OECD report finds NZ's inequality surge from 1985 to 2005 reduced GDP growth by 15.5%; English rejects "econometricians magic"

OECD report finds NZ's inequality surge from 1985 to 2005 reduced GDP growth by 15.5%; English rejects "econometricians magic"

By Bernard Hickey

An OECD report has estimated New Zealand's economic growth rate would have been 15.5 percentage points higher between 1990 and 2010 if income inequality had not surged in the Rogernomics and Ruthanasia years after 1985.

The report essentially argues that the 'trickle down' theory used for much of the last half century by most developed countries does not work and that the best method of improving economic growth is to reduce income inequality.

The OECD argued that widening gaps between those in the bottom four quartiles and rest handicapped the development of "human capital" through education as poorer income groups did not get the same educational and health opportunities as those on higher incomes. It said reducing those gaps and improving those opportunities would lift economic growth.

Finance Minister Bill English rejected the report, describing the theory as controversial and based on decade old data from a "bunch of econometricians doing their magic."

The OECD released a research paper overnight titled "Does Income Inequality hurt economic growth?" that found that when income inequality rises, economic growth falls because poorer groups failed to improve their education and skills to lift output.

"Education is the key: a lack of investment in education by the poor is the main factor behind inequality hurting growth," the OECD said.

"Rising inequality is estimated to have knocked more than 10 percentage points off growth in Mexico and New Zealand, nearly 9 points in the United Kingdom, Finland and Norway and between 6 and 7 points in the United States, Italy and Sweden," the OECD said. The OECD chart above shows the impact of inequality on economic growth across the OECD through 1985 to 2005.

The data tables attached to the paper showed the subtraction to New Zealand's economic growth potential due to widening inequality was 15.5 percentage points, which was the biggest impact in the OECD and well worse than Mexico on 11.3%. Without the rise in inequality, New Zealand's economy would have been the second fastest growing in the OECD behind Ireland over that period (pre-GFC). Instead it was the tenth-fastest growing. See chart below.

'Mind the gap'

The OECD found that the biggest impact on economic growth from widening inequality was the gap between the bottom four deciles of the income distribution and the rest of the population.

"These findings imply that policy must not (just) be about tackling poverty, it also needs to be about addressing lower incomes more generally," it said.

It noted that redistributing incomes didn't necessarily reduce economic growth.

The OECD said widening income inequality may hinder economic growth by undermining education opportunities for disadvantaged groups, which lowered social mobility and hampered skills development.

The OECD said its findings had significant policy implications.

'Trickle down doesn't work'

"In particular, it challenges the view that policy makers necessarily have to address the trade-off between promoting growth and addressing inequality," the OECD said.

"While previous work by the OECD has clearly shown that the benefits of growth do not automatically trickle down across society, the new evidence closes the circle by suggesting that inequality also matters for growth. Policies that help to limit or reverse inequality may not only make societies less unfair, but also wealthier," it said.

The OECD said anti-poverty programmes would not be enough to address the issue.

"Not only cash transfers but also increasing access to public services, such as high-quality education, training and healthcare, constitute long-term social investment to create greater equality of opportunities in the long run," it said.

"Policy also needs to confront the historical legacy of under investment by low income groups in formal education. Strategies to foster skills development must include improved job- related training and education for the low- skilled, over the whole working life."

'Controversial econometric magic'

Finance Minister Bill English disputed the report's finding in this Morning Report interview, describing the finding that inequality lowered growth as "controversial" and based on decade-old data from a "bunch of econometricians doing their magic".

"It's not at all clear how they've come to that conclusion," he said. "It may be true, but in an economy that's not going growing -- and New Zealand grew poorly for quite a stretch up until the mid 1990s -- everyone gets worse off and the people at the bottom are affected the most."

English did however talk up the paper's focus on improving education for those on lower incomes, pointing to the supervising adults now working with teen parents to improve their education.

"We're putting in practice one by one interventions with people who's life course we can change, focused on the types of drivers mentioned in that report," English said.

"We believe that over time with a focus on education and on work we can break some of those cycles of long term persistent poverty. That's what we're most concerned about. We're less concerned about whether people are on a lower income. Of course in a stronger economy they can get on a better income," he said.

"Regardless of what you think about their method of what they've calculated, a stronger growing economy gives you more opportunity for lifting incomes than a weak economy. I would argue with the OECD with their contention that somehow growth doesn't matter. The reason we had more inequality through to the mid 1990s was to a large extent was because of poor economic performance.

Key blames Greens and Labour

Green Co-Leader Russel Norman asked Prime Minister John Key about the report in Parliamentary Question Time. See the video above.

Key said inequality had improved since National was elected in 2008 and he pointed to the report's documentation of a rise in inequality from 1985 to 2005 when a Labour Government was in place with support from the Greens "for a reasonable period of time."

"Shame on Labour I say," Key said.

(Updated with video and Key's reaction)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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I am with English on this one . We are the most egalitarian society on the planet , ( I challenge anyone to name just one country that is more egalitarian and that you would want to live in ) and where access to free healthcare and access to education is free for anyone and everyone .
The problem is we give the "poor" too much and this has led to a culture of dependancy and and belief in a right of expectation that the state must provide everything
Trickle down is far from perfect , but until someone comes up with a better system than trickle down , it is the only way to improve ourselves as a nation .
For generations Kiwis  went through the free  NZ State education system and they turned out fine . They still do today .
We rely on the state funded healtcare system just like everyone else and its fine .
The harsh reality is there are too many people depndant on some kind of benefit, of almost free state  house  , and this helps nobody get ahead in life .
Coupled to this there are Cultural factors keeping huge sections of society poor , Tithing donations to Churches , and remitances to extended families overseas being examples of impoverishing activity .

Your comment would be funny if it wasn't so sad.
None so blind as those who do not wish to see.
We give the poor too much? If we stopped giving the rich so much, we'd be able to eliminate all poverty in the country overnight.

So who are the so called "rich"  that supposedly get everyting as you suggest ?

Listen to the chatter

Following the "google tax" saga and how much tax they dont pay

The Australian austhorities are now proposing to publish in the public domain a list of all Australian individuals who have $100 million in accumulated wealth and how much tax they pay (or don't pay)

Well that produced a violent response from the low profile under-the-radar in-the-shadows wealthy - but pay attention to who they are

Tax advisers to wealthy Australians say most of their clients are European immigrant families who came to this country with little, and have built up their wealth but are not avoiding tax.


How do the so called "rich " in NZ get "everything" that you describe .?
If you refer to the Rich List , then thank God we have that small number of people among us ,  because almost without exception they are wage payers , risk takers and are the spine of our economy .
If the so called 'rich ' did not exist , we would be almost 100% dependant on the State for our livelihoods .

Actually that probably isnt true for most of them. 
By all means prove yourself right.
a) Invariably they seem to dodge tax, paying little.
b) They put their money in international hedge funds these days where they can extract 20%+ and dont run businesses making much.
c) They dont take risks at least in a true business sense ie making a good.  they may well sell short or even naked short markets, buy futures etc, gamble in exchange artes, but real goods, no.
If the s called rich didnt exist then the vacuum / opportunity would be filled by others, maybe even better.

Their parents had money and income, enough to back them when they were starting out.
Their parents had social contacts and networks that helped them build the correct social skills that led to them enjoying the environment that they are in.

They like money and pawing after it - or see no ethical problem in taking excessive funds from others, being able to easily justify anything that gives them advantage.

Pure luck in a few cases.

They have an intrinsic value (eg looks, or famous family name) that others will pay to have or contract themselves to.

Luck or connections for them or their parents (or spouse, see previous)  that result in them having well above average _income_.  that allows excessive discretionary spending - allows risk taking, and buying off failure, and sponsorship of social and hobby connections, as well as offsetting damage from education and startup expenses.

(eg the number of rich people I've met in business, who when asked for some basic business fundamental advice,  say that their brother-in-law or sister/sister-in-law is an accountant or lawyer, so takes care of ALL of that for them (for free)... and thus they have parents & family who can advance them money existing high end incomes for interested party loans, as well as defraying costs.) 
 Even some tough families (who like mine don't believe in giving children money but will give cheap loans if the business plan is good enough) often have critical mentorship advice and critical contacts/networking experience (mine didn't).

It is these things that make the difference.
Note how government reports never mention these factors?  How their employees never identify them.

You clearly believe that one's locus of control is not in your own hands .
You fail to recognise or appreciate that many  , including John Key , had major disadvatageous upbrinignings , and they made the best of what they had .
I would guess that many of those on the Rich list got very little from their parents except for
1) An understanding of the value of a good education
2) A sound work ethic
3) And in some cases and  ability to see opportunity and take a chance

You could dig around - but here are some foreign examples of the type of repugnant behaviour society in general could do without.
The EU’s most powerful official is under mounting pressure as dozens more multinational corporate names are dragged into the Luxembourg tax scandal following a new leak of confidential documents on Tuesday. Read more
Stuff's Chalkie has something say about the domestic version of events.

If we stopped giving to the public servants then those poor would not exist.....it does no good confusing this with the rich vs poor......this is the cost of public system vs private enterprise.
The real rich are the public servants who are unproductive and hghly paid for being unproductive and these people get their high wages/salaries at the expense of the poor.

Which public servants do you refer to...the  nurses, the police, customs, maybe the IRD or the teachers....???
As for unproductive, the largest area is the rort driven rental property/house/land banking scam being manipluated by the power elite.

Rastus , here's a WTF fact about Public Servants wages .
The Head of Watercare Services is a PUBLIC SERVANT who earns a staggering , unbelievable and unimaginable  $900,000.00 a year !
Thats around $500.00 per hour !
Our minimum wage is $14,25 an hour , so he earns the wage of a staggering 35 people on the minimum wage !
Thats for a job where ALL decisions are taken by committees, accountability is ZERO , there is no need to to manage finances ( you simply charge whatever you like for water and connections in a Monoploy )
Now apart from that being a WTF  fact , it alludes me as to how any Public Servant running a monopoly could ever be worth so much.
Its quite sickening in fact .
To think I am paying for that , just p!$$e$ me off

Try the lotteries commision head sharang as well, the job is handing out lotto takings to charities, what would you expect that to pay?

Agree absolutely - for those at or near the top.  Captive market and so on.  They need not focus on where revenue comes from, only expenditure.
I'd like to see top jobs put out for tender...best man at best price. 
Dig further down though and the workers are getting hammered.  BWOE, our local hospital bosses hammer the nurses...if one is sick they won't get a relplacement, many get no meals breaks and so on - often in life and death scenarios. Yet boss man gets a slap on the back, bigger pay packet for keeping to budget.  He did beggar all, the workers made it happen.
Some are doing very nicely in NZ and ...but most borrow and struggle, including many public servants.

I brought it up many times.   Found this when my bosses at the power board just kept getting raise after raise, and I was stuck on minimal wage "because we had to keep costs low".

For him the salary was dictated to the Power Board by the Higher Salaries Commision.
So I looked into some of the process and had to stop because it was making me physically ill.

Critieria were things like:

Other salaries paid to professionals at this level in the industry.

Total business turnover.

The types of perks (brand of car etc) that were driven/enjoyed by similar successful companies executives in similar organisation positions (eg if an executive in Auckland drove a 1 yr release BMW, and that would cost $100k, then the position should be based around $100k because that's what executives drove and thus what salary they needed to look right)

Number of Direct reports.   (this was how "hard" they were working)

Total number staff employed by the business. a big empire was more successful so the more staff you had the more responsibility you must have.

Degrees and other qualifications.

What WASN'T a factor : business profitability.  growth in market share.  sustainability environmentally or economically. salary scales in rest of organisation.  complete lack of accountablility was assumed and thus no factor.  No kpi or target growth was a salary factor (assumed bonus schedule).

Yup, this is wrong, for both public and private companies.

Wow.  So much wrong with this statement.  Is university education free?  I pay to visit the doctors so that cant be free either....State handouts, yes we need to look at that.  What about tackling the biggest drain on the treasury pensions?  Why not means test those?  That would make the biggest difference to the nations coffers.  Or are there other bludgers you had in mind?I also suggest tyou have a look at Norway, Sweden and Denmark for egalitarian societies and see New Zealand doesn't really stack up against that.  Unless you are over 45 that is...

Norway has oil and the income is used for the people . We , regrettably,  have the Green party ensuring we will never develop our oil and gas resiurces fully .
Sweden has more than its fair share of problems, and is taxed to death  .
Denmark is fine , but I would not want to live there

Norway has oil in a convenient spot, close to the market where it's to be sold.
New Zealand is far away from everywhere, so oil companies do a cost/benefit analysis and find that it would really be worth their while to set up shop here. The NZ government tries to lure people here by charging the lowest amount of royalties in the world, and een this doesn't help.
So even if we had somebody developing the oil fields, a very minimal amount would flow to New zealand, anyway.
Not worth ruining our seas, I reckon.
And methinks you credit the Greens wth a bit too much power...how exactly are they 'ensuring' NZ will never develop our oil and gas resources?
Would you volunteer to have your back yard fracked, would you?
Swedes tried to put a right of centre government in, and decided they didn't like the growing inequality this government caused, so they voted them out again. They can't be that sick of paying high taxes if they did that.
And Denmark? Well, chances are they wouldn't let you live in their country anyway. They don't like foreigners.

oil industry was NZ's third biggest export earner.

Does this say more about our other industries (4 and below), than it does our oil industry?
I imagine dairy is the first, what's the 2nd? Meat?
And how big the gap between number 2 and 3?

. so your'e happy for the oil income to be used for the people?  So I guess your also happy for the dairy income to be used for the people?  Which is what one could consider is happening in NZ via taxation, wff etc..

Yes , Oil revenue and royalty income should be used to benefit society as a whole, and the State should ahve a stake in the game  .
Its a diiminishing resource 
Dairy farmers take risks , buy and own the cows , the land and work hard for their income , and are enitled to it  .
Oil is a natural resource and should be used for the benefit of all

The State has responsibility to maintaining the playing field for the home team.
They are failing. but those who set up the system never foresaw such possibility so there is no ISO 9000 type feedback to correct the problem.

time to vote.

oil companies take risks, buy and own the rigs, risk their workers lives and otherwise work hard for their income.
Land, sun, rain, and rivers are natural resoures, should they not be used for the benefit of all?

sun, rain ... yours if they land on you or your legal abode (or company grounds).  shared sustainable access if in common space (shared with trees and animals).

Land, yours to work, doesn't belong to anybody, certainly not to government or society. But your investment _should_ be legally protected as to encourage more investment and better quality development otherwise there is no reason to work it well or for better return.  And it's the investment which is the property which is owned, not the land. stealing is theft no matter who does it.

So no one, especially not government or council, can demand that a person work land or use resources "for benefit of all" because the council and government don't own the people or the resources.   

You're right they don't own the people or the resources but they sure as hell pretend like they do.........and some of those people who face north while being buffered by a nor-wester so hard they can't even lean against the wind would like it very much if both Councils and Government had full ownership over the people..

Um no. 
a) NZ has little oil and gas and what's left is deep and risky to get out, its simply too little to be a game changer aka Norway.
b) The Green party isnt in Govn and hence has no power what so ever to stop deep sea oil drilling except via public opinion, which in a democracy is a peacefu and reasonable way to go about things.
c) Demark has a huge wind industry btw.

Most of the time I agree with you Boatman but not with your comments above. Free education...you should check out some Decile 1 schools first and see the probelms the poor face. And then housing...enough said.

I take you point about the run -down state of decile1 schools and the shocking condition  of housing in poor areas , but the solution is not to further weaken the wage payer or the taxppayer and throw the  money at the poor and indigent .
These issues can be changed through leadership and sense of community and in the case of run-down hosuing ,  legislation  to improve the houses
I really feel sorry for the people living in these condtions , but giving them more benefits and monetary handouts has never helped them before , and will not help them in the future

I have been involved in housing at all levels (but on the sideline)

I absolutely assure you that legislation to improve housing will only serve to raise house prices, so you end up with nice houses that only the wealthy can afford to use.  So what then of those who could only afford poor housing.   I was never so wealthy as the time I was living in a garage, costs were low, opportunities high.  But someone complained and I had to move into a house, and could no longer afford to continue university course.

Boatman I suggest you spend Christmas this year at one of the city missions, you might find your blinkers will removed for you.
Generalizations become no-one

How's about you go to the mission and try the bet in this piece...
Let us know the results.....,
Just sayin'..

English is wrong.  So ie OECD.

It's not the poor not educating.  then they'd just be highly educated poor people.

The inequality is a problem because wealth is about re-investment of capital, but the poor are forced to consume the majority of their small revenue.   thus they can't develop or invest in _anything_.   they are a scattered third world poverty interleaved underfoot of taller poppies of first world successes.   and just like the third world they don't have enough personal property or capital to develop.

And no the healthcare system isn't fine.  Holy heck it isn't !!
If it's worked for you, you've been on of the lucky ones.  

the difficulty is that success is costing too much.  All the extra costs and compliances, chair warmers who have to be paid and can price set on others through politcal control.  Pushes the price of survival up so high that few can participate, and growing population numbers are only making prices rise.

You know if the information changes, improves or becomes available and supports a new determination, I change my mind.  BE is unable to it seems, mind boggling we have him as a finance minister.
The data/info emerging is that those at the bottom of the income ladder spend all their income and save little. So their spending boosts an economy creating opportunities, business growth and in turn jobs.
NZ's inequaility has deteriorated since the 1980s that is an irrifutable fact and just because we are better than many does not mean that is OK or good enough. Especially as its getting worse and not better.
Trickle down has long been debunked btw as absolute codswollop so no it isnt.

Nice Keynes quote btw.
Unfortunately “facts” have no place in dogma or ideology so changing them doesn’t impact anyone with set political views. After all why believe facts you don’t agree with when there are so many counter facts you do. Ah sometimes I wish we were ruled by technocrats..

Trickle-down requires a high cost public service to operate and the costs of this system are far too expensive........by the time the public servants operate the system and get paid  their wages/salaries, too much money has been transferred from the business/private sector to the public sector and the end result are the low-paid minimum wage jobs which is the cause of the inequality.
People on minimum/low wages are there because of the excessive cost of the public system........It is very interesting that the number of children who are deemed to be living in poverty (by NZ standards) totals about the same number of people who work in the State Services sector.  Someone is always going to suffer when you have overpaid public servants delivering inefficient services..........and GDP is distorted for the same reasons........
The stupidity of the OECD to stick to measures like GDP is of no surprise!!

Thank you , I could not have sait it beter myself

trickle down requires those receiving the benefits to spend them back into the community.
ideally this would mean that they paid people , who paid people who paid people...etc

In our current system there is little velocity of money, high intrest rates and taxes means most introduced funds only last 3 - 6 times before it is reabsorbed by the bank or government.

the other aspect that wasn't adaquately accounted for is that successful people who were receiving the benefit had setup up successful systems of capturing the lower levels of wealth and channelling it back up to the top layers.    We can see this in how luxury and fancy items are the ones carrying the greatest premiums, are seldom bought and at discretion.  These, of course, are where the "trickle down" money was being spend because successful people tend to spend more in discretionary luxuries than in commodities and generic necessities.  Money spent on these high price items, went to the businesses of successful people, who tended to have highly paid staff.  They highly paid staff also needed to shop within luxury and premium areas to be socially acceptable to their clientelle.  sucessful business people knew this, and often that is where their business were setup to capture the profits!    Thus there was never a chance for "trickle down" to go against the current flow.

It has nothing to do with public service.

You can try a similar Keynesian approach to paying public service people (ie boost the economy with high government spending) but it suffers a similar problem, that in order to pay for the extra spending then the whooe population ends up paying more to cover the extra cost, but each step is velocity of money related, and diminishes it's revenue sourcing.  This is why it is physically impossible to "tax a country into wealth".

In scandanavia if it wasn't for energy exports proping up their already low velocity of money they would have collapsed by now

Yet a public healthcare system absorbs 1/2 the GDP that a private ones does plus produces a longer life expectancy.  If you actually look at the old US system its costs were also growing at 7% per year and treating less people and using its muscle to not pay for treatment.
So lets not bother with real data eh...

thats because private healthcare has high pressure on it's customers.
the vulture squadron are highly unethical and see your money as something you'll find no matter what if your health is an issue (quote from my Australian Stenographer friend).

that gives high inelasticty to the demand.  Sick people have no power.

By putting in legal controls that was pushed down, but when the legal council become complacent and self-serving both costs will skyrocket.

Bill taking John's lead and name calling anyone who speaks truth to power.

Nonsense , there is no truth in the OECD report , its a figment of some looney left voodoo ecomonist's imagination ......... like Joseph Sitglitz

Yeah, the Nobel Prize winner guy - but he's just another left-wing conspiracist, eh?  A henchman for the oppressed. But then maybe the oppressed are also a figment of our imagination.

That will explain why food parcels are being handed out at a greater rate than ever and Graeme Hart is about to have a second super yacht built, yep the reason for that will actually be that inequality is imaginary.

Wow , Graeme Hart is the exception ( the only one ) and not the rule .
And the issue of food parcels is hopelessly distorted by TV News stories.
Last Christmas the City Mission Christmas lunch for the poor was invaded by a buslload of wealthy pacakge tourists .
While this is the exception , ( one hopes ) , there is also no way of knowing the real fiancial position of those who pitch up fopr a free lunch
We have always had the poor among us , and always will , the good book has such a reference .

He is not an exception he is an example there are a fair few of him around but there are a whole lot more who struggle to keep a roof over their heads and make any sort of progress. Things HAVE changed I know it, because I have been here all the while that they have.
I find it really quite telling that NZers are prepared to accept how work for those who will never be brain surgeons or creative accountants has all but dried up and what is left has become impossible to live on and yet there are people who are prepared to actually blame those who are worst affected.

One of the most stupid things NZ and AUS have ever done was to ape the big bros in the US and UK and introduce university fees for residents. It does not take any "magic" to understand that this together with the very inhomogeneous quality of schools entrenches privilege and undermines meritocratic society. 
The price NZ will pay for this folly will not be limited to a few percentage points lost in growth, I am afraid. It will rob generations of social mobility and turn NZ into a 3rd world hole in which the rich have to barricade in gated communities. 
"User pays", yeah right, what cr_p. Like Mr and Mrs Rich John Key bailed out after they misinvested in SCF. Real market economics at work here, hahaha ...
For my part, I rather pay tax to finance education than Work & Income. 

I am very happy to have my taxes pay for education , but we have been doing that for 100 years , and still not got to where we need to be .
So we need to revise the way we do things to ensure school leavers can maximise their potential
I also dont mind paying for the benefit for real needy cases .
I resent seeing the number of unemployed young drifters on the benefit  I see in the District Court in trouble for everytihing from substance abuse to welfare fraud and just plain criminal activity like theft .

but your taxes _don't_ pay for education.

They pay for government reports to get written, and for pensions and unemployment.

education is paid for by government bonds. (ie borrowing), so is most roading and medical


I refuse to be PC about this , its time to call a spade a spade
Read the OECD report ........... its a load of left-wing twaddle !
It open advocates increasing "redistribution through taxes and benefits" their words , not mine
We already do too much of that , and too many of the beneficiaries smoke , drink  and gamble the money away every Thursday .
Its tragic .
 Just visit the Clendon- Inn Pokie room tomorrow Thursday there will be a queue af people waiting to tip the benefit money into the pokie machines . Its easy -come-easy-go  and there's more next Thursday
Then take a look at the queues at Manukau's McDonalds tommorow (Thursday ) at lunchtime.
That money should be used to buy fresh fruit and veggies instead , and it will do for many more meals too  
They often dont buy food for their kids ( of which they often have far  too many to properly  feed , clothe and educate  ) and then plead poverty.
So we should educate them ?
Well we have had free education for every generation alive today , and it has not solved the problem .
We need to eliminate the culture of dependancy and handout expectation  in NZ

Damn right. Eliminate the sordid NZ culture of dependency. We all know who we are talking about.
Dont give them money for nothing. But make sure that even in the bad suburbs they live in they have high standard schools and later on free access to university or vocational training. Not sure why you see a problem there. Yes, it will cost money, money we can save elsewhere like on bail-outs of SCFs and their stinky rich clients.
From my point of view education is a - at least in the developed world - a human right.

Yes , education is a human right , and we should go one step further an make it a compulsory obligation .......... to finish school and get a skill .
Too many poor people drop out of school as soon as they can , and end up in trouble with the law because they are idle with nothing to do and as a result their lives have no constructive meaning .
I said it before its tragic

If it is a human right, then put _your_ money where your mouth is and you can pay for all of those of us who can't afford that right.

5 times I've had to drop tertiary education from lack of funds.   

Put your money where your mouth is or STFU

Sure, Boatman and I will run for Prime and Finance Minister next election and then we will make sure that taxes are spent on the right things. In the meantime, please be so kind and allow us to have an opinion before taking the country over, will you.
Also in the meantime, could you maintain a minimal standard of politeness? Or who TF do you think you are?

Could you please classify "poor" Boatman?
Compulsory education is daft. This coming from a teacher. The education system is not designed for everyone and caters for less than 40% of the student body. It caters purely for the academic sort who wish to pursue tertiary quals.
I've had 17-18 year olds wasting their time at school based on this nonsence they need to finish school. When the leaving age was 15 (when I was at school) it was socially acceptable to leave school and start a job or apprenticeship allowing the individual to pursue their own career path and yes, it may have been pumping gas or milking cows but it was not seen as the failure our young people see those jobs as today.

Oh, yes, abolishing the vocational system for the academically untalented and turning every nonsense into a university discipline was of course another disastrous decision. 
A lot of things have gone wrong. And nobody is even trying to right them. 

People have been trying to right things, but the government just taxes us more and puts more hurdles and more regulation in the way.  I needed the time and money for me business as well, so there's only so much I could afford to do for those who don't appreciate or reciprocate.   In the meantime those who were seeing the problem were ecstatic to get a paying job even if that meant kiss butt for the problem causers.  Those who weren't personally just say we're imagining it or troublemakers...or even mentally distriburbed.  In the end you'll all get the society you worked to create.   me...I'm almost broke (thanks fonterra) and not interested in helping any more.

education won't solve anything - what would we educate them into?  Even NZ one needs so many regulators to tick checkboxes.

I've been working on the culture of dependancy issue for many years.  Do you have a solution?  In the time I have been researching it, NZ has developed a PC obsession of public ownership and civilly owned rights that would make Marx proud.  (Groucho or Karl, I'm not too sure which).   More "fairness" and more oversight around every corner, competitiveness is seen as damaging.

The oly cure I've seen for dependancy is to create a playing field in which the poor can proudly field their own team.  It is only when they contibute and get the rewards from that contribution is there any point in them signing up - otherwise why should they?
 Better to poor and have friends, and social assets to enjoy, after all they still vote - than have to work at some crappy job with no satisfaction, lousy respect and nothing to show for it.

Great posts Boatman, the best idea I"ve ever seen tabled is beneficiary cards that only allow benefits to be spent on the essentials.  No idea why these haven't been introduced. 

Goodness me anyone would think that you thought hardship and deprivation occurs only in beneficiary circles..

Your post is rather vague and generalised, care to be more specific....
Boatman makes great points; human beings need to be motivated to work and to suceed.  If you make the benefit a comfortable way of life you will see more people on benefits.  A great way to decrease hardship and increase quality of life is to get people into paid employment, not more hand outs. 

The PC brigade stomps on them, and beneficiaries learn to trade and workaround them.

The PC brigrade create issues saying it's unfair to tell people what they can and can't spend money on ... and that it limits them to certain participating stores.  Also that it makes them feel "uncomfortable" because they pay with a card that others might see and think they're poor.
 Also came to be a problem because the cards themselves became tradeable, and the goods purchased would be traded at major discounts for addictive products often on the black market.   It was decided the expense wasn't worth it to manage it, BUT it is available for some who the social authorities decide have no control over their spending habits.

Come on guys, find the root of the issue rather than just sniping at the victims. Opportunity is lost when you must support yourself by entering work rather than becoming educated. The amount of opportunity you lose is very dependant on your personal circumstances.
It is this opportunity gap which is being misconstrued as a straight financial or lifestyle choice, that poorer people are not putting in so readily to their own improvement or don't see it as very important.
However the comparative burden to achieve the same education from a lower income base is markedly higher than those with access to better financial support and this is the disincentive to education which is reported as "poor people don't want to study".

Well said Spinach.

Some migrants , for example many of Indian descent , arrived here poor, and have worked themsleves to death and educated their children to become the backbone of many of our professional classes.
Others , well ............ 

And there are plenty of them nowadays who do not.

plenty of locals have worked themselves to death trying to do similar.  Their honesty and competetence seems to keep them out of those professional classes you are referring to.

Okay fair comment .

Much of the difficulty is what you highlight in the poverty culture in your other post.

Why should these people struggle to maintain Middle Low class through Low Middle Class.  Seriously what's in it for them?  the cost of living is so high and respect so low, and chances of employment so low, entertaining yourself with crime or drink is a reasonable alternative - at least if you have nothing then nothing can be taken off you.  These people know they'll never land that 80- 200k job.  They don't like being in offices and worrying about money all day, and ral can't be bothered with office politics,  your world holds nothing for them, so why should they participate??

FYI , I also  dont like being in the office and worrying about money all day , but  over the years I have had to feed my family , pay off  the mortgage , put diesel in the truck and pay my taxes , so I go to the office and worry about money (I used to worry all day , now its just  sometimes )
And I dont earn the salary you suggest in your post , we have gotten by on much less over the years .

over the years I got made redundant time and time again.  always buckled down when asked, studied when I could, went back to work if I could get a job when I ran out of money, tried to run own business when I couldn't get job.
 Admitedly my ex-wife spend everything and the kitchen sink, when we were married which was a huge set back.

Just never really got ahead.

Now that farms selling up, looking at trying university again... 5th times the charm?

Updated with exchange in Parliament between Russel Norman and John Key on the report, in which John Key blamed Labour and the Green Parties for the rise in inequality.

Russell missed an opposrtunity there when Key responded (in defence) with a quote from the OECD about broadening the tax base. Russell should have come back and asked him then if he favours that OECD recommendation, how his government has or intends to broaden that tax base.

Im with Boatman, 
We should be talking about opportunity and personal responsibilty.

Yes, the opportunities our politicians have and the personal repsonsibility they need to take to arrest the growing problem.

If you're arguing for less Government and more Personal Responsibilty, then I couldn't agree more ;)

Well yes, less government reliance on using its coercive powers to tax labour and more personal responsibility for the wealth of the nation by using those coercive powers to broaden the tax base to include those individuals and entities presently avoiding their reciprocal obligations to our society.

A personal account from a secondary teacher/Dean:
Student A
Arrives to school in pristine uniform, fees paid, donation of $300 paid, plays sport/music/drama, in top 25% academically, parents attend parent-teacher interviews, can afford school camps/sports exchanges/overseas tours ranging from $500 - $12,000.
This student is often acknowledged at prizegivings and is given leadership opportunities and will graduate from school with U.E. Highly likely to study at university.
Student B
Arrives to school in second hand uniform, fees unpaid, no donation paid, unlikely to play sport or be involved with extra-curricular due to cost/transport. In bottom 25% academically (though not always!). Parents don't attend parent-teacher interviews. Student tends to have attendance issues <85% sometimes due to excessive illness - in a few instances due to substandard housing, poor behaviour as a direct result of inability to read/write/learn. Often have addictions and are socially irresponsible. Student is unlikely to leave school with NCEA Level 2 (6th Form cert) and likely to be suspended/excluded. Parent is unlikely to be supportive of the school and avoids most contact including phone calls/ emails and letters.
This student is given a degree of guidance and support; however, it inevitably comes to little as the family/community and society they're brought up in leaves little hope.
The pollies debate inequality, well I experience it daily and I don't begrudge the students like student A, I just feel helpless for the likes of student B.
It appears those above who victimise those on benefits/low income need to spend more time in their communities restoring a sense of belonging for all rather than judge them for their inadequacies. 

Interesting frontline views, thanks for sharing.
There are probably also types C, D, E etc that are less extreme than your examples. But be it as it may, you have to start somewhere. Feeling empathy for "hereditary" bad attitude probably will not be enough. 
Raising building standards in NZ to first world standards would de a good idea, having at least one TV or internet-TV channel solely dedicated to educationally valuable content (quality documentaries etc) would be another. Or how can one instill respect for education in a society? 

And one more thing for you to ponder.. an RTLB (Learning/behaviour resource teacher) who works in a range of Primary/Intermediate and Secondary schools has observed in recent years the increasing number of five year olds arriving to school with massive social/behavioural and learning issues.
Remember folks schools represent society whether you're directly part of it or not.
Inequality is not just about $$$.

Yes. Media, or should I say 'entertainment' is the new circus of Roman times....keep people numb and occupied with mindless trivia, and they won't ask difficult questions.
And if they do ask difficult questions, villify a subsection of their own, so the pack turns on itself. (some on this site seem to heave learned this lesson particularly well, I must say)
News: The rich telling the middle class to blame the poor for the state of the nation.
Everything is about instant gratification, this consumerist society is wreaking havoc on our planet, our wallets, our psyches.
I do despair, sometimes.
haven't watched TV, or owned one, in over 8 years. Can't say as if I miss it.

I watched the election, I cant remember an instance before that.  Its like KFC, I pass one, I happen to be hungry so consume some and regret it for 1~2 years, before one day Im hungry again. 
"The rich telling the middle class to blame the poor for the state of the nation."
Interesting line, and yes the parasites deflecting the blame, very true I suspect.

BTW, oil is dropping faster and faster,
The one year shows this well,
I wonder where it will find a floor, $35 again?