Free Press: ACT’s regular bulletin

Equality
Even Kiwis who think they are on the hard right of Attila the Hun are big softies by international standards. They wouldn’t approve of real poverty and caste destiny in India, for instance. A fair go is part of our national identity. Public opinion polling now says inequality is the number one issue.

Extraordinary Failure
When Prime Minister Savage introduced the Welfare State, government taxed and spent 24% of total economic output. Today that same figure is 31%, but economic output is at least 6x greater per person. If bigger government is the answer to poverty, why hasn’t spending 8x more in real terms done the trick?

Just do it Harder
The Labour and Green parties’ answer to all problems is to just tax and spend a little bit more. Taxing workers and giving it away is a good strategy, they reckon, but we haven’t quite done enough of it yet.

How Hard Now?
Few people appreciate how much redistribution goes on in New Zealand. Opposition parties make out that we live in a hardscrabble wasteland where it’s everybody for themselves. In reality, the government taxes and spends around $80 billion per year, $17,000 for every individual, or $85,000 for a family of five (on average) every year.

Some Real Problems
More taxing and spending might make a more equal go of things, but history doesn’t support the theory very well. In practice the housing market has failed to function, education has failed many kids, and welfare has created dependency. All of these are failures of government that the political left are allergic to fixing.

Housing and Poverty
The New Zealand Initiative produced an excellent study of relative poverty since 1982 (when comparable records began). The upshot is that where 8 per cent used to get by on less than 60 per cent of the median income, now it is 13. Sounds bad.

Housing Costs Drove the Change
The same data compares income relative poverty before housing costs and the picture reverses. Take housing out and the picture reverses, 12 per cent were below the line in 1982, and only 8 per cent today. The single biggest thing that could be done to deal with inequality is build more homes. As Free Press has said many times, it is the council planners’ agenda of shutting down land supply that has led to the shortage in housing.

What about Welfare?
Lindsay Mitchell (who spoke brilliantly at ACT’s 2016 conference) points out that, for all National’s reforms, one in five children are born into a benefit-dependent household. This is little different from 25 years ago. How can having children while on a benefit be responsible?

A Modest Proposal
The Government already uses Income Management for beneficiaries aged under 18, where the government pays rent, power, and basic necessities before giving the remaining entitlement in cash. A compassionate government should attack child poverty by extending Income Management to any parent who has additional children on a benefit.

And Education?
Despite all of the Government’s goal setting, we still have a highly unequal education system. For example, 58 per cent of European children get University Entrance, but only 30 per cent of Māori children. We will never be he iwi tahi tatou, one people as Hobson said at Waitangi, with unequal education.

But it’s not the Schools’ Fault?
The teachers’ unions love to blame everything but themselves for varying educational results. They are partly correct, but at the end of the day the school system has kids for six hours a day, 30 hours a week, 1200 hours a year, for at least 13,000 hours in total. It’s incredible how many do not even get NCEA Level One.

Early Days
Partnership Schools are showing early signs of bridging the education gap. With predominantly Māori and Pacific students, they are achieving 100 per cent UE pass rates. It is very early days for Partnership Schools, but the signs are encouraging that a system with more choice and innovation can help kids learn, an achievement consistent with Charter Schools overseas.

ACT for a More Equal Society
At some level inequality is a real problem and many New Zealanders believe we’ve reached that level already. ACT has solutions that the left are blind to as they electioneer on more taxing and more government spending.

ends

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