NZ inequality about more than just housing, anti-poverty campaigner says

People are much less tolerant of inequality than they were before, says Max Rashbrooke.
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People are much less tolerant of inequality than they were before, says Max Rashbrooke.

Author and researcher Max Rashbrooke says inequality in New Zealand is about more than just housing.

The New Zealand Initiative has released a report called Why Inequality Matters Even though it has Barely Changed which says income inequality has not changed in a decade.

In it, NZ Initiative researchers Bryce Wilkinson and Jenesa Jeram say, however, that high house prices and rents have resulted in a rise in inequality after housing costs are taken into account.

Nobody denies many New Zealanders are doing it hard, but The New Zealand Initiative says income inequality has not been ...
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Nobody denies many New Zealanders are doing it hard, but The New Zealand Initiative says income inequality has not been getting worse.

In response, Rashbrooke said: "Their top line is to claim that inequality is a housing issue. We do have a massive housing problem, and it affects more strongly people in lower incomes, however, roughly speaking, one person in five is in poverty even before you start looking at housing costs.

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"To say the whole story is about housing is just plain wrong."

"Income and wealth gaps are red herrings for what is really hurting those on the bottom rungs of the ladder," says the ...
DAVID WHITE/FAIRFAX NZ

"Income and wealth gaps are red herrings for what is really hurting those on the bottom rungs of the ladder," says the New Zealand Initiative.

Income inequality did rise dramatically in the late 1980s and early 1990s, but since then it had not trended up, and perhaps half the increase in the 1980s and 1990s was a result of changing family make-ups with the decline of the traditional two-parent family.

Wilkinson and Jeram said the cost of housing, particularly in Auckland, was consuming a higher portion of poorer families' incomes, although incomes had risen for both high and low earners.

Jeram said: "Rising house prices have made homeowners richer while poorer people have to pay an increasing share of their income on housing.

"Income and wealth gaps are red herrings for what is really hurting those on the bottom rungs of the ladder. It is the cost of housing that is exacerbating inequality, so we need housing solutions," she said.

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Wilkinson and Jeram said they feared that "myths" around inequality could lead to the introduction of growth-damaging political policies.

This included higher taxes for the wealthy in order to re-distribute the money to families at the bottom of the economic pecking order.

The report also called for the country to work on getting better data.

Income inequality is measured by looking at the relative "incomes" of people in New Zealand. But wealthy people have ways of minimising their "income" by the use of entities like companies and trusts, Wilkinson acknowledged.

Similarly, Wilkinson was not convinced the income attributed to people at the bottom end of the income spectrum painted a complete picture of their incomings.

 

NO PARADOX

The report by the business-sponsored think tank also claimed there was an "Income Inequality Paradox", which was that even though income inequality had not risen in a decade, there had been a surge in newspaper reports on inequality.

Rashbrooke said there was no paradox.

"People are just much less tolerant of inequality than they were before. There is no paradox about it," he said.

He said the huge rise in income inequality in the 1980s and 1990s was not just a historical event. Its social impact continued to this day, and people were increasingly recognising the damage that poverty was doing, he said.

"The biggest issue I have is The New Zealand Initiative seems completely oblivious to the point that even if the big increase in inequality was in the 1980s and 1990s, and hasn't worsened since then, it still has big implications for the country today.

"They seem to think that if something happened in the past it doesn't matter. It is really quite an extraordinary way of looking at the issue," Rashbrooke said.

"Just because poverty isn't skyrocketing at the moment does not mean there isn't a problem to deal with.

"We know with absolute certainty the damage poverty does to children. It has massive, and largely avoidable effects on their health, results in school and their ability to flourish as an adult."

Rashbrooke said the report also failed to address some research on issues such as inequality of opportunity.

But even though Rashbrooke criticised the report, he praised the NZ Initiative for writing it, as it continued to keep the spotlight on inequality.

 - Stuff

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