State of our nation: The good and the bad news Wednesday, 17 February 2016

Source: New Zeland Herald,  17 February 2016 

Most elements of life in New Zealand are getting better despite worsening inequality, a Salvation Army report shows.

The latest annual "state of the nation" report by the army's social policy and parliamentary unit says real wages are rising and material hardship, crime, welfare, teen pregnancy, infant mortality, alcohol consumption and gambling are all falling.

All this is happening despite evidence of still-growing inequality, with a near-record 29 per cent of children living in homes earning below 60 per cent of the median household income after housing costs.

A main cause of inequality is now housing costs, with Auckland house prices up 19.8 per cent and rents for three-bedroom homes up 5.7 per cent last year, while wages rose only 1.5 per cent. Renters and first-home buyers are worse off, while existing homeowners are sitting on higher asset values and paying the lowest mortgage interest rates for 50 years.

The combination of still-rising inequality and improving social wellbeing is a paradox, because many social scientists have seen inequality as the root cause of many social problems.

But Salvation Army analyst Alan Johnson, who wrote the report, said regular minimum wage increases had helped to protect Kiwi workers from the more extreme inequality seen in the United States.

AUT public health researcher Professor Max Abbott suggested last week that a decline in gambling over the past 15 years pointed to New Zealanders "adapting" to the radical liberalisation of the gambling industry during the economic reforms of the late 1980s and early 90s.

He said yesterday that people might also be adapting to other radical changes in the same reform period which initially caused unemployment, crime and welfare rates to skyrocket.

NZ Initiative head of research Dr Eric Crampton said crime rates have also fallen in other developed countries since the 1990s.

"In the United States they put some of that down to getting rid of leaded gasoline and the effect of lead on the brain," he said.

Lead was removed from petrol in New Zealand in 1996.

The good news: 


Crime is declining. A survey of almost 7000 New Zealanders last October found that 11 per cent of people were victims of personal crimes such as violence and theft from the person in the past year, down from 18 per cent in 2005 and 17 per cent in 2008.

The number of such crimes dropped from 1,925,000 in 2005 to 1,825,000 in 2008, and by a further 25 per cent to 1,375,000 in the latest survey.

Crimes affecting the household, such as burglary and car theft, have almost halved over the decade and the proportion of households affected has dropped from 30 per cent to 17 per cent.


The Social Development Ministry says benefit-dependent families have shrunk from 30 per cent of all children in 1998 to 17 per cent last March. The Salvation Army estimates it is now 16.4 per cent, the lowest since the late 1980s.

Teen pregnancy

Teen pregnancy has almost halved from around 6 per cent of young women aged 15 to 19 getting pregnant in 2008 to just 3.1 per cent in 2014.

The report says this may be due to "improved health education for adolescents, changing personal and familial expectations, and perhaps more stringent welfare requirements".

Infant mortality

Infant mortality rates have been declining with improved health care for as long as records exist, and have fallen from 0.52 per cent of babies dying before their first birthday in 2011 to a record low of 0.41 per cent last year. However, this is still the sixth-highest death rate in the 30-nation OECD and com-pares with 0.36 per cent in Australia.


The average Kiwi drank 9.34 litres of pure alcohol in the year to last September, down from 10.21 litres in 2010 and a 15-year low. We are drinking more wine, but this is outweighed by less beer and spirits.


The average adult lost $605 (net of wins) on all forms of recorded gambling in the year to last June, down 7 per cent from 2010 after adjusting for inflation and the lowest since 1999. Lotto revenue fell 9 per cent last year, outweighing increases for the TAB (up 5 per cent) and casinos (up 4 per cent).


Employees' average weekly earnings rose by 3 per cent faster than prices last year to $973 a week, up 10 per cent in inflation-adjusted terms over the past five years. This average includes both fulltime and part-time workers and is affected by increased hours as well as wage rates.

Actual wage rates rose just 1.5 per cent last year, or 1.4 per cent after allowing for a 0.1 per cent increase in prices, and have risen 3.4 per cent faster than prices over the past five years. The report says increases in the legal minimum wage have helped to lift wages in the lowest-paid sectors such as accommodation and food faster than in the highest-paid group (finance).

Preschool education

Almost all children in high- and middle-income areas have been attending preschool for years, so efforts in recent years have been aimed at lifting participation in the poorest three income deciles.

The report says those efforts are working, with school entrants in the poorest three deciles who have attended preschool rising from 87.2 per cent in 2010 to 92.5 per cent last year.

The bad news:

Housing costs

The report says Auckland's housing prices are in a "bubble", up 26.6 per cent in the year to September according to the Real Estate Institute. (More recent QV data show a slowdown to a 19.8 per cent rise in the year to December).

Over the five years to Sep-tember, the Auckland median rose 75 per cent, from $465,000 to $765,000, or from nine to 12.9 times the average wage. Rents have also risen in Auckland, by 5.7 per cent in the past year for a three-bedroom house and by 6.9 per cent for two-bedroom units. Rents are also rising in Waikato and Western Bay of Plenty, but have stabilised in Christchurch.

Household debt

Household debt rose 4 per cent last year to average $134,800 or 152 per cent of average household after-tax income, almost matching its 2009 peak of 156 per cent. About 90 per cent of this debt is housing-related.


Despite the falling crime rate, prisoner numbers hit a new record of 9112 last August. The report says this was entirely due to more offenders being jailed while on remand (up from 1694 to 1977 in the year to last June), while sentenced prisoners reduced slightly from 6766 to 6755.


The proportion of released prisoners returning to jail within a year declined steadily from 28.4 per cent in 2010 to 25.9 per cent in 2014 in line with a Government target, helped by more spending on drug and alcohol programmes, prison employment and support to reintegrate into the community. But reoffending jumped back to 28.1 per cent last year.

The good and bad news:

Housing shortage

The report estimates Christchurch lost about 12,000 houses in the earthquakes of 2010-11, but it now has more houses (190,000) than before the quakes (186,200). Its population has also recovered to 476,900, above a pre-quake figure of 463,900 and about the same ratio of 2.5 people per house as before the quakes.

However, Auckland's housing shortage worsened by a further 5600 homes. Its homes were already relatively crowded with 3 people per house before the building industry collapsed in the global financial crisis, and on that basis its population increase of 43,000 in the year to last September required 14,333 new homes. Only 8721 consents for new dwellings were issued.

Educational achievement

Students in the poorest three deciles are slowly closing the gap with students in the richest three deciles in NCEA: 69.2 per cent of the poorer students left school with at least NCEA level 1 in 2009 and 78.2 per cent in 2014, while the richer students' rate only inched up from 90.6 per cent to 95 per cent.

But the reverse was true for University Entrance: only 16.7 per cent of the poorer school-leavers had UE in 2009 and still only 16.8 per cent in 2014, compared with 55.9 per cent of the richer students in 2009 and 59.9 per cent in 2014.


Unemployment jumped from 3.3 per cent at the end of 2007 to over 6 per cent from 2009-13, and has come down slightly to 5.7 per cent at the end of 2014 and 5.3 per cent last December.

But employment has also dropped in the past year from 65.9 per cent of the population aged 15 and over to 65.3 per cent, mainly because of the ageing population. Employment grew strongly by 4.8 per cent in 2013, and by 3.6 per cent in 2014, but growth slowed to 1.4 per cent last year despite a population increase of about 2 per cent.

Child poverty

Children in material hardship, based on measures such as going without meat and staying cold to save on heating costs, peaked at 21 per cent of all children in the recent recession, and have now fallen back to the pre-recession rate of 14 per cent.

But children in homes earning below 60 per cent of the median household income after housing costs - "relative poverty" - jumped back up to the recession peak of 30 per cent in 2014, because average incomes for working families increased much faster at high and middle-income levels than for lower-paid workers.

Food parcels

The Salvation Army gave out 55,100 food parcels last year, just 100 fewer than 2014 and only slightly down from a 2013 peak of 56,400.

Child abuse

Cases of child abuse and neglect substantiated by Child, Youth and Family (CYF) have plunged by 26 per cent from 22,291 in 2010-11 to 16,472 in the year to last June. But notifications to CYF were unchanged, about 151,000 in both years, and the report says the decline in substantiated cases appears to be related to CYF decisions to reduce the cases it investigated from 42 per cent to 30 per cent.