Putting the fo­cus on in­come in­equal­ity

Kapi-Mana News - - OPINION/NEWS -

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.

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