web analytics

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

Recent Comments

Recent Posts

  • NZ announces a third P-3 deployment in support of UN sanctions
    The Government has deployed a Royal New Zealand Air Force P-3K2 Orion (P-3) maritime patrol aircraft to support the implementation of United Nations Security Council (UNSC) resolutions imposing sanctions against North Korea, announced Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark. “New Zealand has long supported ...
    BeehiveBy beehive.govt.nz
    24 hours ago
  • Pacific trade and development agreement a reality
    Pacific regional trade and development agreement PACER Plus will enter into force in 60 days now that the required eight countries have ratified it. Trade and Export Growth Minister David Parker welcomed the announcement that the Cook Islands is the eighth nation to ratify this landmark agreement. “The agreement represents ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Securing a pipeline of teachers
    The Government is changing its approach to teacher recruitment as COVID-19 travel restrictions continue, by boosting a range of initiatives to get more Kiwis into teaching. “When we came into Government, we were faced with a teacher supply crisis,” Education Minister Chris Hipkins said. “Over the past three years, we ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Border exceptions for a small number of international students with visas
    The Government has established a new category that will allow 250 international PhD and postgraduate students to enter New Zealand and continue their studies, in the latest set of border exceptions. “The health, safety and wellbeing of people in New Zealand remains the Government’s top priority. Tight border restrictions remain ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • First COVID-19 vaccine purchase agreement signed
    The Government has signed an agreement to purchase 1.5 million COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand, say Research, Science and Innovation Minister Megan Woods and Health Minister Chris Hipkins. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • International statement – End-to-end encryption and public safety
    We, the undersigned, support strong encryption, which plays a crucial role in protecting personal data, privacy, intellectual property, trade secrets and cyber security.  It also serves a vital purpose in repressive states to protect journalists, human rights defenders and other vulnerable people, as stated in the 2017 resolution of the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Ministry of Defence Biodefence Assessment released
    The Ministry of Defence has today released a Defence Assessment examining Defence’s role across the spectrum of biological hazards and threats facing New Zealand. Biodefence: Preparing for a New Era of Biological Hazards and Threats looks at how the NZDF supports other agencies’ biodefence activities, and considers the context of ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020
    New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020 Hon David Parker’s response following Thomas Piketty and Esther Duflo. Good morning, good afternoon, and good evening, wherever in the world you might be. I first acknowledge the excellent thought provoking speeches of Thomas Piketty and Esther ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Kaipara Moana restoration takes next step
    A Memorandum of Understanding has been signed today at Waihāua Marae between the Crown, local iwi and councils to protect, restore and enhance the mauri of Kaipara Moana in Northland. Environment Minister David Parker signed the document on behalf of the Crown along with representatives from Ngā Maunga Whakahī, Ngāti ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand and Uruguay unite on reducing livestock production emissions
    Agriculture Minister Damien O’Connor and Uruguayan Minister of Livestock, Agriculture and Fisheries Carlos María Uriarte have welcomed the launch of a three-year project that will underpin sustainable livestock production in Uruguay, Argentina, and Costa Rica.  The project called ‘Innovation for pasture management’ is led by Uruguay’s National Institute of Agricultural ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • 3100 jobs created through marae upgrades
    Hundreds of marae throughout the country will be upgraded through investments from the Provincial Growth Fund’s refocused post COVID-19 funding to create jobs and put money into the pockets of local tradespeople and businesses, Regional Economic Development Minister Shane Jones and Māori Development Minister Nanaia Mahuta have announced. “A total ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Health volunteers recognised in annual awards
    Health Minister Chris Hipkins has announced 9 teams and 14 individuals are the recipients of this year’s Minister of Health Volunteer Awards.  “The health volunteer awards celebrate and recognise the thousands of dedicated health sector volunteers who give many hours of their time to help other New Zealanders,” Mr Hipkins ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community COVID-19 Fund supports Pacific recovery
    The Minister for Pacific Peoples, Aupito William Sio says a total of 264 groups and individuals have successfully applied for the Pacific Aotearoa Community COVID-19 Recovery Fund, that will support Pacific communities drive their own COVID-19 recovery strategies, initiatives, and actions. “I am keen to see this Fund support Pacific ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community benefits from Māori apprenticeships
    Up to 50 Māori apprentices in Wellington will receive paid training to build houses for their local communities, thanks to a $2.75 million investment from the Māori Trades and Training Fund, announced Employment Minister Willie Jackson today. “This funding will enable Ngāti Toa Rangatira Incorporated to provide its Ngā Kaimahi ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Training fund supports Māori jobseekers
    Rapidly growing sectors will benefit from a $990,000 Māori Trades and Training Fund investment which will see Wellington jobseekers supported into work, announced Employment Minister Willie Jackson today. “This funding will enable Sapphire Consultants Ltd. to help up to 45 Māori jobseekers into paid training initiatives over two years through ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruakura Inland Port development vital infrastructure for Waikato
    The Government is investing $40 million to develop an inland port at Ruakura which will become a freight super-hub and a future business, research and residential development for the Waikato, Urban Development and Transport Minister Phil Twyford, and Māori Development Minister Nanaia Mahuta announced today. The funding has been has ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Appointments made to Defence Expert Review Group
    Defence Minister Ron Mark announced today the establishment of an Expert Review Group to review a number of aspects of the New Zealand Defence Force’s (NZDF) structure, information management and record-keeping processes.  The Expert Review Group’s work arises out of the first recommendation from the Report of the Government’s Inquiry ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • No active community cases of COVID-19
    There are no active community cases of COVID-19 remaining in the country after the last people from the recent outbreak have recovered from the virus, Health Minister Chris Hipkins said today. “This is a big milestone. New Zealanders have once again through their collective actions squashed the virus. The systems ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Clean energy upgrade for more public buildings
    More public buildings will be supported by the Government to upgrade to run on clean energy, the Minister for Climate Change James Shaw announced today. Minister Shaw announced that Lincoln and Auckland universities will receive support through the Clean-Powered Public Service Fund to replace fossil fuel boilers. Southern, Taranaki, and ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Schools back donations scheme for the second year
    More schools have opted in to the donations scheme for 2021, compared to 2020 when the scheme was introduced. “The families of more than 447,000 students will be better off next year, with 94% of eligible schools and kura opting into the scheme,” Education Minister Chris Hipkins said. “This is ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruapehu cycle trails gets PGF boost
    The spectacular Mountains to Sea cycle trail in Ruapehu District will receive $4.6 million in funding from the Provincial Growth Fund for two additional trails, Regional Economic Development Minister Shane Jones announced today. “This is an exciting development for the local community, and one that will provide significant economic opportunities ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Update to air border order strengthens crew requirements
    Additional measures coming into effect on Monday will boost our defence against COVID-19 entering New Zealand through the air border, Health Minister Chris Hipkins said today. “As part of our precautionary approach and strategy of constant review, we’re tightening the requirements around international aircrew,” Chris Hipkins said. The COVID-19 Public ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • A true picture of Māori business activity
    A better picture of the contribution Māori businesses make to the economy will be possible with changes to the way information is collected about companies and trading enterprises. Māori Development Minister Nanaia Mahuta and Small Business Minister Stuart Nash have announced a new option for Māori enterprises who are part ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • PGF funding for Taranaki projects
    The South Taranaki museum, a New Plymouth distillery and a Pasifika building firm will benefit from a Government investment totalling more than $1 million, Regional Economic Development Minister Shane Jones says. The $1.05m in grants and loans from the Provincial Growth Fund (PGF) will help the recipients expand and create ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Fijian Language Week 2020 inspires courage and strength during COVID-19 pandemic
    The Minister for Pacific Peoples, Aupito William Sio says the theme for the 2020 Fijian Language Week reflects the strong belief by Fijians that their language and culture inspires courage and strength that is strongly needed in times of emergencies, or through a significant challenge like the global COVID-19 pandemic ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Trades training builds on iwi aspirations
    An investment of $2.025 million from the Māori Trades and Training Fund will support Māori to learn new skills while making a positive difference for their communities, announced Employment Minister Willie Jackson today. “K3 Development Limited Partnership will receive $2,025,000 for its Takitimu Tuanui apprenticeship programme, which will support the ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Conservation Minister plants two millionth tree in Raglan restoration
    A long-term conservation project led by the Whaingaroa Harbour Care group in the western Waikato reaches a significant milestone this week, with the planting of the two millionth tree by the Minister of Conservation Eugenie Sage. “Planting the two millionth tree crowns 25 years of commitment and partnership involving Whaingaroa ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Seniors – our parents and grandparents
    International Older Persons Day is a chance to think about the individual older New Zealanders we know and to confront ageism, Seniors Minister Tracey Martin said today. “What happened around COVID-19 is a reminder that our over-65s are a very large and diverse group of people and we need to ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Residential building sector growing stronger
    Figures released by Statistics New Zealand today show healthy growth in residential building consents in an environment of Government support for the sector during COVID-19, says Housing Minister Dr Megan Woods. Statistics New Zealand reported today that a record 10,063 townhouses, flats, and units were consented in the August 2020 ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • PGF helps Bay of Plenty youth find jobs
    Provincial Growth Fund (PGF) support for a pathways to work hub in Tauranga will help address high youth unemployment in the Bay of Plenty by connecting young people with training and meaningful employment opportunities, Parliamentary Under-Secretary for Regional Economic Development Fletcher Tabuteau has announced. “Priority One Western Bay of Plenty ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Government confirms new acute mental health facility for Lakes DHB
    A new acute inpatient mental health facility at Rotorua Hospital will provide more patient-centred and culturally appropriate care to better support recovery, Health Minister Chris Hipkins says. “Improving mental health and addiction services remains one of the biggest long-term challenges facing New Zealand,” says Chris Hipkins. “Lakes DHB’s existing Whare ...
    BeehiveBy beehive.govt.nz
    3 weeks ago