Inequality ‘a chronic illness’ for New Zealand

Income and wealth gaps have a profound – and negative – effect on New Zealand, researchers have claimed.

Speaking to a conference on inequality organised by the Institute for Governance and Policy Studies, education researcher Cathy Wylie said inequality was “a chronic illness – and it’s getting worse”.

A poorer area like Porirua lost a quarter of its potential high school students to other areas, and half of those students were from its wealthier areas. That left high concentrations of poorer students in low-decile schools, which then struggled to cope.

Successful initiatives, such as the Manaiakalani project in South Auckland, were made possible only when schools were given extra funding and were joined up by a board sitting above them, Wylie said.

Speaking at the same conference, Professor Philippa Howden-Chapman, from Otago University, said poor housing was a major cause of preventable illness in New Zealand. Cold, uninsulated houses left many families unable to heat their homes or crowding together for warmth, which encouraged the spread of diseases.

People in the lowest 10% of income earners spent 13% of their income just on heating their house, while having the OECD’s highest rate of people moving house showed how often New Zealanders had to shift home to escape inadequate living conditions.

Solutions to housing inequality included renewed social house building programmes, a warrant of fitness for all rented homes and further spending on insulation programmes.

Tracey McIntosh, a senior lecturer at Auckland University, spoke of the danger of “normalising” the impact of inequality on Maori by the repeated use of phrases such as “the overrepresentation of Maori”.

She also stressed Linda Tuhiwai Smith’s “call for concepts” and the need for new ways of talking about inequality. New policies also held out hope, she said, pointing to a youth hub in south Waikato, built as part of the government’s social sector trials, which for $167,000 had helped reduce offending among local young people by 87%.

In contrast, keeping someone in prison cost $92,000 a year, and over $700 million was spent each year on the prison system.

Professor Paul Dalziel, from Lincoln University, stressed the need to tackle skills gaps to reduce inequality. Some 40% of people aged 30-34 earned less than a fulltime minimum wage, while hundreds of occupations were on official lists indicating significant skills shortages.

However, the current system was not catering to the full diversity of learners, nor was it giving sufficient attention to trades skills or providing good transitions between high school and tertiary institutions.

Geoff Bertram, a retired Victoria University economist, said the sudden rise in income inequality in New Zealand from the mid-1980s to the mid-1990s had significantly shifted wealth to the top end of the distribution.

He advocated a three-pronged approach to tackling this problem. First, the government needed to crack down on monopolies and do more to protect consumers. This could be done by amending the Commerce Act to strengthen its “pro-consumer” intent and being willing to take profits from monopolistic operators and redistribute them among consumers.

Second, wages could be lifted through improved collective bargaining and tackling the “disempowering and fragmenting” effect of casualised work. Governments could “nudge” firms by withholding contracts from those who paid their CEO more than a certain multiple of workers’ pay.

Third, more taxes on wealth were needed, and they should target the recipients of wealth transfers, rather than trying to tax the donor, which was too easily avoided.