Simon Collins

Simon Collins is the Herald’s social issues reporter.

Bridging Auckland's wealth gap

Simon Collins looks at what can be done to tackle the widening rich-poor divide in our unequal city

Carla Bradley with 11-month-old son Alex, says she and husband Craig have not been able to afford a trip to the movies for about six years.
Photo / Greg Bowker
Carla Bradley with 11-month-old son Alex, says she and husband Craig have not been able to afford a trip to the movies for about six years. Photo / Greg Bowker

Papakura couple Craig and Carla Bradley will be able to go to a movie this Valentine's Day for the first time since they married, exactly three years ago.

Even though Craig works three jobs, earning a total of about $900 a week (almost the average wage), he and Carla sometimes go without food for two days because their budget is so tight.

They can afford a movie on Tuesday night only because an online Herald reader in Australia was so moved by their story in this week's series on "Divided Auckland" that she sent them a surprise $100 movie pass.

"I last went to a movie six or seven years ago," says Carla. "It's our anniversary on Tuesday, Valentine's Day, so we might go. So yeah, I'm quite stoked."

Meanwhile, on the other side of town, Nigel and Anita Smith and sons Ben and Louis returned to their St Heliers home late on Waitangi Day after a long weekend in Sydney.

"We're lucky that we can do one or two overseas trips a year," says Nigel, whose family earns $150,000 a year from the graphic design business that he and Anita founded.

"I went to the Picasso exhibition, we took the kids to the Harry Potter exhibition, we had lunch out a couple of times and we stayed in a nice downtown apartment."

The growing gap between struggling families like the Bradleys and comfortably-off families like the Smiths has prompted city leaders to promise far-reaching changes.

The opportunity

For the first time in its history, Auckland will soon have a comprehensive plan that will be at least a potential tool to tackle a widening gap between the poorer and richer parts of town.

The new Super City council is required to develop a "spatial plan" that "integrates social, economic, environmental and cultural objectives". Its 30-year "Auckland Plan", due to be adopted next month, proposes five "transformational shifts" including:

Dramatically accelerating the prospects of Auckland's children and young people; and

Substantially raising living standards for all Aucklanders and focusing on those most in need.

It overflows with social targets including 100 new preschools in south and west Auckland; cutting housing-related hospitalisations by 35 per cent and boosting home ownership from 59 per cent to 75 per cent.

No one believes the council can do all these things by itself, but it is negotiating with central government and other players to get their buy-in. Regional strategy manager Ree Anderson says: "Everybody will be owning the Auckland Plan. That is the aspiration."

How we got here

To briefly recap where this series started: Auckland has changed in a generation from an equal city in 1986, when median incomes of most suburbs were bunched tightly around the regional average, to an unequal city by 2006, where median incomes of the city's 300-odd suburban census units spread widely across the income scale.

Similar increases in inequality have occurred across many developed countries.

The driving forces have been both technological changes, which have strengthened the power of the skilled at the expense of the unskilled; and policy changes, which have weakened unions, opened markets to free trade, cut taxes on the rich and imposed new taxes on spending that bear most heavily on the poor.

Such changes are not immutable. The share of total income taken by the top 1 per cent of income earners actually fell for about 60 years up to 1986. The reversal since then has restored the rich share of the cake in most countries back to about where it started a century ago.

There is an inbuilt tension in any large-scale economic system. Natural variations in human capabilities and ambitions tend to accumulate according to what has been called the "Matthew effect" after the Bible verse: "For the one who has will be given more ... But the one who does not have, even what he has will be taken from him."

But, as the rest of the Bible demonstrates, human societies have also struggled for thousands of years to set limits to accumulation for the kinds of reasons expressed in the draft Auckland Plan, as above.

Morally, we are programmed to care for others in need. And practically, we are stronger as a group if all members of the group contribute to their full potential, rather than being alienated and disaffected.

Any human community needs to strike a balance between freedom and compassion - in Auckland terms, perhaps between a "competitive city" and a "caring community". The new plan is an opportunity for us to fix that balance for our generation.

A competitive city

Businesses are the natural champions of dismantling many of the remaining limits to capital accumulation. The Auckland Regional Chamber of Commerce, in its submission on the plan, says: "Auckland's future lies in being a globally competitive city that maintains the qualities of its unique environment and inclusive community."

It urges the council to adopt "less restrictive land use planning, seek efficiencies in the resource consent process, and review the development contributions policy with a view to incentivise building work and make housing more affordable".

Chamber chief executive Michael Barnett says higher pay for skilled people is a natural part of fostering skill-based industries such as boatbuilding or high-tech food manufacturing. But he also believes the city needs to do more to lift the skills of people whose potential is being wasted. "What we do have at the moment is extremes, and the extremes are going to impose huge costs on Auckland."

The chamber already runs programmes to help the unemployed into work: a "New Kiwi" job-matching scheme for immigrants; a "Cadet Max" job preparation and work experience scheme for young people in Manukau; and similar schemes for mothers returning to paid work and graduates from the army's limited service volunteer scheme.

Yesterday Auckland Council agreed to provide 230 of the 1000-odd work experience places that the chamber needs for its youth schemes this year.

Mr Barnett believes central government needs to beef up social agencies at low-decile schools to identify kids at risk of failing and help their parents with their problems. He says the council should also lobby the Government to meet the demand for low-income housing.

But, he says, "Home ownership is not the be-all and end-all." Germany, for example, has high living standards despite low home ownership.

A caring community

At the caring end of the spectrum, the Child Poverty Action Group has been lobbying for more help for low-income families since it was formed in 1994.

Its biggest campaign has been to pay the $60-a-week "in-work tax credit" to parents who lose their jobs or can't work, as well as those in paid work. Since 59 per cent of children in poverty live in homes with no full-time worker, this change alone would slash child poverty.

In Auckland, co-director Alan Johnson says, "The lack of affordable housing is the single biggest social or economic issue facing Auckland."

Half of private-sector renters spend more than 30 per cent of their incomes in rent, and new home-building has collapsed in the recession.

"There are more houses missing in the last three years in Auckland than have been destroyed by the earthquakes in Christchurch," Mr Johnson says.

He says the city needs 12,000 new houses a year to cope with population growth and reduce overcrowding, the main driver of rising rates of childhood infectious illnesses. He wants the council and Government to put $100 million into 3000 of those houses each year through equity stakes or subsidies to non-profit agencies.

"Why shouldn't the capital come from the council?" he asks. "It puts capital into the waterfront - what has the waterfront got to do with me?"

The group's submission on the plan says the council should require developers to allocate part of all new housing for affordable homes, and to provide walkways and bike tracks.

It wants the council to cap or reduce numbers of liquor stores and pokie machines, help young people into jobs, provide council land and school sites for new preschools, make swimming pools free across the city and prioritise new facilities and public transport in low-income areas such as Manukau.

The challenge

Mayor Len Brown is ready to pick up many of these themes.

"We are backing up the new housing developments in the south," he says, "at Mangere town centre, Papatoetoe town centre, the Clendon development zone, where I think we can get significant new housing development in partnership with Government and the Housing Foundation and the Salvation Army."

He wants to provide council land for early childhood centres, push through resource consents and advocate for more Government funding for the neediest areas.

Ree Anderson says the council has already approved an extra $500,000 for extra bus services in the south to be tendered by Auckland Transport this year.

Beyond these local moves, a more fundamental shift in the policy balance might mean picking up ideas from the Council of Trade Unions' alternative economic strategy, such as raising the minimum wage to two-thirds of the average wage, strengthening rights to negotiate wages collectively, raising the top income tax rate to 45 per cent and allowing a tax-free income band at the bottom.

Craig Bradley has one immediate suggestion: "Just dropping the tax on petrol. It's going up, and GST is going up, and wages are not going up to match."

Nigel Smith says: "There is something very wrong with a country blessed with so much farmland where its people can't afford food. I challenge Mr Key to make basic, healthy food affordable to all."

The Smiths' business, Transformer Design, does not give Christmas presents to its clients and instead donates to the Auckland City Mission, which supplies 70 Auckland foodbanks.

Personally, the Smiths have joined web-based group Closing the Gap, supporting political action to reduce inequality, and the Donate NZ website started by Papakura florist Claire Sawyers, which links people with surplus goods to community groups who need them. "For example, at a playcentre they don't want a fancy table, the kids are going to mess it up anyway," Ms Sawyers says. "And a lower-decile school would rather put the $300-$400 they were going to spend on a fridge towards helping out the kids."

The KidsCan charity provides food, shoes and raincoats for children in low-decile schools. The Council of Christian Social Services has started a campaign, "Closer Together", to reduce inequality.

Anita Smith says: "If we want people to clean our toilets and streets, and serve our burgers, then we need to pay. Either a decent living wage or a universal, non-means-tested benefit to underpin "market rates". I'd like to see a society where there was no need for charity, which is humiliating. It's about being fair and making choices that are better for our community. In the meantime, charities need help."

The series
Monday: The widening gap
Tuesday: Tax and benefits
Wednesday: Housing
Thursday: Health
Yesterday: Education
Today: What can we do?

- NZ Herald

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