Rich list’s six-fold increase in wealth
The wealth held by the top 0.02 per cent of Kiwis has increased roughly twice as fast as the economy has grown, a new study has shown.
The research found that the wealth held by one-in-5000 Kiwis with substantial wealth has increased six-fold between 1996 and 2015, from about $9.6 billion to $57.1b.
As of 2015, this group of richlisters held wealth equivalent to 23.9 per cent of the total annual GDP of New Zealand, up from 6.7 per cent in 1996.
The study by Auckland University’s Tim Hazledine and Victoria University’s Max Rashbrooke was first released online last year but has only recently been peer-reviewed and published in the New Zealand Economic
Papers journal.
As there is a paucity of good data on wealth in New Zealand – as opposed to income – the authors make use of the National Business Review’s (NBR) rich lists from 1996, 2005 and 2015.
Given the number of people featured can fluctuate and the benchmark for the NBR list has shifted, the pair controlled the data by setting a ‘‘cut-off point’’ at the top 0.02 per cent of the nation – or roughly 736 individuals, as some rich-list entries cover families or husband-and-wife teams.
Rashbrooke said the research was ‘‘another nail in the coffin of New Zealand egalitarianism’’.
‘‘I think New Zealanders still like to believe that we live in a quite egalitarian society, where the lives of the rich and poor are not too different. This shows that isn’t so. ‘‘It reinforces a story we already suspected to some extent, which is that the benefits of economic growth in the last few decades have gone disproportionately to a relatively small group of people.’’
Rashbrooke noted that NBR’S rich list was not necessarily a perfectly accurate picture of the super-rich, as the newspaper has trouble tracking debt and cannot control people making misleading statements. He suspected super-rich Kiwis would want to appear less wealthy to the wider public, so the list could underestimate wealth.
The paper’s peer review comes as the Government’s Tax Working Group – tasked with looking at whether income and wealth are taxed fairly – is due to deliver its interim results. Many have described the group’s job as the design of a broad-based Capital Gains Tax (CGT), a tax most developed economies have but New Zealand does not. This would tax the passive rise in the value of things such as property and stock investments – instead of just income. It is understood a CGT was included as a recommendation in an interim report however, there has been some speculation that the decision was ‘‘too political’’. Rashbrooke said New Zealand’s lack of any kind of tax on wealth or inheritance made it an international outlier.
‘‘I think this research reinforces the need for some kind of tax on wealth.
‘‘When you look at the fortunes on the rich list, some people have worked very hard to generate them but they rely on driving on roads we all funded, and employing people who keep healthy with a system we all pay for. Also because there is an element of luck in the fortunes generated.’’
‘‘This research reinforces the need for some kind of tax on wealth.’’ Study co-author Max Rashbrooke