Can we fix it?
Anna-Bradley Smith examines poverty and i nequality i n New Zealand
Throughout history, blockades have been overcome by new ways of thinking and experimentation – tr y, tr y and tr y again, as the saying goes. This faith in the human ability to find solutions has led to everything from penicillin to electricity to flying machines and it continues to push society forward. So, in a regular section called Can We Fix It? Idealog and Kiwibank look at some of the world’s biggest – and, in some cases, most intractable – problems and the homegrown organisations doing their bit to tackle them. This issue, Anna Bradley-Smith examines poverty and inequality in New Zealand.
Inequality is a buzzword in news coverage and has been tossed between political parties. The way it is measured has also been hotly debated. While we clearly don’t suffer from the same levels of poverty faced by less developed countries, what the blame games and back and forth gloss over are the thousands of Kiwis struggling to make ends meet. Polling shows we identify inequality, poverty and housing as our three most pressing issues, and for good reason: in 2015 New Zealand was ranked 28th for income equality out of the OECD’s 37 developed countries.
In New Zealand, poverty is often measured as living on less than 60 percent of the median household disposable income after housing costs – around 790,000 people. This isn’t just an issue for those directly affected, either. Inequality pulls on the fabric of our society and hinders the success of our economy. As the recently released Salvation Army State of the Nation report says, those who fall outside the margins are part of us.
Since the 1980s the gap between the rich and poor has widened faster than in any other developed country, the number of people classified as poor has doubled – with over a quarter of those households going without essentials such as decent shoes, adequate heating or enough food – and thousands of people have been priced out of the housing market.
Up to 290,000 of those in poverty are children, and around 70,000 children
live in severe material deprivation, affecting their education, healthcare and general wellbeing. Despite 14 percent growth in the country’s economy between 2013 to 2017, there were no substantial changes in child poverty rates, and youth unemployment remained around 20 percent.
While economic growth is vital for progress, the failure of this growth to translate to wages and social security has left lower income earners lacking in opportunities, including fair access to education, experiences, security, participation in society and social mobility.
The government has recently introduced a Families Package, which allocates around $2 billion to housing, health, education and other investments. It’s also introduced the Child Poverty Reduction bill, which requires governments to set reduction targets. For the current government, these include reducing the number of children in low income households and living in material hardship by around 50 percent in ten years.
The Salvation Army report notes extension to the minimum wage, additions to the social wage, regular adjustments to income support programmes and ensuring employees are protected and able to advocate for their interests would help foster a more inclusive economy.
But the multi-dimensional nature of poverty and inequality means multidimensional solutions are needed, and ones that allow the people directly impacted by the issues to be a part of the solutions. Cue some impressive efforts by companies and groups across the country motivated to give everyone a fair shot.
Working from the i nside out
Bringing central government, local government, community organisations, private companies, entrepreneurs, community leaders and families together to problem solve sounds, well, stressful.
But for South Auckland, this mashup is proving its worth in tackling the area’s most pressing social and economic issues, on the basis that if South Auckland doesn’t thrive, neither does New Zealand.
On average, South Aucklanders earn 30 percent less than the rest of Auckland, with that number higher for Māori and Pasifika families, and families face more challenges finding suitable housing and accessing healthcare.
But alongside the challenges are great assets like the youthful population, vibrant churches, sports clubs, community facilities and a great sense of pride and cultural diversity, The Southern Initiative (TSI) director Gael Surgenor says.
“South Auckland is sick of being seen as a problem to be fixed. There’s been 30 years of programmes and initiatives and things to ‘fix the problems’. What people have said is they want opportunities to be part of the solution.”
Born from the Auckland Plan and funded by the council, TSI is bringing together people from all walks of life in South Auckland to champion, stimulate and enable community and social innovation targeting three priorities: shared prosperity, resilience and thriving children and whanau. TSI has started a Māori and Pasifika trades training programme, created jobs through social procurement, supported new businesses and increased healthy food options – all using a social innovation approach and working closely with community members. Collaborating with parents and the Auckland Co-Design Lab, set up in 2015 by Auckland Council and various government agencies to explore what a human-centred, design-led approach could offer public services, they recently undertook the Early Childhood Challenge to explore the challenges faced by South Auckland families.
Research shows the first 1,000 days of a child’s life are critical to their social and economic success later in life. It also shows 0 to 3-year-olds in South Auckland are significantly worse off than those in other parts of the city.
Having parents involved throughout the process resulted in the most authentic outcomes, Auckland CoDesign Lab director Alastair Child says, as those closest to issues are crucial in creating solutions.
The project found parents in South Auckland are facing high levels of cumulative stress affecting their children’s wellbeing, and outcomes around housing, income, food and making services more accessible were identified. TSI and the Auckland CoDesign Lab have fed this back to the appropriate local and central government agencies to make changes. Already, local boards are prioritising making council spaces more family friendly.
This i sn’t j ust an i ssue for those directly affected, either. Inequality pulls on the fabric of our society and hinders the success of our economy. As the recently released Salvation Army State of the Nation report says, those who fall outside the margins are part of us.
Although collaboration can be tricky, Surgenor says challenges around poverty and inequality are too big for any one sector to really make a difference on their own. Community, government, business and iwi all have to keep working together and “finding the sweet spots and the opportunities”.
CONNECTING THE PIECES
Less than 63 percent of New Zealanders own their own home, and there are only 1.9 million private homes to accommodate the population of 4.9 million. For the 40,000 people that have been left homeless, the shortage of affordable housing is more than a headline.
But securing a stable address should become a reality for thousands more families with the teaming up of government initiatives, community and iwi projects, and new technology in the building sector.
With more than 6,000 families in need of state housing, the government has recently stopped selling them off and has said it plans to build more than 1,000 a year, on top of a minimum of 100,000 affordable homes over ten years through the KiwiBuild programme.
In a philanthropic effort, developer Ted Manson has started building 500 social rental homes in Auckland with his family-firm Mansons TCLM. Manson announced the plan, which includes maintenance of the apartment buildings, at a housing summit where he said his family upbringing in a state house had been the foundation for his views on the need for stable, affordable homes.
But with the average cost of building a house at $395,000 ($455,000 in Auckland) not including land, the catch up requires a housing plan that streamlines construction processes, incentivises development of affordable housing and efficiently plans infrastructure and land use to make constructing smaller and cheaper houses an affordable option for developers.
The target of 100,000 homes in ten years would require a level of building not seen before in New Zealand, and according to a government ordered report, it needs to be five times higher to meet demand.
Although the government is making a start, collaboration between local authorities, service providers, community organisations, developers, builders and iwi will be central to crafting a holistic housing plan backed by thriving communities. The challenges also require a rethinking of how we build homes.
The government is introducing a builders training programme, which will improve a lack of capacity in the sector, but new practices and technologies, like prefabrication, also need to be employed.
PrefabNZ CEO Pamela Bell says it’s important the construction sector is collaborative and responsive to changes such as using prefab to get more houses built, and fast.
“Opportunities such as KiwiBuild are a once-in-a-lifetime chance to create lasting transformative change in the construction industry.”
Prefab buildings are built offsite using digital design technology, and are assembled on site in just a few hours. Building with this method can cut build time by 60 percent and cost 15 percent less.
There are already a number of New Zealand companies using prefab and HNZ predicts the practice will account for more than 50 percent of its new builds in the next few years.
Bell says although prefab is a great tool in the tool belt, it just part of what needs to be an integrated solution to address the housing shortage.
“All best-functioning communities need a good mix of master planning plus initiatives to breathe life into them once they are established.”
ALL IN A DAY’S WORK
Give a man a fish, you know the rest. While the adage is old – and yes, definitely clichéd – for Otahuhu-based Trow Group, it is the way of business.
“We strongly believe in giving people a hand up, not a hand out,” Trow Group office manager Julie Latu says.
Born from the desire to give back, Trow Group specialises in civil contracting and machinery hire, working alongside councils and businesses to reduce items going to landfill by deconstructing and salvaging materials for community groups, including maraes and schools.
Its sustainable approach to business is paired with the company’s dedication to investing in the education and training of local people who lack opportunities or support, and giving them pathways to employment, Latu says. It's community development with people at the centre.
“We believe that if each business does its bit towards social good it will be one big step towards a better future for us and our children, and grandchildren.”
Economic development can be a huge force in pulling people from poverty, as evidenced in countries like China. During the 1970s in the height of globalisation, China managed to lift 800 million people from poverty with market reforms, reducing poverty rates from 90 percent to below 5 percent.
Maybe 90 percent of people will go smoke pot and play video games, but i f 10 percent of the people go create incredible new products and services and new wealth, that’s still a huge net win.
The problem is that economic growth, although important, is not shared unless by design. And as the gap between the rich and poor in New Zealand has expanded, increasingly people across the country have decided to do something about it, starting social businesses and initiatives that offer training and employment to people struggling to access opportunities.
Often these businesses have an environmentally sustainable approach, like Kilmarnock in Christchurch, which trains and employs people with disabilities to work in the open market doing a range of services including collating and packing, woodwork and electronic waste recycling.
In Wellington, Pomegranate Kitchen employs refugee women to prepare Middle Eastern food for delivery and catering. The work has helped the women improve their communication and practical skills, and has led to other employment opportunities.
In Lower Hutt, the Common Unity Project started growing food on a school’s unused field and now feeds 2,500 kids a day. The project has also upskilled and hired local community members for a range of work including beekeeping, gardening and cooking.
And in Henderson, The Kitchen Project is giving locals the chance to develop their own businesses through training and the use of an industrial kitchen. Project lead Connie Clarkson says the idea is to generate diverse, affordable and healthy food options in the area.
The project is aimed at people who don’t have the capacity or financial capability to get their food business started, and who live in Henderson and would base their business there.
Social enterprise, Clarkson says, isn’t about giving away something, it’s about ensuring business has a social good behind it.
Levelling the playing fi eld
Sometimes a car breakdown, doctors visit or any unexpected cost can be too much to manage, and money needs to be found quickly.
When sources run dry, pay-day and other third-tier lenders open their doors.
The problem is, third-tier lenders can charge interest rates between 30 and 400 percent, leaving vulnerable people with a debt burden that can quickly pull them into the cycle of poverty, Jonathan Choy says.
Choy is the director of Nga Tangata Microfinance Trust, formed in 2010 by the New Zealand Council of Christian Social Services, the Federation of Family Budgeting Services and the Child Poverty Action Group, to tackle the issue of low-income families trapped in highinterest debt.
“They made the decision to provide a real response in terms of social justice in the financial arena,” Choy says. “To alleviate poverty and to help those on low incomes afford safe, fair and affordable credit.”
The trust looked to Good Shepherd Microfinance in Australia, which has been operating for over 30 years, for its intellectual capital and guidance in creating its first asset building loan.
Microfinance is recognised the world over as a tool to tackle poverty by helping people escape high interest debts and give them a chance to explore business ideas and access education.
With Kiwibank providing the capital – which was recently increased to $500,000 – the trust offers two interest and fee-free loans, one up to $1,500 for asset purchases and the other up to $3,000 for relief from high interest debt.
Choy says the strength of the programme is the loan coupled with financial capability provided by budgeters who work alongside clients.
“Not only to pay back the loan but to help them with their overall financial situation, which is often very challenging.”
Just as important as helping people regain control of their finances, the loans have improved the mental health and wellbeing of parents, which in turn improves the wellbeing of their children, Choy says.
By late 2016 the trust had lent $414,000 to 187 clients, an amount that’s been calculated to have saved over $800,000 in credit costs and charges.
A key aim of the trust is that borrowers are able to get their budget under control, repay debts and gain access to the mainstream financial resources that those with higher incomes or more stable finances have access to.
It also advocates for a safe and fair credit environment that’s more protective of low-income people, including a total cost of credit cap for lenders, a key condition missing from current legislation, Choy says.
Because, as OECD co-operation and development secretary-general Angel Gurria said, “Ignoring increasing inequality is not an option”.