Housing poverty + baby boomer privilege INTER-GENERATIONAL INEQUALITY AS A CAUSE OF OUR HOUSING CRISIS PRESENTATION BY Alan Johnson SOCIAL POLICY ANALYST THE 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 Society WEALTH 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 Society HOMEOWNERSHIP RATES BY AGE COHORT But surely wealth – especially in the form of home-ownership, accumulates during your working life

An Unequal Society HOMEOWNERSHIP RATES BY AGE COHORT But there is evidence of declining rates of such accumulation

An Unequal Society In % 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 % 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