21 October 2013 Book ‘Inequality a NZ Crisis’: Chapt 2 “Inequality in NZ” by Max Rashbrooke

This chapter gives a very sobering picture of inequality in terms of total income and net wealth and their trends over the last 60 or so years.  Basically half the NZ earning population earns less than $24,000 pa including any social welfare support and tax credits.  The top 10% earn more than $72,000 and the top 1% more than $172,000.  In terms of wealth, NZs 2.9M adults own $470Bn, with the top 1% owning 16%, the top 10% owning 50% of net wealth and the lower 50% owning 5% of the wealth or an average of just $6,000 each.  The country-wide average wealth per adult is just $70,000.  What’s more, those on the lowest incomes have seen very little increase in dollar terms since 1984.. This is not the case for the top 10%.  (So much for the trickle down theory!)  We effectively have a regressive tax system when GST is taken into account.  The chapter has many similar illustrations of the wide inequality gap – many from ‘official’ government sources.

We were surprised and concerned by the inequalities portrayed in the figures.  The ability to support an individual let alone family members on such low income levels and enjoy a reasonable standard of living is impossible.  One consequence is having to take multiple jobs (if available) to make the ends sort-of meet; this has a high negative impact on family life and social cohesion. Bill English is quoted as being comfortable with the level of income inequality and doubts governments could combat it as they ‘don’t have the levers’.  We strongly disagree and feel that our government should be making urgent steps to address inequality before society disintegration forces unplanned changes upon us.

Chapter 13 ‘The Rewards of Work’ notes that we have historically chosen the ‘low wage’ economic model and this has contributed to our fall in relative rankings in the OECD to 21st (out of 34).  Our productivity is also poor.  As the saying goes, we can’t expect different outcomes if we keep doing the same things – and things need to change.

Ian Harris