Petty politics – poverty comes from the rich!

National party blogger David Farrar posts on the recent media reports about poverty. Farrar claims if the top 50% of taxpayers declared bankruptcy, then because the poverty threshold is defined as 60% of the median wage, this would drop the poverty threshold to zero, and hence eliminate poverty!

Nice trick if you can do it, but you can’t, of course. If you take out the top half of all taxpayers, the median wage will drop dramatically, but the poverty threshold remains at 60% of the new (much lower) median wage.

This would reduce the absolute number deemed to be in poverty in NZ, because it is a relative measure of how well off the bottom sector of our society is compared to the rest of our society.

I notice a commenter “spam” on DPF’s blog made exactly this point, and was given short shrift. 

That said, Farrar has a point that there is a need for an absolute measure. Even in his scenario of bankrupting the top half of income earners (hehe, interesting idea), NZ wage earners are far better off than starving Sudanese, for example.

However, that does not remove the merit of having a relative measure also. They just need to be combined somehow. What about:


A person is deemed to be in poverty in NZ if:

  • they earn an annual income less than 60% of the median wage   OR
  • they have income less than a Stats Dept basket of minimal living costs (rent, utilities, transport, medical, food, etc).

One of the reasons the existing poverty threshold is relative, of course, is to avoid the unseemly quibbling of the morally upright (or uptight) rich over how the absolute ‘minimal living costs’ could be lower if you just shopped exclusively at the food bank and St Vincent de Paul shops…

It is an issue that should be tackled though, perhaps by Child Poverty Action Group?


Tags: , ,

One Response to “Petty politics – poverty comes from the rich!”

  1. squaredrive Says:

    Back and forth – No Right Turn has now posted on this issue as well, though tackling it more broadly.

    I tend to agree – GST is regressive and should be removed as a whole, not tweaked. For those who remember the introduction of GST and the so-called compensating removal of sales taxes, you will recall most shopkeepers did not fully remove the sales taxes.

    Cunning storeowners removed sales taxes initially, but then hiked prices significantly over the next few months, meaning that within a year people were paying the old prices plus GST (then 10%). I suspect the same would happen again – it is near impossible to tell if a price rise on bread a few months after GST is removed (and the store cuts the price by 1/9), is caused by genuine costs increases the store faces, or just greed.

    Government should tackle the real inadequacy of incomes – and the single biggest issue there is housing costs (mortgages and rent). Tackle that, and a lot of other costs become manageable.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: