Blooming economic health not matched in social statistics

By SIMON COLLINS

New Zealand has a budget surplus but a social deficit, judging by a Herald/DigiPoll survey of New Zealanders' opinions.

Some 59 per cent of those surveyed say that any money available from the budget surplus should be spent on education or social programmes such as health.

Only 33 per cent would rather use the money to cut taxes or pay off debt, and just 8 per cent would spend it on marketing New Zealand as a "hot" migration haven for talented people.

Despite a buoyant economy which has swollen the Government's surplus to an estimated $3.5 billion this year, other surveys have found repeatedly that New Zealanders believe that our social services are failing to cope with our needs.

In the 18 months since the first Knowledge Wave conference, our economic output has grown faster than most other members of the 30-nation Organisation for Economic Co-operation and Development (OECD), and our currency has strengthened.

Yet the OECD comparative report on Society at a Glance, published this month, found that New Zealand had among the worst rates in the developed world of youth suicide, drug use, teenage pregnancies and youth unemployment.

Delegates at this week's Knowledge Wave Leadership Forum will ask why we still fare so badly, and what can be done to strengthen our communities.

Our problem is not that we give lower priority than other countries to services such as health and education. We spend 6.6 per cent of our national income on tax-funded health care compared with the OECD average of 5.9 per cent, and 6.3 per cent on education compared with the average of 5.2 per cent.

Arguably the problem, rather, is two-fold. First, our national income itself still shows up in the latest report as 13 per cent below the OECD average and 23 per cent below Australia, after adjusting for population and price differences.

And second, our national figures hide gross inequalities within our population. It is not that New Zealand as a whole is slipping out of the "first world", but that a gap is opening up between first and near-third worlds inside the country.

The poll shows the level of our concern. The pollsters asked: "As you know, the Government has left-over money - a budget surplus. What out of 100 per cent should be devoted to ... ?" On average, the answers were:

* Spending money on social programmes like health, some of which have been restricted or cut over the years - 32.1 per cent.

* Investing in education and knowledge to further New Zealand's growth prospects - 26.7 per cent.

* Cutting the level of debt accumulated by the Government over the years - 19.1 per cent.

* Cutting taxes that have been creeping up over the years - 13.7 per cent.

* Market New Zealand as a "hot" destination for talented people to move to - 8.4 per cent.

In fact, public health spending has indeed dropped, according to the OECD, from 6.9 per cent of our national income in 1980 to 6.6 per cent in its latest tally (for 1998).

But this was a mere marginal slippage compared with the extra 16 per cent that New Zealand's national income itself fell further behind Australia's in the same period.

And within the country, a measure of widening gaps is that the proportion of people living on less than three-fifths of the average income, after adjusting for taxes, housing costs and family size, rose from 12.7 per cent in 1987-88 to 26.7 per cent in 1992-93.

The latest official Social Report, published in December, shows that poverty levels fell slightly as the economy improved in the late 1990s, but by 2000-01 some 22.6 per cent of the population still lived on less than three-fifths of the average income.

If you take that as the measure of poverty, in 2000-01 poverty afflicted:

* 29.1 per cent of all children.

* 32 per cent of all families with a Maori adult.

* 40 per cent of all families with a Pacific adult.

* 66.3 per cent of all children in sole-parent families.

In 1997, fully 33 per cent of Maori women and 36 per cent of Pacific women reported that their households could afford to eat properly only sometimes. Just under 10 per cent of Pakeha and Asian women said the same thing.

Auckland University economist Susan St John told a forum in Auckland last September: "Child poverty is a cancer in the fabric of this once-proud nation."

It was, she said, a simple matter of state policy. Successive governments had allowed family support payments to dwindle, while tax rates on high earners were cut.

"In the mid-1990s, instead of properly adjusting family support to compensate for inflation, the child tax credit was introduced," she said.

"The child tax credit is added to family support, but only for those children whose parents are deemed 'independent from the state'.

"The rest, about 300,000 of the most needy children in New Zealand, are the undeserving poor and miss out on this $15 per child per week payment.

"How do they miss out? It may be one of their parents is on a benefit, perhaps chronically ill, or lost their job and is now doubly punished, or they are on accident compensation for more than three months.

"If one parent dares to be old and on NZ superannuation, or studying on a student allowance, their children too are excluded."

With the budget in surplus, the issue is at last on the Government's agenda. Prime Minister Helen Clark said before last year's election: "In our next term family support and family tax credits will be reviewed so that our low-income families don't slip behind."

APART from families, the other notable dimensions of poverty in New Zealand are ethnicity and age - and that is not old age, but youth.

Last September, just 3.8 per cent of the ethnic-European workforce was unemployed. But unemployment affected 8.5 per cent of "others" (mostly Asians), 9.3 per cent of Pacific people and 12 per cent of Maori.

By age group, unemployment hit 14.4 per cent of would-be workers in their teens, 8.8 per cent of those in their twenties, 4.3 per cent in their thirties, 3.1 per cent in their forties and 2.7 per cent in their fifties.

Even in their sixties, only 3.8 per cent of those in the workforce were counted as unemployed.

Just on 40 per cent of all the jobless were under 25.

Put the other way around, the proportion of working-age Europeans who were actually in employment rose from 73.5 per cent in 1986 to 76.7 per cent in 2001, despite all the massive economic restructuring that came with abolishing most import controls and privatising Telecom, the Forest Service, the railways and other agencies.

But Maori and Pacific employment rates dropped from 61.9 per cent and 67.2 per cent respectively in 1986 to just 58 per cent in 2001.

The Social Report adds: "The employment rate decline between 1987 and 1992 affected all age groups, but was most pronounced for young people. Youth employment rates have remained relatively low during the period of employment growth since 1992, possibly due to growth in participation in tertiary education and training."

In a May 2000 report entitled Progress towards Closing Social and Economic Gaps Between Maori and Non-Maori, the Maori development ministry Te Puni Kokiri reported that the gap between Maori and non-Maori jobless rates had narrowed since the depths of that early 1990s recession, when at one stage half of all young Maori workers were unemployed.

But with Maori still more than three times as likely as Europeans to be jobless, the report said: "Maori have not fully recovered from the economic restructuring."

But there is some good news. Maori and Pacific people are becoming far more educated.

This matters. A statistical study last year by Janet Humphris of the Labour Department and Simon Chapple of the Social Development Ministry found that a relative lack of education among Pacific people accounted for more than 100 per cent of the widening gap in employment between 1986 and 1999.

In other words, in theory, if Pacific people had been as well educated as the rest of the population, the job gap would actually have narrowed slightly, rather than yawning wider.

Maori involvement in education has exploded in the past dozen years. From 1991 to 1998, Maori school enrolments rose by 18 per cent, partly a measure of population increase. In the same period numbers of Maori preschool students jumped by 39 per cent, and Maori tertiary students leapt by an extraordinary 115 per cent.

In the 10 years to 2001, the proportion of European people aged 25 to 64 with at least upper-secondary qualifications rose from 66.1 per cent to 76.5 per cent.

In the same decade the proportion of similarly qualified Maori in the same age group soared from 39.3 per cent to 57.6 per cent. In the Pacific population, the proportion almost doubled, from 27.9 per cent to 52.5 per cent.

There is still a long way to go. Te Puni Kokiri points out that Maori students passed only 42 per cent of their School Certificate subjects in 1998, compared with 67 per cent of non-Maori students.

At tertiary level, the vast increase in Maori enrolments has been mostly in diploma and certificate courses, with the most dramatic rise at the burgeoning te Wananga o Aotearoa where student numbers more than doubled last year alone to 25,233.

Last July, Maori made up 83 per cent of all domestic students at the three wananga, 28 per cent of those at private education providers and 17 per cent of those in polytechnics, but only 10 per cent of domestic university students.

Except for the wananga, the pattern for Pacific Islanders was similar: 8 per cent of total domestic students at private providers, 5 per cent at polytechnics and just 4 per cent at universities (and 3 per cent at wananga).

Europeans were more evenly spread, making up 55 per cent of the domestic total at private providers, 70 per cent at polytechnics and 58 per cent at universities (plus 13 per cent of wananga students).

Maori and Pacific educators are keen to change this. Last year Auckland University launched a campaign for the universities to produce 500 Maori doctoral graduates in the next five years. If successful, the project will more than treble the estimated 150 current Maori PhDs.

The Herald/DigiPoll suggests New Zealanders are willing to invest more taxes into further narrowing the gaps in education, health and other services. This year will show whether the Government responds.

Herald Special Report - February 18, 2003:
Knowledge Wave 2003 - the leadership forum

Herald feature: