Lisa Owen interviews Sue Moroney and Colin Craig
Lisa Owen interviews Sue Moroney and Colin Craig
Lisa Owen: Sue Moroney in terms of The Spirit Level, do you agree with those theories? Is it important to close the gap?
Sue Moroney: Well look in New Zealand we have always called it ‘giving people a fair go’ and the authors of The Spirit Level call it inequality. But I think that New Zealanders have always known in their hearts that having reduced inequality, giving everyone a fair go, is the sort of country that we want to have. Now since the authors of The Spirit Level did their data research we have significant changes from the National Government that have actually increased inequality in this country.
So basically in principle you agree with theory, closing the gap is important?
Moroney: Yeah absolutely. In 2010 what the Government did here was they gave tax that were, 40% of the benefit went to the top 10% of earners in this country and the rest of us got increased GST. That immediately increased inequality.
Let’s bring Colin Craig in here. What are your thoughts on The Spirit Level? You don’t want a bar of it really do you?
Colin Craig: It’s selective research isn’t it. If they had looked at, and they acknowledge this, if they’d looked at suicide rates they would have ended up with the more supposedly equal countries being worse off. Alcoholism, they’re more worse off. Marriage break ups, they’re worse off. So I think it’s selective. My point is it’s not really about the inequality. The issue is: how do we help those at the bottom end. And I think what we know is that, and I agree with you, that the tax cuts should have been at the bottom. You see we disagreed with National cutting at the top end. At the bottom end everyone benefits proportionally, those who are worse off in our society benefit more. So that’s why tax cuts to the bottom end. And the other thing is housing.
No we heard there about gaps in pay and here’s a good example: the boss at ANZ is earning more than a hundred times more than a bank teller in that bank. What’s good about that for society?
Craig: I’m not saying there is anything good about it but what I’m saying is that piling the tax on the top end on individuals, and some are getting excessive salaries, doesn’t actually really solve the bottom-line problem which is helping those who need it. And I would suggest one of the biggest hurdles for that is housing. OECD just put this report out, says that clearly we are now one of the most unaffordable in the OECD, i.e. the world really. That’s a problem because wealth in this country is really dictated by whether or not you can own a home. And for many New Zealanders that is now not a reality, particularly in the big cities, particularly in Auckland.
Moroney: And so Lisa what we saw in the Budget last week was no attempt to address the housing issues that affect New Zealanders. But what we did see was the Government again increasing inequality by increasing the parental tax credit that doesn’t go to the very poorest families. And so we have got an ongoing record of the current Government where they are actually putting deliberate policies in to increase-
Hang on, but those statistics, we just showed you the statistics in Torben Akel’s piece which show that inequality has leveled off under the National Government, if you look at the trend line?
Moroney: Well and if you actually take into account assets then the picture is entirely different. We have got a Government which also sold off our power companies to the wealthiest New Zealanders and the rest of us get increases in our power bills. That’s an increase in inequality.
So rather than talk about that, what are you going to do to close that gap then?
Moroney: So we have fantastic policies actually. We are going to be increasing the minimum wage to $15 an hour immediately on our first hundred days –
Craig: Which is already very high. Look our minimum wage is already very high, third in the world. That’s not actually really going to make difference. Why don’t we talk about housing, getting people into housing.
Moroney: Well Colin. So go and talk to the people that are paying those rents Colin, and tell them they can do that on the current minimum wage. Because I think if you get out and talk to people –
Craig: Why not talk a tax cut. Why not talk a tax cut –
The two professors told us that raising the minimum wage would assist -
Craig: They didn’t know that we already have one of the highest minimum wages in the world. They were not aware of that-
Moroney: And one of the highest housing costs as well, so if you want to deal with housing you are going to need to address peoples’ incomes.
Craig: The difficulty is if you raise the minimum wage up too high you will cause people to lose jobs.
Craig: If you rather target a tax cut at the bottom end you are giving them all more money in their hand and that does enable them to pay the rent. It gives them more capability –
Moroney: Well I think that has been completely disproven. When Labour was last in government -
Craig: It was your policy last election.
Moroney: That’s right we increased the minimum wage every year and yet unemployment was dropping all the time under a Labour government so there is no correlation. People don’t lose jobs when the minimum wage goes up.
We were just told in that interview that tax rates, we need to raise tax rates. That’s part of solving the problem. So Labour, what’s their top tax rate going to be?
Moroney: Well we haven’t announced what it will be but we have said that there will be an increase for the very top earners. And importantly -
Well it was 39 cents. It was 39 cents for earnings $150,000 and over last time. Is it going to be up around that?
Moroney: Well we’ll be announcing that in the coming weeks, but we haven’t announced it at this point -
What you don’t know what it is or you are just not going to share it?
Moroney: Well we’re just not announcing that today, but have been very clear that we will be increasing the tax rate for top earners. And that’s about reducing inequality –
Professor Wilkinson was talking about the 66% back in the days when we were a more equal society. Is that where we are headed?
Craig: Well the reality is the wealthy end in society is very mobile. They may not wish to move but they can base a corporate wherever they want. I think the idea of ever increasing tax rates – look if you want to have a society of averages like the Soviet Union you might as well end up building a wall to stop people leaving, because that’s what will happen. I think we have got a good society. It’s reasonably unchanged in terms of equality. That’s what the stats tell us. But we can do more at the bottom end and it starts with a tax cut for everybody.
You have identified yourself that ownership of the assets is what makes you very wealthy…
You should know that from your personal experience. So should someone in your position then, who owns these assets, be giving up something for the greater good?
Craig: Well we already do. I mean I already pay far more tax than I’m guessing Sue pays. And I’m glad that that goes towards helping New Zealanders. What I think we need to be very aware of is that if you have an average society, tall poppy syndrome, everybody’s the same; you will end up with people losing interest. Those who want to succeed will move to a place where they can succeed. And if we just increase taxes and increase handouts we’ll lose some of our vigour.
So what, people should be able to pull themselves up by their boot straps, everyone can do it?
Look I grew up in a poor home, I came out of university with nothing but debt. I love the fact that we are upwardly mobile in New Zealand. You can go from nothing to something. They left us off their research but we can do something.
Longitudinal research from Treasury indicates that education and training can only raise people up a few deciles, a few rungs, that they can never achieve-
Craig: Well maybe I’m the exception that proves it. But at the end of the day we are not anything like some of those other countries that they have looked at. New Zealand is great because there is an opportunity to do well. I think if we sent our sports teams out or our kids out, if we are happy if everyone got a medal just for participating, that’s not the sort of society New Zealanders want.
Moroney: Colin’s arguing that everything’s going to be fixed by personal responsibility. Well I want him to come and talk to the 120 workers at the Hutton’s factory who lost their jobs last month…
Craig: I’m not arguing that
Moroney: …Because they had absolutely no control over that situation and yet their incomes have tumbled as a result. They are not going to be at the bottom of the patch trying to actually try and get a job in an era where we have got 7% unemployment -
On that subject Sue, Labour’s policies are very much focused at that middle ground that National’s after as well. What about the very low end of the heap?
Moroney: So we are going to be putting $60 a week into every family with newborn children….
If you earn up to $150,000
Moroney: …if you earn up to $150,000
…Which is the top ten percentile of wage earners
Craig: But you don’t say who you want to take more money off?
Moroney: Well it’s going to go to all families.
Craig: Give it on one hand, take it away.
Moroney: And what the National Party have done is that they have increased spending on families but they have left the very poorest families out of that. That is going to increase inequality.
Isn’t it a reality that the policies required to make the changes that the two professors are talking about would make you both unelectable?
Craig: Of course they would and New Zealanders wouldn’t want them.
Moroney: Look we are very clear that we are going to the election on the basis of getting a good housing policy in place, getting more jobs in place and looking after children. Those are the platforms that the Labour Party will be fighting on and those are going to win the election.
Craig: But tax more and bigger handouts