New Zealand is up to its ears in debt and a double dip recession is a real possibility.
Despite having a low wage economy and a large number of people claiming state benefits it is considered to be expensive relative to other similar countries – especially for housing and food – that caused it to be described as a “100 % Pure rip-off.” It relies heavily on agricultural exports, immigration, international education and tourism to keep the economy afloat.
It suffers from what has been called the “Great Kiwi Brain Drain” and struggles to keep skilled and educated people who leave in high numbers for better paid work in other countries – mostly Australia.
The population is rapidly aging, with some districts predicted to have 30% of residents aged over 65 by 2031.
In May 2011 Statistics New Zealand’s said the country’s population continues to age, with the number of New Zealanders aged over 85 having tripled in the past 30 years. Half of New Zealand residents are now aged over 36.8 years, compared with 34.6 a decade earlier.
An increase in longevity means 1 in 60 New Zealanders is over the age of 85.
New Zealand’s reputation as being a great place to raise kids is a thing of the past because the family unit is fast disappearing in New Zealand. The number of couples without children at home has overtaken couples with children at home for the first time since world war 2. And, shockingly, one in five of those children live in poverty.
A survey conducted by Horizon Research showed that the “burgeoning gap between the haves and have-nots is frothing over into resentment, anger and disillusionment” in New Zealand:
Wealth gap divides nation
Those who are struggling are slamming the government for giving tax breaks to the rich, and for the perceived “propping up” of failed finance companies, while there is a growing tranche of middle- to high-income earners who see those on welfare as a drain on the country’s resources.
According to social researchers, the size of the gap between rich and poor can lead to a welter of other societal problems.
In their 2009 book Spirit Level, Richard Wilkinson and Kate Pickett argue that almost every social problem common in developed societies – reduced life expectancy, child mortality, drugs, crime, homicide rates, mental illness and obesity – has a single root cause, inequality.
And the British academics say New Zealand has greater inequality than most countries.” source
Despite the high number of immigrants in the country there is a large amount of discrimination, particularly against Asian people, Pacific people and gays and lesbians. There are no specific hate crime laws in New Zealand. “it is a mixture of newness, ignorance and prejudice” see video below. Government departments top the list of where people experience the most discrimination.
Here are the facts. Click on the links to read the full stories:
- “The NZ Treasury has been accused of being “asleep at the wheel” after the Auditor General’s office found it took five months to set up proper monitoring processes for the Retail Deposit Guarantee Scheme… Deputy Auditor-General Philippa Smith told a Parliamentary finance and expenditure committee the scheme was set up in haste and Treasury had “continued too long in that reactive and crisis management mode“.” (March 2012) source
- In total “taxpayers have paid out NZ$1.897 billion to investors in failed firms. In late October Finance Minister Bill English said the total amount recovered and repaid to the Crown from the nine receiverships so far was NZ$523 million, with about NZ$395 million of this from South Canterbury Finance. (Jan 2012)
- More than nine companies have called upon the government’s Retail Deposit Guarantee scheme since it was introduced in October 2008. The receivers of Vision Securities Ltd, Rod Pardington and David Levin of Deloitte, expect distributions from any cash recovered to be “significantly less than the payments made to eligible investors under the Crown retail deposit guarantee scheme. Vision, which specialised in financing retirement villages, was sent to the receivers in April, owing 958 investors some $28.4 million.
- At April 30, 2010 the Treasury estimated $880 million for the net cost of all defaults under the bank guarantee scheme, in mid July 2010 that was increased to $887 million. One of the last companies to be put into receivership was finance company minnow Rockforte Finance in early May, which had deposits of just NZ$3.2 million (July 2010)
- New Zealand is $162 billion in debt to the rest of the world, that’s 85% of the country’s GDP. “A ratio of net foreign liabilities to GDP above 60 per cent is considered risky.” The level of net foreign liabilities,which are the cumulative effect of decades of Kiwis spending more than they earn, put them by 2008 in the same neighbourhood as Portugal, Ireland, Greece and Spain.” Source (December 2010)
- New Zealand is expensive. A $100 basket of supermarket goods costs almost 13% of the gross weekly wage, the same goods would be 9% in Britain and Australia and 7.5% in the USA. The NZHerald said “The figures support comments made by visiting rugby writer Peter Bills, who last month attacked New Zealand’s high prices as “one giant rip-off” for tourists and locals.” (August 2010)
- The average weekly mortgage in Auckland is $572. “That means an Aucklander would pay 70.5 per cent of the region’s average weekly wage – $812.04 take-home pay – on the mortgage for a median-priced Auckland house bought last month. This is up from 70.2 per cent in August. Outside Auckland, affordability is worst in Wellington, Christchurch, Hamilton and Tauranga, the report shows.” Source (October 2010)
- The Prime Minister of NZ is the sixth highest paid leader in the developed world in terms of salary relative to GDP, earning a basic salary of $393,000. That is proportionately higher than France’s Prime Minister Francois Fillon, US President Barack Obama, Japan’s Naoto Kan, Germany’s Angela Merkel, Australia’s Julia Gillard, and Britain’s David Cameron.
- The great Kiwi Brain Drain is estimated to cost New Zealand $14,000 for each person that leaves the country through foregone tax and costs of government services such as education, according to World Bank research.
- *The finance company South Canterbury Finance was place in receivership after a bid to re-capitilise failed. The NZ government has bailed out investors to the sum of $1.7 billion to cover their losses, about $150 million more than was needed.
- “Government-guaranteed finance company Equitable Mortgages called in receivers on 26 November 2010”, it has approximately $178 million in Crown-guaranteed deposits. This triggered the Crown’s guarantee under the terms of the Extended Retail Deposit Guarantee Scheme.” (NZ Herald)
- “Around 200,000 New Zealand savers have NZ$6.3 billion frozen in 59 dead or dying ‘Zombie’ finance companies and investment trusts…The New Zealand economy feels a lot like a ‘Zombie Nation’ that wants to keep extending the loans and pretending that eventually everything will eventually go back to normal.” Bernard Hickey, writing for The NZ Herald. (August 2010)
- “People in Northland are too poor to pay council rates. Hardest hit is the Far North District Council, where unpaid rates over the past six years now total $26 million – $4 million higher than last year and $8 million up on 2008. The increase is being put down to the effects of the recession. The number of properties owing rates has fallen since last year but each property on average owes more. Last year, 5500 general land properties owed $9.4m. This year those figures are 4700 and $11.4m. With Maori freehold land the increase is sharper, from 2180 properties owing $11.7m last year to 2100 properties owing $14.8m now. A major factor this year, according to strategic policy manager Chris Ellington, is the number of subdivisions owing money but in receivership.”
- “Out of a population of 4 million there are 360,000 working-aged New Zealanders on welfare benefits or accident compensation. That’s 12.4 per cent, or one eighth, of all those aged 15 to 64 – up from just 2 per cent a half-century ago. More than a fifth of children (21 per cent) are growing up in benefit-dependent families. More than a quarter of working-aged Maori (26 per cent) are on benefits or ACC.
- Rents are set to rise and property prices fall over the next two years until levelling out, the increase in rent is due to changes in personal taxation being passed on to tenants (July 2010)
- Sheep and beef farming in New Zealand could disappear because of a drop in profits, farmers are moving ‘in droves’ into dairy and forestry. If the sheep and meat industry is “not fixed we’re going to have a country covered by dairy cows and pine trees.”
- Tourism plays a significant role in the New Zealand economy. For the year ended March 2009, tourism directly and indirectly contributed $15 billion (or 9.1%) to New Zealand’s GDP (excluding GST and import duties). International tourist expenditure over this period accounted for $9.3 billion or 16.4% of New Zealand’s total export earnings. In 2008 New Zealand received just over 2.2 million international visitors (aged 15 years and over). Of these visitors, 849200, or 38%, participated in at least one adventure activity while in New Zealand.
- In total, international visitors who participated in at least one adventure tourism activity (international adventure tourists) spent $3.0 billion on their New Zealand trip (excluding international airfares) This is half of total international visitor expenditure ($5.9 billion), indicating that adventure tourism activities are an important component of the New Zealand visitor experience.
- Ministry of Tourism statistics indicate that ‘adventure tourists’ are a valuable market segment. On average, international adventure tourists spent $3,520 on their New Zealand trip (excluding international airfares). This is more than the average trip spend of all international tourists, which is $2,682 per trip
- International students are worth $2 Billion annually to the NZ economy. One leading academic has described them as being “only seen as cash cows“Latest statistics put the figure for foreign students studying in NZ at 93,500, including about 15,400 in schools and 29,400 in tertiary institutions. There was a 10 per cent growth in revenue from international fee-paying students last year, totalling $664 million. As a result places for less ‘lucrative’ NZ students are limited.OECD data shows that New Zealand’s wages lag around 30% behind its nearest neighbour Australia. In the past 12 months Australian wages have climbed faster than New Zealand’s (Feb 2010)
- The government says it has no intention of selling Kiwibank, the only NZ owned bank in New Zealand. John Key said ”We’ve got no intentions of selling it. Our position is that we won’t be selling any assets this term.” (June 2010)
Demographics and Immigration
- “A Maori academic says immigration by whites should be restricted because they pose a threat to race relations due to their “white supremacist” attitudes. The controversial comments come in response to a Department of Labour report, obtained exclusively by the Sunday Star-Times, which found Maori are more likely to express anti-immigration sentiment than Pakeha or any other ethnic group. Margaret Mutu, head of Auckland University’s department of Maori studies, agreed with the findings and called on the government to restrict the number of white migrants arriving from countries such as South Africa, England and the United States as they brought attitudes destructive to Maori. “They do bring with them, as much as they deny it, an attitude of white supremacy, and that is fostered by the country,” she said…” read more (Sept 2011)
- “New Zealand’s children suffer not only a higher rate of hardship than other New Zealanders, but a greater share of New Zealand’s children face hardship than in many other countries. New Zealand’s olde r population faces a low rate of hardship relative to the other New Zealand age groups and relative to the same age groups in other countries. Having about one out of every five children facing hardship is a situation that must be improved. The comparison to other countries shows that New Zealand is unusual in choosing to impose such a burden on the youngest segment of the population.” Source NZ Institute report NZ Ahead
- Net migration in year to September 2010 year was 13,900. Asian emigration has overtaken that from Great Britain, with net gains from the United Kingdom of 6300, India 5900, and China 3500.
- Asians are the fastest growing ethnic group in the country and Statistics New Zealand projects it will increase by around 3.4 percent a year to reach 790,000 by 2026. The number of Asians is expected to almost equal the number of Maori within 16 years.
- By 2026 15% of the total workforce in New Zealand will be from Asian countries according to a report. 50% of working age Asians are aged 15-34 are likely to be university educated and working professionally. “The report also tells us degree-qualified Asians are three times more likely to be working as clerks as the national average, suggesting many are actually over qualified for the job they’re in.”
- “Asian New Zealanders continue disproportionately to experience discrimination and harassment. The Human Rights Commission has identified action to counter discrimination against Asian New Zealanders as one of the top ten race relations priorities for 2010.” – NZ Human Rights Commission, August 2010.
- A 100 year old woman died from scabies, after her condition had gone untreated for too long at a Tauranga rest home. A Herald article said that the family of the dead woman weren’t alone in their concerns over her treatment and care. “Several recent reports point to a tsunami of problems bearing down on the sector: a burgeoning ageing population; a lack of facilities; a lack of Government money; and poor standards, auditing and complaints procedures.
- Marlborough is set to become the retirement capital of New Zealand, by 2031 31% of its population will be over 65 years old. Otago’s will rise to 22% over the next 20 years. New Zealand’s rapidly aging population is going to have massive implications for health care.
- “House building consents fell more than 5 per cent in July 2010 according to official figures, more than outweighing a small rise in June, but apartment consents rose in the month to more than 200, the best level for a year. More than half of the new apartments were retirement flats.” BusinessDay.co.nz 31 August 2010
- The family unit is disappearing in New Zealand. Statistics NZ’s latest family and household projections show that couples without children at home overtook couples with children at home in 2008 for the first time since at least World War II.
- Northland has the highest unemployment rate in the country with 7,000 people out of work and still rising. There were only 255 jobs listed in Work and Income books in Whangarei on July 9 this year.
- Migrants are important to the NZ economy. The migrant population of 927,000 people had a positive net fiscal impact of $3,288 million in the year to 30 June 2006. The net fiscal impact per head was $2,680 for recent migrants, $3,470 for intermediate migrants and $4,280 for earlier migrants. The net fiscal impact for the New Zealand-born population was $915 per head. Migration is coming to a standstill and is predicted to turn into negative figures.
- “Tairawhiti has been labelled the domestic violence capital of New Zealand — it is tragically common here, but the awareness we have helped raise means this region also has very high levels of incident-reporting by family members and neighbours.” – Editorial in the Gisborne Herald