Key’s own goal on poverty

Written By: - Date published: 6:09 am, August 3rd, 2011 - 56 comments
Categories: capitalism, class war, equality, john key, labour, phil goff, poverty - Tags:

A bad mistake by John Key in the House yesterday. He was asked by Phil Goff about the widening gap between rich and poor. Thinking himself something of a smart-arse, he cited a report that the government had released just minutes earlier about Household incomes in New Zealand. He claimed it showed that the gap between rich and poor was shrinking. In reality, it shows that Labour got inequality and poverty down, and it doesn’t even cover National’s hand outs for the rich in the past year.

“I have excellent news for the member: a very detailed scientific report on income equality actually went up on the Ministry of Social Development’s website at 2 o’clock today. It is titled Household Incomes in New Zealand. The report shows that the degree of income inequality in New Zealand, under standard measures like the Gini coefficient or the 80:20 ratio, has actually fallen in recent years. I go on to say that in fact the report shows that the distribution of income in New Zealand is more even now than it was at any time under the previous Labour Government. So I point out to the member that he is quite wrong to say the gap between the rich and the poor has been growing; in fact, it has been reducing. “

Well, what does this report say?

First off, it only goes in June 2010. So it doesn’t count the tax cuts for the rich in October last year or the surge in the value of the assets of the ‘rich list’ last year:

“The findings in the report capture all of the impact of October 2008 tax changes and some of the impact of the April 2009 tax changes, but none of the impact of the October 2010 tax changes.”

OK. So, what does the report say about the gap between rich and poor?

“From 1994 to 2004, incomes for middle- to higher-income households grew more quickly than the incomes of the bottom third (around 28% and 15% respectively, in real terms).”

“From 2004 to 2007 the WFF package led to incomes below the median growing more quickly than incomes above the median – the only period in the last 30 years in which this has happened.”

“The rising rate from 1998 to 2004 on the BHC measure reflects the fact that median household income increased much more rapidly than low incomes did in the period. Without WFF the population poverty rate on this measure would have continued to rise from 2004 to 2009.”

So, inequality fell because of Working for Families. Didn’t John Key call Working for Families “communism by stealth”?

You can see the dramatic effects of the neoliberal policies and then the 5th Labour government in the graphs:

The neoliberals really ought to be in jail for New Zealand so much poorer between 1984 and 1994. Fortunately, Labour got into power.

What did this all do to poverty rates?

In a country with a GDP of $200 billion, assets of more than a trillion, and people so wealthy they can afford personal golf courses and jet planes, there is no reason that any person, much less any child, should live in poverty. Labour didn’t get us there. But they made a damn good move in that direction.

Child poverty rates (%) on four measures

AHC

BHC

AHC ‘fixed line’ 60%

AHC ‘moving line’ 60%

AHC ‘moving line’ 50%

BHC ‘moving line’ 60%

1998

–

28

20

20

2001

37

30

21

24

2004

31

28

19

26

2007

22

22

16

20

2009

22

25

18

19

2010

22

25

16

20

Population poverty rates (%) on four measures

AHC

BHC

AHC ‘fixed line’ 60%

AHC ‘moving line’ 60%

AHC ‘moving line’ 50%

BHC ‘moving line’ 60%

1998

–

18

13

16

2001

25

20

13

18

2004

22

20

14

21

2007

18

18

13

18

2009

15

18

13

18

2010

15

18

11

18

So, John how about you come back and skite when you’ve reduced poverty by nearly 50%?
But this isn’t just about redistribution, it was also about a rising tide lifting all boats:

“median household income rose quite strongly in real terms from 2001 to 2009 (+23%)”

Nice work.

The report also has something to say on the topic of capital concentration, which can only be addressed by taxing capital, for example with a capital gains tax:

“Wealth is distributed much more unequally than income.  Wealth Gini scores are typically two to three times those for income. In New Zealand, those in the top income decile receive 25% of gross income; those in the top wealth decile hold 50% of the total wealth.”

Seems like the next big leap for equality has to be a capital gains tax. No wonder National is so opposed to it, despite the obvious economic logic.

56 comments on “Key’s own goal on poverty ”

  • Comments are now closed

  1. ghostwhowalksnz 1
    3 August 2011 at 7:49 am

    This is why he mostly delegates answering questions- he is mostly a klutz with numbers- amoung his many other faults

    • mickysavage 1.1
      3 August 2011 at 1:22 pm

      Question 2 in Parliament today:
       
      Hon PHIL GOFF to the Prime Minister: Does he stand by the accuracy of his answers to Oral Question No 1 in the House yesterday; if not, in what respect were his answers inaccurate?

  2. mickysavage 2
    3 August 2011 at 8:07 am

    This displays typical tory modus operandi.  Find a meme that is consistent with your sense of superiority and shout and yell and scream it until some people start believing it.

    A similar meme was their “decade of deficits” meme.  It was not true.  Labour had pretty well paid off all debt but that did not stop Blinglish telling lies.  

    The reason why New Zealand is doing relatively well is that we do not have the jaw breaking public debt that Ireland, Greece, Portugal et al have.  We were able to spend without worrying too much about interest payments.
     

    Good work Eddie.  May reality always usurp bullshit. 

    • johnm 2.1
      3 August 2011 at 10:49 am

      Hi mickysavage
      Ireland had very low Public Debt and no problems until their crazy Government decided to bail out the Private Bank Casino which they had every legal right not to do and put their people into serfdom of the fiat bankster system!

      Refer following:
      Weak growth and high unemployment spell particular trouble for countries that already have high levels of public debt. That explains why Greece was first to lose the confidence of the markets with a public-debt-to-GDP ratio of 127% and a budget deficit of 15.4% of GDP in 2009, making it the euro zone’s outlier country. IRELAND HAD LOW PUBLIC DEBT GOING INTO THE CRISIS, BUT THE STATE BECAME CRIPPLED BY ITS PLEDGE TO BACKSTOP ITS PRIVATE BANKS together with the hole that was blown in its tax revenues by a combination of recession and housing bust. Forecasts in mid-May from the European Commission showed public debt vaulting above 100% of GDP in both Ireland and Portugal by the end of this year and reaching a dizzying 158% of GDP in Greece. Other countries are pruning before the markets exert real pressure: Britain’s debt has the longest maturity of any EU member but it is still aiming to get its finances in order within four brutal years.
      refer link: http://www.economist.com/blogs/dailychart/2011/05/europes_economies?page=3

      jaw breaking public debt did not apply to Ireland till their Government sold them down the river into debt slavery.

      • mickysavage 2.1.1
        3 August 2011 at 11:36 am

        Hi JohnM
         
        Agree with you that Ireland should not have bailed out the banks.  My comment was merely that Ireland’s books were now in poor shape.
         
        All around the world I am amazed at the response of the people to the banks being bailed out.  Iceland did a good job.  Elsewhere people looked on in bemusement as the bankers were put back on their feet and handled the power back.
         
        There has to be a better way.
         

        • McFlock 2.1.1.1
          3 August 2011 at 12:26 pm

          A while ago I attended a public lecture by Prof Jim Flynn. He mentioned that the US bank bailout was a lost opportunity to massively extend public housing assistance by simply buying the “toxic” properties and mortgaging them back to their residents on a rent to own basis. The banks don’t get a free pass on their idiot investments, and less people get kicked out of their homes.
           
          Of course, helping poor people would have pissed off the tea partiers more than paying out corporations.

  3. Bored 3
    3 August 2011 at 8:13 am

    A capital gains tax is a start BUT when prices are in decline in a real sense (i.e even if there is inflation the money garnered will be worth 2/10th of f.a.) there is little upside to this.

    The real scenario we are facing is a worldwide contraction of economies driven by the decline in available energy and resources. The implication for our societies is how we maintain some social equity as business contracts, as the tax take contracts, as scarcity becomes the norm. How we maintain some production and equitable distribution until we reach a balance.

    It is obvious that Key and his fuckwit cronies dont give a monkeys for social equity that goes beyond buying votes. Goff and Labour may be more concerned but are still too aligned with a view of the future based upon the “growth” model that was the norm and possible until recently.

    So here we have Key and Goff busily bitchin about who gets what etc whilst both back bravely into the future with their eyes set firmly on the past…toward the cliff face.

    Our political class has failed us, our elite and their institutions fail us. Business as usual is not an option, we really need to plan for shared pain and some equity.

  4. Grey Lynn Girl 4
    3 August 2011 at 8:25 am

    I tell my husband “the man is a moron – he can’t say anything without it being scripted”. My husband replies – “If he’s so stupid – how come he made so much money?” I GIVE UP!

    • Colonial Viper 4.1
      3 August 2011 at 9:23 am

      Key is very smart at running underhanded scams. Caught in stage lights with no shadows to hide in however – he’s just another possum about to be mown down.

      In general terms, the Left won’t get much traction with the electorate with this kind of data analysis. The data has been against the Tories forever. People don’t vote rationally, they vote emotionally. Brighter future and all that.

      What’s the future for NZ? Where are we headed as a people and as a country? What values are we going to express in our communities and on a world stage?

      These are the questions which need to be answered.

      • Afewknowthetruth 4.1.1
        3 August 2011 at 10:06 am

        ‘What’s the future for NZ?’

        One of the last places to run for those who have the money to do so, as the global economic system implodes and the global environment collapses.

        ‘Where are we headed as a people and as a country?’

        Almost certainly fascism or neofeudalism, with the haves using ‘security’ forces to hang on to what they have acquired (stolen) and suppress the general populace. Breakdown of complex, centralised systems as the energy necessary to maintain them becomes increasingly unavailable. (but we probably won’t reach that stage for another 8-10 years). Food shortages, especially in the winter. A populace that has made no preparations for any of it and will suffer horribly as a consequence.

        ‘What values are we going to express in our communities and on a world stage?’

        There are no communities to speak of in NZ any more. The bulk of NZ consists of uninformed consumers living in locations with geographically determined postcodes.

        What values are we going to express in our communities and on a world stage?

        The won’t be a ‘world stage’ a decade or two from now. Peak Oil changes the whole game

        • johnm 4.1.1.1
          3 August 2011 at 5:50 pm

          I prefer fascism NZ strong and courageous the rich deported to Detroit the wanker state of the U$$$$$$$$$$$$$$$$$$$ a once courageous state before the rich buggered it to death. Facism is our future where death in War is the prefered market way to go.!

      • jackal 4.1.2
        3 August 2011 at 11:13 am

        I really hate sloganism without any substance to back it up. You can pretty much drive a truck through John Key’s brand of sloganism. Unfortunately the MSM appears to be too drunk to drive.

        As for where we are heading… we already have a feudal system. It wont take much more repression of the masses to see a major backlash. Hopefully we will then learn and not repeat histories mistakes.

    • billy fish 4.2
      3 August 2011 at 9:50 am

      Hi GLG
      In answer if he is so stupid how did he make so much money – he is a bit lucky and has a good nose for a gamble. I worked in a dealing room in the nineties and met many of his ilk.
      As far as money market types from that era go he is a lot better than many of them. Note damning with faint praise here.

      Also he is more arrogant than stupid, I would never call him stupid. He needs a good backup team to cover him and make sure he doesn’t over step. which they do well in rehearsed situations but in a more free flowing debate environment he is not the best.

    • bbfloyd 4.3
      3 August 2011 at 9:51 am

      don’t give up GLG… the reality is that being obsessed with money is NOT a sign of intellect.. it actually shows a lack of depth.

      i’ve known many half wits in my life who were good at making money.. but they were useless at what really counts in life.

      simple answer…. greed and self interest are not the traits of a genuine intellect.

    • Lazy Susan 4.4
      3 August 2011 at 11:54 am

      Making lots of money is a very unreliable sign of a great intellect.

      I don’t believe Key is stupid, maybe he really knew how to work a dealing room or just got lucky. Suffice to say we know he made alot of money by currency speculation.

      Drug dealers, bankers, pop and sport stars, criminals are also people who make alot of money – not that we would chose them to be our Prime Minister.

      • McFlock 4.4.1
        3 August 2011 at 12:31 pm

        Tories love to say that capitalism is a meritocracy.

        Actually, it’s more of a fuckwitocracy.

  5. Peter 5
    3 August 2011 at 8:39 am

    Now to get the MSM to make something of this!

    • bbfloyd 5.1
      3 August 2011 at 9:52 am

      half your luck peter.. you know that they are more likely to criticise labour for nit picking over this issue.

  6. Afewknowthetruth 6
    3 August 2011 at 8:48 am

    Well said, Bored.

    All our political and economic so-called leaders are locked into dysfuntional paradigms which no longer apply (in fact they never applied, but they did give the appearance of applying simply because of the cheap energy and resources that were available in the past). Of particular concern is the idiotic mantra about the ‘need for economic growth’ that comes from a multitude of sources, including many of those who write articles for TS. Several years ago I likened it to driving using the rear-view mirror. Most people continue to do it.

    When I turned on my computer this morning there was ‘red ink’ all over the place, with the notable exception of gold, which is now approaching $1700. It is is, of course, those at the top of the heap who are now able to successfully trade in gold or use it as a mean of protecting themselves against the collapse in the value of paper money, whilst the rest of us are stuck with small amounts of fiat money which is declining in value by the day.

    What is needed is equitable distribution of declining wealth within a contracting economic system.

    No mainstream politicican is within a mile of what is required, so we must anticipate the lowering of the standard of living and the quality of life to continue, whilst the gap between the rich and the poor gets ever wider.

    • freedom 6.1
      3 August 2011 at 12:02 pm

      and as we all know it takes a lot of us to run one of their lives. When the stretch becomes a snap the recoil will leave them with a very bad case of whiplash.

      As Tyler Durden said: (and it has never been fully explained to me why more people do not believe it)
      ” We do your laundry, cook your food and serve you dinner. We guard you while you sleep. We drive your ambulances. Do not fuck with us ”

      not exactly rewriting the the Magna Carta but you get the idea.

  7. Leopold 7
    3 August 2011 at 9:39 am

    Agree with CV. Most people don’t plough through detailed data, nor do they follow parliamentary debates.Goff could win points on any number of debates in Parliament, but they will still vote for nice Mr Key. Perception is all.

  8. queenstfarmer 8
    3 August 2011 at 9:53 am

    1. So what did Key say that was incorrect or misleading? From the information shown, Key’s statement “the distribution of income in New Zealand is more even now than it was at any time under the previous Labour Government” seems to be correct.

    2. “it doesn’t even cover National’s hand outs for the rich in the past year”. What were the ‘hand outs’?

    • Afewknowthetruth 8.1
      3 August 2011 at 10:26 am

      It everything that Key DOESN”T say that is misleading the nation, and leading the nation into unprecedented catastrophe … such as that global oil extraction has peaked and present economic and social arrangements have no future, or that CO2 emission are out of control, or that ETS is a scam, or that humans are ‘killing’ the oceans via CO2 emissions.

      Politics always was a dirty game but it has climbed out of the gutter and climbed into the sewer.

    • Blighty 8.2
      3 August 2011 at 10:56 am

      massive tax cuts on borrowed money, that was the handout for the rich

      • queenstfarmer 8.2.1
        3 August 2011 at 11:39 am

        So you think allowing people to keep more of their money is a “hand out”. Interesting.

        • mickysavage 8.2.1.1
          3 August 2011 at 11:50 am

          So you think we should return to feudal times where the wealthy lived lives of indulgence and the working class lives of grinding poverty.
           
          Interesting.

          • queenstfarmer 8.2.1.1.1
            3 August 2011 at 11:54 am

            Where did I say that Micky?

            • Colonial Viper 8.2.1.1.1.1
              3 August 2011 at 12:01 pm

              Its obvious. The deserving hold the wealth and should give the commands, the undeserving are poor and should obey.

              That is true, isn’t it qstf?

              • queenstfarmer …
                3 August 2011 at 12:03 pm

                I sure hope not CV. I’m surprised you would hold such views.

                • McFlock …
                  3 August 2011 at 12:35 pm

                  lol.
                  Wealth begets the ability to give commands – the old adage “money is power”.
                  So if they don’t deserve to hold the wealth in the first place, why not tax the rich a bit more than people who don’t earn enough to live?

    • Draco T Bastard 8.3
      3 August 2011 at 12:13 pm

      1.) He claimed that as his governments achievement when it was obviously the previous Labour led governments achievement.

      2.) Tax cuts for the rich, tax increases for the poor.

      • queenstfarmer 8.3.1
        3 August 2011 at 12:33 pm

        He claimed that as his governments achievement

        Where? It’s not in the material above.

        • Draco T Bastard 8.3.1.1
          3 August 2011 at 12:39 pm

          right

          The report shows that the degree of income inequality in New Zealand, under standard measures like the Gini coefficient or the 80:20 ratio, has actually fallen in recent years. I go on to say that in fact the report shows that the distribution of income in New Zealand is more even now than it was at any time under the previous Labour Government.

          there where he implies that things have gotten better due to NAct.

          • queenstfarmer 8.3.1.1.1
            3 August 2011 at 1:17 pm

            Then you concede what he actually said was factually correct, you are just willing to “imply” the extra words, which he didn’t say, “due to NAct” in order to make it (possibly) untrue.

            Each to their own.

            • Draco T Bastard 8.3.1.1.1.1
              3 August 2011 at 4:45 pm

              Nope, you’re denying truth because it doesn’t suit your beliefs.

              • queenstfarmer …
                3 August 2011 at 5:29 pm

                An ironic accusation, given that I’m not the one “implying” words that a person didn’t actually say in order to make it fit a particular view of that person.

                • Draco T Bastard …
                  3 August 2011 at 8:46 pm

                  Words also carry the meanings of their context. Ignoring that context won’t make the implication that you don’t like go away.

                • Puddleglum …
                  3 August 2011 at 11:02 pm

                  Qst, are you being deliberately obtuse?

                  Words achieve their discursive work in far more ways than some logical parsing of a sentence would suggest. They are acts carried out in the flow of action. The relevant action occurring here is the questioning of the PM by the opposition leader – an adversarial debate over the competency of the present government.

                  It’s not just an implication about what Key said – it’s why Key said it. If you haven’t worked that out yet about human linguistic behaviour then you really need to get out more.

              • Ianupnorth …
                3 August 2011 at 6:00 pm

                +1
                 
                Exactly, truth is only acceptable when it matches their views!

            • Macro 8.3.1.1.1.2
              3 August 2011 at 5:01 pm

              It’s what is called a “Half Truth” qstf.
              It is not “the truth, the whole truth, and nothing but the truth” and as such it falls into the same category as Disraeli’s “There are lies, damned lies, and statistics” ie it’s equivalent to worse than a damned lie.

              • queenstfarmer …
                3 August 2011 at 5:31 pm

                What’s half about it? The answer was unembellished, correct, and to the point (amusing that some apparently find that so objectionable!)

                (again, I am just basing on what is quoted above – if there were other statements going beyond that, then no one has yet let me know).

                • Colonial Viper …
                  3 August 2011 at 6:21 pm

                  Answer was also out of date and used the trick of excluding relevant information.

  9. Oligarkey 9
    3 August 2011 at 10:24 am

    AFKTT

    You forgot nationalisation of fertile land to be distributed amongst families that are on the bread-line 🙂 Don’t be such a defeatist. When middle nz starts going hungry, they’ll forget all about the next rugby game, and finally start demanding answers. There will be the possibility for real collective action for the first time since 1991 – when the Council of Trade Unions sold its members out by voting against a general strike. Our labour movement leaders just bowed down to the National Party and accepted the death of unionism in NZ. It doesn’t always have to be like that though.

    • Afewknowthetruth 9.1
      3 August 2011 at 10:41 am

      I don’t see any sign of a Castro or a Chavez emerging in NZ yet.

      I agree, the proles not suffering enough yet. Maybe when the supermarket shelves are half-empty and what is there is unaffordable for most people we witness an awakening.

      On the other hand I’m sure many will sit at home watchiing rugby or motor racing, waiting for guvment to save them. That is what they have been carefully trained to do.

      ‘Don’t be such a defeatist.’

      I am still finding that most people ‘do not want to know’. Delusions are so much more comforting than the truth ….in the short term.

      By the way, don’t forget it takes 5-10 years for most fruit trees to become established and productive, and a similar time to build up soil fertility. Most windows of opportunity have already closed.

  10. Oligarkey 10
    3 August 2011 at 10:42 am

    QSF

    – you swaggering blow-hard, he’s taking credit for a program he opposed with Muldoon-style deceptive rhetoric about “communism”. What a jerk. Also – what about Key’s underclass that he feels so strongly for? Oh that’s right, he’s a market ideologue, and as long as labour is cheap, and corporate profits continue to grow at 5 times the rate of median personal income (as they have done over the last 25 years), the unemployed and underemployed are just collateral damage in the “efficient market”. A pretty robotic and inhumane way of looking at humans to my mind.

    • queenstfarmer 10.1
      3 August 2011 at 11:42 am

      he’s taking credit

      Where did he take credit? I don’t know that he did or didn’t, but as you apparently do could you please tell me where he did this.

  11. Oligarkey 11
    3 August 2011 at 10:54 am

    afktt:

    There are plenty of Chavez-type characters amongst us. When enough people realise they are being treated like docile serfs, and are going hungry, there will be a popular reaction, and that will provide the energy and courage for such a person to step forward. It certainly won’t be Goff though 🙂

  12. Oligarkey 12
    3 August 2011 at 11:31 am

    AFKTT following on

    …. my hope is that when the TV news starts getting ever more distanced from reality, and the pain of the permanent energy-recession starts kicking in, people will go online an elsewhere for info. Farrar and co will find it ever harder to convince people that everything is “the poor’s fault”. Also – the explanation of “market correction” and other right-wing sophistries will mean nothing when people see that the dairy farmers are literally creaming it whilst most of the rest of us can’t even afford basic protein.

    I think we need to start drawing up plans for the nationalisation of the big dairy farms right now.

  13. Oligarkey 13
    3 August 2011 at 11:54 am

    “QSF”

    “distribution of income in New Zealand is more even now than it was at any time under the previous Labour Government”

    He implies that National, through their stewardship, have over-seen a drop in income inequality.That’s the obvious implication. You’re just being a disingenuous, smarmy, swaggering rightist. An all too common breed these days. Stop making lawyer-type arguments. They make you look like a slippery jerk.

    • queenstfarmer 13.1
      3 August 2011 at 12:01 pm

      He made a factual, correct statement (again, I’m just going from the information above – I don’t know what else might have been said).

      There was no “obvious implication” to the contrary in that (although at least you have conceded that you’re now attacking on the basis of perceived “implications”, and not what he actually said).

      • McFlock 13.1.1
        3 August 2011 at 12:49 pm

        Key: “The report shows that the degree of income inequality in New Zealand, under standard measures like the Gini coefficient or the 80:20 ratio, has actually fallen in recent years.”
         
        When asked about the currently widening gap between rich and poor, he refers to information that excludes the effects of him gifting himself another large tax cut. And he doesn’t acknowledge that the bulk of the increasing equality “in recent years” was under Labour.

        Factually correct, but misleading nonetheless.

      • Lanthanide 13.1.2
        3 August 2011 at 4:08 pm

        qst, when a prime minister answers a question and uses a favourable report as evidence, it means they are trying to take credit for it.

        Pretty obvious, I’d have thought.

        • Ianupnorth 13.1.2.1
          3 August 2011 at 6:01 pm

          Unless you are a tory and you try to weasel your way out.
          Funny how the usual suspects (Higher Standard, Secret Squirrel (PG), Chris73 are nowhere to be seen – truth is some things are too hard to defend.

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