web analytics
The Standard
Advertising

Polity: Inequality trends

Written By: - Date published: 9:16 pm, May 27th, 2014 - 7 comments
Categories: benefits, equality, tax, welfare - Tags: ,

polity_square_for_lynnThe original of this post was written by Rob Salmond at Polity. He has a series of posts in recent days that have been well worth reposting but alas they missed due to travel. Who gained from National’s tax switch? and May TV polls. He is on fire – perhaps the aussies spiked his drinks? But this one looking at the probable shifts in inequality in NZ in the future is pretty damn sobering to anyone who thinks that we need a more equal society.

As I mentioned yesterday, New Zealand’s Gini coefficient has been fairly status since the late 1990s. Why no movement? There has certainly been lots going on the New Zealand economy.

The answer to that backwards-looking question helps us understand what is coming in future years.

Fifth Labour government
Why did inequality stay the same during Labour’s period in office? Increased taxes on high-income earners should have brought inequality down, and much more money started going to low-income families via Working for Families, too. Why didn’t inequality fall? The answer is because the economy was buoyant through Labour’s time in office, and high-income earners’ investment returns soared to offset the tax increases.

Current National government
In National’s time, we might have thought inequality should fall as well. The GFC brought the rich’s investment returns down to earth with a thud, and the Christchurch earthquakes would have dented some of those returns still further1 Why didn’t inequality drop ithe face of those circumstances?

The answer there likely lies in the tax system. National’s tax “switch” in 2010 provided higher returns to the rich, no matter how you look at it, and those disproportate returns halped make up for the rich’s investment losses.

Beyond 2014
Projecting forward, we now have this uncomfortable combination of one of the most pro-rich tax systems in the developed world, along with rebounding investment returns.

That is a recipe for increasing inequality over the next few years, which is what Treasury’s forecasts are obliquely predicting through their forecasts that per person GDP growth will be much higher than wage growth. Unless, that is, New Zealanders vote to change it.

1. Some jobs, of course, disappeared at the low end as well, but the dollar impact (though not the welfare impact) for a rich person would have been much bigger.

7 comments on “Polity: Inequality trends”

  1. Draco T Bastard 1

    Thomas Piketty’s real challenge was to the FT’s Rolex types

    Piketty asks the question that mainstream economics doesn’t want to answer: do we want a society based on work and ingenuity or on rent?

    We have moved to being a rentier economy since the 4th Labour government put in place an economic paradigm that simply rewards the rich for being rich while penalising those who actually work.

    I haven’t read this yet but some would be interested in it.

  2. Gosman 2

    Inequality rose when Nation first got in to power before settling back down. This is at odds with you view that the GFC reduced inequality and the Tax cuts worsened it.

    http://www.stats.govt.nz/browse_for_stats/snapshots-of-nz/nz-social-indicators/Home/Standard%20of%20living/income-inequality.aspx

    • KJT 2.1

      Dropped with WFF and rose with National’s stupid tax cuts and increase in GST.

      Thanks for confirming it.

    • Geez, Gosman. You’ve stopped spouting your mis-leading BS on THE DAILY BLOGand started here?!

      Ok, by the numbers…

      Inequality is not “settling back down:.

      The (revised) Perry report, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2012 Revised Tables and Figures 27 February 2014 firmly shows that After Housing Costs inequality has increased, as I pointed out to TV3’s Torben Akel (http://thedailyblog.co.nz/2014/05/25/review-tv3s-the-nation-let-them-eat-ice-cream/).

      Specifically, income inequality for After Housing Costs increased from 34.9 (1992) to 37.7 (2012)

      However the actual graph (from Perry’s report) shows a better picture here

      Indeed, if one looks at the chart from 1982 to 2012, the increase in inequality is startling.

      That, plus falling home ownership rates;

      In 2013, 64.8 percent of households owned their home or held it in a family trust, down from 66.9 percent in 2006.
      The percentage of households who owned their home dropped to 49.9 percent in 2013 from 54.5 percent in 2006.
      Of those households who owned their home, 56.4 percent had a mortgage, and 43.6 percent did not have a mortgage.
      There were 215,283 households (14.8 percent) that reported holding their home in a family trust.
      Over a third of households (35.2 percent) did not own their home. This was an increase from 33.1 percent in 2006. Most households who did not own their home were renting (453,135 households).The rest of this category was made up of households who were not paying rent, and a small number of households who did not indicate whether they were paying rent.

      Source: Stats NZ, 2013 Census QuickStats about national highlights

      So please. Keep your misinformation (aka “Gosman facts”) to yourself. If we want fantasy, we’ll check out Disneyland.

  3. Poission 4

    Carney he Governor of the Bank o England has a speech on the ubiquitous nature of inequality today,that identifies inequality as a real fact of life.

    This gathering and similar ones in recent years have been prompted by a sense that this basic social contract is breaking down. That unease is backed up by hard data. At a global level, there has been convergence of opportunities and outcomes, but this is only because the gap between advanced and emerging economies has narrowed. Within societies, virtually without exception, inequality of outcomes both within and across generations has demonstrably increased.

    http://www.bankofengland.co.uk//publications/Pages/speeches/2014/731.aspx

  4. swordfish 5

    Just doing some testing…

    And in the Euro Elections these

Important links

Recent Comments

Recent Posts

  • Government’s housing failure puts pressure on Reserve Bank
    The Government’s failure to take action on the housing crisis has put pressure on the Reserve Bank Governor who has to deal with a rampaging housing market and low inflation at the same time, says Labour’s Finance spokesperson Grant Robertson.… ...
    17 hours ago
  • Labour wishes Russel Norman well
    The Labour Party wishes Russel Norman well in the future as he stands down as Green Party co-leader, Labour Leader Andrew Little said today. “Russel has made a significant contribution to New Zealand politics in his nine years as co-leader… ...
    17 hours ago
  • Russel Norman to stand down as Green Party Co-leader in May
    Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party's Annual General Meeting in May.Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM."After… ...
    GreensBy Russel Norman MP
    20 hours ago
  • Russel Norman to stand down as Green Party Co-leader in May
    Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party's Annual General Meeting in May.Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM."After… ...
    GreensBy Russel Norman MP
    20 hours ago
  • UE bar hike denies access to thousands
    A Government rule change denying access to thousands of young Kiwis access to tertiary education is doing nothing to build a smart, fair future, Labour’s Tertiary Education spokesperson David Cunliffe said today.  “NZQA rules changed by the Government have reduced… ...
    22 hours ago
  • Progressive Rainbow rights? Yeah, nah….
    Legally, New Zealand is perhaps one of the more progressive countries when it comes to lesbian, gay, bisexual, transgender and intersex (LGBTI) rights even though we have further to go on the last two. However, the latest Westpac’s Rainbow Acceptance… ...
    GreensBy Jan Logie MP
    2 days ago
  • National’s back to the future on housing sell-off
    National’s newly announced state housing policy is simply a re-run of its failed ideologically-driven 1990s experiment, Labour Leader Andrew Little says. “News articles from the mid-1990s uncovered by Labour shows this is just more of the same. ...
    2 days ago
  • National’s back to the future on housing sell-off
    National’s newly announced state housing policy is simply a re-run of its failed ideologically-driven 1990s experiment, Labour Leader Andrew Little says. “News articles from the mid-1990s uncovered by Labour shows this is just more of the same. ...
    2 days ago
  • National’s back to the future on housing sell-off
    National’s newly announced state housing policy is simply a re-run of its failed ideologically-driven 1990s experiment, Labour Leader Andrew Little says. “News articles from the mid-1990s uncovered by Labour shows this is just more of the same. ...
    2 days ago
  • Waihopai – years on, still the same
    On 24 January, I attended the Waihopai Base protest in my electorate.  It was attended by a great range of people who are all concerned about the direction our country is heading in.  Thank you to all of those who… ...
    GreensBy Steffan Browning MP
    3 days ago
  • Greens call for ring-fencing of state home proceeds
    The Government must ring-fence the proceeds of any state home sales and spend every dollar raised on more Government-built homes in order to address the housing crisis, the Green Party says.Prime Minister John Key has indicated that his first major… ...
    GreensBy Kevin Hague MP
    4 days ago
  • English breaks his $6000 wages promise
    Just one month into the new year Bill English has already rowed back on his election promise of real wage rises for New Zealanders, says Labour’s Finance spokesperson Grant Robertson. “During the election campaign National promised Kiwis that the average… ...
    1 week ago
  • National fails to produce evidence justifying attack on RMA
    The National Government is misusing evidence provided in the Motu report on planning rules to justify gutting the environmental protections secured by the Resource Management Act (RMA), says the Green Party today. The Motu group's research into the impacts of… ...
    GreensBy Julie Anne Genter MP
    1 week ago
  • RMA changes won’t knock a dollar off the cost of a new home
    The Government’s proposed changes to the RMA won’t increase the number of affordable homes or knock a dollar off the cost of building a new house, Labour Leader Andrew Little says.  “Tinkering with the RMA will not solve National’s housing… ...
    1 week ago
  • What is the real ‘price of the club’?
    What price is too high to join a club?  According to the current the New Zealand Prime Minister, the lives of young Kiwi men and women are a part of the package. In his latest BBC interview, John Key fails… ...
    GreensBy Kennedy Graham MP
    1 week ago
  • Palestine – NZ talks loudly in New York, does little at home
    Even though New Zealand has been gently slumbering over the last few weeks, world affairs have been progressing at its usual break-neck speed. There have been a number of significant steps since we all disbanded from the last parliamentary year.… ...
    GreensBy Kennedy Graham MP
    2 weeks ago
  • DOC debacle means hundreds may have missed out on fishing licences
    Hundreds of families and recreational fishers may have had their holidays spoiled by missing out on their fishing licences, with Conservation Minister Maggie Barry preferring instead to focus on more high profile portfolio priorities over the summer break, Labour’s Conservation… ...
    2 weeks ago
  • Effective action needed against pirate fishing boats
    New Zealand’s failure to detain pirate shipping vessels poaching endangered species in our region is simply not good enough, Labour’s Defence spokesperson Phil Goff says. “We send New Zealand naval vessels to the Arabian Gulf to board pirate ships there… ...
    2 weeks ago
  • Housing affordability crisis gets worse under National
    News that Auckland’s housing is now among the 10 most unaffordable in the world confirms the Government’s housing policy has failed, Labour’s Housing spokesperson Phil Twyford says. “After six years in power, National’s housing policies have not fixed the housing… ...
    2 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere