An outcry for Reform
No matter how much we like to take the mickey out of our cousins on the other side of the ditch, there's no argument when it comes to who has the better economy. Thousands of young New Zealanders are relocating to Australia every year for a warmer climate and the ever-hopeful higher income.
Currently wages are approximately 30% higher in Australia and although the National government assures us they are gradually increasing, this isn't helping those Kiwis who remain in New Zealand and struggle to make ends meet. With a rising cost of living, huge hikes in petrol prices and high taxes on food, New Zealand families are struggling to keep above the breadline.
According to the co-author of ‘The Spirit Level’, a book on the economy of 'civilised' countries around the world, Emeritus Professor Richard Wilkins, New Zealand has the sixth highest gap between rich and poor out of 23 countries.
Green Party co-leader, Metiria Turei, believes New Zealand wealth is distributed unfairly, with a huge gap between the 'haves' and the 'have-nots'. She believes New Zealand would benefit from an increase in the minimum wage from $13.00 to $15.60. “The NBR rich list shows a 20% increase in the combined wealth of the richest 150 New Zealanders. A 20% increase to the $13 minimum wage would see it jump to $15.60. Nearly 275,000 people earn less than $15 an hour in New Zealand,” she says.
Prime Minister Key does not believe raising the minimum wage will help the average New Zealander and he says employers would have to borrow more money to make up for the higher minimum wage: “New Zealanders will lose their jobs.”
At present, New Zealand is in a huge financial hole. Out of a population of 4.2 million people, there are just under two million people working, and the country is currently struggling under a record deficit of $18.4 billion after the Christchurch earthquakes (a $12 billion loss in just one year). The median average combined income for a New Zealand family is just over $60,000 before tax and a staggering 6.5% of New Zealanders are unemployed (approximately 154,000 of our 2.3 million workforce). The deficit is huge and the single question remains: can our prime minister lead New Zealand out of the doldrums with his money management skills?
We wanted to see how difficult it is for the average New Zealander to keep afloat. Assuming that wages haven’t changed much since 2010, we chose three families and analysed their family expenses. The result is simply shocking.
1. The Jackson family (Sandra and son Chris (4yo))
2. The Brown* family (Jade* and Brendon* and daughter Sarah* (2yo) )
3. The Thompson* family (Brooke* and Brad* and sons Jack* (5yo) and Craig* (3yo))
Family two and three are above the average median annual household income and family one is below.
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THE FAMILIES SPEAK OUT:
After showing them the above results, each of the families was understandably shocked. Sandra said she wasn't surprised by the result as she was already $20,000 in debt and didn't see herself ever paying that off. “It just keeps rising and no matter how hard I try, I can't make a dent in it. It breaks my heart, I wish I could give my boy more but I'm in such a financial rut.”
Jade's response was more vocal. “I am so angry and frustrated by these results. Our baby is never going to learn financial responsibility when we are just digging ourselves a bigger hole every day - what are we going to do?”
That same question was posed by Brooke, who said her family is still in debt at the end of the year even though they won $250,000 in the scratchies and put a down payment on their house, bought two cars and have no hire purchases. Both parents are employed and earn a living which is higher than the average combined income, yet they still struggle. “It's ludicrous, why should we struggle when we work so hard?”
Brooke thinks the government is very out of touch. “John Key is living in his big mansion. He doesn't have to scrimp and save like the average Kiwi.” She says New Zealand is set up so that the majority of people are poor and the ruling class keep it that way. “I had a friend from Australia staying with me and she said she was shocked at how expensive everyday food was. We need to look at reducing taxes on food. It makes such a big difference to families like ours.”
Jade believes the government should take taxes off important food such as milk and vegetables. “They should lower PAYE taxes, especially for people only working 15-20 hours per week on a minimum wage,” she says.
The families are all correct, food is getting more expensive. Statistics New Zealand shows that between March 2010 and March 2011, food prices rose by an unbelievable 5.5%.
On top of the rising costs of food, the families mentioned how difficult it was to be a working parent. Brooke believes that caregivers get the short shift in the family when it comes to financial assistance. “The more money you make the less childcare subsidy you get. By the time you pay for childcare and the extra fuel, your take home pay really isn't that much.”
Sandra was a single mother on the domestic purposes benefit for many years. “I wasn't getting ahead financially so I made the decision to go back to work full-time and leave my child at day-care. I only received $150 a week before tax more than what I was getting while on the benefit - where is the benefit in that?”
Key's theory on helping beneficiaries is to allow them to work for their money. “Long-term welfare dependency robs people of confidence, motivation and aspiration. Ultimately it can rob their children of these things, too.” Sandra agrees with this statement and says she doesn’t want to be a beneficiary but she needs help to be able to pay for child care and earn enough to put food on her table.
With all the added costs, all three of the families we interviewed agreed they would never be able to achieve the Kiwi dream of buying their own house, and will be renting forever. “The day I own a house is the day hell freezes over,” says Jade. Jade, like most New Zealanders, is in the situation where she can only dream of buying a house. Without the money to save up for a deposit or be successful in obtaining a mortgage her family will always have to rent. And even if they could afford a house, she has calculated that she would never be able to keep up the maintenance costs, rates and mortgage payments. “The government isn’t there for the little man,” she says, “it’s all about making the rich richer and keeping the middle class poor.”
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Crown revenue comes from a combination of different sources. However, at the moment $24 billion a year of individual taxes help pay for the crown revenue, whereas corporate giants only account for $8.1billion, GST pays for $15 billion and the rest is made up of taxes and revenue. Expenses and revenue are on a core Crown basis and so exclude Crown entities and state-owned enterprises. Effectively New Zealand families are paying almost 50% of government expenditure from social services, judicial systems, health, police etc, but what are the hard working families getting in return? Treasury assures that both corporate and individual tax have been lowered from the year earlier, so salaries and wages have been increasing during the year. The promise is an extra $10 in the average pay cheque per week! $520 a year buys perhaps four tanks of petrol!
With the election looming, it is time to put the question to the government: how are they going to help New Zealand bridge the gap between the poor and the rich and most importantly, what will they do to assist those families struggling to keep their children fed? The land of milk and honey is going down the gurgler and the ‘plug’ of reform is nowhere to be found. Prime Minister Key, New Zealand cannot live on the average median combined income, even 75% above it! We desperately need reform - not electioneering.
EDITOR’S Comment: One’s first reaction after reading this is to tax the rich harder. Any harder and the government will kill the golden goose. NZ needs initiatives and incentives for people to drive them. $64 billion of tax raised from a population of 4.2million is a big ask, how about cutting the expenditure, making the government more efficient and therefore putting $ back into Kiwi family pockets?
We welcome your comments on this issue. Check out our website www.elocal.co.nz and feel free to comment on this story. *Names have been changed as each of the families believed this was personal information they didn’t want made public.