NZ POLITICS DAILY: New Zealand’s War on the poor

Under capitalism there’s always going to be a war against the poor. The process by which we divide up the resources of any society normally involves exploiting the majority for the benefit of the minority. It’s called inequality. And this is how it is in New Zealand: those who have the most power look for ways to extract that money for themselves, or at least retain the status quo. Against this are those who want to have a more equal society. It’s an age-old political issue, and one that has traditionally been at the heart of the left-right political divide. In 2014 this concern about inequality has been a key feature of politics, underpinning much of what has occurred. 

2014: The year of inequality being challenged
‘Inequality’ could be the word of the year in New Zealand politics. Never before have we debated and discussed this concern so much. As I pointed out in my review of the year in politics for the Herald on Sunday, this election year has seen a major revival of public focus on traditional economic concerns, particularly economic inequality – see: A year of controversies that didn't matter. 

The huge resurgence of interest in inequality in 2014 is nicely encapsulated in an article by Max Rashbrooke in The Guardian: How New Zealand's rich-poor divide killed its egalitarian paradise. Rashbrooke outlines the process under which Labour and National governments made decisions that increased inequality, and says that while the outrage ‘has been muted’, this appears to be changing: ‘Alarm bells are finally beginning to sound. Recent polling shows three-quarters of New Zealanders think theirs is no longer an egalitarian country, and that this is a bad thing’.

In another comment piece, Rashbrook deals with the recent OECD report which suggests New Zealand’s economy has suffered due to increasing inequality – see: Inequality: Too big to ignore. Rashbrooke says we shouldn’t be surprised about this finding: ‘After all – and this is broadly the point the OECD makes – if you have a society in which a large chunk of the population are starved of the resources they need, their economic contribution is unlikely to be huge’. Rashbrooke says that the report ‘is a landmark one, and may represent the moment when inequality really became too big to ignore’.

The media has certainly not been ignoring issues of inequality this year, and for one of the most interesting accounts, see TVNZ’s mini-investigation, Only half of NZ's most wealthy paying top tax rate. Looking at tax avoidance by multi-millionaires, it is reported that IRD figures show 46.5% of those worth more than $50 million actually declare taxable incomes of less than $70,000 a year. 

Rich and Poor in New Zealand
Although the rich appear to have been winning for three decades in their ‘war against the poor’, perhaps the tide is turning? There’s still every indication of severe poverty and inequality in this country. Anecdotal evidence is plentiful. For example, recently Duncan Garner went to South Auckland and witnessed an extended family of 13 people living in a tiny house. He discusses such ‘disturbing’ situations, as well as possible solutions in his column, Time for some gutsy decisions on tackling poverty.

In the leadup to Christmas there is particularly strong demand for relief from poverty according to Emma Whittaker’s article, Demand high at Auckland City Mission. She reports ‘people ‘queuing for upward of nine hours outside the Auckland City Mission in the hope they'll walk away with a rubbish sack full of a few basic food items’.

The Prime Minister has recently offered his own anecdotal experiences of talking to school principals who say the problem of hungry children is less than what we’ve been led to believe. Speaking in Parliament, John Key said that ‘extremely few’ children turn up at school without lunch. For an examination of this, watch Campbell Live’s 4-minute item, Key: 'Extremely few' Kiwi kids without lunch.

Recently journalist Josh Fagan gathered his own experiences of life for those at the bottom – see his report, Boarding houses of scandal and shame. This follows on from Max Rashbrooke’s 2012 Listener feature Private boarding house horrors. 

At the other end of the spectrum, there have been plenty of reports recently of how well the wealthiest New Zealanders are doing. Yesterday Kirsty Wynn reported that ‘a staggering one in five suburbs in the City of Sails now boasts homes with a median price of more than $1 million’ – see: Rise of the $1 million suburbs. 

For another report on the lives of the rich in Auckland, see Niko Kloeten’s Wealthy Aucklanders' home values soar. We learn that Graeme Hart’s Glendowie mansion ‘has increased in value from $22 million to $31m, a 41 per cent jump’, ‘Grant Dalton's Remuera home has increased by more than $1m, from $7.65m to $8.8m’, and Hollywood director Andrew Adamson’s Westmere house has increased in value ‘from $4m to $5.3m’. 

The salary increases of public servants have also been in the spotlight – for the details see Hamish Rutherford’s Jump in public servants on $100K-plus. According to today’s Dominion Post, the huge salaries at the top of the public service raise questions about what seems to be a ‘salary arms race’, which is at odds ‘with a growing public concern about inequality’ – see the editorial, Huge public pay packets disturbing.

The National Government responds to inequality
Part of the National Government’s success in 2014 has been down to its savvy response to growing concerns about inequality. The 2014 Budget was an extremely important tool in convincing the public that National took inequality seriously – especially with its much-celebrated extensions to free doctor visits and paid parental leave. 

This might have been enough to temporarily satisfy much of the public. However much more will need to be done by National, and John Key has already recognised this, pronouncing ‘child poverty’ as one of his key priorities – see: Budget 2015 to focus on child poverty – Tolley. According to this report, the Government is ‘working hard on a new package to be unveiled in the May budget that is designed to alleviate hardship’

Will it be enough? Vernon Small has written a good examination of what the Government might do, but doubts the package will be ambitious enough to meet the problem or what other solutions have been put on the agenda: ‘It remains to be seen whether the mix of Key's social conscience and the political imperatives of a third - going on fourth - term government will be bold enough to come up with anything as radical, or as costly, as those prescriptions’ – see: Key must walk the talk on child poverty. 

Today, columnist Dave Armstrong also expresses his cynicism: ‘Expect a few meals to be thrown at low-decile schools, probably by private charities using government money’ – see: Hey Mr Boring, isn't it time for new ideas? Armstrong argues that politics is dominated by moderate ‘boring, but sensible’ figures (Bill English through to Grant Robertson) and therefore we shouldn’t expect anything radical on inequality, even if it’s required. 

Official documents obtained by Radio New Zealand show that ‘the National-led Government is unlikely to change tack in the way it has responded to poverty in the past six years’, according to Brent Edwards – see: Government Prioritising Child Poverty? This analysis suggests that the Ministry of Social Development simply ‘parroted National's own political view of the problem, prompted criticism that officials were no longer giving the Government free and frank advice’.

The Childrens Commissioner, Russell Wills, and business advocate, Phil O'Reilly, have also teamed up to argue for a mix of business, partnerships, and skill training in order to deal with the problems – see: Help families and we all win. 

Others have focused on education, and increasing competition between schools – see the Herald’s editorial, Competition way to reduce inequality. In contrast, last month, the Dominion Post’s editorial asked why the Government isn’t doing more about poverty, and rebuked National for its insistence ‘that only a stronger economy can solve these problems’ – see: The Government must act on poverty. This editorial also admonishes the Government for its backward priorities on the issue, apparently wanting to ‘hold off spending more on children because it discourages work, or might slow growth’

The Government’s likely response will continue to rely upon the ‘insidious’ distinction made between ‘the deserving and undeserving poor’ according to Brian Easton – see: Penalising the Poor. He also disagrees with some of the ‘solutions’ being put forward at the moment. In particular, Easton points to the Government’s focus on targeting families who are not ‘dependent on the state’, saying that this is simply ‘a splendid way to be seen to be doing something about poverty without spending too much money’.

It’s not just National that makes that distinction between the deserving and undeserving poor. According to Susan St John, Labour designed the Working for Families policy to exclude the poorest children – see: Economic ideology destroys us all.

Labour continues to face problems in choosing how to deal with inequality according to Vernon Small, who suggests that under Andrew Little the party might move even further away from redistributive policies – see: Labour at inequality crossroad. 

The Establishment response to inequality
Many on the political right are less impressed with the new focus on inequality and poverty. For example, Rodney Hide has suggested that the debate has been raised by the political left purely out of ideological motives or personal self-interest, saying that ‘Leftists and troughers are working overtime to make child poverty the new reason for funding them and centralising control’ – see his paywalled NBR column, Turkey's the answer, what's the problem? He warns that ‘It’s all nonsense. The claims aren’t true. The numbers rubbish. The arguments don’t stack up’.

Similarly, Liam Hehir argues that ‘overstating the problem doesn't help. It may feed the outrage of those who find indignation so intoxicating. It does not, however, do anything to clothe and feed hungry children.  Indeed, it might make solutions harder to reach. People who believe that child poverty is endemic are inclined to preach state socialism as the answer. Whatever shortcomings our market democracy has, the alternatives are usually much worse’ – see: Overstating poverty doesn't feed kids. Hehir suggests the way forward is: ‘the right mix of a thriving charitable sector, civil society and economic opportunity. When all else fails, well-targeted state support plays a vital role’.

But what’s interesting is how many of those on the right are actually taking the debates and positions of the left seriously. For example, see Mike Yardley’s column, Key is wrong about the minimum wage, which argues for Key to lift the minimum wage to $16/hour and therefore show ‘the way as a compassionate capitalist’.

Business journalist Brian Fallow appears to be taking the resurgence of interest in inequality very seriously. Two recent columns by him are well worth reading: Wealth gap goes mainstream and New take on inequality sparks debate in NZ. The first column quotes the Reserve Bank governor Graeme Wheeler speaking positively about the Occupy movement, and the second column provides some details about wealth inequality in New Zealand 

Both of these Brian Fallow columns reflect the rising influence of French economic Thomas Piketty, whose work on inequality has sparked the publication of a New Zealand book, The Piketty Phenomenon, which includes essays by economists and others discussing implications of Piketty’s theories for this country. For more on this, see Brian Easton’s Does Piketty Matter?

Numerous reports on inequality
Establishment organisations such as the IMF and OECD are now publishing important critiques of the role of inequality in societies like New Zealand. It’s the recent OECD report that has really produced waves. For a variety of views on this, see TV3’s Inequality study 'robust' and 'sound' – economist, Newswire’s John Key dismisses 'out-of-date' OECD report, Radio New Zealand’s Money for poor schools to tackle inequality, and Eric Crampton’s OECD on inequality.

Last month the Children’s Commission also published its annual Child Poverty Monitor. For a variety of perspectives on this, see Brian Marbeck’s High cost of living blamed for child poverty – Commissioner, Kristin Hall’s One in four Kiwi kids still living below poverty line – report, Simon Collins’ Asian kids' health rates slip, and David Farrar’s “Poverty” down 3%. 

Finally, for a visual account of the issues around inequality – including how cartoonists are portraying the issues – see my updated blog post, The politics of poverty in New Zealand – images.