A tenuous grasp on inequality

12:07 pm on 22 September 2017

Opinion - Last election, the issue of income and wealth imbalances was, to quote Victoria University researcher Jack Vowles, "a bark but no bite": people said they cared about it, but it didn't change the way they voted, as National did enough to assuage concerns and Labour's perceived incompetence turned many off.

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This time it's been different. The profits made by some out of the current situation - land-bankers and the like - have become more notable, while the growth in people sleeping on the streets or in their cars has been hard to ignore. Inequality feels more visceral. Labour also looks more competent, or at least relatable, to the average voter.

You can see this in politicians' reactions. Housing is perhaps the main lens through which people see inequality, and parties have been falling over themselves to propose solutions. In addition, during one of the leaders' debates, Bill English - apparently making policy on the hoof - announced that, if re-elected, he would lift 50,000 children out of poverty, on top of the 50,000 he says will be lifted out by the changes in this year's Budget.

After years of National denying the need for, or feasibility of, targets and measures for child poverty, this is welcome news. The problem is that there are strong doubts about whether the initial 50,000 reduction will even happen, and a hastily announced ambition is no substitute for a full plan complete with a suite of poverty measures and detailed ideas to address all its aspects. English also has nothing much to say about the long-term rise in the richest tenth's share of income, which leaves little to go around for others.

His opposite number, Jacinda Ardern, has emphasised poverty and inequality more, and in the past has put up legislation to start addressing it. Her party's policies - providing more Working for Families support, making it easier for workers to get higher pay, and launching a government-funded housing programme - would go some way towards addressing the problem.

But, as child poverty expert Jonathan Boston noted in a seminar last week, Labour's policies would have only a slightly greater impact on child poverty than National's. And a capital gains tax that excludes the family home (which makes up at least a third of all household wealth) would not fully address wealth inequality. Gareth Morgan's proposed comprehensive capital income tax would go further in that direction, but it is not a progressive tax in the way that has been suggested by some international economists.

Even the Greens, recently rated as the party with the strongest anti-inequality policies, haven't fully grasped the scale of the challenge needed. They like to say that they have a plan to "end child poverty", but Jonathan Boston's assessment is that their policies, though dramatic compared to what we've currently got, would at best only halve child poverty rates.

The truth is that to end poverty - or at least eliminate all bar the temporary poverty that is part of life's ups and downs - would take a transformation, as would the wider task of reducing the unfair elements of wealth and income inequality. While observers and politicians across the spectrum are detecting a mood for something different, it is not clear that such transformative change is on the agenda.

Max Rashbrooke is a senior associate at the Institute for Governance and Policy Studies, and has written widely on inequality. He advised the Equality Network on the anti-inequality policy ratings referred to in the article.

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