New Zealand must ensure coronavirus crisis doesn't become an inequality crisis
As New Zealand enters its coronavirus-induced lockdown, the prime minister keeps telling us we are all in this together. But whatever it is that we are in – this crisis, this immense disruption, this pain – some of us are much deeper in it than others. We will not all be equally affected. Some lives could be forever damaged; others will emerge relatively unscathed.
This crisis is shot through with inequality: it is revealing existing imbalances, and risks creating new ones. Every part of the government’s response must acknowledge that this is an inequality crisis. Some people will require especially urgent aid, while others may in the long run have to contribute more to the recovery.
Consider the lessons of the last similar event, the global financial crisis. Even though our government did not fully embrace austerity, the ranks of the poor still swelled by tens of thousands. It took six years for the incomes of the poorest New Zealanders to recover, while those of the richest rebounded almost instantly.
We cannot afford a repeat. So let’s start by doing more to help the most vulnerable of all: the homeless. The New Zealand Council of Christian Social Services (NZCCSS), the body representing church welfare agencies, says those sleeping rough, couch-surfing and living in overcrowded accommodation will struggle to self-isolate.
At the same time, the country must now have hundreds of empty motel and hotel rooms. So can the government not find a way to bring the two together, as is already happening for renters?
Vulnerable people, the church agencies point out, also have “a tenuous connection with the internet and with cell phone connectivity”. Very often they don’t have home broadband and can’t afford to top-up their phone.
So, at a minimum, we should ensure that all the social services they need to call have toll-free 0800 numbers, and that all essential government websites can be accessed without using data. And if schooling is going to be delivered online for an extended period, we’ll need a permanent – and rapid – way to bring free internet access to communities where it is not yet standard.
We must also remember that certain groups, notably Māori and Pasifika, are particularly likely to be in poverty. Many Pasifika families live in overcrowded homes, heightening the risk of disease transmission, and may need extra support. Meanwhile, Debbie Ngarewa-Packer, the chief executive of Te Rūnanga o Ngāti Ruanui, the governing body of one of the Taranaki iwi, has argued that health inequalities mean older Māori are vulnerable at 60, not 70. Everything looks different through an inequality lens.
Although the government’s response so far has been compassionate, it still pales into comparison with action taken overseas. A $25-a-week permanent benefit increase was welcome, but Australia has just doubled its core benefit, albeit temporarily, boosting it by $225 a week. Here, we should also consider making child-related payments easier to access and stop penalising low-income people in relationships who are supporting each other financially. Even business leaders have indicated they would not oppose further increases to benefits.
The newly announced provisions to protect jobs also need tightening. The Council of Trade Unions said some businesses were taking wage subsidies but still forcing staff to take sick leave or annual leave, in breach of the law. It is also unclear what will stop unscrupulous employers taking the subsidies and then simply sacking people. What are the “best endeavours” to keep people on, and how will they be enforced?
More generally, any further support to business has to pass a simple inequality test: will it ultimately help those who need it most?
Renters, meanwhile, are feeling aggrieved after getting less help, so far, than mortgage-holders. The “holiday” for the latter may only delay, rather than reduce, the mortgage payments they have to make. But no such similar ability to defer rent payments has been offered. And while the government has stopped “no-fault” evictions, it should follow the lead of many American cities and ban evictions outright during the lockdown. While evictions may be unlikely at this time, no-one should have even the threat of them hanging over their head.
At the other end of the spectrum, some people will escape the crisis unscathed, or even prosper. Supermarket shareholders and owners will be raking it in. Some workers, including those in the public sector, effectively have their incomes protected. Others can eat a little into large reserves of capital to ride out the crisis. That, after all, is one of the main reasons people amass wealth.
So we cannot take a broad brush or scattergun approach to supporting people through the crisis. If we try to help everyone equally, the money will be so thinly spread that it will make little difference to those who need it most.
The government must also be aware of the risk of exacerbating inequality. It has begun a version of quantitative easing, in which the Reserve Bank buys up government bonds as a way to encourage lending. This may, unfortunately, be needed, but one of the main effects of quantitative easing is to drive up the prices of financial assets held largely by the rich. So we must keep this kind of action to a minimum, favouring instead policies that get money into the hands of ordinary people.
In the long run, we will need to think about who finances the postcrisis recovery. The government’s books are taking a hammering, and once we are out the other side of this crisis, most people will be in no position to help repair the resulting holes.
Although now is not the time for detailed discussions, those who come through coronavirus relatively untouched, those whose wealth is
largely intact, will have to put their hands deeper into their pockets. Only when that happens will it be true to say that we are all in this together.