Rodney Hide: The underclass have no hope

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Solo mums face the highest effective marginal tax rates in the country. Photo / Thinkstock
Solo mums face the highest effective marginal tax rates in the country. Photo / Thinkstock

Matt McCarten bellyaches every week that successive governments don't care about the poor and downtrodden. He's correct.

But the problem is far greater than Matt recognises. The dirty secret of New Zealand politics is that government programmes are perfectly engineered to embed and eternalise an underclass. It's politics, not economics, that creates the massive hurdle the poor must leap to prosper.

Here is just a small sample of how government stomps on the poor and blocks upward mobility.

1. The Government funds the very best schools for rich kids' education. The price of entry is the cost of a house that's "in-zone". Poor families can't afford it. They are locked out of decent schools and their kids are consigned to third-rate institutions.

2. Rich girls are subsidised to attend university and become teachers, accountants and lawyers. Poor girls are subsidised to drop out of school and have babies.

3. The rich teach their kids to work hard and be smart to succeed. The Government teaches poor kids their land was stolen and that to prosper they must work on Treaty claims in hope of winning it back.

4. Rich boys start work on graduate wages. Poor boys are shut out of the job market by the minimum wage.

5. Solo mums face the highest effective marginal tax rates in the country. The rich have tax planners and offshore accounts.

6. Metropolitan Urban Limits restrict the supply of land and inflate the value of existing homes. That's great for families who already own a house or two. It's bad for the poor. The Urban Limits shut them out of ever owning a house. The poor are never able to accumulate capital and establish the sense of pride and belonging that home ownership brings. They are tenants for life.

7. The Government subsidises the winnings of rich horse owners. The gambling of poor people is taxed through the TAB and pokie machines.

8. The ballet and the orchestra are subsidised. Smoking and drinking are taxed.

9. Poor neighbourhoods are crime-ridden. The rich live behind locked gates and security patrols and say tougher sentencing and increased policing don't work. The poor struggle to protect their meagre possessions and to keep their children from the clutches of gangs and drug dealers.

10. The Resource Management Act, occupational safety and health, and our labour laws protect established business from upstarts who can't afford lawyers, human resources consultants and three tiers of management devoted to compliance.

Small business must now stay small and under the government radar. The prospect of starting a business is now just too daunting for the unskilled and out-of-work. There are too many legal hoops and risks to bedevil simple tasks like hiring and firing, building a shed and excavating a little earth.

The transformation of New Zealand society from one in which Jack was every bit as good as his master, and Jack's children had every opportunity to succeed, has occurred in just two generations.

It hasn't occurred with just one policy but rather through a multitude of interlocking policies.

A total policy reversal won't return New Zealand to the egalitarian society it once was. That's because two generations of bad policy have embedded an underclass. The problem is now cultural, not political.

Matt is right to see the problem. But he's wrong to be looking to government for the cure.

It's politics and government that created the poor and downtrodden and rendered the underclass inter-generational.

Debate on this article is now closed.

- Herald on Sunday

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