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Poor people – let them eat cake; grow veges; not breed; and other parroted right wing cliches… (part rua)

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260,000 kiwi kids live in poverty

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When the so-called “reforms” of Roger Douglas – lovingly referred to as  “rogernomics” – swept the country; privatising publicly owned assets; cutting state services; introducing user-pays; down-sizing the state sector; closing post offices in small towns and large cities; and witnessing the wide-spread creation of Food Banks for the first time since The Great Depression, we were told that the restructuring of our economy would pay off with a higher standard of living.

Instead, we ended up with this;

It is not only the government’s figures that reveal alarming levels of poverty. On top of the surge in demand for Income  Support grants is an explosion in food bank usage. Food banks have been described as the most visible face  of poverty in New Zealand. They are the only banks we now own. Only a few food banks existed before National’s election in 1990 on the hollow promise of a ‘Decent Society’. The first food bank in Auckland appeared in 1980, although researcher Adrian Whale noted in a 1993 thesis that throughout the 1980s, food banks were ‘predominantly small scale appendages to welfare services offered by city missions and other voluntary organisations’. But in the early 1990s, food banks established a ‘significant presence among the range of welfare providers in the community’. At least 70 percent of food requests to the Salvation Army  in 1992 were to support families with children. Figures from Presbyterian Support Services show that the number of food banks in the Auckland metropolitan area grew from 16 in 1980 to 130 in 1994.” – Mike Moore, “Children of the Poor”, 1996

Ten years ago, the Child Poverty Action Group reported;

Nationally, the number of foodbanks exploded following the 1991 benefit cuts, and the passage of the Employment Contracts Act (ECA). For those in already low-paid and casual jobs, the ECA resulted in even lower wages (McLaughlin, 1998), a situation exacerbated by the high unemployment of the early 1990s (11% in 1991). The benefit cuts left many with debts, and little money to buy food (Downtown Community Ministry, 1999). In 1992 the introduction of market rents for state houses dealt another blow to state tenants on low incomes. By 1994 it was estimated that there were about 365 foodbanks nationally, one-fifth of which had been set up in the previous year (Downtown Community Ministry, 1999).” – “Hard to swallow – Foodbank Usage in NZ”, Child Poverty Action Group, 2005

In December, last year, the Waikato Times published a story on the growing need for foodbanks in their community. One particular comment stood out;

Humphry has worked with the Christian Combined foodbank for “so many years I can’t remember when I started”, but remembers when it opened in 1998.

“I can’t remember who the prime minister was at the time, but someone [from the prime minister’s office] came and opened the foodbank [in Hamilton] and I remember he said, ‘This will only be a short-term thing, people will only need the foodbank for a few months’.”

If the free market “reforms” of the 1980s and 1990s were such a success, one has to ask the obvious question; why do food banks still exist?

Mike Moore was correct when he pointed out nearly twenty years ago; “Food banks have been described as the most visible face  of poverty in New Zealand.

New Zealand’s poverty – like our domestic violence and child abuse – is best done privately, behind closed doors, and out of sight. The middle classes get queasy at the sight of poverty.

Little wonder that when Bryan Bruce’s sobering documentary, Inside NZ: Child Poverty was broadcast in November 2011, it raised a howl of furious indignation (mostly from the Right) that the election had been “politicised”.

Bryan Bruce reminded us just how far we had come, in the last few decades;

I’m a baby boomer. I went to primary school in the late 50’s when they gave us free milk, free health care and a free education. In those days, Kiwi’s were able to boast that New Zealand was a great place to bring up kids. So when I learned that we’d dropped to number 28 on the list of 30 OECD countries for child well being, with just Mexico and Turkey behind us, I decided to find out what’s gone wrong and what we have to do to fix it.”

Someone in history (the actual utterer remains uncertain) once said of the poor who could not afford to buy bread;

“Let them eat cake.”

Today, in 21st Century New Zealand, it is more like;

“Let them drink coke.”

It certainly is cheaper, as my trip to a local supermarket on 29 June demonstrated;

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Pak n Save (1)

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One of the most common moralistic exhortations by the Right is that the poor should be able to feed themselves and their families. They just need to “budget more prudently”.

Well, at 95 cents per 1.5L bottle of soft-drink, the poor have a much cheaper alternative than the more pricey (and healthier) option of milk.

It’s just a shame it will probably kill them through obesity-related diseases.

Is this what Roger Douglas really intended for his country, back in 1984?

There are six policy reforms which, if carried out, would go a long way to reversing the ingrained poverty caused by forty years of a failed free-market experiment;

1. Reverse the 1991 benefit cuts. This would allow the poorest families in New Zealand to at the very least buy milk instead of teeth-rotting soft-drinks, and turn the heaters on in winter.

2. Take GST of basic foods – fruit, vegetables, bread, milk, meat, fish, et al.

3. Raise the minimum wage to the Living Wage ($19.25/hr). The increase in take-home pay would be a boon to low-income families, as well as benefitting businesses throughout the country, as expenditure increased. As business turn-over increased; they would hire more people; leading to less paid in welfare, and more paid to the State in PAYE tax (helping Bill English finally balance those pesky fiscal books).

4. Implement Hone Harawira’s ‘Food in Schools’ Bill immediatly. Well-fed children learn better; succeed better; and contribute to society much better.  If our Scandinavian cuzzies can do it, so can we.

5. Build more State houses, and stop flogging them off to every Tom, Dick, and Harriet who comes knocking on Bill English’s door.

6. Free healthcare for all children 13 and under.

Can we do it?

Of course we can. If we can implement radical policies that changed New Zealand from a Fortress Economy (ex Muldoon) to one of the planet’s most open economies (ex Douglas) – then we can implement social policies that will make us a better, fairer, safer country.

Because it’s the right thing to do.

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References

Amazon: Children of the poor – How poverty could destroy New Zealand’s future

Child Poverty Action Group: Hard to swallow: Foodbank use in New Zealand

Waikato Times: Big demand puts pressure on foodbank

TV3: Inside Child Poverty – A Special Report

Additional

J R McKenzie Trust:  Child Poverty Monitor

NZ Council of Christian Social Services: Facts about poverty in New Zealand

Previous related blogposts

Can we afford to have “a chat on food in schools”?

National dragged kicking and screaming to the breakfast table

Are we being milked? asks Minister

High milk prices? Well, now we know why

Poor people – let them eat cake; grow veges; not breed; and other parroted right wing cliches

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This blogpost was first published on The Daily Blog on 30 June 2015.

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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..

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Inequality & Poverty

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give the rich tax cuts

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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.

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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. 

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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,

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tax-cuts-april-2009

Source

Additional info

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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%,

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Budget 2010 - What the tax cuts mean for you

Source

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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.

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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).

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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 ?

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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.

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Source: OECD

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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

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[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;

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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,

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Key admits underclass still growing

Full story

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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,

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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?

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working for families

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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

 

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Inequality and poverty

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=fs =

Interview: A Young NZer Acts to make a Difference

29 April 2012 10 comments

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This is another in a series of on-line interviews with Young New Zealanders who are the up-and-coming next generation of political activists and leaders.  We may or may not always agree with them – but these young people will be the ones who influence and form our society in years to come…

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Hayden Fitzgerald

Hayden Fitzgerald

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This online interview is with Hayden Fitzgerald, current President of ACT on Campus;  ACT Party Board Member for Central Region; and  ACT Candidate for Rangitikei in the 2011 Election.

Kia ora, Hayden, and thank you for giving us your time and answers to the following questions…

Q: You’re the current President of ACT on Campus and stood as a candidate in the last election;  how long have you been a member of ACT, and what attracted you to that Party – as opposed to, say, another Party?

I was originally a Green Party fan, switching to National as I studied more economics. I became dissatisfied with National’s failure to act upon the areas it identified as problems while in opposition so switched across to ACT early last year.

Q: What has been your personal best experience with ACT thus far?

I thoroughly enjoyed the experience of representing ACT as the Candidate for Rangitikei.

Q: How do you feel about ACT’s numbers dropping from five to just one MP at the last election?

I think it’s really sad to see ACT’s numbers shrink so much but ACT’s campaign was far from perfect so I think it was predictable.

Q: If ACT goes the way of The Alliance, which other Party do you think would be the natural home for ACT supporters – National?

Personally I don’t think there is a natural other home for ACT supporters. A large majority would likely go to National but others wouldn’t. I think if ACT was to disappear another party similar would rise up to fill the gap before long.

Q: Do you think ACT can re-build its electoral support? Or do you feel that ACT is a “tarnished brand”, and a new liberal party is required with a fresh look to it?

There’s no doubt that the ACT brand is damaged but I think the support base can be rebuilt if the Party sticks to its core values. A complete rebranding of the Party could be something worth considering but the cost of doing so may not outweigh the cost of repairing the current brand. Which direction you think ACT should take here will differ depending on who you talk to!

Q: What are your thoughts on ACT’s recent leadership changes and what impact, if any, do you think they had on ACT’s support?

Referring to John Banks I think it was something that had to happen. Having your only MP as the leader of the Party is really the only practical option. I don’t think it has influenced the support base of the party much. The next three years will determine.

Q: If you had been casting a vote for ACT’s leadership, who would you have supported, Rodney Hide or Don Brash?

Don Brash

Q: Why is that? What are the qualities that you believe Don Brash had, but not Rodney Hide?

Fresh face; one would have thought he would have brought a lot of existing popularity with him.

Q: There have been suggestions that Heather Roy could have made a good leader of ACT. Do you agree with that? If she had been leader, do you think she could  have attracted a greater share of the womens’ vote?

I think Heather is a lovely lady who made a very good politician. I think that she could have contributed a lot as a leader of ACT and no doubt the women’s vote would have increased if she were leader. However, the same would be true of many others.

Q: Do you have a top three list of priorities that ACT should focus on, this Parliamentary term?

Choice, Personal Responsibility and Limited Government.

Q: Have you read or heard of Gareth Morgan’s “Big Kahuna”, and his proposal for a Universal Basic Income/negative tax for the first $11,000?

Yes. Personally I favour a tax free threshold of $30,000 and a flat 20% after that with GST kept at 15% and no company tax.

Q: But no negative tax (or Universal Basic Income as some call it)?

There would definitely have to be some form of “Universal Basic Income” in the way of a safety net. We just have to be careful not to create incentives not to work.

Q: Recently, US billionaire Warren Buffett highlighted how he paid tax at a much lower rate than his own staff, who, in many instances were paying roughly double the rate he was. What do say to people like Buffett who state that the rich are not paying their fair share in taxes? Or do you agree with him?

With a simpler tax system, as I identified above this sort of thing would not happen. This is also an American example. This doesn’t happen to the same extent here in New Zealand.

Q: New Zealand has a fairly free market economic regime compared to, say, the Scandinavian countries. Yet places like Finland and Denmark, notable social-democracies with strong welfare systems and state services, have a high PPP per capita income to New Zealand. Why aren’t we light years ahead of the Scandinavians – especially after 27 years of reforms?

I think it’s very hard to compare New Zealand’s economy to these as we’re so different.

Q: Oh, in what way? What do you think are major differences?

Different climate, population and distance from other countries. Truth is I don’t know much about these economies but I do have a friend who lives in Finland that isn’t too fond of the way things are run.

Q: What, if anything should we be doing different?

Simpler tax system, smaller Government.

Q:  State funding of private schools? Or should they be left to succeed or fail on their own merit?

I favour the voucher system, so parents can send their child to whichever school benefits their child the most, be it public or private.

Q: But would you allow a private school to fail and go into liquidation, if it got to that stage?

Yes; I don’t support Government bailouts.

Q: The minimum wage? Especially when Bill English said on Q+A that it was extremely difficult to live on the minumum wage for any long period of time?

The problem with minimum wages is that they harm the very people they’re supposed to help. I also question whether or not it is up to the Government to decide what an individual can and cannot work for; should it not be up to the individual to decide what a fair wage for them is? I also note that the current minimum wage equates to a lot more than being on social support. Under a simpler tax system with a high tax free threshold low income people would be a lot better off as they would pay no tax.

Q: In what way do you think a minimum-wage harms people?

Locks them out of employment; particularly young people. In theory there is no need for a minimum wage. The minimum wage is equivalent to the safety net that is provided; currently just under $5 an hour.

Q: The Auckland waterfront dispute? What are your thoughts on how Labour and National have responded to this issue? Or should they not intervene?

I don’t think the Politicians should intervene in these issues.

Q: The partial sale of some SOEs? Should New Zealanders be given first option to buy shares, or should the IPO be made available to any/all without any restrictions/criteria at all?

  I’m fine with all New Zealanders’ getting first option.

Q: The sale of productive farmland to overseas investors?

Foreign investment is extremely important to our economy. We also invest a large amount of money overseas. If we want to maintain our free trade agreements we cannot discriminate against foreign buyers. It also raises an issue around property rights; should you not be allowed to sell something you own to whomever you choose?

Q: Mining? Especially of conservation lands?

Cost vs. benefit analysis. I’m generally against mining of conservation lands but we must weigh up how much damage would be done to how easy it would be to repair it etc.

Q: Climate change?

I’m skeptical but willing to be persuaded.

Q: Deep sea oil drilling? Especially after the ‘Rena’ stranding? Are we adequately prepared?

The Rena was a boat whose Captain wasn’t following the rules; as such the company who own the ship and their insurers should be taken for the full cost of repair. I think our regulations around this could do with a review; whether or not much needs changed I don’t know enough to comment.

Q: Should Kiwisaver be compulsory? Should there be an opt-out option?

No. Kiwisaver performance is nowhere near good enough to warrant it being compulsory. Also raises issues around freedom. It would be unfair for the Government to force me to put my own money into Kiwisaver.

Q:  Roads or rail? Which should have priority?

That should be up to the market! Personally, I think both have a place though. Both have their advantages and disadvantages. The proper market would allocate them accordingly.

Q: Free school meals – should they be introduced in all schools? Just low-decile shools? Or not at all?

Not at all. Could perhaps look at doing something based upon individual applications for those in genuine need but I think the real solution is better parental education.

Q: Republic or not?

Republic

Q: What, in your opinion, has been the worst aspect or single thing, about John Key’s government?

Continuation of wasteful spending that has resulted in high debt levels that my generation will have to pay back, particularly around ignoring the elephant in the room relating to our superannuation scheme.

Q: What, in your opinion, has been the best aspect, or single thing, about John Key’s government?

Mixed ownership model.

Q: How do you feel about our current media? Do you feel that the state has a role to play in public broadcasting – perhaps to set standards or broadcast material that, while informative, might not rate highly on a commercial level? Or should it be left totally to the Market to deliver quality broadcasting?

Lean toward it being left completely the market. If people want to watch it, regardless of what it is, the market will provide it. Likewise with broadcasting standards, if a tv channel is broadcasting obscene content then not many will watch it; no need for regulation.

Q:  And is TV3’s planned “The GC” ‘quality tv’?

Probably not something I’ll watch but none the less does seem like the kind of show that would have a broad appeal.

Q: If ACT was in government as the major coalition Party, and you were an MP offered a ministerial role, what portfolio would you want? And why?

Tough decision. Probably Finance, Small Business, Primary Industry or Social Development as these are areas that interest me.

Q: In your opinion, what is the single most critical problem affecting us as a society? How would you address that problem? And what time-frame would you give yourself?

Inflated Government. I would address this by cutting unnecessary regulations and laws like the RMA, cut Government Spending and taxes and shrink all areas of the Government except core services. This could all be done very quickly but I would like to see it happen over 5-10 years as to ease transitional unemployment as people shift from public sector to private sector employment.

Q: What, in your view, would constitute core services?

Defence, basic safety nets (including adequate access to health care for all), basic standards in education, stopping market dominance (via Commerce Commission), Law and order, negotiating with overseas countries (free trade etc.)

Q: Are your friends and family political? How do you relate to those friends and family who aren’t political?

Very few of my friends are political and none of my family are. I suppose I relate to them the same as anyone else does! (Politicians are people too ;))

Q: Can you share with us some of your most favourite things,

* food?

Subway (I dream about it!)

* place to live?

Anywhere in the bottom half of the South Island.

* movie and/or tv program?

American Pie (all of them)

* book?

“The Greatest Show on Earth” – Richard Dawkins

* prominent historical person you admire the most? And why?

Roger Douglas for having the balls to do what’s right.

Q: And your Last Word is on;

National and Labour are the biggest obstacles to the modernisation and eventual success of our economy. New Zealanders need to wake up and stop trying to vote themselves rich. The only way to prosperity is through choice, personal responsibility, individual freedom and limited Government.

Thank you, Hayden, for sharing with us!

Folks wishing to contact Hayden and ACT may do so at; president@actoncampus.org.nz, www.actoncampus.org.nz, www.act.org.nz

Facebook: ACT on Campus, ACT, Hayden Fitzgerald

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Disclaimer

This blog is not affiliated to ACT in any way, shape, or form.

Other Blogposts in a similar theme

Interview: A Young NZer’s Thirst to make a Difference

Ms Heka Goes To Wellington

Ms Heka Goes To Wellington. (Part #Rua)

Citizen Meegan’s submission to Parliament – hand’s off our stuff!

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The “Invisible Hand” of the Free Market?

5 January 2012 1 comment

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The latest evidence of the inability of the “invisible hand” of the Free Market to cope with  the modern complexities of 21st Century society and economy. From an article by Richard Meadows,  in  todays Faixfax website;

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Despite unwillingness to hire, New Zealand businesses paradoxically saw the lack of a skilled workforce as a major impediment to growth in 2012.

Grant Thornton New Zealand partner Peter Sherwin attributed the apparent discrepancy to an overall caution among employers after ”a couple of false dawns”.

Firms did signal concern about the availability of skilled workers 39 per cent, which was 12 per cent higher than the previous period in 2011, he said.

”We have unemployed people but do they have the skills for the jobs that are going to be available? This gets back to one of the real challenges for New Zealand, which is to get a better match between tertiary education and industry.”

Sherwin said there was ”a clear disconnect” between what the education system was producing and industry demands, and he called for a collaboration between industry, the education sector and government to improve the ”connection’‘.” – Source

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What?

Since when does the “invisible hand” of the free market required assistance from the State?

At what point did Business decide that it requires Central Government to fulfill it’s needs?

Since Roger Douglas implemented his neo-liberal “reforms”, the State was to be rolled back and private enterprise allowed to get on with it. We were told time and again;

  • business is more efficient than the state
  • business can meet its own needs
  • the State cannot meet the needs of an economy – that is the role of  business
  • Business = good, Government = bad
  • Business does not need subsidies
  • etc, etc, etc.

In which case why is private enterprise not training and upskilling it’s own workforce?

Why is the “invisible hand” of the free market not providing a skilled workforce, according to laws of Supply & Demand?

Because, my dear fellow, New Zealanders; like the “trickle down” theory, the “Invisible Hand” of the free market is bollocks.

The “free market” an  ideological scam; a confidence trick fed to the public to justify rolling back the State; cutting social services; implementing User Pays; and reducing taxes for the rich. Like a carefully constructed religious cult, the New Right scammers have their loyal  followers who have been sucked into this little ‘game’, to spread the “Gospel of Greed”.

Every so often, though, aspects of the truth appear and we glimpse the reality behind the facade.

The reality is that a modern state cannot function without government; an effective civil service; and social services that are available to all citizens regardless of their material wealth (or lack, thereof).

The reality is that taxes cannot be cut without cutting something in return;  healthcare; education; public transport; and the back-office support staff that allow these services to function.

If we cut the back-office support staff – as this government has done in the last three years – be prepared for some serious stuff-ups. As Anne Tolley discovered recently to her discomfort.

And ultimately, we will see more of this,

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Full Story

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National handed out two tax cuts – April 2009 and October 2010 – and that money had to come from somewhere. Much of it was borrowed from overseas (at $380 million a week) – and the rest was achieved by cutting back on social services.

Like education.

And jobs training.

Which means businesses complaining about a lack of skilled workers;  “Despite unwillingness to hire, New Zealand businesses paradoxically saw the lack of a skilled workforce as a major impediment to growth in 2012.

As BERL pointed out in December last year,

A new study suggests the country could lose between $7.2 and $15.1 billion dollars annually if the Government withdrew its investment in industry training.

The study by the Business and Economic Research Limited (BERL) sets out to quantify the costs and benefits of industry training both to businesses and to the country.

According to one model, it found a cut in all public funding towards industry training would result in a loss in gross domestic product of 0.6 to 1.8 percent by 2014, and between 2.9 and 6 percent by 2021.

That equated to a loss of between $1.2 and $3.7 billion annually in the short-term and between $7.2 and $15.1 billion in the long term.

BERL said under such a scenario, the loss of skilled labour would have a detrimental effect on the export sector, crimping its capacity and reducing its competitiveness as industries competed for a smaller pool of talent.

The report, commissioned by the Industry Training Federation, said the results underlined how the country’s skill levels could ”positively impact on the quality and value of the goods and services produced, and the standard of living in New Zealand”.

However, it also noted the economy was complex and warned that ”any attempts to prioritise or isolate particular industries, sectors, occupations or skills as being more or less important are economically unsound”.” – Source

Because many of our skilled workers have had a gutsful and left for Australia.

And around and around and around it goes…

Why? Because relying on the “free market” to achieve certain outcomes is akin to waiting for The Rapture to arrive. Folks, it ain’t never gonna happen.

Eventually the good people of New Zealand are going to realise that National is spinning us a yarn, and is simply relying on ideological dogma for better times.

Personally, I’m putting my money on The Rapture coming first.

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Acknowledgement

To Fear Facts Exposed for source.

Additional Blog Entries

Greed is Good?

“Building better public services” – Really?

Further Reading

Greed of boomers led us to a total bust

Rich list shows rich getting richer

New Zealand’s wealth gap widens

Industry training has billions in benefits – study

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Election Eleven – Wednesday

23 November 2011 4 comments

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Election Eleven – Wednesday

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Another stirling free-market “success” story,

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So another 28 workers lose their jobs; go on the unemployment benefit; and get labelled as “dole bludgers” by right wing imbeciles.

This is New Zealand in 2011AD:  Neo-liberal Nirvana.

Tell me, my fellow New Zealanders – you who pride yourself as being fair-minded and always willing to give others a fair go – does the closure of this yarn factory and job losses strike a chord with you? There are hundreds – thousands – of similar businesses like Qualityarns that’ve gone bust since Roger Douglas put his hand up in Parliament and said, “Ive got a great idea!”.

Isn’t it ironic… 28 men and women had a job yesterday. Tomorrow they will be on the dole and suffering bene-bashing.

Along with 154,000 other men and women.

Is this it?

Is this what we have to look forward to? Unemployment for some; low wages for others; mass-migration to Australia; and cheap goods from China, India, etc?

Hullo? Is anyone awake in this country?!?!

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~ ~ ~

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This is frankly a form of economic vandalism. What are we mounting here? An economic development strategy for China?” – David Cull, Mayor of Dunedin

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The latest in John Key’s hard-sell* of our assets,

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Listen to John Key speaking to reporters on asset sale plans

Listen to full interview

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Now let me get this straight…

Key reckons that “National would legislate to create a cap on the shares held in any state assets”?  He adds that,

National would pass a law stating that no individual or company could own more than a 10% share. There’s historical precedent there – Telecom had a cap – it’s just a matter of passing legislation. We’d pass it.” Source

Really?

A couple of points here.

National’s definition of the word “cap” appears to be somewhat different to that expressed in, oh, say, just about every English dictionary in the Known Universe. This government has “capped” the civil service by actively cutting government workers, and making them redundant.

So does the word “cap” mean the same for National as it does for ordinary citizens? Recent events suggest not.

Secondly. I’m not a financial whizz-kid in John Key’s league. I’ve never speculated on a zillion dollars; made a bajillion dollars profit; and banked a squillion dollars commision. My work is somewhat more mundane.

However. Even I know that passing a law to “cap” (definition?) share-ownership at 10% can be easily rorted. I can spot an immediate loophole:

  1. Company A sets up five shelf companies; A1, A2, A3, A4, and A5.
  2. Each Shelf company buys 9%.
  3. Result; parent company A now owns 45%.
  4. And John Key smiles and points to his “success” at preventing any one company from gobbling up the whole lot.
  5. And by registering each shelf company in special company/tax havens, such as Ian Wishart described in “The Paradise Conspiracy” – we’ll never know that Company A has bought up the lion’s share of available shares.
  6. Easy peasy.

I suspect John Key – being somewhat more knowlegeable in such arcane matters – is already aware of such a possibilty.

But I guess he doesn’t want to spoil the nice fairy tale he’s been spinning us…

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(* Hard-sell – as in selling to us what we already own)

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Perhaps the most sober, insightful, and plain-speaking look at where we have arrived as a society, after 27 years of radical, free market, “reforms” and the rise of the “Me” Generation,

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Full Story & On-demand Replay

Facebook: Inside Child Poverty New Zealand

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Every politician; aspiring political candidate; community leader; businessperson; and follower of the “free” market should be made to sit and watch this film. This is how we have made New Zealand.

This is a portrait of a society that has lost it’s soul, in pursuit of money and the illusion of “free choice”.

Watch… and maybe learn.

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Well, well, well… I wonder what other bad news Dear Leader is keeping from us,

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When Goff sprung that on Key, he looked decidedly uncomfortable.

Which is silly, really. Trying to keep political secrets in this country is like trying to carry water in a butterfly net. The question is not if a secret will be made public – but will it make it in time for the 6PM News on TV1 or TV3.

I suspect there will be a few more unpleasant surprises in store for us next year, if National wins the election. Their last three years have indicated to us that, as usual, right wing governments and secret agendas go hand-in-hand.

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Firstly, since when is cutting the same as capping?! National has been actively cutting government jobs – whilst at the same time hiring some very expensive “advisors”. These jobs are men and women who have given many loyal years of service to the country. They are the ones who do the work in the back-room offices, to ensure that phones are answered when we have a query about tax or traffic lights are out, and that essential  services are carried out.

Loading front-line services with more paperwork and other administrative duties seems counter-productive. And people are beginning to resent it, and resist these cost-cutting follies.

So much for our esteemed leader, John Key,  assuring New Zealanders that “there’s no way one in five New Zealanders will lose their jobs“.

Making people unemployed is not helping our economy.

For National to be persisting with this false economy of job cuts is not just hurting the economy and hurting ordinary New Zealanders – it signifies a depressing lack of imagination from the National Party,

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This is National’s “action plan”, if re-elected,

National’s action plan includes:

– Have the budget deficit next year, and be back in surplus in 2014/2015
– Establish the Crown Water Investment Company to invest up to $400 million from the Future Investment Fund in irrigation and water storage to make farm land more productive
– Amend the Resource Management Act to have six-month time limits on consenting medium-sized projects
– Immediately implement the new lower public service staffing cap
– Slow the phasing-in of the Emissions Trading Scheme and allow off-setting for pre-1990 forest owners
– Amend the Social Security Act to comprehensively reform benefits
– Introduce changes to sanctions for beneficiaries whose recreational use of drugs affects their ability to apply for and secure a job
– Change bail laws to make it harder for those accused of the most serious offences to get bail
– Introduce screening of parole applications to allow the Parole Board to reduce the number of unnecessary parole hearings
– Pass the Search and Surveillance Bill
– Make secondary school performance information available to parents
– Immediately begin work to develop more effective teacher and principal appraisal
– Increase the number of elective operations by at last 4000 a year
– Work with district health boards to ensure patients needing a specialist appointment are seen within no more than four months by 2014
– Begin work with local primary care networks to provide free after-hours GP visits to children under six
– Start building 17,000 seat temporary stadium at Addington
– Receive and assess the CBD recovery plan

Source

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No mention of jobs.

But plenty of threats of State  punitive actions,

– Immediately implement the new lower public service staffing cap
– Amend the Social Security Act to comprehensively reform benefits
– Introduce changes to sanctions for beneficiaries whose recreational use of drugs affects their ability to apply for and secure a job
– Change bail laws to make it harder for those accused of the most serious offences to get bail
– Introduce screening of parole applications to allow the Parole Board to reduce the number of unnecessary parole hearings
– Pass the Search and Surveillance Bill

The National Party shows a strong inclination toward  “Daddy Statism”. Lots of punishments. Increases in state police powers (they’ll need them).  And blaming those of welfare for the lack of job-growth in this country.

There is nothing positive in any of this.

And this is what New Zealanders are supporting as a possible government?

Perhaps, collectively, we feel we don’t deserve any better.

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2008

That was then…

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2011

This is now…

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I have the strongest impression that New Zealanders are not just leaving because of higher wages in Australia. There has  be more to it than that.

Could it be that those leaving are seeking a better quality of life? Could it be that the free market reforms have created a “Me Society” where New Zealanders feel disconnected from our own country?

Bryan Bruce’s sobering and thoughtful documentary “Inside NZ: Inside Child Poverty” suggests to me that twentyseven years of free market, user-pays, growing gaps between wealthy and Middle Classes and Poor, and growing underclass has created a sense of alienation and frustration.

The irony is that John Key saying that – “I believe we’ve made some progress in so much that we have been closing that after-tax wage gap, we are building an economy that is now growing at a faster rate than Australia but it will take us some time to turn that around” –  is not just unhelpful, but totally ignoring the root-cause of what has fractured our society.

Here’s a clue: Money buys goods and serevices. It does not buy a sense of community.

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Quote of the week.

M@TT   #29   2:12pm

John Key, get your stinking paws off Our SOE’s, you damned dirty ape

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Dominion Post Comments

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Don – stop smoking that ‘Kronic’!!

21 August 2011 1 comment
Don Brash, Leader of ACT Party

Don Brash, on Q+A today (21 August),

“Nobody seriously believes that Governments run commercial business better than private owners do. There is no logic at all for Governments to continue to own them.”

Really, Don?

Let’s do a Fact Check on your claim that “nobody seriously believes that Governments run commercial business better than private owners do”.

Case # 1: Air New Zealand.

In April 1989 the airline was privatised by Roger Douglas with a sale to a consortium consisting of;  Brierley Investments Ltd(65%), Qantas (19.9%), Japan Air Lines Ltd (7.5%), and American Airlines Ltd (7.5%) .

The owners were a fairly high-powered, supposedly commercially-saavy, group of corporations.

Sources:

Treasury 1

Treasury 2

The sale went through, earning the State $660 million.

In 2000, Air New Zealand entered into a commercial deal to buy 100% Ansett Airlines, for  $A680 million, from Rupert Murdoch’s News Corporation Ltd. This deal went sour and Ansett Australia was placed into liquidation by September 2000.  Air New Zealand subsequently announced a $NZ1.425 billion operating loss .

By  October 2001, Air New Zealand was itself in imminent danger of collapsing and  was re-nationalised by the then Clark-led Labour government under a  NZ$885 million bail-out. The government ended up with a 76.5% stake.

So much for private ownership.

Case #2: NZ Rail

In September 1993, NZ Rail was privatised and sold for $400 million (less debt)  to a consortium consisting of Wisconsin Central (40%), Berkshire Partners III L.P. (20%), and Fay & Richwhite (40%). NZ rail then had a succession of owners, culminating in heavy losses, with a $346 million loss for the half-year ended December 2003.

In May 2008 the Labour Government agreed to buy Toll NZ Ltd (less its trucking and distribution operations) for $665 million.

This experiment in privatisation was also a spectacular failure. No private owner could make a profit, even with the government agreeing in  2003 to spend $200 million over the following five years, upgrading the track via the new SOE, Ontrack.

The rail network had been badly run down through lack of investment in new rolling stock and lack of basic maintenance. And one of it’s first private owners, David Richwhite were investigated late 2004, by the NZ Securities Commission, regarding alleged insider trading. In June 2007 Richwhite  agreed to pay NZ$20 million, but did not admit liability.

Another “Tui time” for private ownership of state assets.

Case #3: Finance Companies.

It might be worthwhile reminding Don that the recent chain of collapse of finance companies in this country cost investors  $6 – $8 billion dollars in losses . Many of these  are the real “Mums and Dads” investors that National speaks  lovingly when mooting asset sales.

So Don, spare us the rhetoric that “nobody seriously believes that Governments run commercial business better than private owners do”. Because as many will confirm – that’s bullshit.

The question I ask myself is; Don, do you really believe that fantasy or not. If you do, you are deluded. If you don’t, you are  deliberately mis-representing the truth.

Either way – not a good look, mate.