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April 30, 2007 | by  | in Uncategorised | [ssba]

The Alliance and Social Democracy

Although The Alliance is out of parliament, I believe the role it plays today is the most important in its history. At least twenty per cent of New Zealanders have a Social Democratic outlook, that is, believe that government must tax and intervene to create greater justice and equality.

Sooner or later, many will find a reason to look beyond the two old parties and beyond the Greens, who are essentially a party of the centre without a responsible budget that spells out how they would pay for their promises.

When that day comes, they will not have to reinvent the wheel. The Alliance consistently updates policies that would free New Zealanders from the tyranny of the market, costs them, and provides a cadre of activists who know how to mount an election campaign. They are a party in waiting.

Some 25 years ago, New Zealand was among a group of countries that have a relatively egalitarian distribution of income, nations like Norway, Sweden, Finland, and Austria. Since then, we have set a record in our rush to inequality, passing Australia, passing class-ridden England, and only the oil billionaires of Texas keep us behind the US. The three causes of this flight are: replacement of progressive taxation by flat taxes such as GST; the rise of the number of sole-parent families and their tendency to be in poverty; and the increased salaries paid to those with tertiary qualifications.

How does inequality turn the market into a tyrant that penalises people? Inequality among the classes means that people pay a premium to live in a “good” neighbourhood with good schools. If everyone devotes as much of their income as they can to this end, everyone ends up in the neighborhood they would have been in prior to the competition, and the only result is inflated house prices and less money for other things in life.

Then there is inequality among the sexes. Being born a woman should not be like some incurable disease that handicaps one for life. The Alliance faces the fact that more and more women are going to be rearing children with minimal support from fathers. Its policies are to extend paid parental leave from 12 to 14 weeks, making the self-employed eligible, and the maximum amount paid will equate to the average male wage. A child benefit of $15 per week will help all mothers whether in the work force or not.

Job-sharing quotas in the public service and for all who do business with the government will give women easier entry into work. Free tertiary education and child care will give them a chance to improve their education.

Which raises the question: if education is so valuable, does not simple social justice demand that all have a chance to get it? If the educated are rewarded with higher pay than most, that must be a sign that society needs them. If they contribute to a better society, why should a whole generation be treated as if they had stolen money from the public treasury and must repay it? Why should so many be forced to go abroad to work when they would prefer to work in New Zealand?

Since I have said The Alliance is a responsible party, the reader deserves some detail. There would be no tax on the first $10,000 of income. No civilized nation taxes the poor as New Zealand does. Indeed, The Alliance would reduce income tax for the 75 per cent of New Zealanders who make less than $41,000 a year. This refers to individual income, so a family with two earners who each make $41,000 would not pay tax. On the other hand, the 85,000 who make more than $100,000 a year would bear a much greater burden. Someone on $200,000 a year would pay an extra $18,460 in tax.

The Alliance would fund free tertiary education, universal student allowances, school fees, state housing, and a universal child benefit of $15 per week. The Alliance would also treat a set percentage (rising over three years) of total taxable individual income as a dedicated “KiwiCare” health levy. This would add around one billion dollars to the projected health vote. This would allow for free doctor visits, no prescription charges, reduced waiting lists, and meeting urgent needs in mental health, aged care, and disabilities. It would provide free hearing and eye tests and free dental check-ups.

How would The Alliance meet the cost of all of this? It would levy higher taxes on casino profits, institute a carbon tax, restore the land tax abolished in 1992, and introduce inheritance taxes at 20 cents in the dollar beginning at $500,000. A huge source of revenue would come from the Super Fund and abolition of payments into that fund. We believe that the Super Fund is starving social spending and blighting the life prospects of a whole generation of New Zealanders.

Finally, The Alliance would also gradually replace GST, starting with essentials such as food, and put in its place a financial transactions tax (FTT) at the low rate of two cents per $100.

I should add that the Alliance’s alternative budget is assessed in terms of all the criteria of an enlightened social democracy. It aims for greater equality but it is also designed to reduce unemployment, protect the environment, limit inflation, and prevent any deterioration in our balance of payments.

For more information: (03 479 8668 or 03 466 7024)


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