“You don’t have to be rich to buy a $400 000 house.”

Last week National MP and current Christchurch Central incumbent Nicky Wagner participated in a debate at the University of Canterbury. I’m helping co-ordinate the campaign for Greens candidate Peter Richardson (party vote Green!), so I am the last person who could be considered unbiased or favourably disposed towards Ms Wagner.

Nevertheless, I found myself astounded by her actual nerve, as she said such things designed to appeal to a student audience as “the student allowance system is working pretty well” and “you’re always going to be either time-poor or money-poor”. She also got excited and said “Bullshit!” a few times when an opponent said something she didn’t like, which was admittedly funny.

To me, her most memorable and baffling statement came when Labour candidate Duncan Webb declared he wanted smaller, cheaper housing built in Christchurch. There was some crosstalk, where I picked up Wagner defending a new housing development, which Webb said was “for the rich”.

Wagner responded, “You don’t have to be rich to buy a $400 000 house.”

What, I said to myself, is this bullshit?

A $400 000 house would normally require a minimum deposit of $80 000 to secure a mortgage. This seems like an awful lot of money to me, but what do I know? I’m only a secondary school English teacher on an annual salary of $69 400 who buys classroom supplies for my students, not someone who used to be a teacher, and is now a Minister outside Cabinet with one or more portfolios who has an annual salary of $243,841, plus travel and other allowances.

Perhaps I am wrong in thinking $80 000 is a significant sum of money! Perhaps one doesn’t need to be rich to save that much in a reasonable period. Perhaps today’s student, the people Wagner was addressing, could quite comfortably graduate and purchase a home.

So I made one up. Meet Kal.

Kal enjoys science, so they decide to do a science degree. Their parents are teachers, and their physics teacher was awesome, so they think they’ll become a high school science teacher. This is a smart choice – there is a shortage of science teachers in New Zealand high schools, so they’ve got a really good chance of landing a job right away.

Tuition fees for a BSc at the University of Canterbury currently cost around $5800-$6800 a year. Let’s cut that difference in half, and assume no fee hikes from 2017 to 2019 (ahaha) and say Kal pays $6300 a year for the three year degree: $18 900.

On top of that, Kal also has to pay for their Graduate Diploma in Teaching and Learning (Secondary) which currently costs $6580. Again, we’re assuming this isn’t going to rise while Kal is getting their BSc.

The total cost of their education is $25 480, assuming they never fail a course that has to be repeated. That’s also assuming they never buy textbooks, labcoats, a laptop, or stationery. Since that’s patently ridiculous, let’s say that Kal instead is likely to spend $1000 on those each year, which is conveniently what the student loan system will allow them to borrow. Kal’s total student loan for tuition and course costs is $29 480.

What about living costs? Unfortunately, Kal’s parents live in Timaru, so they can’t live at home, even if they were willing and able to do that for four years. Like many students who come from outside Christchurch, Kal lives in one of the student halls for their first year, and flats with three friends for the following three years.

Kal’s parents earn too much for Kal to be eligible for the student allowance, but with three younger siblings at home, one with special needs, they don’t have much to spare. Student loan living costs restrictions will allow Kal to borrow up to $178.81 a week while they’re studying (usually 4 weeks a year). $178.81 x 40 is $7 152.40.

Kal cannot live on that. Kal’s parents pay the other half of the hall accommodation fees ($14 000 at Connon Hall, the cheapest option) in the first year, and agree to cover any routine medical costs. Kal gets a job as a checkout operator, where they earn the median wage for this position of $15.83 an hour. They work twelve hours a week, which is about the best they can manage with the 40 hour workload of lectures, labs and study, and earn, after tax, $170 a week while they study. Their total weekly income after tax is $348.41.

Despite working full-time over the summer and part-time while they study, they have to take out the maximum living costs loan every year – rent is high, their wages aren’t, Mum and Dad can’t help any more than they already have, and there always seems to be a dentist’s invoice, or car repairs, or an extra high power bill to pay whenever Kal thinks they’ve gotten a little ahead.

It’s okay, though! They’ve graduated! Kal, at 22, is a fully qualified secondary school science teacher with a student loan of $58 089 and no personal debt.

As long as Kal stays in the country, their student loan is interest-free, which is awesome, especially as Kal planned to do that anyway. But they certainly won’t be paying it off fast. At minimum compulsory contributions, even with salary increases, it looks like at least a decade of payments.

However, just as Kal predicted, they aren’t short of job offers. They take a position as a Physics and Science teacher at a large public high school in Christchurch. The current salary for a first year teacher with Kal’s qualifications is $51,200.

(This will go up a little bit by the time Kal starts teaching in 2021, but probably not by much more than a thousand each year – at the moment, despite teacher shortages that are predicted to get much worse, increases in teaching salaries aren’t even keeping up with inflation. We’ll generously assume that the cost of living increases by the same amount as Kal’s salary and proceed with the step increases as they’re currently tabled. This is terrible maths, but I don’t have the kind of models that can predict salary increases.)

Kal’s first fortnightly paycheck has a gross payment of $1969.23. They’re delighted! This is the most money they’ve ever earned in two weeks. Of course, out of that they’ve paid PAYE tax, the compulsory student loan payment, and the PPTA membership fee (not compulsory, but Kal believes in unions). They’ve also allocated $157.54 to Kiwisaver.

Wait, hang on, why is the Kiwisaver contribution so high? That’s the maximum deposit of 8% of pre-tax income!

Because Kal wants to buy a house. A $400 000 house.

(This house is magically going to stay the same price for all the time Kal is studying, working, and saving to meet that deposit, in much the same way that pay increases for Kal will magically stay in line with 2017’s PPTA remuneration table.)

New Zealanders are allowed to withdraw their Kiwisaver retirement savings for a deposit on a first property. Kal has done the maths (go science!) and worked out that this is their best bet – rather than paying the minimum contribution to Kiwisaver and saving separately for a house in a savings account with relatively low interest, or using long-term deposit investments, they’ll make the maximum Kiwisaver deposit, backed with another 3% from their employer. They put the rest of their salary into living costs (especially rent), saving for things and experiences they want, and an emergency savings account for those inevitable stumbles in life’s grand journey.

As well as going a step up in salary every January (unless they do something very stupid) Kal’s annual salary will also increase by about $1000 in September every year, which makes teachers all over New Zealand look slightly puzzled and then pleased as they look at their first spring payslip.

So, in essence, Kal actually earns about $51 534 in their first year, and accordingly contributes to Kiwisaver $4 123. Kal’s employer matches this to 3% of Kal’s salary, another $1 546.

$5 669 in Kiwisaver! Nice work, Kal. Oh, and we can’t forget interest on top of that; that’s the whole reason Kal is doing the 8% contribution in the first place. Because Kal is at the start of their working life, they’ve taken the option of a riskier fund with a 6.2% p.a. average interest rate. I am not calculating the interest earned for each payment and adding that, so Kal magically earns that interest on the whole $5 669, which means they earn another $351.5! Wow!

Okay, frown suspiciously at my dubious maths (or do it better, I’d love that) and let’s fast-forward a few years.

Kal needs an $80 000 deposit, which means they actually need $75 000 for that deposit – the Kiwisaver Homestart grant will cover another $5 000.

End of Year One Kiwisaver account: $6 020.5

End of Year Two Kiwisaver account: $12 646  ($6 020.5 + $5 888 new payments + 6.2% interest on the lot)

End of Year Three Kiwisaver account: $20 075 ($12 646 + $6 257.27 new payments + 6.2% interest on the lot)

End of Year Four Kiwisaver account: $28 426 ($20 075 + $6 691.74 new payments + 6.2% interest on the lot)

End of Year Five Kiwisaver account: $37 797 ($28 426 + $7164.74 new payments + 6.2% interest on the lot)

End of Year Six Kiwisaver account: $48 287 ($37 797 + $7 670.74 new payments + 6.2% interest on the lot)

End of Year Seven Kiwisaver account: $59 924 ($48 287 + $8 138.24 new payments + 6.2% interest on the lot)

End of Year Eight Kiwisaver account: $72 790 ($59 924 + $8 616.74 new payments + 6.2% interest on the lot)

(NOTE: I got to the end of all the calculations above and then realised that AUGH FUCK I forgot to calculate that employers now have to pay ESCT tax on their contributions. I ALSO forgot member tax credits of $521.43, paid yearly when people contribute at least $1042.86. My take away here is 1: this stuff is complicated! 2: just as well I don’t teach commerce.)

After eight years of solid savings, Kal is within shouting distance of the $75k they need to supply to put down an $80 000 deposit on their $400 000 dream home.

Everything has gone very – perhaps implausibly – well for Kal. They didn’t encounter discrimination in finding work based on their nonbinary gender identity, they haven’t met any financial disasters they couldn’t cover with their emergency savings, they haven’t burned out after several years of a fulfilling but stressful career, and they haven’t taken time off to travel or raise children. They’ve been able to save 8% consistently. And as a result, they could be living in that $400 000 house not long after they turn 30!

On the other hand they have also reached the salary cap for their profession, at $78 000 a year. The median income for working New Zealanders is $48 880. (according to this frankly very dodgy survey based on TradeMe advertising)

Regardless of how much Kal saves (and my dodgy calculations thereon), what is clear is that by the time Kal is a position to buy a home, they earn nearly $30 000 more per annum than 50% of the population. According to this calculator, Kal earns more than 82% of New Zealanders.

That makes Kal rich.

And it makes Nicky Wagner full of bullshit.