COMMENT: The 1946 Frank Capra film It’s a Wonderful Life is probably one of the greatest movies ever made and is still required viewing despite its age. Based loosely on the Dickens novella A Christmas Carol, it tells the story of how George Bailey, played by James Stewart, is given the opportunity to see how the world might have been different if he’d never been born. In the movie, George is given a glimpse into what would have happened to his wife and his community of Bedford Falls if he’d never existed and into how much he has touched the lives of those around him, for the better.
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It’s an opportunity that many of us would wish for ourselves but, of course, the ideal of “what might have been” isn’t always framed in such positive terms. For some it’s an expression of regret for missed opportunities, lost love, bad choices, and the road not taken.
Still others go beyond simply applying “what might have been” to their own lives and apply it to society as a whole – often in reference to a decision, or decisions, which, in their view, changed society for the worse. There are some, for example (myself included), who believe that social values have dramatically declined as a result of trends which started in the 1970s and 1980s and that, morally, society has been on a decline ever since. Others apply it to economic changes and suggest that decisions made, particularly in the 1980s and 1990s, set our nation on a course which consigned a generation of Kiwis to a life of poverty, hardship and disadvantage.
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But is this second claim true? Did the reforms of the 1984-90 Lange / Douglas Labour Government and the subsequent reforms of the 1990-98 Bolger National Government set in train a series of events which cast hundreds of thousands of Kiwis onto the economic scrap heap?
Not according to the numbers.
According to the international website Human Progress, which uses official figures from each country to track progress across a range of measures, the economic and health position of Kiwis has improved significantly since 1984 – a year I’ve chosen because it marks the beginning of the Rogernomics reforms which often come in for criticism by proponents of State intervention. According to official figures, our life expectancy has improved by 9% (or almost a decade), infant survival has improved by 66%, the length of time spent in education has improved by 8%, and income per person has improved by a whopping 68% - all figures which give the lie to the idea that these indicators have declined.
Ashley Church: “Affordability isn’t just determined by price.” Photo / Ted Baghurst
Even compared to other nations New Zealand has held its own, well, economically. The site allows comparisons against other economies and shows that we’ve had similar improvements to Australia and the United Kingdom and, particularly tellingly, Sweden - the nation which is held up by many of the critics of our 1980s reforms as a poster child for the types of policies they claim we should have followed. In other words, we’ve done just as well as countries like Sweden, across a range of key measures, without the need for crippling taxes and nanny state interference.
But what about housing? We all know that house price growth has far outstripped wages and salaries in the years since the 1980s, particularly in Auckland. But does that mean that those houses are less affordable? That may sound like a strange question, but affordability isn’t just determined by price – but also by a range of other factors such as income, interest rates, and the ability to put together a deposit.
This means that, despite house prices having increased exponentially over the past 40 years, the actual percentage of the average household income that is required to service a mortgage on a house purchased for the current median price is actually lower, now, than it was in the 1980s – at around 37% of household income, now, compared to around 52% in the 80s.
So I challenge those who claim that we missed a chance to do things differently in the 1980s to follow the evidence. We’re living longer, earning more, learning for longer and houses are more ‘affordable’ than they’ve been in decades. Things may not be perfect – but the wisdom of our economic choices has been borne out by the passage of time.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at ashley@nzemail.com
