Housing costs key as inequality remains high

Latest inequality figures released today show that income inequality has increased again in 2013: the incomes of the lowest half of income earners are going nowhere, having seen no increase in the past five years, while the top half have increased their incomes.

Housing costs are also having a huge impact on people’s incomes, says New Zealand Council of Christian Social Services (NZCCSS) policy advisor Paul Barber. Half of all the people receiving the accommodation supplement are paying more than 50% of their income in rental housing or mortgage finance costs.

The impact of housing costs on people bears out the experience of the social services in NZCCSS networks. People are being driven into homelessness because of the lack of affordable rental housing, especially in Auckland and Christchurch. People sleeping in cars because there is no housing available, and families paying $400 a week to live in sub-standard caravan parks, are evidence of the housing chaos for many low income families.

“New Zealand’s housing sector is a glaring example of the negative effects of income inequality,” Barber says. “It literally divides us geographically. Our health is damaged by poor quality, over-crowded houses. Maori and Pacific communities are more affected than others, reducing their chances to get ahead in life.

“The present programme of “housing reform” isn’t making the promised difference for the most vulnerable in our communities. We are yet to see more houses for those in the lowest third of the housing market. And the next two years offer little hope of change. Housing Minister Nick Smith concedes the problem needs years to be resolved – cold comfort for those sleeping in cars and caravans right now.

“While it’s still early days to assess the changes to housing needs assessments and access to the income-related rent subsidy, we can’t help but note that of the $95.7 million allocated to the Ministry of Social Development to implement changes to housing assessment, only $8 million is for financial assistance to actual tenants. The Social Housing Fund has received a miserly $10 million for new houses.”

“We need housing policy that empowers not marginalises. The current investment is simply too little to make any significant impact to reduce poverty and inequality. That’s a lost opportunity.”

The background to this inequality problem is that, over the past 30 years a huge gap has opened up between the rich and the rest in New Zealand. The incomes of the top 10% and 1% have doubled while everyone else has seen very little increase.

Most of the damage was done in the mid-80s to mid-90s, and despite some improvements in the early 2000s, we are now back to record high levels of inequality. The latest income inequality figures announced today confirm that there is no sign of the gap in incomes closing.

More than half of New Zealanders’ wealth is held in property, so the inequalities in the housing market have a huge impact on overall inequality in this country. With wealth inequality typically twice that of income inequality, huge divides are opening up in our society.

“Housing is vital to wellbeing”, Barber says. “Lower rental costs allow people to spend more on other essentials like food, clothing and heating. If we do social housing well, then everyone benefits from the more equal and cohesive society that results.”

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