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Inequality growing fastest in NZ - OECD

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Kaye Brereton, beneficiary advocate

Kaye Brereton, beneficiary advocate

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Tue, 06 Dec 2011 11:23p.m.

By Laura Frykberg

A new report reveals the average income of New Zealand's richest 10 percent is now 10 times that of the poorest 10 percent.

It's a similar story across the OECD, but New Zealand's income gap has grown faster than any other developed country over the past 20 years.

No matter the weather, New Zealand's Occupy movements are living rough to highlight the growing gap between rich and poor. A new report has gives weight to their cause – that gap among OECD countries is the widest it's been in 30 years.

"It's like 10 people going out for dinner and eating half the dessert and the other nine people eating a little slice each," says Kaye Brereton, Beneficiary Advocate Federation NZ.

"Those nine people are going to be hungry and they're going to be angry."

The OECD report entitled Divided we Stand found the richest 10 percent of New Zealanders earn 10 times that of the poorest 10 percent.

But worse, New Zealand's income gap has grown faster than any other developed nation since the 1980s.

The report says the main reasons for the increasing gap is the highly-skilled benefit more from technological progress than the low-skilled, and the greater inequality in wages and salaries, which it says disproves the theory economic growth trickles down to those in need.

Beneficiary advocates say raising the minimum wage will help bridge the gap and reduce low income earners dependence on the state.

"We're seeing more people who are working poor needing the help of the state as well, and that's about being able to pay for their accommodation, maybe being able to pay for their food and their medication as well," says Ms Brereton.

But the Business Roundtable says comparing the highest earners with the lowest won't solve the problem of inequality.

"It is much better that we focus on what we're doing that are holding people at the bottom back so that they all become wealthier than it is that we've got something wrong because we've got so many people who are doing well," says Bryce Wilkinson.

Mr Wilkinson says the large portion of New Zealanders without enough education to earn a decent income needs to be tackled, something the report also suggests as a way of closing the income gap.

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Comments [18]

Mike
20 Dec 2011 10:38a.m.

@Dan if jobs are created by the poor as you claim, and not the wealthy, then NZ must have lots of jobs created by beneficaries.

If you take off those rosy coloured glasses you will find businesses need capital, and you get capital by not spending everything, which is regularly supplied by the so-called rich.

As Mat said, NZ is primarily an export nation, basically a big dairy farm with support industries that depends on the rest of the world spending. The Dairy industry and support industries create around 1/3 of this countries GDP and make everything else look small in contribution. This is done not on the lowest wages, as NZ wages much higher than many competitors, but through efficiency. Take average dairy herd size of over 300 cows in NZ while in the EU some countries have ave herd size under 25 cows!

Throughout the economy there is places to improve efficency, and its efficiency that should drive pay rises, not just moaning till get a pay rise.

Saw on TV a million dollar lotto winner who was so poor didn't have a bed last night! Well I can't afford to spend money on Lotto while the so-called poor can? And the hammock being used as a bed was more expensive than a bed! The no bed was a choice, not a necessity. Go to a bed shop and can pickup a matress for under $100 (got one in botany for under $100 new, and botany not known for being cheap), it wont be great, but its still a matress and better than the floor. There is also 2nd hand, even use couch cushions (done that before when had people drop by to stay and no matresses). At a pinch, carpet isn't too bad to sleep on, much softer than a hard wood floor!

Mat
15 Dec 2011 6:26p.m.

Dan, you are the one with lacking economic knowledge. New Zealands primary source of income is through export revenue. Handing more money to lower tax brackets will result in more $ leaving the country. You have to remember that your 'demand' for products and services in our country is mainly generated offshore.. where we have no control on policy. What we can control to an extent, is how competitive our exporters are, through government policy. That will create many times more jobs than simply 'taxing the rich and giving to the poor'. Times are tough for everyone right now.. even China.

Dan
11 Dec 2011 11:27p.m.

@ Mike: Your feeble understanding of the economy is distressing and indicative of the myths being spread around. Jobs are not created by the wealthy they are created by demand from consumers. When there is demand there is a market to sell to and thereby an opportunity to create more jobs. In order for there to be demand from consumers they need money to spend. When the rich hoard all their money in offshore bank accounts or purchase a plot of land that money does virtually nothing to stimulate the economy. In contrast those who spend their money on goods and services (middle income and low income workers) increase the demand and in turn provide the opportunity for businesses to create more jobs. It makes sense for them to have more money whether it be through increasing the minimum wage or lowering their taxes.

sammy
11 Dec 2011 10:34p.m.

what do you expect you lot voted national morons .

Mike
09 Dec 2011 9:43a.m.

What a load of sewerage!

What is poor in NZ? According to many its to be collecting a benefit, which is in turn paid for by the tax payers, ie the so-called rich.

If business is so profitable and being an employer is so profitable, then every whinging whiner needs to do is start their own business and employ some people. They can pay higher wages like they are asking everyone else to do. The reality is running a business isn't so profitable and having employees is a complete pain in the backside.

Today employers need to play social welfare, taxman, justice department, plus education department - all that just paying wages! Eg pay wages and you have PAYE, plus workers who been active like rabbits need child support deducted, student loan deductions, if they are some of the non-paying of fines, get court orders to take out fines too, Kiwisaver ...

And thats only a extremely tiny part of runing a business!

The only way to really get those at the bottom to get more is to get them more active and earning as when we have so many collecting from so few paying taxes, there isn't enough to go around, hence huge borrowings by the country. The solution isn't to tax the so-called rich so we have no so-called rich and everyone collecting a benefit will have to make do on less (Left policy). The better solution is make so-called rich more attractive so those earning less work harder to move themselves off the bottom till they get taxed themselves as so-called rich.

Its like a drug addict. If the drug addict waits till someone else cures them of their addiction it will never happen. The addict needs to make the choice to stop their addiction before the problem can be addressed. In the same way we have a similar problem of the so-called poor wanting everything handed to them with no effort on their own part. The worst money wasting in NZ isn't by the so-called rich, its actually by beneficaries as while they are considered 'poor' they live much higher than many middle income who live on much less. Many so-called rich managed to get ahead by living on a lot less than a benefit.

anon
08 Dec 2011 7:44p.m.

Inequality creates the social problems, simple as that. Its so obvious for myself living through a few bad areas in my life. What is the government's solution? Chuck all the poor people in one area (this is stipulated by cheaper housing prices in that area, so naturally the poorer move there), spam liquor stores everywhere, expect the next generation to be happy, cry when it affects the entire community at one point of time in the present or near future, "more jobs HIGHER PAY!" when in reality capitalism for the rich, socialism for the poor, please.. Its a complete joke, slavery requires you to be fed, economic slavery requires you to feed and house yourself, with the net the young generation already understand that the 1% already controls all the wealth and it is bound to happen this way in a monetary system. You try keeping up with weekly rent, food and power on $13/hour, then everyone is wondering why the suicide rate for the younger generation. There is a difference between needs and wants, and when we have to slave away for 40hours a week just to cover our NEEDS, of coarse we are going to spend the weekend getting drunk on some cheap shit just to have a little happiness in our lives. Wake up sheeple

David
07 Dec 2011 1:45p.m.

@Karl - when you enter into a contractual agreement voluntarily, you agree to be paid the amount that has been stipulated. If you disagree with what he is paying you, you shouldn't have taken the job. Simple as that.

nick a
07 Dec 2011 1:02p.m.

The trickle down effect is just a euphemism for the rich pissing on poor people.

Warwick
07 Dec 2011 12:58p.m.

As usual, the Business Roundtable is putting the blame on the victims by saying that the reason they don't have jobs is that they don't have enough education. The reason they don't have jobs is that there are not enough jobs available for the number of people applying. I can guarantee that I have more and better education than Mr Wilkinson and any two of jobs just aren't there. When there is a job, there are hundreds of applicants for a single position, and no lack of well-qualified people.

Bob
07 Dec 2011 12:39p.m.

@Karl - if you were the owner of the business you would be happy to take the money and the overseas trips too. They will be the ones who have taken the risk with their own money and are now reaping the rewards of their hard work. Maybe you should start your own business and understand how much hard work and graft goes into that and all the extra hours that need to be put in to get ahead....

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