blade of the guillotine fall on Antoinette’s neck and sever her head from her body. What’s coming is going to make a shit storm look positively benign… You may not like this statement of fact, but it doesn’t make it any less true.

    • George Hendry says:

      Did you mean ‘when, not if’ ?

    • darth smith says:

      iam sure an economic/environmental collapse will happen 1/2 trillion in debt house holds are treading water on record low interest rates the middle class have used there homes as ATM machines when the bubble pops the anger will spill over in 1987 it was stock holders who got wiped out this time the devastation will touch all levels of society no government will be able to stop the implosion melt down you cant deflate a bubble they always burst.the amount of lies the government is telling and there over sensitive vindictive reaction to the truth sud-justs we are beyond the point of no return



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