Increasingly inequality in New Zealand is obviously not just about poverty – it’s also about incredible wealth and luxury for a small and lucky group. Over 64,000 now own more $1m, and there are at least 430 who actually earn over $1m a year. But because so many of the wealthy are now becoming millionaires, a higher criteria seems to be needed to denote those amongst the truly ‘super wealthy’. Rather than being spectators to this rocketing wealth, maybe it's time to let our unease about it turn to anger and change this situation. [Read more below]
According to an article in the Sunday Star Times, The millionaires' club is not so exclusive any more. In this, financial adviser Murray Weatherston is quoted as pronouncing that ‘$1m today is pretty ho-hum’. Also, in the article What price wealth?, we learn that the NBR Rich List has to keep raising the threshold significantly for their list to stop it taking up the whole newspaper.
When the rich list started in December 1986 – near the beginning of Labour’s neoliberal revolution – the NBR could only find 55 worthy individuals for the list, and a mere $6.8m would get you a spot. In 2006, the newspaper had to raise the threshold to $25m, and due to rocketing wealth, next year it’d probably have to be $30m. Last year the list had 187 individuals, and NBR editor-in-chief Nevil Gibson says that ‘We know there will be well over 200 this year’.
Trends in the NBR’s list are backed up by both Statistics NZ and the Inland Revenue Department. As reported in What price wealth?, ‘Statistics NZ figures show that in September 2004 about 64,000 Kiwis were worth $1m and over. Inland Revenue reveals that the number of people with a taxable income of $1m-plus has increased from 250 in 1997 to 430 in 2005.’ That’s a huge leap.
The article gives other details of the burgeoning super-wealthy in NZ. Jeff Matthews from Spicers is quoted as saying, ‘These people are a lot more prevalent now than seven years ago ... without a doubt.’ Some conspicuous consumption trends also give a clue to situation. A high-end luxury car dealer, Independent Prestige, says they’ve sold 76 Bentleys since early 2004, while there’s now about 10 privately owned super-luxury $3.5m Eurocopters in the country.
Property is another sign of this groups’ nature. Many of them are taking over Auckland’s Waiheke Island – including Graeme Hart (estimated fortune of $2.75 billion), Mark Hotchin ($450m), John Spencer ($265m), and lesser rich like Brad Butterworth (the Dodgy skipper) and Peter Leitch (the Dodgy Butcher).
On the mainland, Auckland is experiencing The $1m property surge according to the Herald. Apparently the number of $1m+ properties being brought is skyrocketing – in the first quarter of 2006 there were 149 such sales, yet in 2007 first quarter this was eclipsed by 266 sales – a 78% increase.
In Auckland, the NZ Herald has felt the need to defend the super wealthy, with an editorial entitled Nothing wrong with being rich, which they put forward the usual arguments about businesspeople deserving the rewards for taking risks or working harder. In response to this, John Minto has published a very good opinion piece in The Press - see Policy change needed to end growing inequality of wealth. Minto asks: 'So do the rich work harder than the poor? Setting aside the fact that many of the wealthy don't work at all, the answer is still no.' He then succinctly details just how wealth in created in economies like New Zealand's and thereby refutes the myth that businesspeople are responsible for making their fortunes:
No-one becomes a millionaire by their own work. They get there by employing people to work for them and by paying them less than the value of the work these employees do. The extra value accrues to the ``self-made'' wealth of the individual. The more people employed, the greater the wealth. The role of employers is not a social role to benefit the community but an economic role to benefit shareholders. As soon as difficulties emerge the workers are laid off, have their hours reduced or are tossed aside for a contractor to pick up on lower terms and conditions. Employees are just another resource to be used.
Finally, Minto makes the crucial point that 'everything we see in our houses, streets and cities was made by workers. None of it was made by shareholders, entrepreneurs or the non-working wealthy.' Minto's suggested remedy is that we let our unease about the current 'obscenity' turn to anger and change this situation. I couldn't agree more.