Our community of residents in New Zealand has long been thought of as a fine example of stability, coherence, mutual support and shared values.
But major fissures have recently begun to appear, from the divisions over Covid vaccinations to those over the current Act New Zealand-led initiative to "reset" the Treaty of Waitangi.
These suggest that the coherence and shared values we thought we enjoyed wasn’t so stable after all. At the heart of this is the realisation that since the neoliberal reforms of the 1980s, enthusiastically adopted by both Labour and National, the country has become increasingly divided in terms of economic wealth.
The rich have got relatively even richer and the poorer have got relatively even poorer. Income data from 2022 (the most recent available) provides startling reading about the gap between the incomes of industry CEOs and the incomes of those on the average wage or below.
The CEO of Fonterra earned the average annual wage of $61,692.80 in the first four days of January. A person earning that average annual wage would take nearly 70 years to earn the same as the CEO earned in one year. A person on the minimum wage would take nearly 98 years.
The annual income of a person working eight hours a week, 52 weeks a year and paid at the minimum wage rate is $44,096. The CEO of Fonterra earned that in 21 hours and 20 minutes. If his salary were halved, Fonterra could have paid 35 more people at the average wage, and he would still have earned over $2 million.
There’s nothing exceptional about Fonterra. The CEOs of Fletcher Building, Fisher and Paykel Healthcare, the Warehouse, Mainfreight, Genesis, Meridian, Chorus and Spark all earned between $2m and $4.5m a year.
The consequence of the neoliberal reforms has not been, as promised, trickle-down, but a trickle up of the available salary and wage funds towards the upper levels. As Max Rashbrooke, editor of Inequality: a New Zealand Crisis writes, "some New Zealanders have enjoyed income gains far in excess of their contribution to society (which doesn’t seem to have doubled in recent decades) while many others struggle to pay their bills and lead a decent life."
Christian Houle (Royal Society Journal, March 2022) tells us that research shows that growing economic, social and political inequality within societies tends to lead to the collapse of co-operation between different identity groups and is an important contributor to violent conflicts.
That is what we are seeing here in Aotearoa. It reflects the evidence presented in a 2020 United Nations World Social Report which explored the social impact of income inequality across the world.
It pointed out that "without appropriate policies and institutions in place, inequalities concentrate political influence among those who are already better off, which tends to preserve or even widen opportunity gaps. Growing political influence among the more fortunate erodes trust in the ability of governments to address the needs of the majority. This lack of trust, in turn, can destabilise political systems and hinder the functioning of democracy."
In identifying the serious threat to all countries and societies offered by climate change it points out not only that the impacts of climate change in the form of floods, fires, increased heat and economic disruption affect the poor disproportionally more than the rich, but that economic inequality hinders the ability of countries to address these impacts, not least because of the loss of trust in government.
The report advises that success in addressing the challenge of climate change depends on adopting three measures.
The first is promoting equal access to opportunity, in order to lift as many people as possibly out of poverty.
The second is fiscal and monetary policies that encourage greater equity. In addition to their direct impact on income distribution, they can also mobilise resources for social policies, including social protection.
"The way in which taxes and expenditures are allocated is at the heart of the social contract."
The third is tackling prejudice and discrimination and promoting the participation of disadvantaged groups in economic, social and political life. The report concludes "it is increasingly clear that reducing inequalities strengthens not only the social fabric but also the economic and environmental dimensions of sustainable development".
If we are to repair the fissures in our identity-group relationships, without which we are in a weak position to address the huge challenge presented by climate change, we need to take on board these three measures. Our current coalition government needs to make significant policy changes in order to significantly reduce income inequality (tax refunds isn’t the answer). It also needs to step back from its confrontational position, driven by the minority partners, towards tangata whenua.
We have a tradition of working together successfully, supporting all in our diverse community, focusing on creating the best possible outcomes. Let us get that Back on Track so we can successfully address the serious climate challenges that face us.
■ John Drummond is an emeritus professor at the University of Otago's School of Performing Arts.
