Majority expects to be looked after

A home will always be the biggest purchase in the lives of most New Zealanders. Photo / File

In the lead-up to the election, we’re taking a look at some of the issues people care about and how political parties aim to tackle them. Today, Michael Botur looks at the lot of people who live between the breadline and the bankers.

There is no such thing as a middle class in this country - well, not according to Statistics New Zealand.

Our egalitarian society doesn't officially record the concept of class. What we do have is a middle: averages, medians and means applicable to our 2.32 million workers. Millions of Kiwis have mortgages, careers, own cars and can afford insurance and holidays. They're sensitive to capital gains tax, rates and income tax. Their votes are coveted. Who are they?

"Pakeha and Asian families are much more likely to be middle class than Maori or Pasifika families," University of Waikato's Martin Thrupp said in a lecture about how middle-class advantage disadvantages low decile schools.

Edward Haddon published a University of Auckland paper which analysed how New Zealanders saw their own class position; 51.5 per cent of us saw ourselves as middle class, with 28.5 per cent calling ourselves lower or upper middle class. In total, 80 per cent of us claim middle class status. The paper was informed by the 2009 Social Inequality IV survey and considered attitudes involving everything from union membership to occupation, household structure, ethnicity, voting, church and even the number of books in the household.

Rising sums
Over the past five years, Consumer Price Index rises have occurred in the cost of home insurance (up to 130 per cent), the price of many foods (around 20 per cent) and electricity and rates (both up roughly 20 per cent). The latest CPI quarterly figures saw electricity rise most, followed by housing. There have been statistical wobbles in seasonal vegetable and dairy product prices. Package holidays, vehicles and alcohol have fallen in price in the last quarter. The CPI continues to report rising prices for many essentials: health, education, and petrol. Then again, prices have slipped in communication, clothing, recreation, second-hand cars and telecommunications.

All powered up
Kiwi households spend $1111 a week, on average. We spend about $192.50 on food, $29.50 on alcohol, tobacco and drugs, $31.60 on clothing and footwear, $158.30 on transport and $107.20 on recreation and culture. There are other costs, of course. The biggest by far? An average $272.90 on rent, mortgage, and power bills.

Labour promises to bring electricity prices "back under control" using its NZ Power concept. "NZ Power will bulk buy electricity from all the generators and pass the savings on to New Zealanders," David Cunliffe pledged. Power prices for the average household would drop by $230-$330 a year, businesses would see prices drop by about 7 per cent, and the policy could create 5000 jobs and boost the economy by $450 million per annum.

One budget adviser, Diane Bruin of Tauranga, said the policy could benefit hundreds of people in her patch. She said power was the highest cost commodity for many people.

Labour Minister Simon Bridges disagreed. "Labour's complex, costly and bureaucratic proposal will kill competition, threaten security of supply, and do nothing to lower power prices," he said.

Saver of Kiwis
The working age population is 3.579 million, of whom 2.328 million are employed. All are expected to save.

The median weekly income from wages and salaries alone is $844 (up 4.8 per cent), says the NZ Income Survey of June 2013. That weekly amount works out to $43,888 for a 52-paid week year. Median hourly earnings are $21.58.

The minimum KiwiSaver contribution rate is 3 per cent, so the median Kiwisaver contribution per week would be $25.32 going into savings - that's $1316.64 saved per year, based on a 52-paid week year. Employer contributions double this.

The Household Economics Survey to June 2013 mostly matches this. Average annual household income from all sources has risen by 11.5 per cent to $84,462.

National promises to replace the KiwiSaver First Home Deposit Subsidy with a KiwiSaver HomeStart Grant, doubling the support for buying a new home and increasing house price limits to enable larger KiwiSaver First Home Withdrawals.

House in order
A home will always be the biggest purchase in the lives of most New Zealanders.

Home ownership rates are the lowest they've been in 50 years, says National.

Average weekly mortgage payments since 2011 have remained about $356 a week.

National plans to increase HomeStart Grant house price limits to $550,000 in Auckland, $450,000 in Wellington and Christchurch, and $350,000 for the rest of the country.

Welcome Home Loans require just a 10 per cent deposit on the mortgage value instead of the new 20 per cent.

The loans are available to households with a combined income of less than $120,000. Deposits to secure these loans can come by cashing in KiwiSaver.

HomeStart grants differ depending on whether somebody is buying a new or existing home. The $20,000 grants are for new houses, $10,000 for existing home purchases. A HomeStart grant combined with a Welcome Home Loan should enable couples earning at least $40,000 to get a mortgage.

Governments are prepared to lend billions to keep the middle class contributing. After all, 80 per cent of the population can't be wrong.