Inequality – Treasury report

Written By: - Date published: 7:22 am, June 29th, 2015 - 21 comments
Categories: capitalism, class war, economy, labour, national - Tags: , , ,

Last week Treasury came out with a detailed and interesting report, Inequality in New Zealand 1983/84 to 2013/14. The web page is here, and the full document (pdf) here. From the summary:

The results indicate an increase in the inequality of market and disposable income per adult equivalent person (using the individual as the unit of analysis) from the late 1980s to the early 1990s. Subsequently, inequality has – with some variability – remained either constant or has fallen slightly.

It wasn’t widely reported. What coverage there was repeated the message of the The New Zealand institute, that inequality is supposedly not rising.

Dig beneath the surface however. Figure 4 in the report is really interesting and useful, plotting three Gini measures (market income inequality, disposable income inequality, and consumption inequality) over time, with significant events indicated:

inequality nz graph

As we all know inequality increased sharply with the neoliberal reforms of the late 80’s – early 90’s. From the report:

It appears that the 1980s reforms – involving cuts in the top income tax rate along with benefit cuts and the ending of centralised wage setting [i.e. the ECA] – are associated with increasing inequality.

The measures level out (damage done) during the late 90’s. They begin to fall with Labour’s increase to the top tax rate in 2001, and Working for Families in 2004. The momentum of this fall continues until 2010, when there is another sharp upturn in inequality following National’s reduction of the top rate and increase in GST.

In short, the last Labour government acted to reduce inequality, the current National government has acted to increase it. Because of the slow (but cumulative) nature of such changes, it is almost certain that the full effect of National’s changes have not yet been measured.

The Treasury report is a useful contribution to the record on inequality in NZ. It should be read in conjunction with these CTU reports (here, here), and the OECD report on just how damaging inequality has been for NZ (in short NZ and Mexico are the worst affected in the OECD with significantly reduced economic growth due to inequality).

Just as a reminder of what the current levels of inequality mean for NZ, see this excellent graphic by Pencilsword, the Wealth Gap Tower, and the discussion that followed here on The Standard.

21 comments on “Inequality – Treasury report”

  1. Ad 1

    Still a seriously stunning graphic, Anthony.

  2. Sable 2

    We are the new Mexicans, I knew it. Now “Meester” Obama has come to offer the peasants of our country the TPPA we can all happily work for low incomes and enjoy our poverty.

    • Draco T Bastard 2.1

      +1111

      The increased capitalism we’ve been getting over the last 30 years are destroying NZ society as it’s also damaging the environment. A few people have more money but a significant plurality are worse off.

      • The Gormless Fool formerly known as Oleolebiscuitbarrell 2.1.1

        How do you figure the plurality is worse off?

        What is it with the left and its love of crises?

        Consumption inequality (the one that actually matters) is at 1984 levels.

        Thank you capitalism.

        • McFlock 2.1.1.1

          Consumption inequality (the one that actually matters) is at 1984 levels.

          lol
          Yes indeed, after thirty years of neoliberalism on of three measures of inequality has returned back down to pre-experiment levels. Mostly thanks to the GFC. Gotta love that “levelling down”.

          Thanks, capitalism /sarc

        • Draco T Bastard 2.1.1.2

          How do you figure the plurality is worse off?

          Because that’s what the stats show when you look at real incomes (Prosperity for All?, B Roper, pg 35/36). And those charts don’t cover the majority of this century which, as the article shows, has actually got worse.

        • adam 2.1.1.3

          What is it with the right and its’ love of creating crisis?

          For all their vaunted great economic managers spin, why can’t capitalists read a simple graph?

        • Ergo Robertina 2.1.1.4

          Consumption inequality is not a good measure of individual wellbeing, if that’s what you mean by ”actually matters”. How do you know the consumption isn’t debt funded?
          And it reflects offshoring which drove down production costs, environmental degradation, and social problems like alcohol abuse which are associated with wealth inequality.

  3. Heather Grimwood 3

    Great to bring that tower to light again…….and we are now a few more years into the mire. …..and most definitely educated ( and hardworking) western people can find themselves in poverty, albeit it relative to the millions of poor souls on the global scene.

  4. Old Mickey 4

    Would be great to get Reverand David Clark’s view on this finding.

    • Michael 4.1

      IIRC, Clark spoke in favour of a Universal Basic Income just after last year’s election. He may have been in shock though; having recovered his poise it seems to be business as usual and he hasn’t uttered the heresy since.

  5. G C Cameron 5

    Taking a more conceptual approach – I’m inclined to ask, “is inequality stemming from loose morals/values in the over all society or inadequate legislation?

    I’m sure many people would say both! In which case I’d ask, “What came first, loose morals or inadequate legislation. Did they just grow up together”?

    Some people might point out NZ’s Revolutions to illustrate our progressive values. Woman getting the vote, Gay Rights, Ethnic Diversity, Race Relations, etc.

    But is it wise to raise a child on Music Television? Haven’t insidious drugs invaded/ flooded into New Zealand. BZP the active ingredient, in the once legal ‘herbal Party Pills,’ it was an A Class drug in America. ‘Synthetic Cannabis’ clearly toxic. These drugs were legal for years here.

    Has Hollywood cast a narcissistic spell on our country. I think so; people are consumed with individualism and their personal freedoms. Simply put, we don’t care enough about each-other.

    I’m not suggesting NZ use to be a magical place were love and candy filled the steams. It wasn’t. But certainly bad influences and opportunities abound here now – often with Hollywood promoting then.

    It often becomes hard for people to know right from wrong – many live (all be it subconsciously) by the mantra, “if it feels good, do it”.

    • DoublePlusGood 5.1

      Ah, so apparently it was MTV, BZP and Hollywood movies causing inequality in this country, not regressive tax systems and the Employment Contracts Act.
      So…that makes no sense at all.

      • G C Cameron 5.1.1

        Because the “regressive tax systems and the Employment Contracts Act “were instituted by kind hearted, egalitarian minded, sober people? People who would never be greedy AND ALWAYS consider the workers best interests.

    • JanM 5.2

      Individualism and ‘personal responsibility’ was a deliberately taught policy from the 80s – it was meant to introduce competitiveness and remove collegiality – that went well, didn’t it?
      I sometimes wonder if the little turkeys who booted rogernomics, and all that, along so enthusiastically really understood what they were letting us all in for -‘ nasty, bushwacking little animals’

      • Andrea 5.2.1

        JanM – there are some boomerangs you wouldn’t want to see returning,,,:-))

  6. Smilin 6

    We are all slaves to the money machine there is nothing else of value only if it has a price tag
    The real truth about how Fascism has survived is in what we are forced to sign up to everyday without question or have a right to change only if you have more money or the military might, all the rest is window dressing

  7. Charles 7

    Ah great news. If not much has happened over the past twenty years, then nothing will ever happen and we don’t have to do anything about the inequality problems that do exist. If only we could get people to live for only twenty years we could eliminate intergenerational issues, too. I would like The Treasury to measure inequality for the last five minutes, I’m pretty sure it’ll show everything is peachy-keen for everyone.

  8. Smilin 9

    IMAGINE theres no country its easy if you try the National party is selling it off
    All the people can do is wonder why
    IMAGINE all the people revolting booting National out of the sky
    And a new govt might make us give it a try

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