Poverty, inequality and 'bludgers'

Last updated 09:30 18/12/2013

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Debate has flared up in the last few weeks about poverty and welfare in New Zealand and much of what has been said has been offensive or ignorant.  

To bring sense to the debate we must establish some facts, starting with determining where the poverty line lies. There is some consensus around aligning it with an income level set at 60 per cent of median household disposable income after housing costs.

Today, this would be $495 per week for a household of two parents and two children, or $319 for a sole parent with one child.

The main problem with this calculation is it doesn't involve any money for emergencies. People can get by on these amounts of money in some parts of New Zealand, but one sickness, disaster or job loss can push a family into a debt spiral.

So who's in this poverty group? About one in six adult New Zealanders and one in four children.

New Zealand's gini coefficient (the generally accepted measure of inequality) sits at .33, placing us above the OECD average, with negligible difference between us and the UK (though still more equal than the US or Australia).

However, what is concerning is the rate of increase in our gini coefficient, which places us with the fastest growth of inequality of any OECD nation since 1981.

The figures look even scarier when you move from income distribution to wealth distribution with 10 per cent of New Zealanders now owning well over 50 per cent of the wealth of the country.

In New Zealand, our way of fighting inequality has always been various social programmes. Welfare benefits range in this country from the modern (Working For Families) to the very old (old age pensions).

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Like any privilege there are those that will sometimes abuse it. Thus, since coming to power National has prioritised cutting down on welfare fraud and aimed to "save $200 million of taxpayers' money over the next four years".

As a public, many listened and became incensed and asked: how dare those bludgers take our tax dollars?

It is at this point that I would like to give serious thanks to Dr Lisa Marriott of Victoria University whose work is the basis for the following.

Last year in New Zealand, tax evasion cost the nation between $1-6 billion. That's billion, the one with a 'b'.

The IRD estimates that NZ has a black economy which avoids paying $11.4b in tax each year.

While I do not suggest that we make every lawnmowing child pay tax, if we collected even half of that next year we could give every school in NZ a million dollars, pay over half of the government's share of the Christchurch rebuild and pay for the entire food in schools programme, with serious change left over.

If we are a nation that is incensed about welfare fraud should we not be incensed about tax fraud? Both are stealing from our government.

Yet, in this country you are 150 times more likely to be caught for welfare fraud than tax fraud, despite every dollar we spend prosecuting tax evasion, we earn back an average of $8.60.

National has painted a picture of a group of New Zealanders mercilessly stealing government money, and I agree, I just don't think it's the ones they are accusing in order to get votes.

We have an inequality problem, that problem is growing, those most affected by this inequality (those in poverty) are seriously struggling and all the while we demonise those asking for help while others are doing much worse.

It's time for a fact-driven discussion of poverty and inequality in New Zealand, I just don't think it is the one we are having at the moment.

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