Drop the Cap to Close the Inequality Gap

The Income Equality group Closing the Gap today joined those calling on the government to drop its self-imposed spending cap, saying there’s little hope of putting a dent in inequality if such arbitrary spending limits stay in place.

Closing the Gap spokesman Peter Malcolm said it was disappointing that the Labour-led coalition hobbled itself with its pledge of capping spending at 30 percent of GDP. “As Auckland Action Against Poverty has argued, spending levels should be based on what society needs not on arbitrary caps,” he said.

“The coalition government has made a good start with its focus on health, housing and the Families Package, but much bolder steps are needed to tackle what have become very entrenched and damaging levels of inequality,” he said. “The government may have stemmed the bleeding, but repairing the damage is a much bigger task.”

Mr. Malcolm said recent economic commentary makes clear New Zealand has a lot of room to expand spending — we’re currently at 28 percent of GDP, while some Scandinavian countries spend more than 40 percent.

“New Zealanders have made clear our current levels of inequality are simply unacceptable, but closing those gaps cannot be done under a spending cap, and with the current unfair taxation system still in place,” he said.

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