New Zealand rocks but the poor are rolled


'New Zealand rocks' by Chris Johnston features a rock performer in the shape of New Zealand performing to an audience in the shape of Australia, ignoring the plight of poor women and children who stand in darkness behind himNew Zealand's status as a rock star economy with unusually high growth in 2014 is in question from commentators who say the economy has never recovered from major economic policy shifts 30 years ago.

NZ Deputy Prime Minister and Finance Minister, Bill English, showed cool confidence at the bilateral talks with the Australian Government in early February, no doubt boosted by the HSBC chief economist's prediction that NZ is set to outpace most of its market peers in economic growth this year. With the Australian economy in disarray, the Abbott Government is showing keen interest in developments in NZ's projected 3.4 per cent growth.

Financial commentator Rod Oram points to the latest quarterly survey of business opinion, which has confidence on a 20-year high as one indicator that the 'rock star economy' epithet might stick. But while the NZIER survey shows the economy is advancing on a number of fronts, 'they are measuring the breadth of expectation [rather than] the depth — they are not measuring how big the growth is going to be', he said on Radio New Zealand.

Economist Brian Easton says New Zealand's sexy image on the global business stage does not necessarily translate to a better life for those on low incomes, particularly women and children. Easton, who's recently published a user's guide to economic inequality, says inequality is difficult to measure. One indicator might show it going up while another has it coming down or staying the same, 'so it's easy to choose the indicator you want'.

But, he says, all the indicators are that New Zealand suffered a sharp rise in inequality as a result of policy changes to tax rates and benefits 30 years ago and is now in the company of those OECD countries with the biggest gap between rich and poor. 'The simple way to put this is that in the 1980s we were in the bottom half of the OECD as far as inequality was concerned. Those above us had greater inequality. By the mid-1990s we were in the top half — among the most unequal parts of the OECD — and it's still like that.'

Easton points to child poverty as the single greatest indicator of growth in the wrong direction for those at the bottom of the heap.

A major influence on the rich-poor gap is growth in the share of income of the top one per cent of adults whose income share has grown from about six times the average in the 1980s to around ten times today. Most of the shift occurred 'between 1998 and 2003. The two major influences seem to have been a change in the tax treatment of dividends and an increase in margins for management and professionals over average workers.'

Inequality matters, Easton says, because a more equal society equates with better overall health of the nation as a whole. 'We don't fully understand why that happens.'

One argument against inequality is a higher incidence criminality. 'As far as we can judge, child inequality leads to inferior health, poor education and higher criminality for generations to come,' says Easton.

The Salvation Army's State of the Nation report, 'Striking a Better Balance', highlights continuing child poverty indicators over the last five years. Citing the incidence of one young mother of an eight-week-old baby whose benefit was halved because she did not attend a job-search seminar, the report shows government spending on income support for families has fallen 15 per cent over the period.

Child poverty has stayed at around 20 per cent over the five years, but last year the number of substantiated cases of child abuse or neglect rose 3.7 per cent and those of violence, mistreatment or neglect towards children rose 1.3 per cent.

'Too many New Zealand children are spending their lives limited by poverty and carry the harmful effects into adulthood,' says Mike O'Brien of Child Poverty Action Group. 'We need bold, comprehensive and urgent action to address this ticking time-bomb. CPAG urges the government and all political parties to prioritise children and introduce with urgency policies and programs that tackle the underlying causes of child poverty.'

Does Australia really want to cut social spending to New Zealand levels and take the country into a situation of higher crime including family violence and increased child poverty to improve the look of business figures?

Cecily McNeill headshotCecily McNeill has edited the newspaper for the Wellington and Palmerston North dioceses for the past eight years and worked as a radio journalist for 20 years.

Topic tags: Cecily McNeill, New Zealand, Australia, Bill English, Tony Abbott



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Existing comments

How wonderful to see this insightful commentary filled with the best of the Church's teachings on social justice and care for the poor. I have emailed this to the Christchurch Press, hoping they might publish it. Thank you.
Joy Ryan-Bloore | 17 February 2014

Unfettered laizez faire capitalism has no respect for the welfare of individuals or families. Social injustice in New Zealand goes back as far as the Treaty of Waitangi in 1840. The intent was not for protection and recognition of Maori rights, but a mechanism for taking their land. The purpose of government is to promote the common good, not just maximise GDP. There can be no peace without justice.
Kevin Luxford | 17 February 2014

Having worked for an Australian organisation in Christchurch, New Zealand, in 2010 and 2011 I have to say I was struck by the chasm between the wealthy and the rest of the community. In those two years the economy of that, once, socially "cutting edge" nation was languishing and there was a general despondency in the air. The mere mention though of the possibility of addressing the country's huge social needs by taxing capital gains on investment properties and holiday homes or by raising the pathetically low minimum wage were howled down as outrageous and dangerous. As for the "rock star" economy of 2013/ 2014 there is much to be impressed by in New Zealand however a significant part of the current growth is being fuelled by the short to medium term rebuilding of Christchurch. Finally to state that Australia's economy is in disarray is utter nonsense but Cecily is very right in warning that we must not allow our economic rationalists to take us down a similar path to inevitable social breakdown. Egalitarian Australia may already be an endangered species but what we have is vastly superior to what many of our brothers and sisters across the ditch endure.
Martin Loney | 17 February 2014

I'm afraid Abbott has a real hangup about wages so will do anything to reduce them and to hell with the consequences. For someone as well educated as he is, his economic nous is as dismal as his his climate change views but perhaps worst of all is his unwillingness to consider views on these matters that differ from his. Regrettably we have the Australian Tea Party we voted for.
Miles Harvey | 21 February 2014


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