Covid-19, Govt policies see inequality increase - commentator

Source: 1News

The Covid-19 pandemic has led to the biggest widening of inequality in Aotearoa's history, economic and political commentator Bernard Hickey says.

"Government and Reserve Bank policies have engineered, deliberately or otherwise, the biggest and fastest increase in wealth for home and business owners in the history of Aotearoa-NZ," he wrote on his website The Kākā.

Hickey had looked at national accounts data from Stats NZ for the September 2021 quarter to reach this conclusion.

He told Breakfast the wealth of asset owners — home and business owners — had risen by $952 billion over the last 21 months.

Meanwhile, citing data from the Child Poverty Action Group, Hickey said debt repayments to the Ministry of Social Development had risen by more than $400 million to $1 billion by mid-2021.

"So essentially anyone with assets has had a fantastic time, but if you're a renter or on a benefit or on a difficult income — working two to three jobs, working part-time — you have really struggled," he told Breakfast.

"And the Government's policies have made it much, much worse by firstly increasing asset values but also not increasing incomes at the bottom enough, particularly to deal with the massive increase in rents."

Hickey went on to say those with assets had been able to save an extra $52 billion in cash.

"So Covid for those people who own homes and shares has been absolutely fantastic. For those who are renters and who are on precarious incomes or maybe a benefit, it has been not just bad, but awful."

Hickey said the Government should take the advice of its Welfare Expert Advisory Group around lifting benefits.

It had recommended main benefits be increased by between 12 and 47 per cent.

Main benefits include jobseeker support for people looking for work or who have a health condition or disability, sole parent support, supported living payment, emergency benefits, and youth payments.

Main benefits have had a weekly $20 top-up since July 2021 and additional payments will come in from April this year.

Some advocates have said the increases aren't enough.

Finance Minister Grant Robertson said characterising the wage subsidy scheme and resurgence support payment were vital to keep people connected to their jobs and provided much needed cashflow and confidence.

"Characterising this as simply increasing the wealth of business is not correct. This funding paid wages and basic bills for businesses and was vital to reducing the economic scarring of Covid-19."

Robertson said the Government's actions were in response to a one-in-100 year economic shock and to keep New Zealanders safe and protect livelihoods.

"We had to do this in real time and without any previous examples to rely on."

Robertson said although economic activity is above pre-Covid levels, unemployment is at record lows and wages are rising, the Government acknowledged the "impact from the pandemic remains uneven".

He said the Government continues to look at what it can do to relieve hardship and detailed how it had lifted income support "a number of times" during the pandemic in line with the Welfare Expert Advisory Group's recommendations.

The Government had also provided direct support to low income households and lifted the minimum wage, Robertson said.

"As a result of cumulative increases, this has meant low income families are better off in real terms."

Robertson said the Government knew debt-to-Government levels is a long-standing issue and that Covid-19 has added to it.

The Government was "taking this seriously" and a cross-agency approach to address it was underway.

He said demand outstripping supply in the housing market is a "decades-long problem" which the Government is also addressing.

Robertson said record house building and consents had been seen in recent times.

"However, tackling long-standing issues to deliver a more sustainable housing market are complex and no one thing alone will fix it."