Are the left lying to us about inequality?

The left-wing parties claim that New Zealand is becoming less equal, that inequality is rising and that nasty Mr John Key, when he isn’t snacking on babies, is plotting with banksters to make things worse.

It is plausible to desperately stupid people but the reality is far from that:

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 Treasury paper follows close on the heels of an ?OECD report which found income inequality in New Zealand was above average for the group, which includes many of the world’s most advanced economies.

Last December the OECD also said the Gini co-efficient – a broad measure of inequality – rose faster in New Zealand than in many other OECD countries between 1985 and 2011. Growing inequality meant New Zealand’s economy had only grown by 28 per cent between 1990 and 2010, rather than the 44 per cent growth it should have had.

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.

Right, so Labour in the 80s caused inequality to rise and since then it has been falling. But was it permanent?

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.”

The Treasury paper also demonstrated that the rise in real incomes following the reforms of the 1980s more than compensated for the rise in income inequality that came during the reforms, Crampton said.

So, instead of resiling from Rogernomics and hanging their heads in shame, the Labour party should in fact be singing his praises. He rescued New Zealand from increasing inequality.

Don’t believe Labour when they talk about inequality rising.


– Fairfax