MANA Movement policy release - Economic Justice

Address notes from Mana Economic Justice Spokesperson and co-vice President John Minto to Economic policy launch in Kelston – 2pm, Sunday 20 July 2014.

Reducing inequality and giving everyone a fair go

MANA Movement’s policy prescription for a rich man’s country which is a poor family’s nightmare

Kia ora koutou, nga mihi nui ki a koutou
E nga tangata whenua o tenei rohe – Ngati Whatua – kia ora koutou,
E nga iwi o te motu – nga hau e wha – tena koutou, tena koutou, tena tatou katoa

It’s not hard to see New Zealand has entrenched inequality when
• A worker on the minimum wage pays higher tax rates than billionaire property investors.
• The big banks fleece customers and get to decide for themselves how much tax they will pay.
• The richest 1% have three and a half times more wealth than the poorest 50% of New Zealanders.
• Half our high-net wealth individuals don’t declare enough income to even pay the top tax rate which comes in at $70,000.
• Beneficiaries are pilloried in nasty campaigns for bludging off taxpayers while tax evasion is a way of life for the rich in places like Parnell and Remuera.
• When close to 300,000 children live in poverty and 80,000 children go to school hungry every day.
• When three families share a one-family house or live in cars or cockroach infested caravans.
• When the state has weakened bargaining power of unions so much and wages have fallen so low that the government now subsidises low wages with billions of taxpayer dollars through Working for Families.
• When workers’ share of GDP dropped 20% in the 10 years from 1984 and has stayed the same low level since.

So welcome to the New Zealand created by Labour and National governments over the past 30 years in particular.

Welcome to a rich man’s country and a poor family’s nightmare.

It’s become so outrageous that for the last six years the National government has been borrowing money hand over fist to finance tax cuts for the super wealthy. We now have about $10 billion in extra government debt due to those tax cuts alone – all because John Key wanted to give his rich mates a tax-free pass.

It’s time to change the government.

But change is not enough. Tinkering with the figures won’t put food on the table or fill the lunchboxes. MANA is committed to big, bold economic policies to change the face of New Zealand – to put people at the heart of policy – to create an economy that works for people rather than the other way round.

The government says inequality isn’t getting any bigger so we shouldn’t worry about it. John Key says we should accept forever that wage and salary earners will pay tax on every dollar we earn and every dollar we spend while the very rich pay will pay diddly squat.

MANA rejects that. John Key calls this the politics of envy – MANA calls it the politics of greed.

Workers’ contributions to our society are unrecognized and undervalued. It’s unfair to value work according to what is the least someone will pay you to do a job. Instead we need to look at the social value of the work people do. For example the New Economics Foundation has calculated that a hospital cleaner does work with a social value 13 times higher than what they are paid to do the job. It’s the reverse for a bank CEO who is paid around 13 times more than the value of the work they do.

The pattern which has led to this extreme inequality is clear – weaken unions, drive down pay, increase profits. Then the cycle begins again - casualise work, drive down wages, increase profits. And round and round it goes. It’s a slow squeeze which is driving workers, their families and everyone on low incomes into poverty.

We’ve become good at describing the problems but what’s been lacking are practical plans to deal with it. MANA has those specific policy plans – so let’s get stuck in:

The three big things we must do are:
1. Shift the tax burden from workers, beneficiaries and their families and onto those getting a free ride.
2. Raise the incomes of low-income families.
3. Remove wages from the competition between companies and so remove the ever downward pressure on wages and salaries

1. We must shift the tax burden from workers, beneficiaries and their families and onto those getting a free ride.
• Abolish GST which hits low-income earners hardest.
• Significantly increase the tax take by introducing a tax on financial speculation, called the ‘Hone Heke tax’ (chopping down taxes such as GST), which will be designed using examples of similar taxes introduced overseas. It will be used to replace the $15 billion collected by GST each year, and invest in key policies such as job creation and whānau wellbeing.
• Reduce the tax paid by low income earners by not taxing the first $27,000 earned and reintroduce a progressive tax scale where high income earners pay a higher proportion of income tax.
• Introduce a significant capital gains tax on all but the family home and Māori land.
• Collate all sources of income, including from shares, bonds, property, and investments, to be taxed at an individual’s personal tax rate.
• Reintroduce inheritance tax to be paid on a progressive scale for inheritances valued at over $500,000. This would exclude land held communally on behalf of iwi. Building family dynasties is not part of MANA policy.
• Regulate family trusts and other tax avoidance devices to ensure no tax advantage applies to these or similar structures.
• Expand funding to the IRD to investigate and eliminate corporate tax loopholes.

2. Raise the incomes of low-income earners
a. Increase the minimum wage to $18.80 per hour (a living wage) and index it at 66% of the average wage to ensure it remains a living wage.
b. Repeal youth rates for workers aged 16-17 years.
c. Increase benefit levels to provide a liveable income.
d. Eliminate economic discrimination against the children of beneficiaries, as happens in the current ‘Working for Families’ policy.
e. Work towards implementing a Universal Basic Income where everyone in Aotearoa aged 18 and over would receive a minimum, liveable, tax free income after which progressive tax would kick in. This would eliminate the huge costs involved in administering the current shame and blame WINZ system, and do much to end poverty and address growing inequality.

3. Remove wages from the competition between companies to remove the ever downward pressure on wages and salaries (except for the executive class whose pay has skyrocketed)
a. Support changes to employment relations laws that give workers greater bargaining power to negotiate wages and conditions with theiremployers, including the right to strike.
b. Guarantee workers' security of hours by requiring employers to offer extra hours to existing staff, up to 40 hours per week, before hiring new staff.

Two other parts of the policy I’d like to mention – there should be no surprise about these.

Reduce the cost of living
c. Buy or take back key state assets, like power companies and telecommunications, at the price paid for them (or their market value – whichever is the lower), exclusive of the millions in fees and incentives used to sell them.
d. Abandon the market-based provision of essential services such as electricity and water in favour of non-profit and sustainable provision of those services.

Reduce loan debt
e. Regulate loan sharks and restrict banks’ profit margins on loans, credit cards, and mortgages.

In introducing these big bold policies it’s important to address the big lie the rich keep telling us – that being poor is your own fault.

Not enough income to feed the kids? National tells us parents are to blame for spending money on pokies, booze and the TAB. But hang on – which community in NZ asked for pokies? Which one asked for booze shops on every corner? Which one asked for loan sharks to charge 500% for a piddling loan?

And which government refuses to give local communities the power to close down the pokies, shut the booze shops and deal to loan sharks and fast-food joints?

MANA will crackdown on pokies – we will give local communities the power to drive them out. The same with booze shops, loan sharks and fast-food joints. More details on these policies later in the campaign…

In the meantime when you see the billboards that say Vote Hone Harawira, Annette Sykes and Te Hamua Nikora then get behind the campaign. And to get more MANA MPs into parliament give your party vote to Internet MANA.

ENDS

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