Mind the gap between the rich and the poor

SIMON CUNLIFFE
Last updated 08:46 08/07/2012

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Are National's chickens coming home to roost?

Went to the theatre the other night - on the Wellington waterfront. Arthur Miller's All My Sons. Cracking good show. It was written in 1947, its themes smoking hot in the aftermath of World War II.

At the centre of this family drama is the sometimes morally debilitating business of creating wealth, how far individuals might go to preserve it, how they might pass it on, and at what cost. Sex, death and taxes - that kind of thing.

If one function of art is to confront us with unpalatable truths, Miller's great skill as a dramatist is to do so by marrying the public with the private, the personal with the political.

It makes a welcome change from the glib vocabulary with which we talk about "growth" and "progress", as we do ad nauseam these days. We wrap our lips around the lingua franca of economics like pinstriped fortune tellers licking fairground icecreams.

We routinely divorce the business of "wealth" from the human dimension - in all its personal, social and cultural complexity, as if these aspects of our existence were leprous cousins. We are the poorer for it.

Our latest and most encompassing conversation has been about the partial sale of state- owned assets. We are told it is necessary to sell 49 per cent of the public energy companies to pay down debt, and that until we sell them, providing individuals and institutional investors something worthwhile to accumulate, our stock exchange will remain immature and anaemic.

The fly in the ointment is that the dividends from these same energy utilities would soon produce equal if not greater sums than they will realise when they are sold. What's more, they generate returns - would have generated them - in perpetuity, whereas they can be sold only once.

The second is, ultimately, an argument in favour of wealth redistribution. The Government's one-vote majority has enabled the legislation to set in train a valuable state-assets lolly scramble, and every last one of us has provided the lolly.

We all own Mighty River Power, Genesis Energy, Meridian and Solid Energy. They are effectively run state-owned enterprises. Reports by well-heeled analysts say as much. Their dividends help us build roads and schools and hospitals, and, yes, even pay down debt.

Soon, on our behalf, the Government will be tossing our shares into the air - to be plucked by those who have the dosh and the wherewithal. That may indeed include a good many of us, because energy is a safe bet. It's something most of us need. But does that make the policy virtuous or right?

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Last week we heard the median family earns $67,000, and has $1700 in the bank, so it can afford a shares flutter, they say. To put those Statistics New Zealand figures another way, half of all families in this country have an annual income of less than $67,000, and have less than $1700 in the bank - about four winter months' worth of electricity bills.

While we are on statistics, sources cite 200,000 Kiwi children living in poverty. Just as sobering, if not more so, are our wealth distribution figures.

A Child Poverty Action Group report of 2011 suggests the top 10 per cent of the population accounts for 51.8 per cent of the country's net worth, the bottom 50 per cent of people owns just 5.2 per cent. How many of them are going to be able to stump up for $1000 packages of shares in the utilities companies? And when all is said and done, when 49 per cent of those blue chip state assets have been sold, will those inequality figures be better or worse?

Why should we care?

Because all the evidence, and the opinions of luminaries such as American super-investor Warren Buffet, suggest heightened wealth inequality is deeply corrosive of social cohesion and a well-adjusted, fair society. And because this is the direction in which, against the better judgment of many Kiwis, we seem to be headed.

Miller once said the structure of a play is always the story of how the chickens come home to roost. The narrative of the life of governments could be said to follow the same prescription.

In its first term, despite the most adverse economic conditions since the 1930s, the National-led Government rewarded its natural constituency with generous, lopsided tax cuts. It proudly presented to the world a big gleaming egg.

With its determination to proceed with the partial sale of state assets it has, assuredly, laid another.

Simon Cunliffe was awarded best columnist at the 2012 Canon Media Awards. He has been a journalist for almost 30 years. Most recently deputy editor (news) and an Otago Daily Times editorial writer, he has also been a senior journalist and deputy editor at The Press in Christchurch. A West Coaster by birth, he began his career in London in the 1980s, contributing to several national publications. He spent time at The Independent before retuning to New Zealand in 1994. He is also a playwright, and now lives in Wellington.

- Sunday Star Times

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