Inequality cuts through the social fabric

In my previous column (Indian Newslink, August 1, 2014) I had highlighted Labour’s plan to develop a high-performing economy that translates into more jobs, better homes and improved quality of life for all of us. The last part of that sentence is crucial: Labour believes that the purpose of economic growth is to benefit all of us, and not just those in the top 10% income bracket. Labour’s socialist democratic ethos means that our policies are based on values that promote eradicating inequalities and ensuring that we are all able to live with dignity. New Zealand used to be one of the most egalitarian countries in the world. Growing chasm Today, there appears to be a growing chasm between those who are well off and the rest of us. Cost of living continues to increase, the rich have become richer and the rest of us are earning roughly the same amount we earned 20 years ago. According to Wellington based author and journalist, Max Rashbrooke, in his book ‘Inequality: A New Zealand Crisis’ (published in 2013), wages just are not increasing fairly – those on low incomes have barely seen their earnings increase while incomes of those at the top have doubled over the same period. The lowest 10% have seen their after-tax income, adjusted for inflation, increase from $10,000 in the mid1980s to $11,000 in 2011. Those in the middle-income band have seen their after-tax income increase from $25,000 to $30,000 in the same period. By contrast, those whose earnings are within the top 10% of the country have seen their after-tax income double from around $50,000 to $100,000 and $150,000 to $300,000 for those in the top 1%. Rashbrooke said, “Despite all the talk we have heard about income ‘trickling down,’ the gains from 30 years of economic growth have gone largely to those at the top.” Another example of this is the fact that New Zealand’s public sector Chief Executives are the second highest paid in the OECD. Yet, more than 2500 public sector jobs have been cut in cost-cutting measures since the current Government came into power in 2008 and the wages of those further down the income ladders remain comparable to their private sector counterparts. Middle Class squeezed Meanwhile, grocery, food and accommodation prices are rising at an alarming rate. Bryan Bruce, in his 2013 documentary ‘Mind the Gap,’ suggested that the middle class is being squeezed from both sides – by the top 10% who benefit from tax evasion to the tune of $5 billion a year, and the low-wage earners who earn barely enough to feed their families. The argument that we become part of the top 1% merely by working hard does not stand up to scrutiny. I know many social workers, healthcare assistants and manual labourers who work incredibly hard. Many of them work two or even three jobs just to pay their bills. If hard work and university qualifications alone were enough to move us into the top income bracket, many more of us would be there by now. Labour’s plan to create a stronger, high-value economy will lift the wages of those at the bottom rungs of the income ladder and ensure a fairer tax system so that middle New Zealand is no longer squeezed from both sides. Lifting wages Research tells us that there is an economic argument for lifting wages – it stimulates the local economy. This is because low wage earners tend to spend their additional income in the local shops. Conversely, high-income earners tend to spend more of their money offshore in overseas shopping and holidays. Unequal societies, we know through international evidence, are less functional – in health and crime statistics. Wide income gaps weaken trust and divide societies – and this weakening social fabric affects all of us. Finally, we have a moral responsibility as fellow human beings. Applied Christianity Michael Joseph Savage, the first Labour Prime Minister and one of New Zealand’s most loved leaders, referred to Labour Party’s socialist principles as ‘Applied Christianity.’ I would argue that the fundamentals of Labour values are found in all our major world religions and in the basis of secular ethics. The idea that we are one in our humanity and that we have a moral responsibility towards the environment and towards each other resonates with most people I have talked to. Labour’s belief in fairness of opportunity and equality of outcomes stem from the fundamental belief in that which unites us as human beings and as New Zealanders. Priyanca Radhakrishnan is Labour Party’s List Candidate in the general election scheduled to be held on September 20, 2014. Email: priyanca02@gmail.com