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OECD Report on effect of inequality on the NZ economy

OECD Report on effect of inequality on the NZ economy

Income Equality Aotearoa New Zealand Inc. - “Closing the Gap”

On the issue of inequality and its effects, once again ideology triumphs over research. Minister of Finance Bill English disagrees with a recent OECD report and he doesn’t accept its findings, even though the report is based on solid research, says Peter Malcolm General Secretary of “Closing the Gap” the Income Equality Aotearoa NZ Inc.

The very recent OECD report says “Over 1990 to 2010 rising inequality in NZ is responsible for wiping a third off NZ economic growth.”

The report goes on to say that “the loss in the economy in NZ through inequality was the highest in the developed world.”

It also says, that higher taxes and more redistribution of wealth to combat inequality will have a positive effect on our economy, and that “there is no evidence that redistributive policies such as taxes and social benefits harm economic growth”

It talks of “compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate”.

“Anti-poverty programmes would not be enough to deal with the problem”

It also says there is a need for cash transfers and access to high quality public services such as education and health.

IMF researchers have also argued exactly the same things, i.e. that countries with less inequality have better economic growth, Malcolm says.

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He goes on to say that it should now be clear to all that research shows that:
• In NZ, inequality has risen among the fastest in the developed world. Although this change has slowed in the last few years, it is still high when compared to many other countries
• Inequality is causally linked to many social ills, a lack of cohesion and levels of trust and participation in society.
• Inequality has a detrimental effect on the economy
• In short inequality is damaging to all
• Inequality can be positively tackled by having a more progressive higher tax regime, and more wealth transfers particularly to the bottom 40%.

All income, regardless of source, must be part of the tax system if it is to be fair.

Malcolm goes on to say “Sadly we do have many high levels of social ills in our country and our economy could be doing much better. We could make serious inroads to these problems if we comprehensively tackled inequality. Let’s move forward on policies based on research and not ideology.”


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