Financial strain emerges as the biggest threat to social unity

Financial stress doesn’t just strain household budgets; it reshapes how people trust institutions, relate to each other, and participate in society. When money pressures build, communities can become more fragmented, civic engagement shifts and confidence in fairness and opportunity begins to erode.

That dynamic is playing out in New Zealand, where financial stress, weakening institutional trust, and rising isolation are increasingly pulling people apart, according to a new report from The Helen Clark Foundation.

The second annual Social Cohesion in New Zealand report found the country’s social fabric is fraying on nearly every measure. Based on a survey of almost 3,000 people, it marks the second year of an ongoing tracking programme, allowing for direct year-on-year comparisons.

“The results are both frightening and hopeful,” economist and co-author Shambeel Eaqub says. “New Zealand still has strong foundations, but there are growing cracks in how people experience fairness, opportunity and connection. Financial stress is the dominant driver.”

The sharpest declines were seen in perceptions of fairness and institutional integrity. Trust in government fell from 42% to 39%, while the proportion of people who believe hard work leads to a better life dropped seven points to 45%. Attitudes toward immigration are also becoming more negative, in line with global trends.

Drawing on more than 5,500 responses collected over two years, the report identifies three broad groups within the population:

The Connected (30%): High levels of belonging, trust in institutions and acceptance of others,

The Ambivalent (41%): Moderate sense of belonging but low participation; includes many older homeowners, retirees, and centre-right voters,

The Alienated (28%): Disconnected from institutions and traditional civic life, but often active in protest movements and online political spaces. This group includes nearly half of Māori and Pasifika respondents, close to half of Green voters, and a large majority of NZ First voters.

“We have three very different New Zealands living alongside each other. Financial stress, political allegiance, institutional distrust, and social isolation are reinforcing each other, producing a population that is frustrated and disconnecting from the conventional institutions we rely on for collective decision-making,” Eaqub says.

The research highlights financial stress as the single biggest driver of declining social cohesion. Those struggling financially are far less likely to feel connected, trust institutions, or engage in community life. At the same time, loneliness and isolation are increasing.

“Isolation doesn’t mean people disengage entirely,” Eaqub says. “But it does change how they participate – away from traditional institutions and toward more oppositional or online forms of engagement.”

What needs to change

Despite the challenges, the report points to some encouraging signs. More than 80% of New Zealanders still report a sense of national belonging and pride in their way of life; a figure that has remained stable. Younger people, while experiencing poorer social cohesion outcomes, are also the most aspirational group.

The Foundation is calling for a more coordinated and long-term approach, including better alignment between economic and social policy and sustained investment in community initiatives rather than short-term fixes.

“Social cohesion isn’t a ‘nice to have’ – it’s what allows a country to make difficult decisions and navigate long-term challenges,” Eaqub says.

“It happens when communities have the support and conditions to solve problems together, manage differences, and care for each other over time. If we want a resilient, inclusive New Zealand, strengthening social cohesion is vital.”