Openness on company ownership: the government’s response

I have a story in the Guardian today, about New Zealand’s poor record as a conduit for illicit global finance. I didn’t have space to give much detail on the government’s latest move, a register of true (“beneficial”) owners of companies. So below are some questions and answers with the relevant minister, Commerce and Consumer Affairs Minister David Clark.

Will trusts be caught by the proposed register of beneficial ownership?

There is a register of companies and a register of limited partnerships. The reforms announced mean that those registers will contain information not only about who the shareholders and directors are (as currently), but also about who the beneficial owners are. If a company or limited partnership includes a trust in its corporate chain of ownership, then the trustees of that trust (but not the settlors) may – if they meet the definition that you cite – qualify as the beneficial owners.

In practical terms, this means where a trust has any beneficial interest in a company, we will now be collecting all kinds of information we were not collecting before. The changes mean we will be able to look through those trusts where required.

By contrast, there is no register of trusts. The Law Commission recommended against creating such a register in its 2013 report. The Government accepted that advice when it passed the Trusts Act 2019.

However, it is unlikely that trust use will subvert the reforms I have announced. The reforms that led to the Trusts Act in 2019 mean that there are a lot more requirements involved in operating a trust these days. I also note that recent reforms to the Tax Administration Act 1994 require trusts that generate a taxable income to disclose a lot more information to Inland Revenue about the parties to the trust.

The Cabinet paper mentions extra funding for administering the register, but will there be extra funding for verification and enforcement?

The Cabinet minute notes that “the ongoing operating expenses to provide for a beneficial ownership register and an identifier system are estimated to be $3.4 million per annum” (rec 31). While details are still being settled, this will include an annual sum for identity verification (i.e. checking that a beneficial owner is a real person) and for enforcement (e.g. prosecuting any person who provides information to the Registrar knowing or being reckless as to whether it is accurate [rec 22]).

Will the Registrar verify that a beneficial owner is who they say they are?

The Registrar will systematically check/verify the identity of every beneficial owner (both new ones, as they register, and existing ones, in a stand-alone work programme). However, this verification will be limited to checking that the individual is a real person and that the individual communicating with the Companies Office is that same real person (and not a third party). What officials are considering is the possibility of the Registrar going further – where there are red flags – and verifying that the individual in question is in fact a beneficial owner of the company or limited partnership concerned.

There is no apparent mention of empowering any agency to actively check for failures to comply with the register or punish non-compliance (though penalties are listed). Does that not suggest the register might be relatively toothless?

The Registrar will have the power, and the funding, to enforce the new offences set out in the Cabinet minute.

Directors and shareholders will be able to apply to have their residential addresses suppressed. But what will the test be? Will requests be automatically granted, or will people have to show likely harm from publication of their address?

This will depend on whether the request concerns the display of the residential address on the entry for the company or limited partnership in question, or the inclusion of the residential address on a document that the individual uploaded at some stage in the past. In the former case, the Cabinet minute notes [rec 25.1] that directors and shareholders “can require the suppression of their residential address from the main register information if they provide an address for service” – in other words, there is no test beyond the provision of an address for service, so there is no need to show the likelihood of harm. By contrast, the Cabinet minute also notes [rec 25.2] that they “can require the Registrar to suppress their residential address from uploaded historical documents if they provide an address for service, in return for a fee, if they can demonstrate specific safety concerns.

It must be stressed, the use of a residential address has previously been a proxy for an individual identifier, but did not always work effectively, especially where someone had multiple addresses. The implementation of the unique identifier system, will make linking connected interests far more streamlined.

The 2021 Financial Action Task Force report on NZ pointed out multiple problems. In light of these issues, don't the changes announced (beneficial ownership and individual identifier) look rather inadequate?

The proposed reforms are specifically targeted towards addressing deficiencies related to the transparency of beneficial ownership of companies and limited partnerships, and will go a long way towards improving New Zealand’s compliance with the FATF standards related to this issue.

Stuff: Rich list donors are great for political parties but not for democracy

Read the original article on Stuff

In a democracy, government is supposed to be “of the people, by the people, for the people”, in Abraham Lincoln’s famous phrase. The recent flood of donations to National and ACT, though, suggests we risk getting a government of the Rich List, by the Rich List, for the Rich List.

National has reportedly, in just one month, raised $1.8m in large donations, and ACT $850,000. These are extraordinary sums, roughly ten times the normal amount for a non-election year. And what no-one seems to have noticed is that, in National’s case, all bar one of their 17 donors are on the Rich List.

Graeme Hart, worth $11b and New Zealand’s richest man, reportedly gave a quarter of a million, as did toy entrepreneur Nick Mowbray (family net worth: $2.5b) and former Brierleys chief executive Murray Bolton ($400m). Other mega-donors reportedly include former strip-club owners the Chow brothers (a reported $500m) and property investor Trevor Farmer ($750m).

The only apparent non-Rich-Lister is Mike Thorburn, who, news reports suggest, is the inheritor of the ECC lighting empire. ACT’s donors, meanwhile, include Hart (again), and billionaires Rod Drury and Stephen Jennings.

The issues raised by such donations go well beyond the Right, however. A number of individuals face charges relating to allegations of concealing or improperly reporting donations to the Labour and National parties while two people are facing charges relating to allegations of fraudulently depositing money into a New Zealand First Foundation account and Te Pati Māori is being investigated over its reporting of donations.

Donations cause our parties recurring problems because they revive the age-old concern about the confluence of politics and money. Liberal democracies insist that every citizen should have an equal chance to influence politics, even while allowing concentrations of wealth that are often translated into excess power.

This can take the form of a quid pro quo: a donation buys a favourable decision. Such instances, thankfully, are rare here. But one of the most concerning aspects of the NZ First case is that, allegedly, the party's fundraising foundation hid thousands of dollars in donations from industries directly affected by its MPs' decisions.

Perhaps nothing untoward happened. But if so, why the apparent effort to hide the donations? The appearance of misbehaviour should, by itself, concern us: even just a suspicion of corruption can corrode people’s faith in politics and stop them voting.

Donations can also have a subtler influence, biasing politicians not towards specific individuals but towards the wealthy as a whole. The Rich List donors represent not even the 1% but rather the 0.01%. (Almost all, moreover, are Pākehā men.) And the $1.8m they have given National is a large sum, domestically speaking, worth nearly half what the party spent contesting the last election.

Research by Victoria University’s Thomas Anderson and Simon Chapple shows that, between 1996 and 2019, big donations from businesses outweighed those from trade unions by four to one. If political parties become dependent on large donors for the cash needed to contest elections, how will they not also become, subtly and over time, biased towards those donors’ interests and worldviews? As the Stuff columnist and former National Party staffer Ben Thomas has observed, donor relationships can, in a given policy area, “change your idea of what’s possible or desirable”.

Several of the donors, Hart and Farmer among them, founded their fortunes in the heady, hyper- individualistic 1980s, when state assets were sold at fire-sale prices and inequality and child poverty soared. If, as ACT leader David Seymour says, such donors are dissatisfied with “New Zealand’s long-term direction”, and want other values “cemented in a more serious way”, we might reasonably suspect they seek a 1980s revival entirely out of step with the public’s desires.

The counter-argument is that wealthy donors are nobly disinterested individuals who simply “care about democracy”, to quote National fundraiser (and former Cabinet minister) Paula Bennett. But this seems inconsistent with what we know about money and politics, which is that the former tends to corrupt the latter. We make politicians declare every gift they receive over $500, on the basis that these things typically lead to bias; why would we suddenly abandon such suspicions when it comes to donations of $250,000?

Donations can, finally, create imbalances between parties, allowing the richer ones to buy more advertising and employ more campaigners. National’s advertising expenses will be capped next year, during the official three-month election campaign, but no restrictions apply before then. It could spend large sums on a “permanent campaign” for the next year or so, in a manner that other parties, except its soulmate ACT, may not be able to match.

The party expects the money to keep flowing: “I’m not finished here,” Bennett told reporters. That would be good news for National, but by no means for democracy.

Stuff: Excess profits and lack of competition play role in inflation story

Read the original article on Stuff

Every good political narrative needs a villain: otherwise how do you create a sense of crisis, or present your own idea as the solution? And so it is with our hugely inflated cost of living. The National Party already has an evildoer in its sights: the government’s supposedly wasteful spending. Some commentators see a looming threat from workers whose wage demands could push inflation still higher. But are these really the right villains?

We can, for a start, take Labour out of the police line-up. It’s hardly Grant Robertson’s fault the cost of bringing a 20ft shipping container here from Shanghai has gone up tenfold, from US$500 pre-pandemic to US$5000 last September.

Nor did he launch the war in Ukraine that has caused the biggest commodity price spike in half a century, while sending oil prices soaring. And although inflation may be 5.9 per cent here, it’s also 6.2 per cent in Britain, under a Conservative government, and 7.5 per cent in the States. It’s everywhere.

Examined closely, official figures show nearly four-fifths of our current inflation occurs in three sectors: transport (mostly oil, plus second-hand vehicles); food (especially fruit and vegetables); and housing (rising construction costs and rents). Very few of those increased costs relate to public spending or regulation.

As to the supposedly “massive” $6bn in new spending Robertson will announce in May’s Budget, we mustn’t forget that the government already buys $110bn-worth of goods and services each year, and the price of those items is rising. Easily half the $6bn could be taken up just maintaining government agencies’ purchasing power: it’s a reaction to inflation, not a cause of it. And given the state of our water pipes and social housing, we need – if anything – to be investing more, not less.

Countering inflation is of course a core role of the Reserve Bank, which will presumably keep raising interest rates to dampen down demand. Politically, though, Robertson can’t just sit idle on an issue rapidly dominating public debate.

In the short term, the best he can do is ease inflation’s impact on the poorest. Inflation can actually be redistributive, because it erodes savings (largely held by the well-off) and makes it easier for governments to pay off debts (their tax take goes up as wages and prices rise, while the dollar amount of debt stays the same).

But that’s true only if the lowest earners have their purchasing power protected – rather than taking the biggest hit, as they are currently. Halving public transport fares was a sensible temporary step. It should be made permanent, and planned benefit and minimum-wage increases should at the very least be maintained.

Currently, there is little danger of such increases creating a wage-prices spiral (in which rising prices drive up salary demands, which in turn raises prices, and so on), if only because New Zealand’s sparsely unionised workforce won’t mount sufficient pressure. (This is especially true if ordinary people, like the Treasury, expect 5.9 per cent inflation to be a blip, not the new normal.) Official estimates, meanwhile, suggest the upcoming minimum-wage hike will add just 0.12 per cent to inflation.

Rather than blaming salary earners, we might look at business owners. Some overseas economists believe excess profits, especially in uncompetitive industries, are a key inflationary force. Cartels find it easy to hike prices, and keep them high: where, after all, will the consumer go? US president Joe Biden certainly thinks it’s a problem.

Domestically, many of our bars and restaurants may be struggling – but overall, firms report higher profits, and more cash in the bank, than they did before the pandemic.

Recall the main sectors causing inflation: food, transport, housing. Food retailing is dominated by a supermarket duopoly that, according to the Commerce Commission, rakes in $1 million of excessive profits every day.

Fuel retailing is not as competitive as it should be. Markets for housing materials, which cost 20-30 per cent more here than in Australia, are riddled with cartels. Electricity generation, meanwhile, is run by a handful of firms. The government’s aim, in all these sectors, should be to inject greater competition, curb excess profits, and keep costs down.

Here’s another thought: in the wake of Covid, supply-chain chaos, and the West’s now-unwanted interdependence with Russia, other governments are rethinking globalisation and mass importing – so why not ours? Buying things overseas may often be cheaper than making them here. But if more domestic production, in a few strategic areas, gave us extra resilience, and insurance against huge supply-chain cost increases, it might start to make economic sense.

Any such moves would take time. But then the Treasury’s forecasts might be wrong: high inflation could be a lasting phenomenon. We also need protection against future inflation shocks. And lastly, though least importantly, such action would give Robertson the appearance of doing something. Because that, too, is a question of political narrative.

RNZ: Government makes inroads on poverty but what's left in its toolkit?

Read the original article on RNZ

The stratospheric rise of poverty and inequality during the Covid-19 pandemic can be seen everywhere - except in the statistics.

It has become something like received wisdom that in the last couple of years, the economic damage wreaked by the coronavirus, combined with an inadequate government response, must have sharply widened disparities.

But a few weeks ago, Statistics New Zealand released data showing child poverty declined on two out of the three key measures between July 2020 and June 2021, as well as the year before - that is, through the first stages of the pandemic. The number of children in families unable to afford necessities like proper clothes and heating fell by 6000.

That data was followed by another release showing income inequality had reduced in the 12 months to June 2021, and in the previous three years. Finally, last week, new wealth inequality data revealed no overall change between 2018 and 2021. The share of assets held by the wealthiest 1 percent even declined fractionally, from 20.1 percent to 20 percent.

How can this be, some may ask, if foodbank use is soaring while supermarket owners rake in record profits?

The answer is that economic inequality, which is essentially a question of whether income and wealth is distributed fairly across the whole population, has many facets.

Foodbank use is a stain on our society, and a sign of the desperation some families feel. It is also part of a wider story that wraps in hundreds of thousands of families under or around the poverty line.

Many of those families have been helped by the government's benefit increases, which have lifted Jobseeker Support by $90 a week, not to mention more generous Working for Families payments, the food in schools programme and other poverty-reduction policies.

The Covid-19 wage subsidies, and the consequent prevention of mass unemployment, have been a boon to middle- and lower-income households. In the bigger picture, minimum wage rises and pay equity settlements have helped, too. These are real increases in income that make it easier for families to buy food and clothing, heat their homes and give their children a good start in life.

At the wealthier end, the government's 39 percent tax rate on income over $180,000 is bringing in at least $600 million a year and gently correcting high-salary excesses. The removal of some tax privileges for landlords - who tend to be among the better-off - will continue this trend.

In short, commentators who take hold of just one or two readily available figures, and on that basis proclaim that inequality is soaring, are liable to be wrong.

This does not imply, though, that everything is fine. Poverty rates remain stubbornly high for Māori, people with disabilities, and others.

Even though over 20,000 children have been lifted above the poverty line since 2018, another 150,000 are still left below it, on one measure. Having over one-fifth of all assets owned by just 40,000 New Zealanders is an extraordinary concentration of wealth in a supposedly egalitarian country, and leaves very little to go around for everyone else.

Progress is also slowing. In the first years of the Labour-led government, the $1 billion-a-year Families Package, which boosted benefits and tax credits, made big inroads into the poverty figures. Since then the reductions have slowed to a crawl. They may even, in the last nine months, have gone into reverse, as the Auckland lockdown and rising living costs have hit household budgets.

The prime minister's officials have told her that, if she wants to meet her ambitious target to halve child poverty in a decade, she needs another Families Package every few years. Most experts think billions more dollars must be added to baseline spending - something the government has apparently little appetite for, and would struggle to do anyway, since it refuses to raise the requisite tax revenue.

The high-level wealth inequality figures also conceal some disturbing trends. The wealthiest 1 percent's share has been unaffected by rampant house price inflation because housing is not, relatively speaking, very important to people who own such valuable businesses, shares and other financial investments.

What that inflation has done is lift the (apparent) wealth of the next set down, the property-owning middle classes - and thus widen the already alarming gulf between them and the property-less families immediately below. This is, of course, due partly to the government's 'easy money' policy of making borrowing incredibly cheap during the pandemic.

If the building boom continues, and predicted price falls finally eventuate, the housing gulf might slowly close. But other forces, especially the cost of living crisis, will only widen disparities.

If this government wants to be remembered as having decisively attacked poverty, it cannot rely on its early wins, but must rather take even more significant measures. The question it faces, then, is simply this: what do you have left in the toolkit?

Stuff: NZ's problem is it doesn't tax enough, or fairly enough

Read the original article on Stuff

A few years ago, dining out in Wellington, I spied a discreet card on the restaurant table, asking if I would top up our bill by a small percentage to help fund a new children’s hospital. I’m not against private charity, but this seemed bizarre, requiring sick children to rely on the whims of Wellington diners in order to get the care they needed.

It was emblematic, too, of the desperate underfunding of our public services. New Zealanders sense the problem: they see the schools unable to afford the computers on which learning now relies, the state housing waiting lists that grow ever-longer, the delays for people seeking hip replacements or the latest cancer drugs. And those lucky enough to have lived overseas, especially in Europe, will have a sense of how good – how modern, how responsive, how well-equipped – public services can be.

But few people understand the full scale of the problem: namely, that New Zealand’s public services are trying to get by on roughly $30 billion a year less than they would have if we funded them like the Europeans do.

The tax gathered by the New Zealand government, which funds our public services, comes to roughly 32 per cent of our annual income or GDP – just below the OECD average. But that average is dragged down by poorer nations – Mexico, Colombia and others – whose public services we probably wouldn’t seek to emulate.

Countries whose services we do envy fund theirs much more generously. Even leaving aside the tax-loving Scandinavians, the Austrian authorities take in 42 per cent of their GDP in tax, the Dutch 40 per cent, and the Germans 38 per cent. Such countries get greater tax contributions from those who earn very high incomes, make capital gains, or receive large inheritances.

New Zealand’s annual income or GDP is $345 billion​ a year, so our 32 per cent tax take yields roughly $110b for our public services. But if we taxed at Austrian levels, we’d have another $34b a year; at Dutch levels $26b, and German $21b.

Think what we could buy with that money! Computers in schools, thousands more state houses, reduced surgery waiting times. Electric vehicle charging stations and extra buses. The protection of our native birds against predators. Better support for pensioners and people with disabilities.

New Zealanders want those things; they just don’t currently stump up the requisite tax. They try, as the saying goes, to satisfy champagne tastes on a beer budget.

National Party leader Christopher Luxon wants to repeal every extra tax hike or added levy the Labour Government had imposed since 2017.

That’s understandable: a greater tax take, after all, implies less personal spending. But it’s a trade-off most European citizens make. And I think many middle-class New Zealanders would happily consume less if it meant they could rely on a better healthcare system when they fall ill, and if they knew the welfare system was doing more to help those down on their luck. Tax may or may not be love – as per Shamubeel Eaqub’s famous phrase – but it certainly is how we pay for civilisation, for all the thousands of things government does to underpin our way of life.

The counter-argument is that our public services could just squeeze more from the money they already have. Now, I’m all for efficiency, and have ideas about how government could be better run.

But on most measures, we already have a fairly effective public sector, ranking anywhere between second and sixteenth worldwide. (In other words, if you think ours is bad, you should see the others.) And most of the nations placed above us are also high spenders. If you really want superb public services, you have to pay for them.

As well as taxing more, though, we need to tax more fairly. Low-income New Zealanders already contribute a lot, partly because GST weighs heavily on them. Conversely, given the way the housing market has generated enormous, unearned capital gains, which Boomers convert into inheritances that perpetuate intergenerational inequity, the case for some kind of capital gains, inheritance or wealth tax looks ever stronger.

All this lends context to the current stoush over low earners being dragged into higher tax brackets via inflation. Yes, the brackets may need adjusting, but unless we add a new top rate to compensate, much of the benefit will go to the best-off. National leader Christopher Luxon’s plan would, by lifting tax thresholds and removing the current top rate, give him an extra $8000 a year – but someone on the minimum wage just $110. He’d also give property investors a tax break.

But even Labour’s tax strategy, which largely maintains the status quo, is like fiddling at the margins, when we should be imagining new ways to properly fund public services. We must invest more in our collective wealth. That way sick children can know they’ll get the care they deserve as of right, rather than having to constantly extend the begging bowl.

Guardian: NZ’s parliament protests were frightening but they don’t mean the country is splintering

Read the original article in the Guardian

The occupation of New Zealand’s parliament was fractured from the outset: fascists vied for control with controversial pastors, conspiracy theorists and more moderate anti-mandate protesters. And even as the occupation violently collapsed with rioters lobbing cobblestones at police, the divisions remained. Some shouted “burn it down”, while others tried to restrain them.

As New Zealand reacts to some of its darkest days in recent memory, these internal rivalries are, obscurely, a hopeful sign – a reminder there was far more division inside the protest than between the protesters and the wider nation.

Right-wing politicians took the occupation as evidence of a sharp rent in the social fabric. The National party leader, Christopher Luxon, gave a speech headlined “A Divided Society”. ACT’s leader, David Seymour, described the country as “splintered”. But while we cannot erase the images of parliament’s lawn burning, nor should we panic ourselves into a false assessment of how deep our social divisions run.

Hardline anti-vaxxers remain marginal. In the 2020 election, only 2% to 3% of New Zealanders voted for parties promoting Covid scepticism or conspiracies. Today, 94% of the eligible population is double jabbed, even if some signed up only because they feared losing their jobs.

Of course, the 6% of New Zealanders who are unvaccinated does represent tens of thousands of people, and that is alarming. So too the fact that, adjusted for population, New Zealand has three times more consumers of far-right Facebook content than the US. But they are still less than 1% of internet users.

New Zealand is not a house divided against itself. The country does not have two large, permanently opposed blocs – think Catholics and Protestants in Northern Ireland – whose enmity makes governing next to impossible.

It’s true some polls found 20% of New Zealanders supported the parliamentary occupation (almost all stated their opposition to vaccine mandates as their reason, rather than support for the darker elements of the protest).

Another poll found 25% of New Zealanders believed the government’s Covid response had gone too far.

But that same poll also showed 50% the country endorsed Jacinda Ardern’s policy, while 25% want it tougher still. For a democratic nation confronting a controversial policy that has required the state to curtail core liberties, these are natural tensions.

Disagreement is a sign not of dysfunction but of healthy democratic debate. Countries can also be surprisingly resilient. The 1981 Springbok tour was divisive in the extreme, yet those wounds healed with time.

New Zealand is, overall, a cohesive society. According to Victoria University’s Institute for Governance and Policy Studies, 80% of New Zealanders believe others can generally be trusted. (That is, they rate their trust in others to be at least 5 on a 10-point scale.) The same proportion has faith that the government will solve core social problems. Meanwhile, the Kiwis Count survey shows trust in public services has been high and rising, no matter who is in power.

Seen in this light, the parliamentary occupation represents a small, if frightening, loss of cohesion – a fraying at the edges, rather than a great rip in the social fabric. Some of the protesters were already marginalised – disproportionately poor and Māori, they had undoubtedly experienced racism and a sense of not belonging to their society. They were probably in the 20% who do not trust others, or government, very much.

Such concerns were then easily channelled into conspiracy theories and violence. This non-negligible group of New Zealanders have, with a worrying intensity and conviction, constructed an alternative reality. A world in which, to take just one touted scenario, the government has invented a fake virus in order to poison the population. They have broken away. The task now is to help them reattach themselves where possible, and ensure there are no further breaks.

That is no easy task, for it will require us, paradoxically, to be both tougher and gentler. Tougher in the sense that the police must never again be caught napping, violent and threatening speech must be more forcefully regulated, and something must be done to stop Facebook and other platforms pushing extreme content on users.

But gentler too, in that lectures about “following the science” won’t get people out of conspiracy theory rabbit holes – only slow, non-judgemental conversation with trusted friends will. We must also inoculate individuals against misinformation and help them reconnect with their communities, one of the surest defences against extremism. We must confront racism and the economic disparities that damage trust and suppress political engagement by making the poor feel (sometimes correctly) that the elites have everything sewn up.

This is a matter not of appeasing the protesters but of supporting the countless New Zealanders who are also poor and marginalised yet chose not to join a violent occupation. While the views of parliament’s occupiers do not yet represent a major threat to social cohesion, their wider spread would. That is the danger we must guard against. But we do so from a position of strength, because we are not hopelessly divided against ourselves.

Child poverty keep keeps falling, confounding the commentators

The latest child poverty statistics were released yesterday, showing reductions on the three main measures, even (for 2 out of 3) between July 2020 and June 2021, i.e. through much of the pandemic, thus confounding the claims of many commentators.

(A brief technical note: the first measure shows how many children are living in households with less than half the typical income (are poor households keeping pace with average ones?); the second shows how many children are living in households with less than half the income the typical household had in 2017 (are households getting richer compared to the past?); and the third one shows how many children are in households going without basic items like heating and clothing (are households able to afford the necessities?).)

Some may wonder how this can be, when foodbank use and other indicators of severe poverty are soaring. Well, foodbank use, though an indictment on our society, affects only some people in poverty, while many others have benefited from higher benefits and wages, wage subsidies, accommodation supplement increases, and so on.

Also, calculating poverty rates across hundreds of thousands of people, without access to Statistics New Zealand data and Treasury modelling, is next to impossible – and frankly I think some of the people who try to do it themselves should be more cautious about the claims they make.  

It’s not all good news for the government, of course. Much progress was achieved with the Families Package several years ago, but that progress has slowed up since, or even come to a standstill on some measures. Major negatives include the fact that child poverty rates for Māori are high and not consistently falling, and the same is true for people with disabilities.  

Moreover, only one out of the government’s three main targets for 2021 has been unequivocally met, with another possibly met. The target that was most clearly missed – to sharply reduce the proportion of children living in households with less than half the typical income – is, to my mind, extremely important, because it measures the extent to which poorer households are keeping pace with, or falling adrift from, the standard of living considered normal in their society.

To deal with that issue requires lifting low incomes more rapidly than middle ones. Basically, it looks like the government is going to need an equivalent of the Families Package – which cost more than $1 billion a year – again this term, and next (if it wins in 2023), if it is going to meet its targets. And there is no sign so far that it plans such a move. The hardest parts of meeting the child poverty targets, in other words, lie ahead.

Stuff: Self-improvement won't get us out of this mess

Read the original article on Stuff

“It’s exhausting to watch.” So says Dr Morgan Edwards, as she attempts to describe the vaccine misinformation spread by so-called mumfluencers.

Mothers with large online followings, they promote “wellness”, yogawear, supplements, “therapies” of doubtful value and, increasingly, anti-vax conspiracy theories.

As Stuff’s Kirsty Johnston showed earlier this week, mumfluencers are a central component of the Covid Convoy, their influence deriving from the role mothers play in making vaccination decisions for their household.

These bloggers and Instagrammers are not just exhausting but also impossibly irritating. Their relationship with science is tenuous at best, and they have no conception of the advantages they enjoy: their gospel of “wellness” is inaccessible to people who can’t afford organic vegetables or don’t have time to meditate for an hour a day.

Mumfluencers have their roots in the hippy left, but as that was often an individualistic form of protest – the “turn on, tune in, drop out” part lasted rather longer than the commune-building one – it was always vulnerable to overlapping with the libertarian far-right.

And indeed the two movements have now coalesced around fears over bodily freedom and shared suspicion of the state, as documented by Conspirituality podcaster Matthew Remski.

But we shouldn’t let our irritation with mumfluencers blind us to their insights. They understand, better than anyone else, the depth of our frustration with modern life. Tired, stressed, anxious, and working insane hours, in a world where conventional religion offers far less direction and structure than it once did, we naturally seek wellness, a sense of peace, a higher purpose.

As I’ve previously written, mumfluencers have diagnosed a real problem. They just have entirely the wrong answer.

The main issue with modern life, after all, is not that it is too collective, too government-driven, but that it is too individualistic. We blame people too much for their failings, ignoring the deep social and structural causes of illness, unemployment and despair.

And if individualism is the problem, the mumfluencer remedy – a relentless focus on personal self-improvement through mindfulness, supplements and the like – will hardly get to the heart of things.

What, then, is the solution? Take one of our most vexing issues: time. No-one, from shift-laden hospitality workers to stressed public-sector contractors, seems to have enough of it. Many are working longer hours than they would like. (Alongside, of course, those who want more employment.)

That’s partly because where it used to take just one income to raise a family, it often now needs two. The proportion of two-earner families has risen from under 50 per cent in the 1980s to over 70 per cent today. In nearly half of all households, both parents work full-time.

Few of the couples I know would want it that way: they’d rather both work part-time. But they simply wouldn’t earn enough, not if they wanted to pay the rent or mortgage.

That in turn points to two key problems with New Zealand’s economy: wages are pitiful, and housing costs exorbitant. The first problem is caused partly by weak productivity, but more substantially by a fall in the share of company income going to workers (as opposed to owners), from 70 per cent in the 1980s to under 60 per cent today. If it were restored, the average worker would earn $14,000 more each year.

And wouldn’t that allow lots of time off, reducing stress and denting the mumfluencers’ appeal? A four-day working week would help, too.

A similar logic holds for housing, where we need a huge collective effort to drive costs down and reduce individual despair. So too with mental health. Rather than just expecting individuals to meditate​ their distress away, we should also address its social causes, which include the stressful, precarious and casualised work environments many must endure.

Even the treatments for mental distress should be collectively provided, through a fully functioning public health system. The Labour Government has lifted mental health funding, but struggles to convert it into improved services.

Politics must offer these answers; otherwise, things could take a dark turn indeed. If we don’t ensure both parents can happily work part-time, the rise in two-earner households could be twisted to put the blame on women’s entry into the paid workforce, fostering a fundamentally regressive movement that takes the 50s housewife as its model.

Nor is this a notional concern: “trad wives” views, as they are known, have been voiced by some parliamentary occupiers.

We need, moreover, to change not just our political policies but also our values, ambition and delivery. Labour superficially speaks the language of “well-being”, but has never really followed through on it. And that’s part of the problem. Disillusionment with collective solutions helps push people towards mumfluencers. Restoring a sense of shared purpose and mission to politics is part of the task of drawing them away again.

Don’t buy the lie that we are divided

National leader Christopher Luxon’s claim, on Monday, that this is “the most divisive government in recent memory” came as a surprise to people who know anything about this nation’s past. More divisive than the 1980s Labour government – which surely is within “recent memory” – and its undemocratic economic blitzkrieg, which made thousands of people redundant almost overnight?

It’s also worth comparing this Labour government to administrations further back in history. Far more divisive were the nineteenth-century administrations that confiscated millions of hectares of Māori land. So too Sid Holland’s National government, which in 1951 made it illegal not only to report the views of striking waterfront workers but even to feed them.

Historical knowledge, though, doesn’t seem to be in the National leader job description these days: John Key once described the colonisation of New Zealand as “peaceful”, which must have come as a surprise to the iwi who had their land stolen and their people murdered. 

The irony is even stronger when you consider that Jacinda Ardern’s greatest achievements have been feats of unification: eschewing revenge and angry rhetoric after the Christchurch mosque shootings, and helming the “team of 5 million” covid response in which the young and healthy have stayed home to protect their vulnerable elders. 

Yes, the vaccine mandates have excluded many from their normal way of life. But that exclusion was amply justified, and temporary: for all the politicking, most parties want the mandates relaxed as soon as possible. 

Deep differences of opinion may have sprung up. But, far from being irreparable, they are a standard part of democracy. The 75% who back tough covid action is, in fact, remarkably high for such a heated issue.  

Here’s another history lesson: the 1981 Springbok tour famously divided the country, but with time the wounds closed over. Indeed we have an immense capacity for healing, not least because the body politic is fundamentally in good shape. 

Four in five New Zealanders believe our governments will solve key national problems, while trust in public services is high, and rising. Crucially, we don’t have a deep and seemingly irreparable breach between two large groups – think Catholics and Protestants in Northern Ireland – that makes governing next to impossible. 

So it creates an unnecessary sense of crisis to talk about a torn social fabric – or social chasms, as Act leader David Seymour has done. On the other hand, we mustn’t be complacent about what has happened in recent weeks.  

While some Covid Convoyers have genuine concerns about the mandates, they have largely discredited their cause by standing shoulder-to-shoulder with those issuing death threats to journalists and politicians. Personally, having observed the Parliamentary siege first-hand, and followed the reporting, I’ve been dismayed by the violence – and above all the detachment from reality. Conspiracy theories are rife. 

The views represented by the hardcore occupiers are mostly marginal: just 5% of New Zealanders, after all, are not double-vaccinated. But even that is a worrying number. Some larger figure –perhaps one-fifth – are sympathetic to parts of the protest. Moreover, the occupation is clearly radicalising its more mainstream members; the growing influence of the global far-right can be seen in the conspiracy-theorist Counterspin’s broadcasting; and academics who follow extremism report an eight-fold increase in activity on anti-vax social media channels. The social fabric isn’t rent but, to use a different metaphor, a small group has splintered off. 

So how do we respond? The siege of Parliament must act as a particularly unpleasant wake-up call, like a rooster crowing in a suburban backyard. The police, caught completely unawares, must rethink their approach to extremist gatherings. The Speaker of Parliament, Trevor Mallard, should reflect on his foolish attempts to harass the occupiers. Some commentators must realise they can’t downplay the danger of violent extremism or always take protesters’ statements at face value. 

We need, in short, to be tougher with extremists. But we also need to be gentler in other areas. 

Those who have descended the rabbit hole of conspiracy theory have often been preyed upon by online ‘Mumfluencers’ and the alt-right. Sneering at them won’t help, nor will lectures from distant authority figures. Their rescue will fall to people in their own lives, trusted figures who can listen, empathise, and help non-judgementally. 

We must also build a fence around the rabbit hole. That will require better public health communication, programmes showing people how to spot misinformation, and tougher regulation of Facebook and algorithms that promote hateful content. 

It will also take a wider social mission to ensure that the 5% – if they are even that large – don’t become the 25%. We need to take steps to ensure everyone, as far as possible, feels part of the social fabric. And we don’t need to do that to appease Parliament’s occupiers – they are all steps we should have been taking anyway.  

Anti-poverty programmes that ensure everyone feels economically included; the devolution of public services to Māori providers trusted by their communities; the creation of affordable housing for all; the reduction of wealth disparities that polarise society: none of it is easy, but all of it is possible. And all the more so because we begin from a basically unified starting point.

Stuff: The fallacy of education as a fix for income disparities

Read the original article on Stuff

“We have to build a better economic engine that actually lifts everybody, not just a few.” More socialist rhetoric from Jacinda Ardern? Au contraire: it’s National leader Christopher Luxon, speaking to Breakfast’s John Campbell last week.

Luxon’s phrasing shows just how sharply the inequality debate has shifted from a decade ago, when the then finance minister Bill English was denying there was any such problem. And Luxon is right.

Since the 1980s, incomes have more than doubled for the richest New Zealanders, while rising by less than one-third for the poorest. We have built a dangerously unbalanced economy.

When Campbell challenged him on solutions, though, the National leader immediately highlighted education, saying we need to “create the rungs of social mobility, so people can lift up and rise out”.

But this is where politicians so often go astray, misled by two false assumptions: that there need be large rungs separating individuals on the ladder of life, and that it is education’s job to lift people from one to another.

Metaphorically, the rungs represent income disparities between different occupations. But while everyone, save perhaps a few hard-core socialists, accepts there will be some disparities – when people choose to work longer hours, for instance – there’s no reason for them to be especially large.

The old line is that massive inequalities are needed to incentivise entrepreneurship and economic growth, but the Scandinavians have much smaller disparities than us and much stronger economies, so that doesn’t hold.

We would do better, in fact, with smaller economic imbalances. We could ensure the well-off contribute their fair share of tax; currently many pay a lower rate than minimum-wage workers, according to Inland Revenue research. We could raise pay rates for cleaners and aged care staff – and help beneficiaries live with dignity – by strengthening the bargaining power of frontline employees, lifting benefits, and making housing affordable for all.

Then, because the rungs would be much closer together and – crucially – the lower ones much higher, people wouldn’t have to desperately scramble upwards to escape poverty, as Luxon’s “rise out” phrase suggests: they’d already be enjoying a decent life. Individuals might still retrain – from cleaners to lawyers, say – but as a means to fulfil their ambitions, not to leave an intolerable situation.

As the British thinker R.H. Tawney once argued, the good society is not necessarily one in which people can rise but one in which they can lead a decent life “whether they rise or not”.

At this point, the fallacy of Luxon’s focus on education becomes clear. For as long as poverty exists, families will naturally use education to escape it. But they shouldn’t have to, because that poverty shouldn’t exist in the first place.

Luxon also points the arrow of causation the wrong way. The most crucial years of a child’s life are the first few; “education” is too late to help there. We also know that socio-economic status, which includes factors like a family’s income, is the single biggest determinant of whether children do well at school or not. The core problem is not that educational failure causes poverty; it’s that poverty causes educational failure.

Schooling, which is principally about helping children discover their abilities and become well-rounded citizens, does have an economic role. It drives innovation and technological breakthroughs, which in turn boost growth. But – and this is the crucial distinction – that is a matter of raising living standards for a whole society, not lifting individuals above others on the ladder of life.

It generates more wealth, but doesn’t solve the problem of how to distribute it. And because poverty is partly relative, a matter of not having what is needed to participate in current society, we’ll always have to grapple with wealth’s distribution.

We need, in short, to decouple education from the idea of escaping individual poverty, by (significantly) decoupling occupational status from income.

To put it another way, schooling should be about occupational or social mobility, not economic mobility. It should ensure that a child’s occupation isn’t constrained by what their parents did. That’s a useful kind of mobility, one that widens horizons and expands opportunities for all.

But education shouldn’t be about ensuring children can earn more than their parents, because their parents should already earn enough for a decent life, whatever their occupation. That kind of mobility – economic mobility, which is what Luxon is actually talking about, even when he says “social mobility” – is relatively unimportant, if the ladder’s rungs are closer together.

In fact, it’s a zero-sum game, socially. If you educate the children of aged-care workers to become lawyers, it just means that someone else’s children have to become aged-care workers. They then suffer the resultant low pay and poor conditions.

Luxon’s rhetorical embrace of egalitarianism, in short, is welcome – but risks winding up in a dead end.