WelCom News
A newspaper for the Wellington and Palmerston North Catholic Dioceses

Editorial: The economy rocks?


March 2014

Cecily McNeill

New Zealand’s economy has acquired international ‘rock star’ status with unusually high growth projected for 2014, but at what cost? Our child poverty figures are shameful with a quarter of all children living below the poverty line.

Some commentators say the country’s economy has never recovered from major economic policy shifts of 30 years ago; yet one international banker predicts growth of 3.4 percent this year and the latest quarterly survey of business opinion has confidence on a 20-year high.

So why is this not translating into a better life for those families who are struggling to make ends meet and whose children are suffering from preventable, third-world diseases?

Economist Brian Easton, who’s recently published a user’s guide to economic inequality, says all the indicators show New Zealand suffered a sharp rise in the gap between rich and poor as a result of policy changes to tax rates and benefits 30 years ago.

Easton points to child poverty as the single greatest indicator of growth in the wrong direction for those at the bottom.

A major influence on the rich-poor gap is growth in the share of income of the top one percent of adults whose income share has grown from about six times the average in the 1980s to around 10 times the average today.

‘Most of the shift occurred … between 1998 and 2003. The two major influences seem to have been a change in the tax treatment of dividends and an increase in margins for management and professionals over average workers’.

But there is no such help for those at the other end of the economy. The Salvation Army’s State of the Nation report, Striking a Better Balance, released on 12 February, highlights continuing child poverty indicators over the last five years.

Citing the incidence of one young mother of an eight-week old baby whose benefit was halved because she did not attend a job-search seminar, the report shows government spending on income support for families has fallen 15 percent over the period.

Child poverty has stayed at around 20 percent over the five years, but last year the number of substantiated cases of child abuse or neglect rose 3.7 percent and those of violence, mistreatment or neglect towards children rose 1.3 percent.

In response, Associate Professor Mike O’Brien of Child Poverty Action Group says, ‘Too many New Zealand children are spending their lives limited by poverty and carry the harmful effects into adulthood. We need bold, comprehensive and urgent action to address this ticking time-bomb’.

In his Lenten message for this year, Pope Francis calls on all Christians to ‘confront the poverty of our brothers and sisters, … to make it our own and to take practical steps to alleviate it’.