Archive

Posts Tagged ‘OECD’

Foot in mouth award – Bill English, for his recent “Flat Earth” comment in Parliament

.

idiot bill english

.

I won’t be wanting to see any hint of arrogance creeping in… One of the big messages I’ll be wanting to give incoming ministers and the caucus is that it is incredibly important that National stays connected with our supporters and connected with the New Zealand public.John Key, 22 September 2014

.

It appears that Finance Minister, Bill English did not get the memo from Dear Leader Key’s office:  “Dont get arrogant!”

On 29 June, near two years after Key’s warning, Bill English’s cockiness has landed him in deep, fetid water when he responded to a question from Labour’s Grant Robertson in Parliament;

Grant Robertson: “Does he agree with the statement of Pope Francis I that “Inequality is the root of social evil”,  given that inequality has risen in New Zealand on his watch, and is it not time he got back to confession?”

Hon Bill English: “ There is no evidence that inequality in New Zealand is increasing.

A day later, interviewed by an exasperated Guyon Espiner, English again denied that inequality was increasing in this country. English’s tortuous mental and verbal gymnastics to deny rising inequality was utterly unconvincing and judging by the tone of his own voice, he wasn’t convincing himself either;

.

Porirua family can only afford biscuits - bill english - radio nz - inequality - poverty

.

English’s assertion that inequality in New Zealand is not rising beggars belief, when nearly every metric used has come precisely to that conclusion.

From the Salvation Army, last year;

.

income inequality - salvation army - child poverty

.

The Children’s Commissioner reported on increasing child-poverty, rising by  45,000 over a year ago to now 305,000  children now live in poverty;

.

A third of NZ children live in poverty - childrens commissioner

 

.

Statistics NZ’s report on the problem was unequivocal – “Between 1988 and 2014, income inequality between households with high incomes and those with low incomes widened“;

.

income inequality - statistics nz - poverty

.

1988 – When Rogernomics began in earnest. What a surprise.

Interestingly,  income inequality fell slightly in 2004, when Working for Families was introduced by the Clark-led Labour Government. Working For Families was the same policy derided by then-Opposition Finance spokesperson, John Key, as “communism by stealth“.

From the last bastion of “radical marxism”, the OECD, came this damning report on rising inequality in New Zealand impacting on our economic growth;

.

income inequality - oecd nz - poverty

.

The Report stated that “rising inequality is estimated to have knocked more than 10 percentage points off [economic] growth in Mexico and New Zealand“.

And even our Dear Leader once admitted that New Zealand’s “underclasses” was growing;

.

key admits underclass still growing - poverty - foodbanks - homelessness

.

So, is everybody – including Bill English’s boss – wrong?!

Is Bill English the sole voice-in-the-wilderness trying to spread The Truth, whilst everybody else – including faraway OECD – is wrong?!

Or has he run foul of Dear Leader’s prescient warnings not to become arrogant?

Enjoining the poor to ignore hunger and simply “Let them eat cake” did not work out well for a certain person 223 years ago. Bill English may not lose his head over his obstinate refusal to see the world around him – but he may lose the election next year.

So for Bill English, on behalf of those who are low-paid; homeless; unable to afford to buy a home; unemployed; poor; and will be spending tonight in a car or an alleyway, I nominate Bill English for a Foot In The Mouth Award;

.

Foot In Mouth Award

.

.

.

References

NZ Herald: Election 2014 – Triumphant PM’s strict line with MPs – Don’t get arrogant

Parliament Today: Questions & Answers – June 29

Radio NZ: Porirua family can only afford biscuits (audio)

Fairfax Media: Child poverty progress ‘fails’, Salvation Army says

Radio NZ: A third of NZ children live in poverty

Statistics NZ: Income inequality

MSD: Future Directions – Working for Families

NZ Herald: National accuses Government of communism by stealth

OECD: Trends in Income Inequality and its impact on economic growth

NZ Herald: Key admits underclass still growing

Newstalk ZB: Demand for food banks, emergency housing much higher than before recession

Additional

Office of the Children’s Commissioner:

Previous related blogposts

When National is under attack – Deflect, deflect, deflect!

State house sell-off in Tauranga unravelling?

The Mendacities of Mr English – Fibbing from Finance Minister confirmed

Why is Paula Bennett media-shy all of a sudden?

Park-up in Wellington – People speaking against the scourge of homelessness

.

.

.

national's free market solution to housing

.

This blogpost was first published on The Daily Blog on 5 July 2016.

.

.

= fs =

Advertisements

A fair go in New Zealand?

.

equality - inequality

.

A very insightful piece by Dr Deborah Russell, lecturer in taxation at Massey University, and Labour candidate for Rangitikei, raised  a clear picture of the difference between equality and inequality;

.

Deborah Russell - We all deserve to get a fair go

.

There is little doubt that inequality has increased over the last thirty years. In  February this year, a bungle by Treasury resulted in  child poverty numbers being  underestimated by twenty thousand. Income inequality  was also underestimated.

Part of the reason has been one aspect of the neo-liberal “revolution”: tax cuts and increased user pays.

New Zealanders could do well to reflect that, since 1986, we have had no less than seven tax cuts;

1 October 1986 – Labour

1 October 1988 – Labour

1 July 1996 – National

1 July 1998 – National

1 October 2008 – Labour

1 April 2009 – National

1 October 2010 – National

At the same time we have had less revenue from SOEs as they were privatised or partially-sold off.

So it’s little wonder that more and more User Pays has crept into our economy/society, such as $357 million in “voluntary” donations for ‘free’ schooling, that parents have to cough up each year. That’s on top of school uniforms, text books, shoes, personal equipment, etc.

The neo-liberal revolution of the 1980s and 1990s didn’t stop, it just became more covert, with incremental increases, so we barely noticed. And when we did notice – such as the increase of prescriptions from $3 to $5 – public opposition was muted. Yet, once upon a time, prescriptions cost 50 cents each, and before that, were free.

An indicator of growing inequality is the level of home ownership in this country. This is a core statistic that cannot be fudged by National’s spin-doctors and their right-wing wannabes/sycophants.

According to the 1986 Census, home ownerships rates in New Zealand was  74.1%, with 23.1% renting.

By 2013, according to last year’s census, the figures had changed radically;

» 49.9% owned their own home  (54.5% in 2006)

» 14.8% homes were owned by a Trust (12.3% in 2006)

» A total of 64.8% of households owned their home or held it in a family trust (66.9% in 2006)

» 35.2% were renting/did not own their own home (33.1% in 2006)

As the Census 2006 Housing in New Zealand report stated,

“Over the 2001 to 2006 period the incomes of the majority of private-renter households have for the first time since 1986 increased more quickly than owner-occupier households. This supports the contention that an increasing number of working households on what would previously be considered ‘reasonable’ incomes can no longer access home ownership.

The decline in home ownership rates over the 1991 to 2001 period was significantly greater for younger households than it was for older households. This trend would appear to have continued over the 2001 to 2006 period. The gap between the home ownership rates of couple-with-children households, who have historically had the highest home ownership rates, and other types of households, narrowed over the 1991 and 2001 period, and has continued to narrow over the 2001 to 2006 period. Conversely, the home ownership rate gap between couple-only households and other types of households has widened over both periods, in favour of couple-only households. Home ownership rates as would be expected increase with household income. There are, however, differences between regions, based we suspect, on differences in average house prices by region.”

The upshot is that whilst home ownership rates are in free-fall –  unsurprisingly renting is steadily increasing.

National’s response to address our critical housing? To reduce demand – not by building more houses – but  by restricting first home owners with a 20% Loan To Value Ratio (LVR). This measure forced a sizeable chunk of house-buyers from the market, whilst local and offshore speculators were allowed free reign.

This is most definitely not what was promised to this nation in the late 1980s, when “trickle down” was supposed to increase our wealth. To the contrary, as the decades slide by, it is more and more apparent that we’ve been cruelly hoaxed.

I am reminded of something John Key said in a speech, when he scathingly condemned the previous Labour government in an election speech on 29 January 2008;

 

 

.

John Key wanking on about some crap
“Well, I’ve got a challenge for the Prime Minister. Before she asks for another three years, why doesn’t she answer the questions Kiwis are really asking, like: […] Why can’t our hardworking kids afford to buy their own house?”

.

Good question, Dear Leader. Good question.

.

*

.

Postscript – A tale of denial

.

#1 – Crisis

NZ housing market most overpriced - report

 

#2 – Denial

PM denies OECD figures reflect housing crisis

.

#3 – Blame others

Housing crisis worse under Clark's Government - Key

.

 

#4 – Revelation

Key 'out of touch' over housing crisis

.

#5 – Toughlove

You’re wrong John, there is a housing crisis in NZ

.

# 6 – Acceptance?

 

.


 

References

NZ Herald: Deborah Russell: We all deserve to get a fair go

Radio NZ: Govt disappointed by stats bungle

Fairfax media: Children in poverty vastly underestimated

NZ Herald: Parents fundraise $357m for ‘free’ schooling

NZ 1987-88 Official Yearbook: Table 6.4. TENURE OF DWELLINGS (6.1 Households and dwellings)

Statistics NZ: 2013 Census QuickStats about national highlights – Home ownership continues to fall

Statistics NZ: 2006 Census – Dwelling ownership

Centre for Housing Research:  Census 2006 Housing in New Zealand

John  Key.co.nz: A Fresh Start for New Zealand

Radio NZ: NZ housing market most overpriced – report

Radio NZ: PM denies OECD figures reflect housing crisis

NZ Herald: Housing crisis worse under Clark’s Government – Key

TV3: Key ‘out of touch’ over housing crisis

Scoop media: You’re wrong John, there is a housing crisis in NZ

Additional

Fairfax media: Housing affordability getting worse

Closer Together-Whakatata Mai: New Zealand’s income inequality problem

 


 

.

selling housing

This blogpost was first published on The Daily Blog on 21 May 2014.

= fs =

National, The Economy, and coming Speed Wobbles

1 March 2014 4 comments

.

The Nationalmobile

.

For a while, the news seemed dire for the Left, and impressively positive for National;

  • A recent Fairfax Media-Ipsos poll put National on 49.4%  versus  31.8% and 10% respectively for  Labour and the Greens.
  • The latest Roy Morgan Poll had National at 48%, compared to 30% and 12% for Labour and the Greens respectively.
  • Annual average economic growth  was 2.6% to September 2013.
  • The Household Labour Force Survey for the December 2013 Quarter showed a drop in unemployment, from 6.2% to 6%.
  • Dairy prices (and thusly export reciepts) continued to rise.
  • The trade deficit continued to slowly improve.
  • And there was just enough ambiguity around recent child poverty statistics to allow National, and its drooling sycophants,  to claim that it was no longer a  growing problem (it was simply a constant problem).

However, is everything as it really seems? Is the news all rosy and are we rushing head-first toward the “promised land“, the much heralded, Neo-liberal Nirvana?

Or, are dark clouds beginning to appear on the horizon?

New Zealand’s economic recovery is predicated mostly on the Christchurch re-build, and piggy-backing on the global economic situation picking up. As Treasury reported in 2012;

The Canterbury rebuild is expected to be a significant driver of economic growth over the next five to ten years. The timing and speed of the rebuild is uncertain, in part due to ongoing aftershocks, but the New Zealand Treasury expects it to commence around mid-to-late 2012.

As predicted,  the ASB/Main Report Regional Economic Scoreboard recently revealed that Canterbury had over-taken Auckland as the country’s main center for economic growth.

Meanwhile, the same report outlines that Auckland’s “growth” is predicated on rising house prices. Economic “growth” based on property speculation is not growth – it is a bubble waiting to burst.

The other causal factor for our recovery is international. The IMF reported only last month;

Global activity strengthened during the second half of 2013, as anticipated in the October 2013 World Economic Outlook (WEO). Activity is expected to improve further in 2014–15, largely on account of recovery in the advanced economies. Global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO. But downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain...

Being  mostly an exporter of commodities (meat, dairy products, unprocessed timber, etc), New Zealand cannot but help ride the wave of an upturn in the global economy as increasing economic activity creates a demand for our products.

Any economic recovery, as such, has little to do with the incumbent government – just as the incumbent governments in 2008 and 2009 had little to do with the  GFC and resulting recession (though National’s tax cuts in 2009 and 2010 were irresponsible in the extreme, reliant as they were on heavy borrowings from overseas). We are simply “riding the economic wave”.

As the global up-turn generates growth in New Zealand’s economy, paradoxically that leaves us vulnerable to new, negative, economic factors;

1. The Reserve Bank has indicated that  it will begin to increase the OCR (Official Cash Rate) this year.

Most economists  are expecting the OCR to rise a quarter of a percentage point on March 13. As Bernard Hickey reported in Interest.co.nz;

Wheeler said in early December he expected to raise the OCR by 2.25% by early 2016, which would lift variable mortgage rates to around 8% by then. The bank forecast interest rate rises of around 1% this year and a similar amount next year.

2. An increase in the OCR will inevitably flow through to mortgage rates, increasing repayments.

As mortgaged home owners pay more in repayments, this will impact on discretionary spending; reducing consumer activity, and flow through to lower business turn-over.

Even the fear-threat of higher mortgage interest rates may already be pushing home owners to lock-in fixed mortgages. Kiwibank for example, currently has a Fixed Five year rate at 6.9%. ANZ has a five year rate at 7.2%. Expect these rates to rise after March.

If home owners are already fixing their mortgages at these higher rates, this may explain the fall in consumer confidence, as the Herald wrote on 20 February,

New Zealand consumer confidence fell from its highest level in seven years this month, while remaining elevated, amid a pickup in inflation expectations and the prospect of interest rate increases.

It may also explain, in part, this curious anomaly which recently featured in the news cycle,

.

Govt deficit bigger than expected as tax trickles in

.

The Herald report goes on to state,

The smaller tax take was across the board, with GST 2.3 per cent below forecast at $7.5 billion, source deductions for personal income tax 1.2 per cent below forecast at $11.71 billion, and total corporate tax 4.9 per cent below expectations at $3.56 billion.

Treasury officials said some of the lower GST take was due to earthquake related refunds, and that the shortfall in Pay As You Earn might be short-lived. The corporate tax take shortfall was smaller than in the previous month…

  • A drop in GST would be utterly predictable if consumer spending was falling.
  • Personal income tax would be falling if employers were cutting back on part-time work available. Which indeed seems to be the case, according to the latest Household Labour Force Survey (HLFS) Poll on unemployment,

Over the year, the total number of under-employed people increased by 27,200 to 122,600. As a result, the under-employment rate increased 1.0 percentage points to 5.3 percent.

Less wages equals less spent in the economy and less PAYE and GST collected by the government.

  • This would also account for the drop in corporate tax take falling by  4.9%.

The effect of the Reserve Bank’s decision to begin raising interest rates will be to dampen economic activity and consumer demand. This will be bad news for National.

3. An increase in the OCR will inevitably also mean a higher dollar, as currency speculators rush to buy the Kiwi. Whilst this may be good for importers – it is not so good for exporters. If we cannot pay our way in the world through exports, that will worsen our Balance of Trade; in turn risking our international credit rating; which in turn can  impact negatively on the cost of borrowing from off-shore (the lower our credit-rating, the higher interest we pay to borrow, as we are considered a higher lending risk).

This, too, will affect what we pay for our mortgages and capital for business investment.

4. As economic activity and consumer demand falls, expect businesses not to hire more staff and for fresh  redundancies to add to the unemployment rate. Unemployment will either stay steady later this year, or even increase.

Less people employed or a reduction on work hours for part-time employees will also result in a lower tax take.

5. As interest rates rise, in tandem with the Reserve Bank’s policy on restricting low-home deposits, expect home ownership to fall even further. This will increase demand for rentals, which, in turn will push up rents. Higher rents will also dampen consumer spending.

6. As the global economy picks up and demand for oil increases, expect petrol prices to increase. This will have a flow-through effect within our local economy; higher fuel prices will lead to higher prices for consumer goods and services. This, in turn, will force the Reserve Bank to ratchet up interest rates (the OCR) even further.

7. As businesses face ongoing pressures (described above), there will be continuing  pressure to dampen down wage increases (except for a minority of job skills, in the Christchurch area). For many businesses, the choice they offer their staff will be stark; pay rise or redundancies?

8. Expect one or more credit rating agencies (Fitch, Moodies, Standard and Poors) to put New Zealand on a negative credit watch.

9. According to a recent (21 February) Roy Morgan poll, 42%  of respondents still considered the economy their main priority of concern. 21% considered social issues as their main concern.This should serve as a stark warning to National that people will “vote with their hip wallets or purses” and if a significant number of voters believe that they are not benefitting from any supposed economic recovery, they will be grumpy voters that walk into the ballot booth.

Interestingly, the “Economy” category also included the social issue of “Poverty / The gap between the rich and the poor”.  16% believed that “Poverty / The gap between the rich and the poor”was a major factor within the economic situation – a significant sub-set of the 42%.

Add that 16% to the 21% considering social issues to be the number one priority, and we see the number of respondents in this category increasing to 37%. That is core Labour/Green/Mana territory.

10. National has predicated its reputation as a “prudent fiscal manager”  on returning the government’s books to surplus by 2014/15. As Bill English stated just late last year,

“We remain on track to surplus in 2014/15, although it will still be a challenge to actually reach surplus in that financial year.”

Should National fail in that single-minded obsession, the public will not take kindly to any excuses from Key, English, et al. Not when tax payer’s money has been sprayed around with largesse by way of corporate welfarism. Throwing millions at Rio Tinto, Warner Bros, China Southern Airlines, Canterbury Finance, etc, will be hard to justify when National has to borrow further to balance the books.

On top of which is the $61 billion dollar Elephant in the room; the government debt racked up by National since taking office in 2008. As Brian Fallow wrote in the Herald in 2011,

The concern about government debt is not so much about its level, but the pace at which it is increasing. In June 2008 net government debt was $10 billion, or 5.6 per cent of GDP, and gross debt $31 billon, or 17.2 per cent of GDP.

Since 2008, New Zealand’s sovereign debt has increased six-fold – made worse in part by two ill-conceived and ultimately unaffordable tax cuts.  Those tax cuts were, in essence, electoral bribes made by John Key to win the 2008 general election. (Labour’s paying down of massive debts it had inherited from National in the 1990s, plus posting nine consecutive surpluses, had come around to bite Cullen on his bum. Taxpayers were demanding “a slice the action” by way of tax cuts.)

That debt will eventually have to be repaid. Especially if, as some believe, another global financial shock is possible – even inevitable. With a $60 billion dollar debt hanging over our heads, we are not well-placed to weather another global economic shock. In fact, coupled with private debt, New Zealand is badly exposed in this area (as the OECD stated, in the quote below).

So the “good news” currently hitting the headlines is not so “good” after all, and many of the positive indicators have a nasty ‘sting in the tail’. As the OECD  recently reported,

The New Zealand economy is beginning to gain some momentum, with post‑earthquake reconstruction, business investment and household spending gathering pace.Risks to growth remain, however, stemming from high private debt levels, weak foreign demand, large external imbalances, volatile terms of trade, a severe drought and an exchange rate that appears overvalued. The main structural challenge will be to create the conditions that encourage resources to shift towards more sustainable sources of prosperity. Incomes per head are well below the OECD average, and productivity growth has been sluggish for a long time. Lifting living standards sustainably and equitably will require structural reforms to improve productivity performance and the quality of human capital.

As the election campaign heats up, expect the following;

  1. Greater media scrutiny on National’s track record,
  2. The public to become more disenchanted with Key’s governance as economic indicators worsen and impact on their wallets and purses,
  3. National (and its sycophantic supporters) continue to blame welfare beneficiaries; the previous Labour government; the GFC and resulting recession; and other “external factors” for their lack-lustre performance,
  4. Key and various business  figures to become more strident in their attacks on Labour and the Greens,
  5. A dirty election campaign , including a well-known extremist right-wing blogger releasing personal information on political opponants, which will backfire badly on National,
  6. National to fall in the polls; NZ First will cross the 5% threshold; and Labour/Greens/Mana to form the next government, with Peters either sitting on the cross benches, or taking on a ministerial portfolio outside Cabinet.

So it’s not the Left that should be worried.

National is on shakier ground than many realise.

.

*

.

References

Fairfax Media: National on wave of optimism – poll

Roy Morgan: National (48%) increases lead over Labour/ Greens (42%) – biggest lead for National since July 2013

NZ Herald: Economic growth hits 4-year high

Statistics NZ: Household Labour Force Survey: December 2013 quarter

Fairfax Media: Dairy prices squash trade deficit

NZ Herald: NZ’s trade deficit remains despite better terms

Fairfax Media: Inequality: Is it growing or not?

NZ Treasury: Recent Economic Performance and Outlook

Fairfax media: Canterbury overtakes Auckland in economic survey

IMF: World Economic Outlook (WEO) Update

Reserve Bank:  Price stability promotes a sustainable expansion

Interest.co.nz:  Bernard Hickey looks at what the Reserve Bank’s OCR decision means for mortgage rates and house prices

NZ Herald: Consumer confidence slips as rates increase looms

NZ Herald:  Govt deficit bigger than expected as tax trickles in

Statistics NZ:  Unemployment December 2013 Quarter

Roy Morgan: Economic Issues down but still easily the most important problems facing New Zealand (42%) and facing the World (36%) according to New Zealanders

NBR:  Govt sees wider deficit in 2014 on ACC levy cut, lower SOE profits

Fairfax media:  Public debt climbs by $27m a day

NZ Herald: Govt debt – it’s the trend that’s the worry

NZ Herald: Cullen – Tax cuts but strict conditions

OECD: Economic Survey of New Zealand 2013

Previous related blogposts

TV3 Polling and some crystal-ball gazing

Other blogposts

The Daily Blog: Latest Roy Morgan Poll shows the Labour funk

The Daily Blog: Canaries In A Coal Mine: Has The Daily Blog Poll anticipated Labour’s Collapse?

.

*

.

The Cost of Living

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 23 February 2014.

.

.

= fs =

When the Rich Whinge about paying tax

17 February 2014 3 comments

.

I can't afford this and pay my tax

.

It seems that after seven tax cuts since 1986, the rich still aren’t satisfied;

.

taxation rich poor

.

The matriarch of the Horton family – the 41st richest family in New Zealand according to the 2012 NBR Rich List and worth an estimated $220 million – Dame Rosie Horton, is complaining that “increasing the rate on the wealthy to provide services for lower income New Zealanders would just discourage hard work” and claims that “the country is already overtaxed and demanding an even greater take from the wealthy would only put people off working hard“.

New Zealand?! “Over-taxed”?!

After two tax cuts (2009 and 2010) which saw the wealthiest and top income earners benefit the most, Horton is still insisting that New Zealand is “over-taxed”?

Well, let’s put that to the test and compare New Zealand to Australia, via the KMPG on-line tax rates indicator;

.

KPMG - individual tax rates

.

Verdict: New Zealand’s highest individual tax rate (33%) is lower than Australia’s (45%) and lower than the Oceania average (37.75%).

.

KPMG - corporate tax rates

Verdict: New Zealand’s corporate tax rate (28%) is lower than Australia’s (30%) – though marginally higher than the Oceania average (27%).

.

KPMG - indirect tax rates

Verdict: New Zealand’s indirect tax rates, GST, is higher (15%)  than the Australian rate (10%) or the Oceania average (12.92%).

.

The only tax rate higher than Australia or the Oceania average is GST. That tax is recoverable by companies (through their GST Return), and does not impact on rich families (who can also avoid it with some skillful accounting) unlike poorer or middle class families.

So let’s compare New Zealand globally. Where do we stand on taxation rankings? In 2006 the US-based Tax Foundation positioned New Zealand at number 22 out of 30,  in terms of high-to-low taxation ranking;

.

Tax Foundation: Top Marginal Combined Individual Income Tax Rates in the OECD
2000 and 2006

Country

Top Combined Marginal Individual Income Tax Rate in 2000a

Rank

Top Combined Marginal Individual Income Tax Rate in 2006a

Rank

Percentage Reduction in Marginal Rate
(2000-2006)

Denmark

59.70%

3

59.74%

1

0.06%

Sweden

55.38%

4

56.60%

2

2.20%

France

53.25%

6

55.85%

3

4.88%

Belgium

63.90%

1

53.50%

4

-16.27%

Netherlands

60.00%

2

52.00%

5

-13.33%

Finland

48.67%

8

50.90%

6

4.58%

Austria

45.00%

17

50.00%

7

11.11%

Japan

50.00%

7

50.00%

7

0.00%

Australia

48.50%

9

48.50%

9

0.00%

Canada

46.41%

13

46.41%

10

0.00%

Germany

53.81%

5

45.37%

11

-15.67%

Spain

48.00%

10

45.00%

12

-6.25%

Italy

46.40%

14

44.10%

13

-4.96%

Switzerland

43.23%

21

42.06%

14

-2.71%

Portugal

35.00%

28

42.00%

15

20.00%

Ireland

44.00%

20

42.00%

16

-4.55%

Poland

40.00%

23

40.00%

17

0.00%

Greece

45.00%

18

40.00%

18

-11.11%

United Kingdom

40.00%

24

40.00%

19

0.00%

Norway

47.50%

11

40.00%

20

-15.79%

United States

46.09%

15

39.76%

21

-13.74%

New Zealand

39.00%

26

39.00%

22

0.00%

Luxembourg

47.15%

12

38.95%

23

-17.39%

Korea

44.00%

19

38.50%

24

-12.50%

Iceland

45.37%

16

36.72%

25

-19.07%

Hungary

40.00%

25

36.00%

26

-10.00%

Turkey

35.60%

27

35.60%

27

0.00%

Czech Republic

32.00%

30

32.00%

28

0.00%

Mexico

40.00%

22

29.00%

29

-27.50%

Slovak Republic

35.00%

29

19.00%

30

-45.71%

Average

45.93%

  

42.95%

  

-6.46%

.

Note that the Ranking chart above is dated 2006 – three years before National’s tax cut in 2009, and a further year before the 2010 tax cut.  Our marginal tax rate is now at 33%, putting us even further down the Chart, just above the Czech Republic. That would put New Zealand at number 28 out of 30.

The following chart is a comparison of corporate tax rates;

.

United States 39.10%
Japan 37.00%
France 34.40%
Belgium 34.00%
Weighted Average (by GDP) 32.50%
Portugal 31.50%
Germany 30.20%
Spain 30.00%
Mexico 30.00%
Australia 30.00%
Luxembourg 29.20%
New Zealand 28.00%
Norway 28.00%
Italy 27.50%
Canada 26.10%
Greece 26.00%
Simple Average 25.50%
Denmark 25.00%
Austria 25.00%
Netherlands 25.00%
Israel 25.00%
Finland 24.50%
Korea 24.20%
United Kingdom 23.00%
Slovak Republic 23.00%
Sweden 22.00%
Switzerland 21.10%
Estonia 21.00%
Chile 20.00%
Turkey 20.00%
Iceland 20.00%
Czech Republic 19.00%
Hungary 19.00%
Poland 19.00%
Slovenia 17.00%
Ireland 12.50%

Source: OECD Tax Database
PART II. Taxation of Corporate and Capital Income. Table II.1. Corporate income tax rate: Combined Central and Subcentral (column 4):
http://www.oecd.org/tax/taxpolicyanalysis/oecdtaxdatabase.htm

(Via The Tax Foundation – http://taxfoundation.org/article/oecd-corporate-income-tax-rates-1981-2013)

Whilst New Zealand ranks above the Simple Average, at number 11 (equal with Norway) we are still considerably below the Weighted Average (by GDP) and well below our major trading partners, Australia and the United States (figures not shown for China).

Another ranking is the Marginal Effective Tax Rate on Capital Investment, OECD Countries, 2005-2013. On this scale, New Zealand ranks 13th out of 34 nations. At a rate of 21.6%, we are well under the weighted average of 28.5%, though marginally above the unweighted figure of 19.6%. Australia, Japan, and the US rank well above us in higher marginal effective tax rates on capital investment.

So is New Zealand “over-taxed”?

Or are we hearing the remonstrations of a woman with considerable wealth, enjoying a life of luxury and privilege that 99% of New Zealanders could only imagine.

That’s 99% of us.

Horton belongs to the remaining 1%.

Which, in that context explains why she is bleating about having to pay anything resembling her fair share of taxation.

This blogger acknowledges that Horton may well contribute to charities. If so, good for her.

But contributing to charities is no substitution for taxation which ensures that State resources are fairly shared out, according to need, priorities, and maximising benefit for the country as a whole.

However Horton decides to prioritise her philantropy is her choice. But left to the random vaguaries of personal  philantropy, some will always miss out. Goodwill is important, but is no substitute for ensuring the widest, and optimally organised  distribution of resources to health, education, roading, public transport, the justice system, environmental conservation, etc, etc, etc, etc – all the things which New Zealanders enjoy and take for granted every day of their lives.

Why is it that with all their considerable wealth, the rich still feel the need to complain? With a dollar value of $220 million, Horton and her family will never have to worry about paying the mortgage of rent on time; whether their power bill will be higher yet again this winter; if they can afford to pay their children’s uniforms and “voluntary” school fees; and how much they’ll be able to afford to spend on groceries.

The infra-structure of this country did not materialise out of thin air; built up over-night by pixies. It was built by people paying taxes, and the State (the people’s collective will)  building everything from scratch.

When Horton switches on her light-switch tonight, I hope she spares a thought for the tax-dollars that went to pay for the dams; the access roads; the transmission lines; and the workers’ wages who built this incredible asset.

Rather than complain about taxation, Horton should count herself lucky, and give thanks to whatever deity she worships, that she was born in New Zealand.

It could easily have been Somalia.

They have little or no taxation.

.

*

.

References

Radio NZ:  Philanthropist dismisses ‘rich tax’

NBR: The Rich List at a Glance (Wealth order)

NBR: HORTON family

Tax Foundation: Top Marginal Combined Individual Income Tax Rates in the OECD 2000 and 2006

Tax Foundation: Marginal Effective Tax Rate on Capital Investment, OECD Countries, 2005-2013

News.Com: Tax collecting a deadly job in Somalia, five taxmen killed this year

Previous related blogpost

Greed is good? (28 August 2011)

.

*

.

election 2014

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 10 February 2014.

.

.

= fs =

Mediaworks, Solid Energy, and National Standards

17 June 2013 3 comments

.

Solid Energy looking to sell Southland land

Acknowledgement: Radio NZ – TV3’s owners in receivership

.

Stupidity heaped upon government incompetence – there is no other way to describe the fiasco that Solid Energy has become since National took office in 2008. Whether it was National Ministers  encouraging Solid Energy to expand their operations during a time of  recession or  forcing it to borrow huge sums and then pay it to the National government as “dividends” – Key, English, Joyce, et al have a lot to answer for.

It is not often that a government will run a SOE into the ground and then blame others for their incompetance. (See previous blogpost: Solid Energy – A solid drama of facts, fibs, and fall-guys )

News that Solid Energy may be planning to sell 3,500 hectares of land, and which may be purchased by offshore investors, is the final humiliation.

At this stage, I will make the following point;

  1. I don’t care if a foreign purchaser resides in Boston, Berlin, or Beijing. The negative economic consequences to New Zealand are all the same.
  2. Rightwingers maintain that it doesn’t matter if the land is sold into foreign ownership; “no one can take it away”. But that’s not the point. It’s not the land that is removed – but the profits  generated for owners. It is dividends  to overseas investors that can be “taken away”, thereby reducing our income; worsening our balance of payments; and ultimately pushing up interest rates.
  3. Land sales to overseas investors denies the birthright of  all New Zealanders to participate in land based enterprises. It is difficult for young people to buy a farm when competing with wealthy  investors from Boston, Berlin, or Beijing. In the end, those young New Zealand may end up tenants in our own country – which Dear Leader himself said was not desirable (see: PM warns against Kiwis becoming ‘tenants’ ).

The most common sense solution to this problem (I refuse to call it an “issue”) is simple and straightforward.

If local buyers cannot be found, the land should be transferred to SOE Landcorp, to hold it in stewardship. Good, productive farmland could be later sold/leased to young New Zealanders who want to get on the first rung of the ladder to farm ownership.

Selling/leasing to the next generation of New Zealanders – our children – is a sound way to give them opportunities in our own country.

Why we would deny them that birthright and instead prefer to sell to faceless foreign investors, sitting in offices halfway around the word, defies understanding.

As Bruce Jesson said in his book, about the neo-liberal mentality to sell off everything to the highest bidder, and bugger  the consequences; Only their Purpose is Mad.

.

*

.

MediaWorks in receivership

Acknowledgement: NZ Herald – MediaWorks in receivership

.

It is a great shame that Mediaworks is in this position. Their flagship broadcaster, TV3, has raised the quality and standard of programming in this country. Unlike the mediocre rubbish on state-owned TVNZ, TV3 has treated the viewer with a fair measure of respect.

Programmes like Campbell Live, Outrageous Fortune, and Inside Child Poverty have been nuggets of gold at a time when mainstream media is dumbing down faster than John Banks’ integrity post-Skycity and Dotcom donations scandal.

This leftwing blogger wishes the company all the best for the future; fervantly hopes that no one loses their job; and looks forward to more high-quality programming  from TV3.

See more at The Daily Blog by Selwyn Manning: Breaking News: New Company Newco Positions To Purchase MediaWorks Off Receivers

Breaking News: New Company Newco Positions To Purchase MediaWorks Off Receivers – See more at: http://thedailyblog.co.nz/2013/06/17/breaking-news-tv3-radiolive-owners-mediaworks-has-gone-into-receivership/#sthash.YBRLNczb.dpuf

.

*

.

Teachers to boycott trial of national standards computer system

Acknowledgement: Radio NZ – Teachers to boycott trial of national standards computer system

.

The biggest problem and greatest threat from National Standards is the American phenomenon, “Teaching to Tests”. As Gordon Campbell wrote, four years ago when National Standards were first mooted by the Nats,

The main risk is that national testing will foster mechanical ways of assessing of children’s learning, as teachers get pressured into ‘teaching to the test’ – thus narrowing what they teach, and fuelling a focus on simplistic measuring rather than on creating a richer, and more child-oriented environment.

Quite simply, what this means is that for schools to “look good” in league tables (another right wing invention that inevitably follows National Standards), they will be pressured to teach  students solely to answer tests. Nothing more, nothing less.

Because otherwise, a school risks looking poorly in National Standards results. Couple this with “performance related pay”, and “teaching to the test” to guarantee a high ranking in League Tables, becomes a dead cert.

Parents should not only be worried – they should be downright angry. This undermines our education system and turns it into a farce. Kids become expert at answering tests – but not much more. Problem-solving, initiative, increased knowledge, and even more tradition curricula, become secondary.

Because, really, if we’re going to have “performance related pay”, then teachers will make damn sure that their school doesn’t fall behind in any National Standard and subsequent League Table.

Interestingly, China, Sth Korea, Singapore, and Hong Kong are also at the top of the OECD PISA scale.  International education scholar, Yong Zhao (see bio here), pointed out why in December 2010;

… China has become the best education nation, or at least according to some experts and politicians. Chinese students (a sample from Shanghai) outscored 64 countries/education systems on the most recent PISA, OECD’s international academic assessment for 15 year olds in math, reading, and science…

[…]

I don’t know why this is such a big surprise to these well educated and smart people. Why should anyone be stunned? It is no news that the Chinese education system is excellent in preparing outstanding test takers, just like other education systems within the Confucian cultural circle—Singapore, Korea, Japan, and Hong Kong…

[…]

That’s the secret: when you spend all your time preparing for tests, and when students are selected based on their test-taking abilities, you get outstanding test scores.

Acknowledgement:  A True Wake-up Call for Arne Duncan: The Real Reason Behind Chinese Students Top PISA Performance

Is this education?. Or is this a  corruption of education and turning our children into mass-trained cogs, able to pass tests, but not much more in terms of free-thinking and expanding knowledge?

Make no mistake. This is setting us up for failure in the decades to come.

Perhaps, instead we should be looking at the Finnish experience,

In his country, Dr. Darling-Hammond said later in an interview, teachers typically spend about four hours a day in the classroom, and are paid to spend two hours a week on professional development. At the University of Helsinki, where he teaches, 2,400 people competed last year for 120 slots in the (fully subsidized) master’s program for schoolteachers. “It’s more difficult getting into teacher education than law or medicine,” he said.

Dr. Sahlberg puts high-quality teachers at the heart of Finland’s education success story — which, as it happens, has become a personal success story of sorts, part of an American obsession with all things Finnish when it comes to schools…

[…]

Both Dr. Darling-Hammond and Dr. Sahlberg said a turning point was a government decision in the 1970s to require all teachers to have master’s degrees — and to pay for their acquisition. The starting salary for school teachers in Finland, 96 percent of whom are unionized, was about $29,000 in 2008, according to the Organization for Economic Cooperation and Development, compared with about $36,000 in the United States.

More bear than tiger, Finland scorns almost all standardized testing before age 16 and discourages homework, and it is seen as a violation of children’s right to be children for them to start school any sooner than 7, Dr. Sahlberg said during his day at Dwight. He spoke to seniors taking a “Theory of Knowledge” class, then met with administrators and faculty members.

“The first six years of education are not about academic success,” he said. “We don’t measure children at all. It’s about being ready to learn and finding your passion.”

Acknowledgement: New York Times – From Finland, an Intriguing School-Reform Model

Solutions?

1. Don’t vote for National in 2014.

2. Look at Finland for our answers to improve education – not the US which is lower on the OECD PISA ranking than us. (Finland is near the top.)

3. Be wary of simplistic rightwing agendas.

Other Blogs

Gordon Campbell: National Education Tests, And Michael Jackson

The Political Scientist:  National Standards and Neanderthals – “They will know what is required …” – Part I

The Political Scientist: National Standards and Neanderthals – “They will know what is required …” – Part II

The Political Scientis: National Standards and Neanderthals – “They will know what is required …” – Part III

.

.

= fs = 

12 June – Issues of Interest

12 June 2013 2 comments

.

Looking at the pieces

.

Nigel Latta on National Standards

On Facebook, child psychologist and TV host, Nigel Latta, had this to say about the recent National Standards “results”;

‘National Standards’ aren’t.

The latest national standards ‘results’ being reported in the media are utter nonsense. Pure and simple. Even if we ignore the large inconsistencies between the way that the ‘standards’ are measured (and we can’t because the inconsistencies make comparisons all but impossible), and the fact that it assumes all children of a given age are maturing at the same rate (which they don’t), and we ignore the impact of little things like child poverty (which some politicians like to do much to their shame), it’s still impossible to say anything at all about a change in the numbers when you only have two data points.

They can’t say that a difference of 1.2-2% on the various measures between last year and this year is an ‘improvement’, because we simply don’t know.

If you had assessed all of those very same children again the day after they were assessed for these numbers, in the exact same conditions with the exact same measures, then you would also get a different number. That’s because in the real world we have this little thing called statistical variation–things never work out exactly the same. To make any meaningful statements about ‘improvements’ you need meaningful measures (which national standards aren’t anyway) over several different data points (i.e. over several years).

I wish the media would get that very simple, but very important point. Politicians will spin it as a gain, but it isn’t. It’s simply meaningless statistical ‘noise’.

The government went with national standards because they thought voters would like it, not because it’s the best thing for making progress on education. If we really wanted to lift our ‘national standards’ then, perhaps as a beginning, we’d take more care of the large numbers of our kids living in poverty.

When they produce their ‘rankings’ of schools I’m pretty sure it’s going to show a trend whereby higher decile schools meet/exceed the ‘standards’ much more than lower decile schools. I wonder why that might be? And who do we blame for that? Teachers?

Don’t be sucked in by all this political positioning. My advice is to ignore the national standards tables because they don’t mean anything. There’s a reason teachers were so opposed to the way these ‘national standards’ are being used… fundamentally because it’s nonsense!

Nigel Latta, Facebook, 12 June 2013

.

100% Pure brand busted!

New Zealand’s distance from it’s major trading partners (except Australia) has always been a major impediment to our trading. Our point-of-difference has  been the quality of our food products, and has made them desirable commodities on that basis.  Branding ourselves as “100% Pure” and  “Clean and Green” were marketing tools that created a multi-billion dollar export industry.

But that is coming to an end.

We are not “100% Pure” and nor are we “Clean and Green”. Anything but.

National has paid lip service to being green.

Pollution has been allowed to increase.

It’s focus on “reforming” the RMA to allow for exploitation mof sensitive environmental areas; more and more chemicals ion our farms; allowing dangerous deep sea drilling of our coastline; mining in Conservation lands; and ditching our committment to the Kyoto Protocol – have not gone unnoticed by our trading partners.

And those trading partners  are starting to react accordingly,

.

Sri Lanka demands DCD testing on NZ milk powder

Acknowledgment: Radio NZ – Sri Lanka demands DCD testing on NZ milk powder

.

An over-reaction?

Not when National has appointed a  board to over-see a resource consent application to allow an increase of nitrogen pollution  in the Tukituki River  by a staggering 250% !

.

Nitrate proposal seen as death knell for river

Acknowledgment: Radio NZ – Nitrate proposal seen as death knell for river

.

This will not doubt be ratchetted back to “only” 50% or 100%, and National will claim that they are “listening” to public concerns. It’s an old political trick when a deeply unpopular policy is put forward. Make a number unfeasibly large; then offer a lower number, and claim that government has listened to the public. In reality it was the lower number all along that was the preferred option.

National has consistently undermined environmental protections in this country, as well as knee-capped DoC by sacking staff and under-funding it’s operations.

We are now starting to pay the price of right-wing policies that pursue business and profit ahead of  preserving our environment.

What National and it’s one-eyed supporters don’t seem to comprehend is that business and profits are dependendent on our clean and green environment. Mess up the environment and expect to lose customers and profits.

Just ask the Sri Lankans.

.

User-pays healthcare?

For those neo-liberals and naive National supporters who advocate replacing our socialised healthcare system with privatised healthcare insurance, I present the reality,

.

NZ private health insurance uptake hits 6-yr low

Acknowledgment: NZ Herald – NZ private health insurance uptake hits 6-yr low

.

Private health-privider,  Wakefield chairman Alan Isaac said,

“The total number of New Zealanders with private health insurance (is) decreasing.”

Acknowledgment: IBID

Well, no wonder!

Even as private healthcare companies like Wakefield are complaining about losing customers, they are hiking premiums and still making a 27% increase in full-year earnings. Twentyseven percent! Compare that to other investments, and you begin to realise that these companies aren’t doing too bad.

That’s 27% that could have been re-invested in healthcare – but is instead going into the pockets of shareholders.

What would happen, I wonder, if New Zealand’s healthcare system was fully privatised and  went totally “free market”, as ACT policy demands?

This OECD chart suggests the result, if we were ever foolish enough to go down that road,

.

OECD - private - public - healthcare expenditure -2007

Source: OECD – Total health expenditure per capita, public and private, 2007

.

At 7,290, the United States spends nearly three times as much on healthcare as we do. Their private/public health costs are vastly greater than the entire public/private expenditure we have here in New Zealand with our “socialised” system.

And ACT wants to emulate our American cuzzies?!

The only thing the USA has demonstrated is that a privatised healthcare system will result in a massive blow-out in costs and rapacious profits for shareholders.

The argument from the neo-liberal Right is that private enterprise is “more efficient” and better for consumers. This is absolute bollocks.

If anything, private health insurance is highly ineffective at delivering  universal healthcare for it’s clients,

.

Ongoing jumps in health insurance costs

Acknowledgment: Fairfax Media – Ongoing jumps in health insurance costs

.

As has been observed by others in the past, private health insurance is relatively cheap when you are young, healthy, and make few demands for medical intervention.

But with old age; increased infirmity; and heightened vulnerabilty comes increased premium payments for policy-holders. Just when they most require increased medical services.

This is the fatal flaw in private medical insurance; those who most require it, will pay the highest premiums. And pay, and pay, and pay…

Just ask the Americans.

See also: NZ Herald – Jack Tame: Sickness is too expensive in the land of the free

Other blogs:  Canadian and U.S. healthcare – a debate

Canadian and U.S. healthcare – a debate
Canadian and U.S. healthcare – a debate
Canadian and U.S. healthcare – a debate

.

Some good news at last…

.

It has been a stain on our reputation that despite our anti-nuclear legislation, our Superannuation Fund was still investing in overseas companies engaged in producing atomic bombs and cluster munitions. This was a problem (I refuse to call it an “issue”)  that I highlighted  in December, last year.

Previous related blogposts:  New Zealand’s OTHER secret shame

Previous related blogposts:  New Zealand’s OTHER secret shame – *Update*

The Superannuation Fund has done the right thing by no longer continuing to invest in Babcock & Wilcox, Fluor Corporation, Huntington Ingalls Industries, Jacobs Engineering Group, Serco Group and URS Corporation;

.

Super Fund sells nuclear investments

Acknowledgment: Fairfax Media – Super Fund sells nuclear investments

.

The other weapons we are no longer investing in is the manufacture of cluster-munitions. These vile things are the weapons-of-choice for vicious dictators and other repressive regimes which they use against their civilian population.

They have been used in Syria, against unarmed civilians. Children have been killed by these monstrous devices.  (see: Syrian children ‘killed by cluster bombs’)

Cluster munitions have been outlawed by  nearly 100 nations which signed a  treaty to ban cluster bombs.  In 2009, to their credit, the current National-led government  passed legislation banning these obscene weapons from our country. This included the possession, retaining, stockpiling, assistance, encouragement, or even inducement to deal with them.

NZ Parliament: Cluster Munitions Prohibition Act 2009 (17 Dec 2009)

It would take a ruthless person to discount this human suffering and advocate for our continued investment in their manufacture.

The Superannuation Fund was effectively breaking the law with it’s investments in General Dynamics, L-3 Communications, Raytheon, and the Goodrich Corp.

It’s good to see that our fingers are no longer bloodied by such  investments.

As for right-wingers who dismiss investment in atomic bombs or cluster munition – go play with a cluster bomb.  Come back to me after it’s detonated in your hands. Then we’ll talk.

Just ask the Syrians.

.

The bucks stops with me over there, somewhere…

I guess it was inevitable, really…

.

Deputy Secretary resigns over Novopay

Acknowledgment: Radio NZ – Deputy Secretary resigns over Novopay

.

Did we really, really expect any one of the three Ministers who signed off on Novopay to put their hand up and admit responsibility?!

No less than three ministers signed off on Novopay, to allow it to “go live”;

  • Education Minisrer Hekia Parata
  • Associate Education Minister Craig Foss
  • Finance Minister Bill English

Because doesn’t it strike people as  indicative that Minister for Everything, aka, Mr Fixit, Steven Joyce was appointed Minister in charge of Novopay – thereby taking responsibility for this ongoing balls-up away from Parata?! (see: ODT – Joyce to take on handling of Novopay)

Despite the so-call “ministerial inquiry”, Joyce had a very interesting point to make on 31 January;

.

Government sticking with Novopay - for now

Acknowledgement – Radio NZ – Government sticking with Novopay for now

Steven Joyce revealed that Education Minister Hekia Parata, Finance Minister Bill English and former education minister Craig Foss approved the use of Novopay despite being told that it had bugs.”

So… how can  Joyce’s statement be reconciled with his statement, five months later,

Reporting to Ministers was inconsistent, unduly optimistic and sometimes misrepresented the situation.”

Source: Beehive.govt.nz: Ministerial Inquiry report into Novopay released

Either Ministers were “told that it had bugs” or  reporting wasunduly optimistic and sometimes misrepresented the situation“. Which is it?!

By the way, the Ministerial Inquiry was undertaken by Maarten Wevers and Chairman of Deloitte New Zealand Murray Jack.

Mr Weavers was former head of the Department of the Prime Minister (John Key) and Cabinet.

Connect the dots.

.

WhiteWash

.

Other blogposts: Gordon Campbell on the latest Novopay revelations

.

.

= fs =

Johnny’s Report Card – National Standards Assessment y/e 2012 – inequality & poverty

9 January 2013 3 comments

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Whilst it is acknowledged that the Global Financial Crisis impacted harshly on our society and economy, it is also fair to say that National has had the benefits of starting out with a sound economy (surpluses, low unemployment, etc)  in 2008 and four years in office to make good on it’s election promises..

.

Inequality & Poverty

.

.

give the rich tax cuts

.

The rhetoric:

You can measure a society by how it looks after its most vunerable, once I was one of them. I will never turn my back on that.

[…]

Yet, also, you can measure a society by how many vulnerable people it creates – people who are able to work, and able to take responsibility for their own lives and their children’s lives, yet end up depending long-term on the State.” – John Key, 28 November 2006

See: Speech to North Shore National Party luncheon

My father died when I was young. My mother was, for a time, on the Widow’s Benefit, and also worked as a cleaner. But the State ensured that I had a roof over my head and money for my mother to put food on the table. It also gave me the opportunity to have a good education. My mother made sure I took that opportunity, and the rest was up to me.” – John Key, 30 Jan 2007

See: The Kiwi Way: A Fair Go For All

I have said before that I believe in the welfare state and that I will never turn my back on it. We should be proud to be a country that looks after its most vulnerable citizens. We should be proud to be a country that supports people when they can’t find work, are ill, or aren’t able to work. ”- John Key, 30 Jan 2007

See: IBID

When Sir Ed climbed Mt Everest back in 1953, he wasn’t the only New Zealander on top of the world. We all were.  We were among the five wealthiest countries on earth. Not any more.

Fifty-five years on, we are no longer an Everest nation.  We are among the foothill nations at the base of the OECD wealth mountain. Number 22 for income per person, and falling.

But what does a wealth ranking matter, you might ask?  Why does it matter if we’re number 22 or number four? 

It matters because at number 22 your income is lower, you have to work harder, and you can save less.  You face more uncertainty when things go wrong, when you or your family get sick or lose a job.  No New Zealand sports team would be happy to be number 22.  Why is the Government?

This is a great country.  But it could be so much greater.  It has been so much greater. 

So the question I’m asking Kiwi voters is this:  Do you really believe this is as good as it gets for New Zealand?  Or are you prepared to back yourselves and this country to be greater still? National certainly is. 

[…]

So, make no mistake: this election won’t be fought only on Labour’s economic legacy.  National will be asking Labour to front up on their social legacy, too. Many of the social problems the Government said it would solve have only got worse.

This time a year ago, I talked about the underclass that has been allowed to develop in New Zealand. Labour said the problem didn’t exist.  They said there was no underclass in New Zealand.

But who now could deny it?  2007 showed us its bitter fruits. The dramatic drive-by shooting of two-year-old Jhia Te Tua, caught in a battle between two gangs in Wanganui. The incidence of typhoid, a Third World disease, reaching a 20-year high. The horrific torture and eventual death of three-year-old Nia Glassie. The staggering discovery of a lost tribe of 6,000 children who are not enrolled at any school.

The list goes on and on.  The fact is, that under Labour, there has been no let-up in the drift to social and economic separatism.

We don’t need more of their hand-wringing, their strategies, and their interdepartmental working groups. What’s needed is the courage to make the tough calls to fix these problems.” – John Key, 29 January 2008

See: A Fresh Start for New Zealand

I’m a product of the welfare state – there hasn’t been any great secret about that.” – John Key,  27 Aug 2011

See:  ‘Socialist streak’ just means we have a heart, says Key

The results:

Interestingly, whilst Key’s 2008 speech (A Fresh Start for New Zealand) started off describing New Zealand’s growing underclass, National’s Dear Leader went on to describe a series of punitive actions that his Administration would undertake, if elected to power.

The following sub-headings in Key’s speech are illuminating,

  • Youth Plan (education, youth crime)
  • Youth Guarantee (education, training, universal educational entitlement, threat of benefit sanctions)
  • Youth Justice (extending Youth Court; tougher sentences for youth offenders; new Youth Court orders)
  • New powers for the Youth Court
  • First, the power to issue parenting orders.
  • Secondly, the power to refer young offenders to mentoring programmes.
  • Thirdly, the power to refer young offenders to compulsory drug or alcohol rehabilitation programmes.
  • Tougher sentences
  • The first is longer residential sentences.
  • In addition, National will fund a new type of programme for teenagers who aren’t bad enough to be put in a youth justice facility but who need a serious dose of intervention.
  • National will fund a new range of revolutionary ‘Fresh Start Programmes’. (boot camps)
  • Finally, we think the Youth Court needs better teeth for following up serious youth offenders when they are released back into the community.

This was John Key’s “vision” of a “Fresh Start for New Zealand”; more punitive action against youth offenders – but precious little to address the root causes of youth crime; poverty, lack of jobs, poor housing, worsening health, lack of training and apprenticeships, etc, etc, etc.

Key’s “solution” was to treat the symptoms of this country’s growing underclass.

So it should be hardly any surprise that those symptoms worsened, and the underclass; prison population; domestic violence; hungry children; poor housing – all grew.

The truly unbelievable aspect to Key’s shonkey speech in 2008 was how comprehensively New Zealand voters sucked it up, en masse.  (We seriously need to introduce comprehensive  Civics courses in our schools, to teach young New Zealanders how to recognise and deconstruct political BS.)

Tax cuts:

Whichever way we look at it, New Zealand in the last four years has become a more unequal society, and with growing poverty.

The first causal factor was the 2009 and 2010 tax cuts, which gave the most to the highest income earners and most wealthy New Zealanders,

.

tax-cuts-april-2009

Source

Additional info

.

When, on 1 April 2009,  then-Maori Party MP, Rahui Katene asked John Key in Parliament,

How do low-income New Zealanders benefit from the tax changes introduced today?”

Dear Leader replied,

They benefit because 630,000 New Zealanders—the New Zealanders who do not have children and who have been relatively low-income New Zealanders, and who got absolutely nothing under the previous Labour Government for 9 years—get $10 a week, or $500 a year. It is a small start, and it will be welcomed.”

See: TheyWorkForYou Blog – Tax Cuts—Implementation

At least Key wasn’t bullshitting us this time; for those on minimum wage up to  it was indeed small. Someone on $100,000 would receive two and a half times more than someone on minimum wage.

The following year’s October tax cuts were hardly better – but this time the rate of GST was increased from 12.5% to 15%,

.

Budget 2010 - What the tax cuts mean for you

Source

.

The impact on low-income families – along with increased costs for medicines (see:  Prescription charges to increase), and other user-pays government fees – would be harsh.

Contrary to the NZ Herald’s claim above, the average earner would not be “better off”. The $15 a week “extra” would be quickly swallowed up in rising government charges; medicine prescriptions; increased petrol taxes; and the flow-on inflationary effects throughout the economy.

This was not a “tax switch” – it was a tax-swindle – with the richest making the biggest gains.

Interestingly, ACT’s Roger Douglas – commenting on the 2009 tax cuts – realised that National was having to borrow heavily to finance said tax-cuts,

Does the Prime Minister agree with Professor Eric Leeper’s statement in the latest Reserve Bank Bulletin that counter-cyclical fiscal policy could actually be counter-productive; if not, why not; if yes, why, then, is he borrowing $1 billion plus interest a year in order to give tax relief of $1 billion?” – Roger Douglas, 1 April 2009

So much for National’s promises in 2008,

National’s rebalancing of the tax system is self-funding and requires no cuts to public services or additional borrowing.

[…]

This makes it absolutely clear that to fund National’s tax package there is no requirement for additional borrowing and there is no requirement to cut public services.”

See: National – Tax Policy

Salvation Army Report: The Growing Divide – A state of the Nation Report 2012

This document by the Salvation Army is one of the most insightful and far-reaching analyses of current economic stagnation; political factors; and related social problems. It pulls no punches.

This blogger encourages people to read the Report (it’s written in plain english; very little jargon; and contains excellent data, with references). It should be put into the letterboxes of every home in this country. Click here to link to the report.

[NB: The report was written at a time when unemployment was at 6.3%. Since then it has increased three consecutive Quarters to the current 7.3% (see: Unemployment January 2012 to November 2012.]

Amongst the Report’s findings,

1. Inflation, higher prices, increased GST, raised indirect taxes (eg, fuel taxes), and government charges, have off-set the tax cuts of October 2010.

2. If New Zealand is to return to the historically low rate of unemployment of 3.8% in December 2006, (from the then-figure of 6.3%), we would require  90,000 jobs, in on top of  25,000 to 30,000 jobs required each and every year just to keep up with the growth of the labour force. The figure of 90,000 will have increased as unemployment now stands at 7.3%.

3. The rapid growth in the labour force participation rate of people aged 65+ (from 14.1% in December 2006, to 19.5% in December 2011)  has been at the expense of  falling employment participation of young people in the 15 – 19 year old age group.

Those in the 15 – 19 year old age group, the Report states, have “borne the brunt of the recession and tightening of the job market”. Unemployment for this group rose from 14.3% in December 2006, to  24.2% in December 2011.

It is also this group targetted by National’s harsh “welfare reforms”, which attempts to blame young people as “work shy” – a ‘double whammy’ from the Global Financial Crisis and a right wing government keen to shift blame for rising  unemployment onto powerless victims of the Recession.

4. The numbers of welfare recipients receiving the Domestic Purposes Benefit has also been affected by the Global Financial Crisis and resultant Great Recession. DPB recipients dropped from a peak of approximately 111,000 in late 2003, to 96,000 in mid 2008. Since 2008, and as redundancies increased; unemployment rose; and jobs disappeared, the number reversed. DPB recipients skyrocketed to an all time record of 114,230 benefits by December 2011.

Far from being “bene bludgers” opting for the DPB as a “lifestyle choice”  (which is constantly parrotted by ill-informed conservatives and low information voters), solo-parents are as vulnerable to recessionary forces as other  workers.

5. In the year to December 2011,  average weekly earnings rose a only 2.6% from $991.05 to $1016.95. Taking annual inflation of 1.8% into account, weekly earnings rose  by a fractional 0.8%. With increases in rent, fuel tax, and other government charges, that increase will have vanished altogether.

6. The Report gave as an example of unequal wage increases the difference between hourly earnings in the finance sector increasing by $1.01 per hour, from $36.63 per hour in June 2011 to $37.64 in December 2011.

By contrast, the average wage in the traditionally poorly paid accommodation sector increased by only 3 cents an hour from $16.40 to $16.43 per hour.This was a clear illustration of  the average hourly earnings of the highest paid sector increasing 2.3 times more than those for lower paid workers.

7. Most of the increase in State benefit payments  over the past five years was made as  higher spending on New Zealand Superannuation (43% of the increase) and  Working for Families (37% of the increase). Approximately 568,000 people were receiving superannuation by June 2011.

This compared to 319,000 of other welfare recipents as at December 2011 – up  from 264,500 from December 2006. Welfare numbers were dependent on the economy and increased only because of the impact by the GFC-caused Recession.

8. Food parcels issued to families and people in need doubled from 24,250 in 2006, to 53,360 in 2011. Again, this was in accordance with the advent of the GFC in 2007/08; skyrocketting unemployment; and a lack of job-creation policies by National, once it won the election in late 2008. (John Key admitted to this on 18 October 2011.  See: Key admits underclass still growing)

9. Inflation of living costs for  2011 was fractionally higher for Low-Income Household CPI at 2.1% than it was for the All Groups CPIs, at 1.8%. Low-Income Households were more vulnerable to increasing costs such as rent, government charges, and gst increases.

10. The Report correctly predicted  that levels of unemployment would rise during 2012, and would negatively impact on growth in wages and salaries of poorest paid workers.

For a full understanding the the Report, it is recommended that people read the document in it’s entirety, as I have  abridged and condensed much of the information contained therein.

The Report reinforces anecdotal evidence, facts, and  stats, that are already in wide circulation and confirms that jobs, incomes, and those receiving social welfare assistance are all affected by the global downturn over the last four to five years.

After all, John Key uses that very excuse to explain away National’s poor economic performance,

We did inherit a pretty bad situation with the global financial crisis... ” – John Key, 11 Sept 2011

See: View from the top

Ministry of Social Development: The widening gap: perceptions of poverty and income inequalities and implications for health and social outcomes

In New Zealand, income inequalities have increased since the neo-liberal reforms and benefit cuts of the late 1980s and 1990s, although the rate has slowed this decade (Blakely et al. 2007, Ministry of Social Development 2006, Ministry of Social Development 2007). The New Zealand Living Standards 2004 report showed a million New Zealanders living in some degree of hardship, with a quarter of these in severe hardship. Despite the buoyant economy and falls in unemployment levels, not only was there a slight increase in the overall percentage of those living in poverty between 2000 and 2004, but those with the most restricted living standards had slipped deeper into poverty (poverty defined as exclusion from the minimum acceptable way of life in one’s own society because of inadequate resources) (Ministry of Social Development 2006, 2007).

[…]

This greater income inequality has seen New Zealand move into 18th place out of 25 in the OECD in terms of income inequality from 1982 to 2004 (Ministry of Social Development 2007). Over the preceding two decades New Zealand experienced the largest growth in inequalities in the OECD (2000 figures), moving from two Gini coefficient points below the OECD average to three Gini points above (Ministry of Social Development 2007:45-46). One indication of the impact of these inequalities has been that relative poverty rates, including child poverty rates, have increased.

Source: MSD

OECD: Growing Income Inequality in OECD Countries: What Drives it and How Can Policy Tackle it ?

.

Over the two decades to the onset of the global economic crisis, real disposable household incomes increased in all OECD countries, by 1.7% a year, on average (Table 1). In a large majority of OECD countries, household incomes of the top 10% grew faster than those of the poorest 10%, leading to widening income inequality. Differences in the pace of income growth across household groups were particularly pronounced in some of the English-speaking countries, some of the Nordic countries and Israel. In Israel and Japan, real incomes of people at the bottom of the income ladder actually have fallen since the mid-1980s.

Over the two decades to the onset of the global economic crisis, real disposable household incomes increased in all OECD countries, by 1.7% a year, on average. In a large majority of OECD countries, household incomes of the top 10% grew faster than those of the poorest 10%, leading to widening income inequality. Differences in the pace of income growth across household groups were particularly pronounced in some of the English-speaking countries, some of the Nordic countries and Israel. In Israel and Japan, real incomes of people at the bottom of the income ladder actually have fallen since the mid-1980s.

.

Source: OECD

.

At present, across OECD countries, the average income of the richest 10% of the population is about nine times that of the poorest 10%. While this ratio is much lower in the Nordic countries and in many continental European countries, it rises to around 14 to 1 in Israel, Turkey and the United States, to a high of 27 to 1 in Chile and Mexico. The Gini coefficient, a standard measure of income inequality that ranges from zero (when everybody has identical incomes) to 1 (when all income goes to only one person), stood at 0.28 in the mid-1980s on average in OECD countries; by the late 2000s, it had increased by some 10%, to 0.31. On this measure, income inequality increased in 17 out of the 22 OECD countries for which data are available (Figure 1, left-hand panel). In Finland, Germany, Israel, New Zealand, Sweden and the United States, the Gini coefficient increased by more than 4 percentage points: and only five countries recorded drops, albeit small ones .

Source:  IBID

.

[See also Addendum 2 below.]

So it’s official – the Great Experiment in free market reforms from the mid 1980s to the late 2000s, has produced growing inequality here in New Zealand. Indeed, the trend has been global,

Income inequality followed different patterns across OECD countries and there are signs that levels may be converging at a common and higher average. Inequality first began to rise in the late 1970s and early 1980s in some Anglophone countries, notably in the United Kingdom and the United States, followed by a more widespread increase from the late 1980s on. The most recent trends show a widening gap between poor and rich in some of the already high-inequality countries, such as Israel and the United States. But countries such as Denmark, Germany and Sweden, which have traditionally had low inequality, are no longer spared from the rising inequality trend: in fact, inequality grew more in these three countries than anywhere else during the past decade. However, some countries recorded declining income inequality recently, often from high levels (Chile, Mexico and Turkey).

Source:  IBID

It is no coincidence that the trends “first began to rise in the late 1970s and early 1980s in some Anglophone countries, notably in the United Kingdom and the United States” – that is the precise period when Margaret Thatcher won office in May 1979 and Ronald Reagan became US president in January 1981.

Our turn came three years later with the Lange/Douglas government that ushered in “Rogernomnics“.

The OECD report above is simply being ‘coy’ by not connecting-the-dots.

What is more telling? Any person reading this would not be surprised. We have become innured to an unfair economic system which produces unequal outcomes and great disparities in incomes and wealth. As the OECD report states with alarmingly candour,

Increases in household income inequality have been largely driven by changes in the distribution of wages and salaries which account for 75% of household incomes of working-age adults. With very few exceptions (France, Japan and Spain), wages of the 10% best-paid workers have risen relative to those of the 10% least-paid workers. This was due both to growing earnings’ shares at the top and declining shares at the bottom, but top earners saw their incomes rising particularly sharply (Atkinson, 2009). The highest 10% of earners have been leaving the middle earners behind more rapidly than the lowest earners have been drifting away from the middle.

Source:  IBID

Furthermore, as the OECD report points out, “…more working hours were lost among low-wage than among high-wage earners, again contributing to increasing earnings inequality“.

The OECD report is backed up by Statistics New Zealand,

As with total employment, the drop in full-time employment mainly reflected a decrease in male
full-time employment, which was down 12,000 (down 1.2 percent).
Usual hours worked decreased 0.4 percent – down to 79.6 million hours over the quarter. The
changes in full and part-time employment reflect the fall in the number of hours people usually
work during a week. Over the quarter, the number of hours people actually worked decreased
0.8 percent, down to 73.2 million hours.

See: Household Labour Force Survey: September 2012 quarter

Ministry of Social Development – Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

Whilst New Zealand has no formal or official measure of poverty or material hardship/deprivation, there are studies and conclusions leading to reports that offer a disquieting insight into the state of income inequality, poverty, and child poverty in our country.

One  such report was conducted by Bryan Perry for the Ministry of Social Development in August 2012, entitled the “Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011” – a 195 page study.

The full report is available here: MSD – Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

A much-condensed precis of the Report;

.

2012 MSD Household Incomes Report ‘Summary’

  1. Household incomes BHC (before deducting housing costs) rose in real terms for all income groups from 2007 to 2009, continuing the steady growth that began in 1994,
  2. Income inequality increased significantly between 1988 to 2004, then fell from 2004 to 2007 as a result of the WFF package, and was still around the same level in 2009 as in 2007,
  3. Income inequality grew very rapidly from 1988 to 1992, followed by a slower but steady rise through to 2004,
  4. From 2004 to 2007 inequality fell mainly as a result of the WFF package,
  5. Median Household  incomes fell 3% in real terms after little change (+1%) from HES 2009 to HES 2010,
  6. This fall followed a long and strong rise in the median from the mid 1990s to 2008-09 averaging 3% pa in real terms. GDP per capita increased at 2.5% pa over this period on averagwe,
  7. Incomes fell for deciles 3-6, but rose for the top decile especially,
  8. At the very bottom (P15 down), incomes were flat from HES 2010 to HES 2011 (protected by benefit rates being CPI adjusted and NZS being wage related),
  9. Inequality decreased significantly from HES 2009 to HES 2010 then rose from HES 2010 to HES 2011 to its highest level ever. This volatility reflects the impact of the GFC,
  10. On the AHC (HouseHold income after deducting housing costs) moving line measure, the child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of households with children with high  ‘outgoings-to-income’  (OTIs),
  11. The 2009 child poverty rate is almost double the rate that prevailed in the early 1980s,
  12. In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 230,000 children (22%) below the low-income threshold (ie ‘in poverty’), down from 380,000 (37%) in 2001,
  13. Hardship rates for children rose from 15% in the 2007 HES to 21% in HES 2011 using the ELSI measure. In part, this reflects the falling incomes of those in deciles 3-6, some of whom may already have been in a precarious financial position – the loss of income has been enough to tip them into hardship even though their incomes are still above the poverty threshold,
  14. Chronic poverty (as defined in the Incomes Report) is about having an average household income over seven years that is below the poverty threshold over those years. Looking at children in poverty in a HES survey (cross-sectional), 60% of them are in chronic poverty in any survey and 40% in temporary poverty. In addition there are others who are in chronic poverty but not in current poverty in that one year – this group is about 20% of the number in current poverty.
  15. In 2009, between 460,000 and 780,000 people were in households with incomes below the low-income thresholds (ie ‘in poverty’),
  16. In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 650,000 (15%) below the low-income threshold (ie ‘in poverty’, down from 930,000 (25%) in 2001,
  17. In 2009, just over one in three poor children were from households where at least one adult was in full-time employment, down from around one in two before Working for Families (2004),
  18. Income poverty rates for single person working-age households trebled from the 1980s to 2007 (10% to 30%) and were 35% in 2011. One in 9 poor people and 1 in 4 poor households are from this group. The rates are higher for the older group living on their own (45-64 years) than for the younger group,
  19. In 2001, 42% of households in the lowest income quintile had high ‘outgoings-to-income’, but this fell to 34% by 2004 reflecting the introduction of income-related rents, and has remained steady since then (33% in 2009),
  20. In 2009, 37% of children lived in households with high ‘outgoings-to-income’, a rise from 32% in 2007, and 26% in 2004 – the 2004 figure was the lowest proportion for some time, following the introduction of income-related rents in 2001 (when the proportion with high ‘outgoings-to-income’ was 32%),
  21. In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 650,000 (15%) below the low-income threshold (ie ‘in poverty’, down from 930,000 (25%) in 2001,
  22. The child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of households with children with high ‘outgoings-to-income’,
  23. The 2009 child poverty rate is almost double the rate that prevailed in the early 1980s,
  24. Just over two of every three two parent families were dual earner families in 2009, up from one in two in the early 1980s, but down from nearly three in four in 2004,
  25. Children in sole parent families have a higher risk of hardship (46%) than those in two parent families (14%). This reflects the relatively low full-time employment rate for sole parents (35% in 2009) –  73% of sole parents were in receipt of a main benefit in 2009,
  26. The value of New Zealand Superannuation (NZS) fell further below the median household income from 2007 to 2009,
  27. People living in sole parent households are a relatively small subgroup, making up only 8% of the population.    Only 3% of those in sole parent households are found in the top income quintile.  On the other hand, a high proportion have incomes in the lower end of the income distribution.
  28. High housing costs relative to income are often associated with financial stress for low to middle income households.  Low-income households especially can be left with insufficient income to meet other basic needs such as food, clothing, transport, medical care and education,
  29. For the bottom quintile, the proportion with high ‘outgoings-to-income’ reduced from 2001 to 2004 with the introduction of income related rents, then remained steady in 2007 and 2009 at the 2004 level.1   For all but the bottom quintile, the proportion with high housing costs rose strongly from 2004 to 2007.  From 2007 to 2009, the situation for the second quintile continued to worsen, such that by 2009, each of the two lower quintiles had one in three households with high ‘outgoings-to-income’,
  30. From 2007 to 2009, median household incomes (BHC – HH income before deducting housing costs) rose by 4.3% pa in real terms (8.6% in total).  This continues the steady growth in the median from the low point in 1994.  The AHC (HH income after deducting housing costs) median rose less rapidly (3.2% pa), reflecting the relatively rapid rise in average accommodationcosts,
  31. The increasing dispersion of household incomes from the 1980s through to 2009 is clear. For the period as a whole, incomes for households above the median increased proportionately much more than did the incomes of households in the lower three deciles Real equivalised household incomes (BHC) decile boundaries, 1982 to 2009   .
  32. In 2009 the incomes of the bottom 30% of the population were on average only a little better in real terms than those of their counterparts two decades earlier in 1988. On the other hand there were more substantial gains in the period for the top half of the distribution. The income distribution is therefore much more dispersed in 2009 than in 1988,    Real equivalised household incomes (AHC) decile boundaries (2009 dollars)  .

  33. The most significant structural change to the income distribution over the two decades from 1984 to 2004  is a significant hollowing out of the middle parts of the distribution from $12,000 to $30,000 (equivalised) and a corresponding increase in the proportion of the population in higher income households.  There was also a small increase in the proportion of the population in low-income households in this period.  From 2004 to 2007, the impact of the Working for Families package in that period is very clear for low to middle income households.The income distribution was more dispersed in 2004 than in 1984.  From 2004 to 2007 income inequality decreased.
  34. The significant change in shape of the income distribution from 2004 to 2007 reflects two main factors: (A) the impact of the WFF package on low to middle income households and (B) the reduction in the number of people in households whose main source of income is an income-tested benefit (100,000 fewer in 2007 than in 2004)
  35. As recently as 1996, the government of the time in New Zealand was openly disapproving of any poverty discourse.  However, in 2002, in the context of the Agenda for Children, the government made a commitment to eliminate child poverty, and in the Speech from the Throne in November 2005, the Governor-General described the Working for Families package as “the biggest offensive on child poverty New Zealand has seen for decades”.   The current National-led government, like the previous Labour-led government, espouses the principle that ‘paid work is the best way to reduce child poverty’. New Zealand does not however have an official poverty measure.
  36. The rise in moving line child poverty rates from 1990 to 1992 was driven by two factors: the rise in unemployment, and the 1991 benefit rate cuts which decreased real incomes for beneficiaries by a greater amount than the median fell in the period,
  37. From 1992 to 1998 the 60% of median moving line poverty rate for children fell as unemployment rates fell and incomes for those around the poverty line rose more quickly than the median in the period,
  38. From 1998 the median continued to grow in real terms, but the incomes of many low-income households with children remained fairly static through to 2004.  This meant that the moving line child poverty rate rose to 2004, indicating that low-income households with children were on average further from the median in 2004 than in 1998,
  39. On the After Housing Costs (AHC) moving line measure, the child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of HouseHolds with children with high OTIs (‘outgoings-to-income’ ratio),
  40. From 2004 to 2007, the poverty rate fell strongly … for the working poor than for the beneficiary poor. There were no further policy changes to housing assistance from 2007 to 2009 – the maximum rates of assistance remained fixed and did not move in line with movements in housing costs, and net housing expenditure rose for low-income households with children.  This is reflected in the rise in child poverty rates from 2007 to 2009 using the moving line AHC approach.

.(Report Note: when a household spends more than 30% of its income on accommodation it is said to have a high “OTI”  –  ‘outgoings-to-income’ ratio)

The above is a heavily condensed version of Bryan Perry’s report. For a full report, please refer to: Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

It is fairly clear that income inequality is not only still prevalent – but increasing. The ‘Gini’ does not lie – and the Inequality Factor has risen from 30.2 to 33.5 (the higher the figure, the more inequality).

Child poverty is still with us, and remains  New Zealand’s most critical problem (I refuse to call it an “issue”).

Despite John Key’s fine words and stirring rhetoric, National has failed to change it’s core “values” and adheres to a dogmatic faith in the Market to deliver solutions to poverty in our country.

Yet, John Key should know precisely what needs to be done. As he told the nation five years ago,

My father died when I was young. My mother was, for a time, on the Widow’s Benefit, and also worked as a cleaner. But the State ensured that I had a roof over my head and money for my mother to put food on the table. It also gave me the opportunity to have a good education. My mother made sure I took that opportunity, and the rest was up to me.” – John Key, 30 Jan 2007

See: The Kiwi Way: A Fair Go For All

The State invested heavily in Mr Key – as it did with many other people prior to the Rogernomics roll-backs of the late 1980s – and New Zealand benefitted accordingly from that social investment.

The social welfare system is designed as a safety net for citizens in time of need. Whether through job losses or injury or raising children single-handed, our society – through the State – demands that no one suffers. (Never mind the deranged ravings of the ill-informed on talkback radio.)

However, there is another role for our welfare society; to guarantee that the young from impoverished and vulnerable families  are accorded the same opportunities that other, luckier parents can provide for their own children.

This is a country of plenty. There is no reason why we cannot eradicate poverty; poor housing; disease; lack of adequate, nourishing food for all children; and low schooling/training outcomes.

The only reasons that this blogger can see for the perpetuation of poverty is a double curse on our country, namely,

  1. An irrational prejudice against the poor
  2. A debilitating lack of will

Until we resolve both of these collective “disabilities” to our vision for a better society, we will continue to reap the rotten fruits of our inaction.

On 28 November 2006, John Key said,

You can measure a society by how it looks after its most vunerable, once I was one of them. I will never turn my back on that.”

I see no evidence of that.

Indeed, six years later, Key admitted that the underclass he spoke of has not diminished,

.

Key admits underclass still growing

Full story

.

Addendum 1

It is interesting and worthwhile to compare the rhetoric of John Key’s speech, A Fresh Start for New Zealand, with the data contained in the Salvation Army report, “The Growing Divide“.  Both are worth reading. It rapidly becomes clear how Key cynically mis-represented facts to suit his Party’s election agenda.

Addendum 2

It is worth noting that the GINI Coefficient – which is one method by which to measure income inequality – shows interesting figures for New Zealand,

.

OCED_New Zealand_GINI_coefficient 1970s_late_2000s

Source: OECD Income distribution – Inequality (GINI co-efficient)

A high GINI factor (close to 1 or 100, expressed as a percentage) indicates maximum inequality. A figure at zero indicates absolute income equality.

New Zealand’s GINI Coefficient rose (income became more unequal) from the mid-1980s to around 2000. At the mid-2000s, the GINI Coefficient began to reduce – indicating incomes are becoming less unequal. (Though has not addressed growing poverty in this country.)

What factor intervened in the mid-2000s to stem the rising inequality of incomes?

.

working for families

.

The same policy introduced by the preceding Labour Government,  which Dear Leader, John Key, once described as “communism by stealth”  (see: National accuses Government of communism by stealth) – but  by 2008 had decided that he liked “Working for Families” after all (see:  National to keep Working for Families unchanged).

After 2010, the GINI coefficient begins to rise again, as effects from our stagnating economy and National’s policies begin to over-take the positive income-redistribution aspects of ‘Working for Families’.

Income inequality in New Zealand is once again on the rise,

Gini scores (x100) for market and disposable household income, 1986 to 2011 (18-64 yrs)

HES year

Before taxes and transfers (market income)

After taxes and transfers (disposable income)

Reduction (%)

1986

36.4

26.4

27

1991

42.4

31.3

26

1996

43.1

32.9

24

2001

43.1

33.1

23

2004

41.7

32.9

21

2009

40.3

32.3

20

2010

38.3

30.2

21

2011

42.2

33.5

21

 Source: MSD – Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

Additional

Dominion Post:  Children need changes now – commissioner

 

.

Inequality and poverty

.

.

=fs =