How inequality fucked New Zealand

A very interesting article from New Zealand, particularly for me as I left in 1985 when "Rogernomics" under David Lange was taking off. All that we see the Abbott gov trying to do here was done decades ago in New Zealand. 

Indeed Peter Reith under Howard went to New Zealand in the late 1990's to study how they'd killed the unions with their industrial legislation laws. My father told me later on that the unions over there just "laid down and died". Reith tried the same thing here with Patricks Stevedores but found much more union resistance than in New Zealand. Eventually his effort to break the warfies ended with a high court ruling against it. 

The same thing has happened now with this gov and welfare changes. NZ has changed their welfare system dramatically, "simplifying" it into only a few payments. Andrew's noises about simplifying welfare here come from the New Zealand experience. Early reports on how people are doing over there under it are not good, with many falling through gaps that weren't there before. 

Well now we have a new OECD report out that measures the damage to economies that inequality has created. NZ has come out as one of the worst affected, along with Mexico. Both of them losing 10% growth between 1990 and 2010.

Pretty amazing for a country that once prided itself on it's egalitarian nature. 

The simple answer is that in the two decades from 1985 onwards, New Zealand had the biggest increase in income gaps of any developed country. Incomes for the richest Kiwis doubled, while those of the poorest stagnated. Middle income earners didn’t do too well, either. 

Because New Zealand had previously been so egalitarian, that world-beating increase still wasn’t enough to rocket the country right to the top of the inequality league table, but it is now doing just as badly on some measures as Britain. In both countries, the top fifth get about 40% of after-tax income; the bottom fifth get just 8%. New Zealand is now just as divided as the country that many of its citizens’ ancestors left in order to find a more equal society. 

How has this happened? Tracing the causes of a growing income gap is like trying to map earthquake fault lines – never a precise science – but it is hard to ignore the correlation between the timing of the increase and the country’s post-1984 political revolution. Embracing reforms known elsewhere as Thatchernomics and Reaganomics with unprecedented enthusiasm, New Zealand halved its top tax rate, cut benefits by up to a quarter of their value, and dramatically reduced the bargaining power – and therefore the share of national income – of ordinary workers. Thousands of people lost their jobs as manufacturing work went overseas, and there was no significant response with increased trade training or skills programmes, a policy failure that is ongoing. At the same time, New Zealand stopped building affordable houses in any serious quantity, forcing poorer households to spend ever-increasing amounts on rent and mortgages. more

They did some horrible things over there after I'd left. My father also told me that the gov ended subsidised rent in public housing, and simply started charging full market rent. There was an enormous amount of vacant public housing after that as people had to move out because they couldn't afford the rent. Old retired couples and all. Dad had voted conservative all his life for the National party, but not after that, said they were bastards.