Housing poverty + baby boomer privilegeINTER-GENERATIONAL INEQUALITY AS A CAUSE OF OUR HOUSING CRISIS
PRESENTATION BY
Alan Johnson
SOCIAL POLICY ANALYSTTHE SALVATION ARMY
SOCIAL POLICY & PARLIAMENTARY UNIT
The central thesis for today
That the political dominance and privilege of the baby boom generation is a source of housing poverty in Aotearoa
Zero Sum Society
As an absolute bottom line, we pledge that superannuation payments will be higher with National through our commitment to retain the floor for super at 66% of the average after-tax wage, and the effect of our tax cuts on the after-tax average wage, which is used to calculate superannuation rates.
National will also maintain the age of eligibility at 65 years. We will keep this pledge, and I will resign as a member of our Parliament rather than break it
JOHN KEY’S PRE-ELECTION COMMITMENT -2008
Zero Sum Society
In 2011 there was 1 person over 65 for every 5 working age people
By 2026 there will be 1 person over 65 for every 3 working age people
Over the next 20 years the number of people qualifying for NZ Superannuation will grow by nearly 500 per week
Zero Sum Society
It takes an average of two working people paying PAYE to fund the NZ Superannuation for one retiree
Over the next 20 years the number of people entering the workforce will probably grow by 150 people per week
Zero Sum Society
45% of all planned new spending by the
Government over the next four years ($2.5 billion) is to fund NZ
Superannuation entitlements
Over the same time period the Government is planning real (inflation adjusted) per capita
spending cuts in health and education
An Unequal Society
In 2001 the wealthiest 1% of adult New Zealanders had more than
three times more wealth than the poorest 50%
WEALTH DISTRIBUTION IN NEW ZEALAND IN 2001
An Unequal SocietyWEALTH DISTRIBUTION BY AGE IN 2001
In 2001 those aged over 45 years old owned 71% of the wealth
An Unequal Society
BABY BOOMERS
WEALTH DISTRIBUTION BY AGE IN 2001
In 2001 those aged over 45 years old owned 71% of the wealth
yet made up 42% of the adult population
An Unequal SocietyHOMEOWNERSHIP RATES BY AGE COHORT
But surely wealth – especially in the form of home-ownership ,
accumulates during your working life
An Unequal SocietyHOMEOWNERSHIP RATES BY AGE COHORT
But there is evidence of declining rates of such accumulation
An Unequal Society
In 2012 6% of those aged over 65 lived below an accepted poverty
threshold while 21% of children did
POVERTY RATES IN 2012
A Baby-Boomer Society
In proportional terms spending on NZ Superannuation and housing
assistance has grown at similar rates over the past 10 years
SPENDING ON NZ SUPERANNUATION & HOUSING ASSISTANCE
NZ’s home ownership rate has fallen progressively since 1991 – from 74% to 65%
Housing poverty + housing plenty
In 2012 23% of tenant households spent more than 40% of their income on housing while 7% of owner-occupiers did
The incidence of rheumatic fever in the most crowded 20% of homes is 23 times that in the least crowded homes. The Maori rate is 10 times that of Pakeha and the Pacific rate is 21 times – these differences are related to housing conditions
Over the past decade the value of median price dwelling has risen from the equivalent of 5 years of the average wage to 7 years in NZ overall and from 7 years to 10 years in Auckland
Housing poverty + housing plenty
Over the past decade the wealth of those 65% of Kiwis who own housing has risen from $282 billion to $655 billion
Between 2006 and 2012 there was one dwelling built for every 1.5 additional people in NZ outside of Auckland, one per 3.8 additional people in Auckland and one per 5.9 additional people in South Auckland
Proposals to tax wealth and to tax wealth accumulated through housing investment have been repeatedly ignored by politicians
Housing poverty + housing plenty
In 2008 NZ’s rental housing stock was valued at $200 billion yet it generated a taxable loss of $500 million and perhaps tax refunds of $150 million
Only perhaps 8-10% of adult New Zealanders own rental property investments – so what are the politician scared of?
Not all Baby-Boomers are wealthy but many are and
the current policy framework is not questioning their
privilege and the consequences of this privilege
Thinking generationally
- this is especially so in the housing market
We Baby-Boomers we
have perhaps ignored
questions of inter-
generational justice
Thinking generationally
We have failed to acknowledge our current and past
privilege
The extent to which this privilege comes at others’
expense – the Zero Sum Society
How much we owe to and will rely on the following
generations