For three decades now, right-wing ideologues have claimed our free-market economic system brings prosperity to all.

Rodney Hide's mentors preached that massive tax cuts for the rich and the removal of pesky regulations would prompt their extra wealth to flow down to the rest of us.

This week the Living Wage movement - made up of 130 community groups, churches and trade unions - released figures showing that since we adopted this model many of our citizens have fallen off a cliff.

We are now ranked 23rd worst out of 30 OECD countries for income inequality. Around 270,000 New Zealand children are living in poverty, creating a permanent future under-class.


Before we start blaming the victims, the Living Wage organisers reveal that four out of 10 poor children are in families where at least one parent is in full-time work or self-employed.

Wages moved a measly 2 per cent in 2010. In the same year, our 150 richest New Zealanders expanded their wealth by a whopping 20 per cent. Our top 1 per cent now have more wealth than the bottom 60 per cent put together.

The Living Wage movement called for employers to pay at least $18.40 an hour as the minimum their workers require for the basic necessities of life. That's $4.90 more than the current minimum wage.

When I entered the workforce in 1980, a Kiwi worker was paid the same as an Australian for a similar job. Now our average wage is 20 per cent less in real terms. Interestingly, our minimum wage of $13.50 is 30 per cent less. Australia's minimum, in our money, is $20.35. Even adjusting for their living costs, it's $16.28 - $110 more a week for a full-time worker.

No wonder our best and brightest are fleeing across the ditch.

Successive governments have given various excuses why Australia has boomed and we have gone backwards. All of it is bogus.

The difference is Australia has "awards" that set all workers' wages and conditions. If a corporation or an individual sets up a business they know the price of labour they'll have to pay.

The Living Wage movement is calling for publicly funded institutions to start the ball rolling by paying decent wages. Overseas examples show that this has worked: by setting a higher "market rate" it has forced private businesses to follow to keep their good workers.

And no, there is no evidence that jobs are lost.

I prefer the Australian system as it helps all workers. But the Living Wage campaign is a good start.