Putting the focus on income inequality
Over time, income inequality tends to erode access to employment, education, health and many avenues of opportunity.
Two years ago, the British researchers who wrote bestselling book The Spirit Level marshalled evidence from around the world to support their thesis that income inequality results in poor social outcomes.
Earlier this month, evidence on the local situation emerged from a variety of sources.
Not that the data was headline news exactly, even though the Social Development Ministry’s report on household incomes did include the startling observation that ‘‘New Zealand had one of the higher poverty rates in the OECD in 2008-09, for those aged 65-plus’’. Given the greying of our population as baby boomers begin to retire, one might expect that income inequality would occupy a key position on the election agenda this year. Not so far, though. In reality, New Zealand has precious little time left during 2011 to consider such matters.
Only a few weeks remain before the country will become totally absorbed by the Rugby World Cup, and election day occurs barely a month after the cup final.
In all likelihood, New Zealand’s levels of income inequality will largely remain of concern only to a handful of academics and policy wonks.
The recent publication of the annual Rich List has offered one way of measuring wealth concentration in New Zealand.
As Auckland business analyst Brian Gaynor pointed out, the 10 wealthiest New Zealanders owned wealth equal to 37.5 per cent of the total value of all companies listed on the New Zealand stock exchange at the end of June. In Australia, the comparable figure is only 4.1 per cent.
Similarly, Gaynor went on, the 10 wealthiest New Zealanders own assets equal to 11 per cent of our GDP while again, the total assets of Australia’s 10 wealthiest individuals equal just over 4 per cent per cent of GDP.
Some of this difference does reflect the relatively sorry state of the New Zealand stock exchange, and the fact that a bigger share of wealthy Australians invest in their buoyant share market.
Instead, New Zealanders tend to get wealthy by property investment, or by selling private businesses, rather than via ongoing productive investments.
In Parliament, the Ministry of Social Development’s household incomes report briefly became a political football.
Prime Minister John Key welcomed the findings that the growth in income inequality had been slowing down in recent years – while in response, the Labour Opposition cited the same report’s findings that the Working For Families scheme was the main reason why the gap had narrowed, thanks to how the scheme had lifted the incomes of low to middle income families with children.
If anything, any relief is likely to be temporary.
Almost by accident, the global recession has briefly reduced income inequality by lowering the gains enjoyed by the top two tiers of wealth in New Zealand.
Moreover, the Ministry of Social Development report didn’t include either the last round of tax cuts, or last year’s hike in GST, both of which seem likely to increase the gaps between rich and poor.
No doubt, our rates of income inequality provide a revealing snapshot of New Zealand society.
Yet in November, are voters likely to pass a damning verdict on the policies causing those disparities? Almost certainly not. Gordon Campbell is an experienced political journalist and columnist who has written for The Listener and Scoop.