The matter of income inequality and the huge gaps between the lowest paid and the best paid in our country continues to weep like an incurable septic sore and the Government, for reasons of its own, seems to being guided by the Treasury thinking and considerations in its decision making processes. I find this odd because it would seem methinks that an across the spectrum approach is what is needed, not the single mindedness and rejection of known facts and considerations by Treasury, apparently on behalf of the Government.
In reading Mr Rashbrooke’s latest article, Why Income Gaps Matter: The Treasury and the Tricky Issue of Inequality, it brings some interesting concepts and ideals to the fore and in the process shows that the Government and its Treasury Colleagues are not as rigorous as one should and would hope, but rather selective in their choices. At least one should be grateful that at least the Treasury have recognised that there are sizeable differences between the top and the bottom rungs of the financial ladder in New Zealand. As Mr Rashbrooke notes the rungs of this ladder are unequally divided so that someone in the lowest economic percentile now seemingly has no hope of clambering up to the next rung. It is Treasury’s underplaying the significance of additional evidence that more unequal societies suffer more health and social problems that perhaps is most important in this article. Against world wide research and conclusions of international authors of the calibre of Sir Michael Marmot, WHO etc ‘who present persuasive evidence that income equality is a significant cause of these health and social problems’ Treasury seems to have chosen those aspects of research that meet their preordained results rather than facts.
Perhaps the most complex problem to be addressed (described as the gaps between the rungs) is whether poorer households ‘struggle to participate in society’ and at what point does low income interfere in that participation in society. The counter comment from Treasury is that ‘most poverty is short term poverty not long term poverty’, yet Treasury does not define the level of income in poverty terms or how long term is long term.
Less than 60% of the household median in disposable income after tax – is an international poverty measurement below which people tend to struggle to participate fully in society.
The Treasury’s counter argument would seem to be that households in poverty are not necessarily struggling. Of those families in chronic poverty (defined as lasting for longer that 7 years) only one third are in technical hardship. For families below the breadline for seven years and no end is sight this article makes it clear that Treasury is failing New Zealanders in its recommendations to Government
So much is known about poverty yet the markers and the effects in New Zealand seem to be ignored in Treasury research.
Three points are known and made in this article of relevance to this debate.
- People who rise out of poverty may not rise very far above it and may end up in unhealthy, unstable forms of work, still unable to participate fully in society.
- The measure of hardship the Treasury uses is the number of households reporting three or more of the eight official markers of deprivation. Treasury does not set out how many poor households report one or two markers – and since those markers are inherently significant things, such as having to visit a food-bank, even reporting one marker might be taken as a sign of non-participation and thus constitute a problem for equity, as defined by the Treasury.
- Many poor household avoid these markers of deprivation through means that are both sub-optimal and unlikely to be captured in official statistics: borrowing, relying on support of family and friends, working in the black economy or even crime.
In short the extent of non participation in society among those in temporary poverty is likely to be far greater that the Treasury suggests, thus reinforcing the value of low income as a marker and highlighting the centrality of income measures – and income inequality – to those arguments.
Treasury underplays the evidence with the statement that at ‘best there is a modest linkage between inequality and social problems’ yet world wide research and literature states that ‘more unequal societies suffer significantly more health and social problems’.