Wealth gap divides nation

18:12, Jan 22 2011

Accusations that New Zealand is one of the worst performers in the developed world when it comes to the income gap between rich and poor have been validated by a Sunday Star-Times survey.

Conducted by Horizon Research, it shows the burgeoning gap between the haves and have-nots is frothing over into resentment, anger and disillusionment.

Those who are struggling are slamming the government for giving tax breaks to the rich, and for the perceived "propping up" of failed finance companies, while there is a growing tranche of middle- to high-income earners who see those on welfare as a drain on the country's resources.

According to social researchers, the size of the gap between rich and poor can lead to a welter of other societal problems.

In their 2009 book Spirit Level, Richard Wilkinson and Kate Pickett argue that almost every social problem common in developed societies – reduced life expectancy, child mortality, drugs, crime, homicide rates, mental illness and obesity – has a single root cause, inequality.

And the British academics say New Zealand has greater inequality than most countries.

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Wilkinson told the Sunday Star-Times that inequality rose faster in New Zealand in the late 1980s than in any other country. His book ranks New Zealand as the sixth most unequal society of 23 rich countries, when the incomes of the richest 20% are compared with the poorest 20%.

While New Zealand might have traditionally seen itself as an egalitarian society, it was no longer so, said Wilkinson, professor emeritus at the University of Nottingham Medical School.

"Inequality does change in societies quite quickly," he said.

Since World War II, for example, the position of the United States and Japan has swapped, with Japan becoming more equal and the US less so. But that also meant that countries like New Zealand could become more equal again if there was the political will for it.

Wilkinson's assessment is backed by an online survey of more than 2000 Kiwis.

When respondents were asked what they'd like the government to do in 2011, typical responses were to get tough on crime, stop borrowing, remove GST on food and sort out "Maori issues".

But many respondents recognised the growing income gap.

"I hope that the gap I see growing between two distinct classes of people closes somewhat. We used to be a pretty level society, but these days we have a distinct middle and very much lower class, and I regret that," wrote one person. Others said:

"...the inequality between high-income earners and low-income earners is resulting in poverty for the latter and major social problems."

"Address the growing gap between the income of the haves and have-nots by removing the tax breaks for the rich so that the wealthy pay their fair share."

The anger around wealth and poverty was reflected in the comments about welfare.

Those who want the government to "lay off the benefit bashing" say beneficiaries and low income earners felt "third class", were "stigmatised" and struggled to make headway. Many blamed the hike in GST – from 12.5% to 15% in October last year – as well as unequal tax cuts.

"Give beneficiaries a break, we are getting more in debt due to the tax cuts, which were total lies, unable to feed family decent food, life is just not worth bringing kids into this society, more money for food and bills."

An equally vociferous call was made against the "bludgers" and solo mothers on the domestic purposes benefit.

"I thought the DPB was a hand-up not a handout.

"I have a neighbour on it who has Sky TV, Tivo, and two computers and yet cannot afford to send her pre-schooler to kindy."

Others called for the government to get tough on benefit fraud and to pay benefits in the form of food stamps.

"Make people on benefits find interests so they do at least some work rather than sit at home, drink alcohol and take drugs as well as abuse their own children," said one person.

Sunday Star Times