Analysis by Dr Bryce Edwards.
Should we celebrate the super rich in New Zealand or see their growing wealth as a cause of inequality and division? The publication of the NBR’s latest annual Rich List has fuelled debate about the gap between the rich and poor.
Every year the National Business Review seeks to help New Zealand understand and appreciate this country’s super wealthy. The Rich List is a catalogue of extreme wealth concentration and provides insights into power, inequality, and business. And each year, the cries of “injustice” seem to get louder.
What is fascinating about this year’s Rich List debate is that the most trenchant criticism of the rich and the economic divide comes from one of the Rich Listers. Sir James Wallace is ranked 93rd on the NBR list, with an estimated worth of $130m. Wallace has lashed out at his own kind declaring the “super wealthy” are “super selfish”, and blames the rich for the growing gap between the rich and poor – see Narelle Henson’s NBR Rich Lister calls out the super wealthy. He claims that the super wealthy need to be “outed”, and he draws attention to their “obscene” incomes and luxury lifestyles.
A more dispassionate – but equally revealing – critique can be found in a Radio New Zealand report covering analysis of the Rich List by researcher Max Rashbrooke, who has a book coming out soon about the wealthy in New Zealand. Rashbrooke says that the “wealthiest one percent of people now own 17 percent of all wealth in New Zealand. But… the poorest half (50 percent) of the country own just 5 percent” – see Shannon Gillies’ Rich-listers rake in the cash.
Rashbrooke, who was also interviewed on Morning Report, says the “list shows the global financial crisis has ended for the wealthiest, but ordinary New Zealanders are still struggling”. Pointing to the increase in wealth on the latest list, he says “the huge increase in wealth represents the biggest increase proportionally in the review’s list”. Based on this, he characterises our economy as a “trickle up” one, as resources seem to get distributed from the poor to the rich.
So how much richer have the rich become? The actual Rich List is here, although most of it is paywalled. Nonetheless, totalling up the individual fortunes of those on the list shows that this elite of 184 earners now totals $55 billion – up $3.8 billion (or 7.4 per cent) from last year.
Rich List editor Duncan Bridgeman discusses the increase in his NBR article, Wealth creators shine brightly amid economic prosperity. He says “This is the biggest proportional increase since the Rich List first appeared in 1986. Back then, it started with 55 individuals and 12 families with a total minimum net worth of $5.3 billion”. He confirms that the rich are currently doing well: “there’s no question that the past few years have been good ones for the country’s wealthy”.
You can also watch Bridgeman’s six-minute interview with Paul Henry – see: Rich Listers benefit from property boom.
John Anthony has a good summary of the list in Graeme Hart tops NBR’s 2015 Rich List. In this report, the increasing wealth of the rich is emphasised – it is pointed out that “The fortunes of New Zealand’s richest people have skyrocketed in value over the past decade”. For example, Graeme “Hart has increased his wealth by $6.25b since 2006”.
To contextualise Hart’s rising fortunes, another article says: “The minimum wage may be $14.75 an hour, but the richest New Zealander Graeme Hart took home $63 a second last year – even when he was asleep” – see: Richest Kiwi earnt $5m a day last year.
Hart’s extraordinary wealth and career was also explored last month in an excellent profile by Matt Nippert – see: Graeme Hart: the undercover billionaire.
Breaking down the Rich List
Each year’s Rich List is usually diced and divided using different filters – such as gender, industry, and ethnicity. But the categorisation most reported is that of geography – with different newspapers reporting on the regional aspects of the wealth list. For regional interpretations see Simon Hartley’s Coutts joins Otago names on 2015 ‘NBR’ rich list, Tim Fulton’s Canterbury rich listers get richer, Jack Montgomerie’s Gary Rooney, van Leeuwens on rich list, Jonathan Dine’s Xero chief tops our rich list, Rebecca Savory’s Three of the country’s wealthiest men prefer to call Tauranga home and Narelle Henson’s Waikato’s rich list revealed.
In terms of gender, as usual, men dominate the list. In fact, you have to go all the way down to the 38th ranking to get to the first woman, Victoria Ransom. The other women on the list are Diane Foreman, Wendy Pye, and Annette Presley. There are actually other women on the Rich List, but they’re part of the dozens of entries listed as families and couples, rather than individuals.
The gender dimension of those on high incomes was also recently brought into the spotlight by the Herald’s CEO pay survey – see Hamish Fletcher’s ‘Heartbreaking’ lack of female executives, Fran O’Sullivan’s Lack of women at the top needs to change and Heather du Plessis-Allan’s It’s a million-dollar club for the blokes.
Rising inequality debate
Debates about inequality have become a central part of New Zealand politics. But is the gap between the rich and poor actually getting worse? A recent Treasury report gives reason to think otherwise – see the news report Inequality in NZ hasn’t risen in 20 years, Treasury paper says, and Eric Crampton’s blog post, Inequality in Consumption.
In reply to this, see Max Rashbrooke’s Despite what you hear, inequality has risen in New Zealand. And for other technical arguments and material, see Brian Easton’s What Is Happening at the Top of the Income Distribution?
And perhaps New Zealand was never really that equal anyhow. Blogger Steven Cowan looks at the wider debate and proposes that the “world must be turned upside down” – see: The fat cats get fatter.
Inequality was also made a focus recently in the Herald’s CEO pay survey – see Hamish Fletcher’s articles, What CEOs of top NZ companies earn, The decade of rising rewards and Bosses’ pay up 325pc in decade.
And with the release of the NBR’s list, many will be asking the same question posed by Gareth Morgan last month: Do the rich pay their fair share of tax?
Politics on the Rich List
New Zealand is not a plutocracy – the rich do not actually run the country directly (despite occasional conspiracy theories of many on the left). We may live in an advanced capitalist liberal democracy where the interests of business have an extraordinary influence on public policy, yet to a large extent the areas of politics and wealth are not exactly the same thing in New Zealand. This can be seen by looking at the Rich List, in which there are few politicians or even people overtly connected to parliamentary politics – but nonetheless there are some.
The most obvious political figure on the list is the Prime Minister, John Key (#173) with a net worth of $55m. But another National MP is worth about the same – backbencher Ian McKelvie made his money in farming and now chairs Parliament’s primary production select committee.
National Party president Peter Goodfellow is high on the list, as the Goodfellow family are worth $550m – up ten per cent from last year. Not only is Goodfellow busy running New Zealand’s ruling political party, but also has interests in the family’s “fishing, food, finance, property, clothing and engineering” businesses.
The National Party is linked with a number of other Rich Listers. Barry Coleman (the former publisher of the NBR) is valued at $145m, and last year donated $50,000 to National. And Parliament’s Speaker, David Carter, has a brother on the list – Philip Carter who owns about $120m.
Of course other parties have supporters amongst the rich. For example, Philip and Jackie Mills are listed as being worth $110m, but support the Green Party. Long-time Act Party supporter Alan Gibbs is high on the list with his $495m fortune. And Greg Loveridge ($55m) worked for the previous Labour Government and donated $5000 last year to Trevor Mallard’s election campaign.
Finally, for a very different “rich list” see Time Magazine’s just-released The 10 Richest People of All Time.