I recently caught up with Dr Ganesh Rajaram Ahirao who was formerly the Research Director at BERL and Chair of the now disestablished Productivity Commission ,who has been analyzing data from Stats NZ on wealth distribution in our country - and what he has uncovered is truly alarming.
You can find his research on his Substack here:
However I have copied his research post below in case you can’t access it and you want to read his disturbing analysis as he talks to me about what it means.
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In 2024 Aotearoa wealth ranged between
* an average net debt of $298,000 for each of 19,9401 households
* an average net wealth of $9.2 million for each of another 19,940 households.
Alternatively,
* 19,940 households shared total net debt of $5.9 billion
* another 19,940 households shared total net wealth of $183.8 billion.
The picture below illustrates the net wealth per household - across the total spectrum of the wealth distribution - with each vertical bar representing 19,940 households.2
The right-hand end of the spectrum illustrates that, while relatively small in number, the net wealth of the uber-wealthy was visibly well above those only a few bars towards their left. For example, the 19,940 households in the 95th percentile (the 6th bar from the right) each with $4.1 million of net wealth is less than half that of the $9.2 million for each of those households in the 100th percentile.
Adding up the ten bars at the right-hand end of this spectrum, (together representing 199,400 households), results in a combined $1,006.9 billion in net wealth. Each household in this group possesses net wealth of at least $2.5 million, with many having visibly more.
However, wealth at the left-hand end of this spectrum is close to invisible. The widespread prevalence of household’s either in net debt, or possessing relatively negligible levels of net wealth, is saddeningly stark.
The left-hand 50 vertical bars in the picture - together representing the net wealth of 997,000 households (that is, half of all households) - barely register any visible wealth.
The following picture magnifies the previous chart, allowing the left-hand 50 vertical bars to become visible. Note, critically, that the vertical axis depicts a considerably smaller range of wealth (in $thousands and not $millions) than in the previous chart. However, each vertical bar still represents 19,940 households - with the 50 bars together totalling half of all households in Aotearoa in 2024.
The numbers are sobering, if bland
* the half of all households illustrated here together recorded net wealth totalling $138.2 billion
* that means half of all households in Aotearoa possessed 6.7% of the total net wealth of all households
* consequently, the other half of households in Aotearoa possessed 93.3% of the total net wealth of all households.
I urge you to see past the blandness of the numbers and remind yourself that behind each of the 19,940 households represented by each of those vertical bars lie individuals, families, whānau, hapū, and community hopes and aspirations.
The numbers in the latter chart include many people and communities still awaiting - in vain - for the hope and opportunities to be accrued from the much-promised trickle down.
The chasm opens
Those unfortunate to be amongst those households towards the left-hand end of this spectrum have seen their wealth struggle to register any significant improvements over the 9 years to 2024. Worse, many have seen their debts noticeably increase.
What was a divide, has become a chasm.
The combined total debt of the least-wealthy 10% of all households (that is, 199,400 households, being the ten bars at the left-hand end of the spectrum in the pictures above) last year totalled $8.0 billion. In 2015, that debt totalled $1.7 billion.
In contrast, the combined wealth of the most-wealthy 10% (the ten bars at the right-hand end of the first picture) rose from $551.5 billion in 2015 to the aforementioned $1,006.9 billion.
Yes, the nine years to 2024 saw the least-wealthy households in Aotearoa subjected to an ever worsening debt picture - with their total debt rising by $6.3 billion.
That is, an average $31,640 worsening for each household.
Over the same period, the most-wealthy households in Aotearoa enjoyed an increase in their total wealth of $455.3 billion.
That is, an average $2.3 million improvement for each household.
I know it is a cliche to talk about the rich getting richer, while the poor get poorer. But, what I do not know is when (or how) we - as a nation - have seemingly become so immune to this utter failure of our economy and the consequent dereliction of our duty to our people and communities.
Many prognoses, advice, and policies centre on education as the key out of poverty. I share such a view. And, yes, I wholeheartedly encourage further education and training as this data (discussed below) provides evidence of a better wealth outcome for those with further qualifications.
But, as the least-wealthy sought further education over the years to 2024, in a perversity that I can only describe as incredulously cruel, a noticeable component of the loss of wealth of the least-wealthy was a disproportionate increase in student debt.
The hurdles and barriers facing many in navigating across the chasm appear increasingly insurmountable.
The above chart illustrates - through standard headline statistical indicators of inequality - the nature of the gap that has now widened to a stark chasm.
The P90/P10 indicator is defined as the net wealth of the household at the 90th percentile compared to the net wealth of the household at the 10th percentile. The relative closeness (or not) of these two measures reflects the relative equality (or inequality) of the underlying distribution. When stated as a ratio (as depicted), the higher the indicator the higher the relative inequality. And similarly, using the stated respective percentiles, for the P80/P20 and P70/P30 indicators.
The chart shows that, in particular, the P90/P10 indicator has dramatically increased over the 9 year period - from a ratio of 50 to be a ratio of 73 in 2024.
This dramatic shift - accompanied by the relative stability of the other two indicators of inequality - confirm the changes in wealth are relatively concentrated at either ends of the spectrum. In contrast, the ‘middle’ appears to have held relatively stable - likely underpinned largely by the increasing skew towards housing-related wealth.
The throw-away quip could be that this data does not tell us anything we didn’t know already. I would counter that, yes, the data is bland (and blind); but the people and their communities are real, as are their opportunities, aspirations, and hopes.
Whether we knew already is not the issue; it is whether we continue to remain immune to the failure of the economy that we have designed.
A peek under the hood
Houses, financials, non-financials, and student debt
I follow with an outline of some of the detail of the changes in the distribution of wealth. However, to ensure data comparability I am limited to looking at totals and averages for each quintile group; noting each quintile group of households represent a fifth (or 20%) of all the households in Aotearoa (that is, 399,800 households in each quintile in 2024).
The picture below, again, illustrates a comparatively microscopic change for the least-wealthy households (at the left-hand end of the spectrum - labelled Q1). Similarly, the numbers for the second quintile (labelled Q2) are also barely visible.
Closer inspection of the numbers for quintile Q1 reveal
* total net wealth worsened by $2.7 billion over the nine years (or $6,720 per household), comprising
* a $4.8 billion increase in other financial wealth
* a $2.0 billion increase in education debt (student loans)
* a $4.7 billion increase in other non-financial wealth
* a $9.3 billion reduction in net equity in their own houses.
The comparable numbers for quintile Q5 (as visibly illustrated) are
* total net wealth improved by $650.2 billion (or $1.6 million per household) over the nine years, comprising
* a $297.8 billion increase in other financial wealth
* a $0.6 billion increase in education debt (student loans)
* a $119.5 billion increase in other non-financial wealth
* a $233.6 billion increase in net equity in their own houses.
Outside of the total quantum and different direction of the changes over the 9 years recorded by the two quintiles, points to note include
* an improvement in the net equity in own houses for quintile 5 contrasted with the reduction for quintile 1
* undoubtedly related to the reduction in home ownership opportunities, and consequent shift to renting, for households at the left-hand end of the wealth spectrum.
* the improvement in other non-financial wealth for quintile 5 households includes a significant increase of $80 billion in other real estate assets (net of loans on such assets)
* undoubtedly reflecting the attractiveness of holding assets in houses other than one’s own
* but this was an opportunity well out of reach for quintile 1 households. In this case the $4.7 billion improvement in other non-financial wealth included a reduction in the loans (net debt) owing on other real estate assets
* in addition, an improvement in wealth was recorded for both quintile groups through collections of household contents and equipment, furnishings, cars and other consumer durables.
* the improvement in other financial wealth enjoyed by both groups reflected savings (including KiwiSaver and other pension funds and stock holdings) alongside cash holdings, but also netting out debt to other lenders
* the improvement for the quintile 5 households were concentrated in a $245 billion wealth increase in bonds, stocks, securities, equities and other items within the savings sub-category
* the improvement for the quintile 1 households were more noticeable in cash holdings but also balanced by an unwelcome increase in debt to other lenders - likely to include pay-day lenders and/or MSD debt.
* in what is a truly perverse outcome, the total increase in education debt over the 9 years of $5.3 billion was dominated by the $2.0 billion increase experienced by households in the least-wealthy quintile 1
* this contrasts with the increase in education debt recorded for quintile 5 households, which was a comparatively microscopic (given the scale of their total overall wealth) $0.6 billion.
The perversion needs to be highlighted in response to the “bootstrap brigade” that propound the view that those less wealthy just need to avail themselves of further education and training opportunities.
The noted outcome serves as a reminder (for all that either choose to remain unaware, or are willingly complicit in ignoring evidence) that such opportunities are costly in present-day Aotearoa.
Individual wealth data confirm unequal starting positions
Turning to the wealth of individuals - rather than of households - there are numerous ways that the data could be sliced or diced that would all warrant exploration. For brevity, I touch on just a couple of topics that I consider of high importance and relevance - that of the wealth of individual Māori and that of the relationship between wealth and qualifications.
Net wealth for Māori still well behind the national total
For Māori, the story sadly remains one of starting well behind the start line. Promisingly, though, the difference appears to be narrowing.
As is widely understood, the age distribution of the Māori population is significantly different (younger) than that of the total population. This difference needs to be accounted for when comparing the measures for the different population groups. If not adjusted, then any measures for the younger populations would be skewed (biased) downwards due to the observation that younger people accumulate, on average, less wealth than older people. This process is called age-standardising the data and ensures apples are, indeed, compared with apples. The following chart illustrates the appropriate headline data.
Across all individuals (aged 15 and above) the median3 net wealth in 2024 was $136,000, up from $84,000 some 9 years earlier. In contrast, the median for Māori individuals in 2015 was astonishingly low at $22,000. The behind the start line analogy is entirely appropriate here, noting the impact of inherently colonial influences, not to mention generations of land theft and cultural dispossession and alienation.
Noticeably, and promisingly, the 9 years since has seen this figure more than double to stand at $52,000 in 2024. This move puts this measure at more than a third of the nation-wide figure, up considerably from close to a quarter only 9 years earlier.
It is also pertinent to note that these measures only include individually-owned assets (less individually-owed liabilities). In particular, they do not include collectively-owned assets - such as whenua Māori, and other Trust and Incorporation assets or, indeed, settlement pūtea. This, of course, begs the question of the definition of wealth - but that’s must await a separate note!
Higher formal qualifications associated with higher wealth
While the 2015 data showed a significant difference in median net wealth for those with further (formal) qualifications, the 2024 data has turbo-charged that difference.
The picture above illustrates that in both 2015 and 2024 the median net wealth of individuals (aged 15 and above) with no qualifications or with only Level 1-3qualifications was noticeably below others. Further, those with Level 5-6, Level 8, andLevel 9-10 qualifications recorded the highest median net wealth. Of interest is the relatively low figure for median net wealth for the Level 7 qualification group.
But, the biggest takeaway from the above chart is the striking increases in the median net wealth figures for all groups with further qualifications at Level 4 or above.
The quandary (or challenge) is to ensure that such results are sustained (or improve further) into the coming years. And for those in households that have been subjected to relatively large immediate increases in education (student) debt are sufficiently supported while they continue to await the promised longer-term gains.
“We can’t afford it”
Simply put, if just half of the $455.3 billion improvement between 2015 to 2024 enjoyed by the 10% most-wealthy households were re-distributed, it would equate to another $142,700 for each of the 80 percentiles of households representing the least-wealthy third of all households. That $142,700 improvement could re-ignite the opportunities and hope for the least-wealthy households amongst us.
And, by the way, that would still leave a $226.7 billion improvement for the 91st to 100th percentile households, leaving them still well above the households in the 90th most wealthy percentile.
Oh, and abolishing (or ‘forgiving’) student loans would also be a good start. Forgiving those in households in quintile 1 would require only $5.9 billion. A mere pittance in comparison to some of the sums mentioned here.
There were a total of 1,994,000 households in Aotearoa in 2024. Thus 19,940 represents 1% of all households. This is approximately similar to the number of households in the Marlborough District; or in the Timaru District; or in the Waitākere Ranges Local Board Area.
All raw data used in this note has been sourced from Statistics New Zealand Tatauranga Aotearoa in its latest Household Net Worth survey released last week and available at https://www.stats.govt.nz/information-releases/household-net-worth-statistics-year-ended-june-2024/
Noting the median is equivalent to the 50th percentile of the distribution, representing the ‘half-way’ point - with half the population recording a level below the median figure and half above this figure.
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