Boomers: it’s time to change instead of blame

‘‘Unfortunately some of those policies meant disadvantaging others – which is a hard thing for people to hear when they were not responsible for putting those policies in place.’’

Those policies included selling off public assets, she said, which meant people who could take advantage of the sales did well but those with less money could not invest and lost the benefit of the publicly-owned assets, too.

‘‘And then people in both Labour and National Governments implemented new and different tax, welfare, education, housing policies, that didn’t award the same advantages to the next generation. So it hard-coded differences between the generations.’’

Economist Shamubeel Eaqub said the older generations now had proportionally more wealth compared to the rest of the population than older people had traditionally had in the past, because of declining home ownership among young people.

As house prices have risen in recent years, the wealthier have become wealthier while the gap to those without assets has increased. Home ownership rates are highest for those aged 70 to 74.

‘‘People accumulate wealth over time. Fewer younger people can do so now because of all the issues that have driven lower home ownership rates.’’

New Zealand’s home ownership level is now at a low not seen since 1951.

The Baby Boomers had more than $200 billion tied up in their own homes and $54 billion in other real estate.

That is compared to $190 billion for those aged 35 to 54, who were a larger proportion of the population and carried significantly more debt.

Eric Crampton, chief economist at the New Zealand Initiative, said there was a standard life cycle for wealth, of taking on debt while people were young and building assets over time.

‘‘There is no problem in retirees having a lot of wealth. If people on average didn’t have more wealth when they retired, that would be a problem. But what is a problem is the way that a lot of people with a lot of wealth in housing have worked to make it very, very hard for others to build more housing – town hall meetings blocking upzoning and urban expansion seem disproportionately attended by relatively wealthy homeowning retirees.’’

Eaqub said it should not be expected that the situation would come right when older people eventually passed on an inheritance to their kids.

‘‘Boomers will live a long time ... they will consume a lot of wealth to fund their retirement. There may be less left than their children may want.’’

Brad Olsen, an economist at Infometrics, agreed. ‘‘With people living longer, and with costs, especially housing costs, remaining at higher levels than previously seen, the amount passed down between generations will likely decrease in relative terms. Those who retire will use up more of their net worth over their retired lifetime, so will have less to pass on to the next generation down.’’

The highest earners in the population are those in paid employment aged 40 to 54, who earn a median $1151 a week.

Olsen said people who had less would pass on less, potentially exacerbating the ‘‘wealth divide’’.

‘‘Who is to blame is much less important than what we plan to do about the situation we’re in. It’s all good . . . to throw stones at various generations for what they have or haven’t done, but if we actually want things to change – higher home ownership, lower relative housing costs – we need to rapidly shift our energy from blame to action. Otherwise we seem destined to repeating the same mistakes over and over.

Berentson-shaw agreed: ‘‘The solution is to redesign the system of policies, not to blame individuals.’’