The widen­ing gap

Taranaki Daily News - - Comment&opinion -

sec­tor chief ex­ec­u­tive got only 1.3 per cent?

These are hard ques­tions and it’s not ob­vi­ous that the DHBs can an­swer them. The point is not that re­duc­ing the DHB bosses’ salaries would free up the money needed to pay the ju­nior doc­tors.

If Health Min­is­ter Jonathan Cole­man is right in say­ing that the doc­tors de­mands would cost $60 mil­lion and re­quire 160 ex­tra doc­tors, the pay cut would go nowhere near it.

What stings is the un­fair­ness and the un­just­ness of the dou­ble stan­dard. And in the in­tensely po­lit­i­cal bat­tle over ju­nior doc­tors’ pay, the DHBs are al­ready on the back foot. The ev­i­dence does strongly sug­gest that the doc­tors are over­worked and that there is a risk to pa­tient health and safety as a re­sult.

The dou­ble stan­dard just rubs salt in the wound.

The rea­son the wound is raw is that inequal­ity and un­fair­ness over pay have be­come one of the weep­ing sores of mod­ern politics. This has taken var­i­ous forms in ev­ery ad­vanced English-speak­ing coun­try, for it is the mar­ket revo­lu­tion among An­glo-Saxon na­tions that has widened the pay gap most spec­tac­u­larly. It is there that the ar­gu­ment is most heated.

Econ­o­mist Gareth Mor­gan makes the wider eco­nomic point on the same day that the union is cry­ing ‘‘un­fair’’ over doc­tors’ salaries.

New Zealan­ders recog­nise the need for fun­da­men­tal change to end the ‘‘crazy inequal­ity lad­der’’ the coun­try has been climb­ing ‘‘since the ne­olib­eral ex­per­i­ment failed to de­liver ‘trickle down’’’, Mor­gan says.

Some pro­po­nents of Roger­nomics and its daugh­ter­dis­ci­plines claimed that the revo­lu­tion would make in­comes more equal, not less. His­tory has proven them wrong. So what should be done about it?

Mor­gan rightly points to the un­fair im­pact of a tilted tax sys­tem which clob­bers salaries but leaves cap­i­tal gains largely un­touched. Whether there will be a real change here, how­ever, seems un­likely. Na­tional pre­tends that its tax regime on hous­ing is a kind of cap­i­tal gains tax for spec­u­la­tors; Labour has for­mally aban­doned its pre­vi­ous pol­icy of a cap­i­tal gain tax on houses apart from the fam­ily home.

Bri­tish and Amer­i­can politi­cians have sought to put a cap on sky-high in­comes. Labour leader Jeremy Cor­byn said this week that un­der Labour no busi­ness would gain a Bri­tish gov­ern­ment con­tract if its boss earned more than 20 times as much as its low­est-paid worker. Democratic Party con­tender Bernie San­ders pro­posed a 100 per cent tax on in­comes over $450,000.

Caps on the high­est salary could col­lide with the mar­ket ne­ces­sity of pay­ing higher salaries for spe­cial skills. But the ev­i­dence is over­whelm­ing that inequal­ity has risen too much. The ques­tion is: how is the prob­lem to be tack­led?

- Fair­fax NZ

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