Despite the rhetoric, inequality not increasing in NZ

Stuff reports:

New Zealand needs to “change its tune” on inequality, think tank The New Zealand institute says.

The group, which is supported by many leading business people, made the call following the publication of a Treasury paper which found inequality in this country has, with some variability, largely remained constant for the past 20 years. …

The new Treasury report acknowledged inequality in this country did rise from the late 1980s to the early 1990s. But it said that since then inequality had – with some variability – remained either constant or had fallen slightly. (Read the report in full here)

In a statement on Friday, NZ Initiative head of research Eric Crampton said “New Zealand simply has no problem of rising inequality”.

In contrast, income inequality had risen in may parts of the world and New Zealand seemed to have imported the narrative that the gap between rich and poor in this country had been widening to the same degree.

“The most striking finding in the latest Treasury work is that inequality in consumption is lower than it was before the reforms of the 1980s. While salary-based measures of income inequality have not declined as dramatically, a lot of work ignore the fact that the tax and transfer system already works to equalise incomes,” Crampton said.

“In the end, it’s consumption-based measures that give us a better picture of real differences in how people live.”

So when you take account of the tax and welfare system, there is less inequality in NZ than the early 1980s when for some bizarre reason socialists hark back to as a golden era.