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.
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.