In recent decades, inequalities in New Zealand have grown faster than in most other OECD countries. This trend was halted under the last Labour Government, but other governments have more than made up for it.
Rising inequality is bad for a country that prides itself on its egalitarianism.
Large wealth disparities are bad for nearly everyone. High levels of inequality in society have been linked to higher chances of poor health outcomes, poor education outcomes and anti-social behaviour. These things have both social and economic costs for a country.
Last month I posted for Red Alert on why inequality is bad. But how does one go about tackling inequality?
Increasing GST, and taking the income to give the biggest tax-cuts to the wealthiest people is clearly not the answer. National’s tax ‘switch’ has hurt those at the bottom, and squeezed those in the middle, who are now worse off than they were before. Inequalities are even worse now than the graph above suggests.
The OECD held a forum on tackling inequality at the start of this month. The background paper is instructive.
Aside from asking if who you marry matters, the report also asks what policy-makers can do about the problem of inequality. Answers focus in the area of skills training and education, particularly where they are available for disadvantaged groups. Looks like National’s cuts to education in the early childhood (ECE) and adult and community (ACE) area aren’t the right answer either.
Labour has promised to reverse the ECE and ACE cuts. We’ve also said we’d make the first $5000 of earnings tax free. And we’ll raise the minimum wage to $15. All of these things are useful first steps in tackling inequality.
In line with the OECD view, an economy that provides skills, jobs and opportunity for all New Zealanders has both social and economic benefits.
Hat-tip Jeremy Warner at The Telegraph.
Dr David Clark is the Labour Candidate for Dunedin North. He has worked in shops, in a factory, as a Presbyterian Minister, as a University Tutor and as an analyst at the New Zealand Treasury. He currently runs a University Hall of Residence.