Government puts economic growth cart before horse and crashes into public expectations

One of BigCake’s hang ups is that we need to figure out where we want to go to before we get into the detail of how we are going to get there.

As a nation we’ve had trouble getting our heads around the former because Governments have expressed economic goals in terms of gdp per capita, top half of OECD (ie income-based standards of living).

Kiwis are more comfortable with a broader measure of how we’re doing as a nation (ie a quality of life measure that takes into account things like jobs, education, the environment etc).

So BigCake is pretty interested in anything that shows how we’re thinking about these issues.

When it comes to money we’re not a happy bunch of campers, according to Massey University researchers who surveyed 935 Kiwis in 2009 on a range of issues, including income and taxation.

• 62% of respondents believe income differences are too large. Oldies and women are particularly so.
• Respondents feel business leaders, like company chair people, are paid too much.
• About half thought they are paid less than they deserve, particularly young people and the low paid.
• Most respondents thought the shape of the distribution of incomes should be rotund (most people in the middle) however the majority believed the reality was a pyramid (few rich, many middle income or poor).

Government action through the tax system is seen as the main way of fixing these problems.

BigCake doesn’t disagree with the Government’s planned tax changes (apart from their wimpiness), but it’s clear that the majority of Kiwis (at least based on this survey) believe the changes, which will put more money into the hands of the rich, are heading in the wrong direction.

Just over 50% of respondents favour high income earners paying a larger share of their income in taxes than those on low incomes.

But this proportion, the report says has fallen steadily from 70% in 1992 to 60% in 1999 to around 50% last year. Nearly there, Bill.

Last year’s survey was a repeat of ones conducted in 1992 and 1999.

The desired income distribution shape hasn’t changed much over 20 years, but perceptions of the actual shape have moved with survey respondents believing we are getting closer to shape we want.

The report says “…the proportion of New Zealanders who believe our society has a small elite at the top and most people at the bottom has declined from 62% in 1992 to 37% in 2009.

“By contrast, the proportion who believe New Zealand society has most people in the middle has more than doubled.”

Other interesting findings:
• 80% of respondents consider themselves to be middle-class.
• 45% of respondents earning more than $100,000 a year believe in a progressive tax system compared with 64% for those earning under $40,000.
• 42% in households earning more than $100,000 a year believe income differences are too large compared with 73% for those earning less than $70,000.

The survey reveals our strong streak of egalitarianism.

Respondents believed the best way of getting ahead were: hard work (90%), ambition (82%) and a good education (72%).

The report says these three characteristics are “regarded as much more important than knowing the right people (thought to be important by 29% of respondents), having well-educated parents (26%), coming from a wealthy family, having political connections, or a person’s race, gender or religion (all less than 10%).”

Respondents saw education as an important factor in ‘getting ahead’.

“…most respondents (71%) believe people in New Zealand have the same chance of going to university, regardless of their gender, ethnicity or social background.”