- Overall vision: what do we want for New Zealand?
Our ultimate aim is a decent life for all, together: one in which everyone and their whānau can thrive, not just survive, where they can live in harmony with others, pursue their dreams and participate in the life of their community. This is a reasonable and responsible expectation for an advanced and wealthy country like New Zealand, but it’s not currently being realised. Inequalities are a major reason for this failure. They arise in many ways – because of gender, of ethnicity, of religion, of economic resources. These inequalities also overlap. Women, for instance, earn less than men both because they are directly discriminated against and because they are affected by the loss of bargaining power that reduces all workers’ share of company profits. The Equality Network focuses on economic inequality – imbalances of income and wealth – while supporting campaigns to address other forms of inequality. Economic inequality is particularly important because sufficient income and some wealth are essential if people are to lead flourishing lives, and the distribution of those resources affects the nature, shape and quality of our society. Economic imbalances divide communities, weaken the social fabric and lead to worse health and lower levels of trust. By concentrating resources among those who are already doing well, the policies that drive economic inequality limit the life chances of those who need the most support.
Yet none of these inequalities is inevitable or natural: they are all the result of political decisions.
Underlying this vision is an acknowledgement that together, we create the society in which we live. Anyone doing well may have worked hard to get there, but they have also drawn on the pool of common resources we help fund when we pay our taxes. And anyone who is struggling, or affected by social factors, deserves assistance from that pool. A more balanced distribution of income and wealth would replenish the collective resources New Zealand depends on for its continued success.
- A target for a more equal country. From the mid-1980s to the mid-1990s, as a result of specific government policies, New Zealand has seen the biggest increase in income inequality of any developed nation. While there should never be a perfectly equal distribution of income and wealth, New Zealand could aim to reduce economic inequality to the level enjoyed by countries, such as Denmark, where the richest tenth have an average income five times that of the poorest tenth, the level New Zealand had in the early-1980s. Currently in New Zealand that ratio is nine to one. If New Zealand’s ratio could return to five to one, the Equality Network’s aims – strong communities and a flourishing life for all – would likely be realised. While the ambitions in the Equality Network’s 2020 manifesto will not achieve that level by themselves, they would be a major, and politically feasible, step in that direction.
- The causes of economic inequality
Many things create economic inequality, notably in New Zealand the continuing negative effects of colonisation have bred prejudice in the system and inequity of outcomes for Maori. Government policies that cause excessive economic inequalities can be traced back as far as the 1860s colonial administration. Women have also suffered from persistent discrimination as exemplified by the gender pay gap.
The causes of inequality are ultimately political. Globalisation (results in jobs going offshore) and automation ( robots taking over jobs) either cannot or should not be directly opposed because they are either too embedded or bring benefits. But these factors have been at work in countries that have not experienced sharply increased inequality. What matters are the political decisions whether, for instance, people displaced by globalisation or automation get adequate income support and retraining. In these cases, policies need to be put in place to ensure these trends work to everyone’s advantage or at least reduce their negative effects. This is also true of trends such as the growing numbers of sole parents, where the task is to ensure these parents are not in poverty, and not push them back into unhealthy relationships.
Other causes of inequality are specific political decisions that can be reversed, such as tax cuts for the rich, benefit reductions, the failure to build enough houses, laws that curb workers’ bargaining power and decisions not to provide adequate skills and training systems.
As well as these direct causes there are indirect causes of inequality, such as wider economic policies that make lower inflation more important than reducing unemployment. Indirect causes include
public attitudes, like prejudice against people in poverty, which pave the way for other policies. They also include the under-resourcing of services such as education and health. Better services do not
immediately give people more money but they do allow them to earn and save more in the longterm.
The causes of inequality can be divided in other ways too. One important cross-cutting division is between predistribution – what happens in markets and in the workplace where most incomes are
initially received – and redistribution, what government does once wages and salaries are received.
A final, cross-cutting division is between policies for lifting the bottom (lower end) and curbing the top (upper end). Since inequality, not just poverty, is the issue, there need to be policies to curb the extremes of wealth and income among the best-off and redistribute it to those in need.
- A framework for policies on economic inequality
In broad terms, policies for reducing economic inequality can be divided into three groups: income inequality, wealth inequality, and long-term drivers of inequality. This builds on the Equality Network’s 2014 inequality policy matrix . Income inequality concerns the imbalances in how income (people’s weekly or monthly salary or benefit) is distributed. Policies to address these imbalances are needed in several areas, including:
• Recognising the value of currently unpaid work, such as bringing up children
• Skills training to ensure people can get good, high-paying jobs
• Reducing imbalances within the workplace, by raising low wages and curbing excessive executive pay
• Paying more generous benefits and child support payments
• Increasing income tax rates for those most able to contribute more Wealth inequality concerns imbalances in assets (things people own or have saved, such as houses, cars, cash in the bank and investments). Policies to address it include:
• Ensuring more people benefit if the company they work for grows in value
• Taxing wealth in some substantive way, either annually and/or when assets are sold
• Redistributing that wealth to families currently unable to build up wealth stakes
• Government-funded house-building programmes to boost the wealth of poorer families
Long-term drivers of inequality include many things, notably inability to access quality health care and education, negative social attitudes, and people’s inability to empathise with different communities. Policies to address them include:
• Investing more in healthcare so that all New Zealanders can access quality support
• Investing more in education so that all young people can reach their full potential
• Limiting donations to political parties to prevent the wealthy gaining undue influence
• Increasing people’s awareness of issues through high-quality public broadcasting
• Bringing different communities together to increase empathy and understanding
- The policies chosen
The policies in the 2020 manifesto do not attempt to capture the full scope of change needed. Instead we have identified three things that represent some of the key responses to tackling inequality, and that would both make a significant difference and be politically feasible at this time. The Living Wage addresses predistribution elements of income inequality, while fairer benefit and child support payments address redistribution issues. A government house-building programme helps tackle wealth inequality, while taxing wealth addresses upper end and wealth inequality. And requiring the wealthy to pay their fair share provides a means of paying for other policies.
- In addition to these immediate changes, the Equality Network and its member organisations seek seven long-term commitments:
- A full partnership between Māori and the Crown to fulfil the promise of Te Tiriti
- A free healthcare system to ensure everyone can access quality health support
- Increased education funding to ensure every child and young person has access to free, high quality public education that allows them to reach their full potential
- A huge, sustained boost to free retraining and skills programmes to give people a better chance to find a job or new jobs where a change in employment occurs
- Extending the law to enable industry collective bargaining
- Curbs on political donations to stop money distorting politics
- Broadcasting that serves the public interest Healthcare, education funding and skills training address obvious major long-term drivers of inequality and disadvantage, while curbing the influence of the wealthy on politics will remove a roadblock to pro-equality policies, as will creating a better informed and better-connected public.
Healthcare, education funding and skills training address obvious major long-term drivers of inequality and disadvantage, while curbing the influence of the wealthy on politics will remove a roadblock to pro-equality policies, as will creating a better informed and better-connected public.