Inequality - a 'wicked problem'

tracey2203
11 minutes ago
4 min read

Wicked problems demand better questions and bold conversations

Inequality is what policy-makers call a wicked problem.

There’s no single cause, no simple fix, and no point at which inequality can be declared “solved”. It’s shaped by decades of choices about housing, tax, wages, welfare — and about whose voices carry the most weight in our economy.

As the year draws to a close, it can be tempting to look for neat summaries or pithy soundbites. As political debate begins to sharpen ahead of next year’s election, we’ll hear plenty of them: high taxes punish success; lowering taxes will make New Zealand more competitive; it's fairer if everyone pays the same tax. These phrases travel well. They sound reassuring. And they flatten a complex reality into something easy to repeat.

What they rarely do is withstand scrutiny. When “fairness” is reduced to everyone paying the same rate of tax, or when inequality is treated as a natural outcome of individual striving rather than a design flaw, the lived reality of rising working poverty, housing stress, and entrenched disadvantage disappears from view.

That’s why we’re wary of tidy answers and empty slogans. Wicked problems demand more of us. So instead of offering conclusions, we’re carrying a set of questions into 2026. These are the questions guiding our work in the year ahead, and the conversations we think Aotearoa New Zealand needs to keep having.

1. What does “fairness” mean when low-income households are struggling to pay for the basics?

If fairness means anything in this context, it has to start with whether people can meet their basic needs — not with abstract ideas about equal tax rates or individual effort. These pressures aren’t theoretical. Recent research shows how quickly the ground is shifting beneath low-income families:

Families below the Income Floor face a growing crisis (Child Poverty Action Group Report, July 2025):

Minimum wage no longer guarantees adequacy: couples with two children working 40 hours on minimum wage are already in deficit in 2025; by 2026, even 60 hours won’t lift them above the income floor.
Sole parents face severe shortfalls: sole parents in private rentals with three children are close to $200 short each week of basic and participation costs.

Hardship is worsening: after modest improvements (2021–2024), households are projected to be worse off from 2025 onwards.

Housing costs deepen deficits: couples on Jobseeker Support with two children and average rent are more than $300 per week short.

Single adults aren’t spared: people on Jobseeker or Supported Living Payment sit nearly $100 per week below the income floor

Access the full report here

We can, and need to, do better.

2. Who benefits most from the status quo?

Household net worth distribution, year ended June 2024 - statistics from NZ Stats

While total household wealth in New Zealand has increased, who holds that wealth has barely changed.

The top 10% of households own around 50% of all wealth, while the bottom half own only about 5%.

When wealth is concentrated, so is power: over assets, over policy settings, and over whose interests are prioritised in economic decision-making. This matters because many of the biggest gains — from housing, investment growth, and tax settings — flow most strongly to those who already own assets. Economic growth alone does not reduce inequality if the underlying distribution remains largely unchanged.

Inequality feeds power — and power feeds inequality.

3. Why do simple solutions sound so appealing — even when they don’t fix the problem?

Simple economic stories are comforting. They suggest we don’t need to make hard choices or disturb existing power — just grow the economy and everyone will benefit. Trickle-down theory is the best-known version: cut taxes at the top, boost growth, and trust that prosperity will flow downwards.

But the evidence keeps saying otherwise. While New Zealand’s total wealth has grown (see above), who owns it has barely shifted. The top 10% still hold the majority of wealth, while the bottom half owns almost nothing. When the pie grows but isn’t re-cut, growth doesn’t trickle down — it pools at the top.

These narratives persist not because they work, but because they’re politically convenient. They shift attention away from choices about tax, housing, wages, and asset ownership.

Simple solutions feel reassuring, but without deliberate action they leave inequality untouched.

4. What would it take to design an economy that works for everyone?

Designing an economy that works for everyone starts with clarity about what’s at stake. This isn’t just about fairness in theory — it’s about whether people have what they need to live well, and whether the systems we rely on are strong enough to support us all.

Inequality isn’t an abstract idea or a debate about envy. It means some people simply don’t have the resources they need for stable housing, good health, education, or security. And when wealth is concentrated at the top, it weakens the systems we all depend on. Health outcomes worsen, educational gaps widen, infrastructure falls behind, and governments are pushed toward debt, austerity, or user-pays models. The damage doesn’t stay contained — it shows up in overcrowded hospitals, struggling schools, neglected roads, and communities under pressure.

Designing a better system requires honesty — about how our economy is currently designed, who it rewards, and what it fails to deliver for too many people

These questions matter. Not because they offer easy answers, but because they ask us to look honestly at how our economy is functioning now, and who it is leaving behind. Wicked problems don’t resolve themselves. They demand we ask the tough questions, have the bold conversations, and the courage to move beyond comforting slogans.

Tracey

Closing The Gap