Academic journal article New Zealand Sociology

Economic Inequality in New Zealand: Update to a User's Guide

Academic journal article New Zealand Sociology

Economic Inequality in New Zealand: Update to a User's Guide

Article excerpt

Key Messages

New Zealanders seem to have three major notions about inequality:

- egalitarianism

- poverty

- opportunity.

These concerns go back to the first European settlements. However, inequality appears to have been a less important in the immediate post-war era, perhaps because economic inequality may have been diminishing. In the late 1980s the tax system was rebalanced in favour of the rich and in the early 1990s real benefit levels were cut. Various public responses in the following years culminated in widespread public concern about inequality in New Zealand.

This reports updates research published in the last year. It finds no major changes in the level of household disposable income shares, but reports that the 2013 census shows a marked increase in those who report no personal income. It also reports a couple of studies on top personal incomes based on tax data. That which covers before tax incomes shows no marked changes since the early 1980s, but the after-tax shares lift markedly in the late 1980s following the reductions in income tax rates on top incomes generally and dividends in particular.

A review of the recent literature on poverty reports no new insights although it cautions against policy loosely connected to statistics but without analysis. It illustrates this with the current preoccupation with 'resolving' the child poverty problem by getting parents out to work.

The review concludes that while there is no 'crisis' in the usual meaning of the term, for there has been no marked change in the measures of inequality of income since the mid-1990s New Zealanders seem to be more explicitly concerned about inequality and poverty than they were a decade ago. They may be seeing their aspirations for an egalitarian society slipping away, they are probably more aware of the existence of poverty, although they make a distinction between the deserving and undeserving poor, and they are probably increasingly worried about the impact of poverty on opportunities for children. Thus the campaign to raise the public's awareness of inequality and poverty has been successful - resolving the issue will require greater technical skills.

Prologue

This is a follow-up to Easton (2013) 'Economic Inequality in New Zealand: a User's Guide', New Zealand Sociology 28 (3): 9-66. It adds new material, describes developments since the original article, and updates some material. As for the previous article it aims to assist the general public concerned about economic inequality while maintaining a scholarly standard.

New Zealanders' Notions of Inequality

Economic inequality has probably been a concern of New Zealanders ever since the establishment of a settler society, but the extent of the concern has varied. It seems to have had three main dimensions using income - or perhaps wealth - as the scale:

- Egalitarianism is the tenet that all people are fundamentally equal and a belief in equal treatment across gender, religion, economic status and political beliefs. In New Zealand inequality was seen as independent of their economic and social status. It was the notion that 'Jack is as good as the master' (so, today, is Jill). In one sense the notion did not worry too much about the degree of income or wealth inequality; what was important was that should not be too evident or have too much of an impact on society.

- Poverty involves the notion that all should have a minimum standard of living sufficient, in the words of the Royal Commission on Social Security, 'to be able to participate in and belong to society'. (RCSS, 1972: 65) Importantly it shifts the focus of the poverty line from an absolute standard (sufficient to sustain life and health) to a relative one in which the poor's living standards are judged against the community as a whole. Unlike the previous dimension there is not as much concern about the overall income distribution (other than that those further up should contribute to the elimination of poverty). …

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