The New Zealand Institute

The New Zealand Institute looks to help Kiwis get ahead

26 Jul 2004

A report into New Zealanders’ wealth released today has shown that many New Zealanders struggle to get ahead financially, and calls for attention to be focused on improving this situation.

The report called “The Wealth of a Nation: The Level and Distribution of Wealth in New Zealand”, is the first in a series of six papers to be released by the newly formed New Zealand Institute, around the central theme of ‘Creating An Ownership Society’ in New Zealand.

Chief executive Dr David Skilling said this was chosen as the Institute’s first research program because of the evidence that asset ownership is vital to the welfare of individuals, communities, and the overall country.

“The report shows that many New Zealanders do not own significant assets, and notes that New Zealand has the least asset-friendly policies of the Anglo countries,” Dr Skilling said.

“Official data shows that the wealthiest 10% of the New Zealand population hold more than half of the total wealth and the bottom half of the population holds less than 3%.  In our report we’ve also noted that New Zealand has a relatively high proportion of people with negative wealth - 16% of the New Zealand adult population has negative wealth compared with 4% in Australia and 8% in the US,” he said.

“Median household wealth in New Zealand is NZ$68,000 compared to A$220,000 in Australia”.

Dr Skilling said many of those with low wealth were young and could increase their wealth over time. However, many people never accumulate assets.  “Even at the end of people’s working lives, about 10% of 60 to 64-year-olds have no or negative wealth and half have less than $220,000.”

Dr Skilling said that those who really struggle to get ahead are those who earn below the median income and those with dependent children.

The report also identifies factors that are likely to make it harder for young New Zealanders to get ahead.

Generations of New Zealanders have got ahead through home ownership - paying off the mortgage and benefiting from capital gains.  However, home ownership rates have declined sharply over the past decade - from 74% to 68%.  This decline is particularly pronounced among the young. 

In addition, student loan debt will make it more difficult for many young New Zealanders to accumulate wealth to the same extent that their parents were able to.  Over 100,000 New Zealanders currently have student loan debt of over $20,000 and over 425,000 New Zealanders currently have some outstanding student loan debt.

Dr Skilling concluded that together these factors have the potential to significantly reduce the ability of New Zealanders to get ahead, and build an ownership stake.

“Following the report’s release today, the Institute’s focus will be on identifying ways to assist many more New Zealanders to get ahead.  We can learn from countries like Australia, the UK, the US and Canada, where there are policies that successfully assist people - like savings policies and assisted home ownership programs.  The good news is that there are proven ways to help.” said Dr Skilling.

The next papers in the series will outline the evidence of the benefits from asset ownership, and will then explore some possible solutions.

ENDS

Note to Editors:
The New Zealand Institute’s report brings together publicly available information from the 2001 Household Savings Survey, the IRD, the Reserve Bank, and overseas studies.  And Institute staff have conducted a series of about 80 in-depth interviews with a wide range of New Zealanders about their experiences and perspectives on these issues.