Parties at cross purposes on inequality

5:39 am on 12 September 2014

The National Party leader, John Key, says the country is on the "cusp of something special" and voters should not put that at risk by changing the Government.

John Key

John Key argues New Zealand's economic outlook is brighter under National. Photo: RNZ / Diego Opatowski

But just what that "something special" is no one knows because Mr Key never spells it out.

What he does say is that National has successfully managed the country and the Government's finances through the Global Financial Crisis and the Canterbury earthquakes. He points to the fact the economy is now recovering, with forecast growth this financial year of 3.7 percent.

Unemployment has fallen although it is still higher than when National took office and, while the Government's books are forecast to be in surplus by the end of June next year, it will still be two or three years before debt starts to fall.

Yet it is clear that after weathering the effects of the recession and the earthquakes, New Zealand's economic outlook is much brighter. That's what Mr Key says a change to a Labour-Green Government would put at risk.

He also says when Labour was last in office it left the public accounts in a mess.

That claim, though, is not correct. Labour ran surpluses throughout its time in government and left office with public debt at historic lows. The good state of the public finances allowed National to run up debt to buffer the country from the worst effects of the recession.

Labour leader David Cunliffe, left, with National's John Key.

Labour leader David Cunliffe has said his main priority is to lift children out of poverty. Photo: TV3

Labour leader David Cunliffe gives credit to National for managing the country through tough times but he says National does not have a clear plan and vision for the future.

Mr Cunliffe argues Labour wants to reduce poverty, lift wages and turn New Zealand into a more productive, smarter, greener economy.

It sounds very much like the Green Party.

Labour would do it by lifting the minimum wage to $16.25 an hour, introducing a capital gains tax, offering tax credits on research and development, making KiwiSaver compulsory and making changes to the Reserve Bank Act to help ease the pressure on the value of the New Zealand dollar.

During the TV3 leaders' debate this week, Mr Cunliffe said his main priority was to lift children out of poverty.

The Green Party has been campaigning on that theme for years, having made children the centrepiece of its 2011 campaign and repeating it again this time.

Internet-Mana is also focussed on child poverty, with Mana leader Hone Harawira calling on all parties to support his feed the children legislation when Parliament resumes sitting after the election.

110914 AUCKLAND Photo Kim Baker Wilson / RNZ. Hone Harawira speaking about the "predators on poverty".

Hone Harawira speaking yesterday to supporters in Otahuhu, Auckland. Photo: RNZ / Kim Baker Wilson

Call for cross-party agreement on child poverty

At Mt Roskill kindergarten in Auckland this week, the Child Poverty Action Group released its latest report, Our Children, Our Choices, and called on all parties to work together to eradicate child poverty. The group believes there has to be a sustained effort across health, education, housing, social policy and income support to lift the 260,000 poverty-stricken children out of hardship.

It supports moves to lift the minimum wage but says beneficiary families also need help. The group recommends the tax credits available to families where at least one of the caregivers is in paid employment should also be extended to those families dependent on benefits.

The Green Party would introduce a new children's credit of $60 a week to be paid to families it says are currently not getting that assistance. As well, the very poorest families would get a parental tax credit of $220 a week for the first few weeks of their children's lives.

Labour's best start policy would pay $60 a week in the first year of every child's life and for another two years for poor families.

But Mr Key says handing out more money to beneficiary families will not solve poverty. National believes getting beneficiaries into jobs is the way to move families out of hardship.

In the TV3 debate, Mr Key claimed only 11 percent of the 260,000 children in poverty came from working families. But Mr Key was wrong. Two out of five children in poverty come from working families because the incomes their caregivers earn are simply too low.

Mr Key agrees wages need to rise but warns Labour's proposed increase to the minimum wage would put jobs at risk.

Mr Cunliffe disputes that and says higher wages would flow through to more spending, which would boost economic activity and help the very businesses which employ workers on the minimum wage.

Inequality and poverty debate 'clouded'

One of the big problems about the debate about inequality and poverty is that it is clouded by confusing and conflicting claims and counter-claims about how bad it is and whether it is getting worse.

Labour and the Greens say poverty has got worse under National while Mr Key says his government has reduced the number of children in poverty by 30,000.

Technically, he is right that in the past year or two the number of children deemed to be living in poverty has dropped from about 300,000 to 260,000. But the numbers spiked between 2009 and 2011 before then dropping away.

In its analysis of poverty, the Ministry of Social Development says the biggest dent to poverty came between 2004 and 2008 as working families benefited from the Labour-led Government's extension of Working for Families tax credits.

That is why the Child Poverty Action Group wants those tax credits extended to beneficiary families to help lift their children out of poverty.

But the debate about poverty remains a difficult one when there is no cross-party agreement on what poverty actually is. Successive Labour and National governments have refused to set an official poverty line or targets for reducing it.

Until they do political parties will continue to argue at cross purposes.

That undermines what should be a serious debate about how to reduce wealth inequalities and make the lives of the country's poorest families better, particularly for their children.

Follow Brent Edwards on Twitter @rnzgallerybrent

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