NZ POLITICS DAILY: Solving inequality and poverty with your vote

The tide has come in on issues of economic inequality and poverty. A significant number of people are now voting on ‘fairness’, with concerns about the distribution of wealth and income in this country. All the political parties are being forced to respond to growing discontent about economic disparities and their impact on society. Voters want to hear from them what they will do about the problem. This is highly significant, because traditionally such concerns are a fringe issue. But now, for the first time in modern New Zealand political history, this is perhaps the key issue of the campaign.

To get a sense of how the two main parties are responding to issues of inequality, watch the 8-minute segment of the TV3 Leaders’ Debate on Inequality. This is the part where Labour leader David Cunliffe makes his dramatic heartfelt promise to make addressing poverty his first priority as a prime minister.

If in the event that Labour does manage to win the election, it’s likely that this message on inequality and poverty will come to be seen as one of the reasons for the victory. Certainly the opinion polls show the striking degree to which the issue resonates at the moment. Recent Roy Morgan research is reported on by Simon Collins, who says Poll finds rich-poor gap is the big election issue. Apparently, back in 2011, only 4% of voters saw inequality is the biggest issue facing New Zealand, but this has jumped to 18% this year, constituting the single most important issue for voters.

Similarly, a TVNZ survey shows that 67% ‘say the Government should be doing more to reduce the gap between rich and poor’ – see Kate Chapman’s Vote Compass: Government should do more on inequality.

Other polls have related results. Simon Collins has reported that Kiwis want more action on child poverty – but not higher taxes. Only 19% of voters believe the National Government is doing enough about child poverty, compared to 51% who want them to do more.

When it comes to the distribution of wealth in society, there’s evidence that people want it to be much more even. Apparently, ‘the most recent Statistics New Zealand data indicated the richest 20 per cent of us owned 70 per cent of the wealth’, with those in the bottom 40% owning almost nothing – see Rob Stock’s Wealth split worse than most realise . In contrast, reseach by AUT academic Peter Skilling shows that overall, the public would like to see a ‘split of roughly 30 per cent [of wealth] for the top fifth, roughly 20 per cent each for the second and third fifths, and the last 30 per cent split between the bottom two-fifths’.

How do parties want to deal with inequality?
It’s not apparent that any political parties are really rising to the occasion with any radical solutions to the problem. Perhaps there simply aren’t any plausible solutions in the current environment. The party making the most noise about inequality is probably Internet Mana, but its supposed solution seems rather piecemeal and, in the context of the problem, quite limited. See for example: Harawira: Child hunger the 'litmus test'.

It also could be argued that Internet Mana’s attempt to stop the poor from buying socially destructive goods means that its focus is simply on the symptoms of inequality rather than the causes – see Brendan Manning’s Mana Party targets 'predators on poverty'.

Although it might be expected that the left parties have the inside running on this issue, not all are convinced. For example, David Farrar says: ‘I know there are groups like CPAG that have advocated for particular policies to reduce child poverty, under both National and Labour Governments. But the public stuff such as marches, and rallies, I don’t think ever occurs when Labour is in. That implies for many (not all) of those involved this is a means to an end (get Labour into Government) rather than genuine concern for the issue’ – see: Child Poverty.

Farrar also points to evidence that there isn’t actually a case for the scenario in which there ‘is no child poverty when Labour is in Government, and it gets worse when National is in’. For more on this, see Lindsay Mitchell’s A brief examination of child poverty claims.

It could be that none of the parties are really capable of offering a solution. This week Rachel Smalley argues that not only is poverty New Zealand’s greatest crisis, but she bemoans the lack of leadership from political parties – see her must-read column, Who will be brave enough to tackle poverty?

The Establishment and inequality
It’s not just the parties of the left that are campaigning and concerned about inequality. For example, in yesterday’s Herald’s ‘Mood of the Boardroom’ report on the business communities’ orientation to electoral politics, one CEO communicated the ‘growing disquiet about the rising inequality of wealth and income’ – see: CEOs overwhelmingly back John Key.

It’s also the case that the Government and John Key are very conscious of the need to address voters’ concerns about inequality. You can see this in the lengthy profile published this week about John Key in the Sydney Morning Herald, in which the Prime Minister puts forward his claim to have taken ‘measures incrementally to improve care for the disadvantaged’ – see Peter Hartcher’s The Key factor. The article also includes quotes from Key – when in opposition – about his desire and promise to tackle inequality.

Of course there are many policies that National has implemented – or is about to – which might have ameliorated some of the problems. For instance, its promise to increase free doctor visits to those under the age of 13 is a very popular one. According to one recent survey, 92% believe this is an effective action to reduce child poverty – see Simon Collins’ Kiwis want more action on child poverty - but not higher taxes.

Higher wages as an answer to inequality
There’s a growing consensus amongst all parties that higher wages are the answer to poverty and inequality. The difference is over how to achieve this. Labour and the Greens are pushing for a jump in the minimum wage. This is resonating with the public – with one survey suggesting 60% want it raised – see TVNZ’s Majority calls for rise in minimum wage.

One blogging economist, Brennan McDonald, looks at some the issues relating to the minimum wage in his post, Minimum Wage To $16.25? Yeah Nah.

Tax reform as an answer to inequality
Tax cuts or capital gains tax? Both policies are being sold as part-solutions to inequality. The equity arguments for Labour’s capital gains tax are put forward well in Josie Pagani’s column Hard work means nothing with NZ taxes and Dave Armstrong’s column Is this a taxing time to be rich, a politician or both?

But will Labour’s tax really bring in all the revenue that it’s supposed to? The New Zealand Institute of Economic Research suggest not – see TVNZ’s Economists criticise Labour's Capital Gain Tax sums.

The detail of Labour’s tax is worth discussing. For example, the Dominion Post newspaper is strongly favourable towards it, but also says that the ‘strongest objection to Labour's idea is that its various exemptions, especially on the family home, will make it so complex as to be worthless’ – see: Capital gains tax still a smart idea.

And for an in-depth look at such issues, see Tom Pullar-Streaker’s Are we being fairly taxed?

Debates and evidence about inequality
For some excellent facts, figures, viewpoints and discussion about isssues of inequality, see the features published on Radio New Zealand’s website, The Wireless, including Alexander Robertson’s New Zealand's haves and have-nots, Toby Morris’ Picturing the impacts of poverty, and Megan Whelan’s Election Issues: Inequality. Also by Radio NZ, see: Is New Zealand an unequal society?

Brent Edwards of Radio NZ is also covering the issues well – see his pieces Poverty – Dominating the political debate, and Power play.

For an interesting discussion on the origins of inequality and why the problem might be increasing, see Peter Lyons’ Is NZ's prosperity real? He says that ‘Income inequalities are a necessary feature of a market economy’.

Finally, for an extended examination of inequality in New Zealand, watch the recent TVNZ documentary: Nigel Latta: The New Haves And Have Nots.

Today’s content

Campaign

Simon Wilson (Metro): Let Battle Begin

Steve Braunias (Metro): Campaign Diary: Day 6

Audrey Young (Herald): Election 2014: Key support slumps in latest poll

No Right Turn: A clear difference on child poverty

Victoria Young (NBR): Conservative Party drops court action after Electoral Commission backs down (paywalled)

Election Data Consortium: Busting Myths About Non-Voters

Matthew Beveridge: Beginning of the end: Reporters on Twitter?

Josh White (Newstalk ZB): Surprising level of undecided voters

Listener: The things that matter