Commitment to Reducing Inequality Index

Paula Feehan

Advocacy and Campaigns Director

Oxfam New Zealand

Paula Feehan

 

Commitment to Reducing Inequality Index Top Resulte 2017

A new index in town... and New Zealand ranks poorly!

Three quarters of governments are doing less than half of what they could be doing to tackle inequality. New Zealand finishes a lowly 30th in the world rankings according to a new global index published by Oxfam and Development Finance International.

The Index is not a measure of inequality, but it ranks governments on their commitment to tackle inequality and the over-arching message is that tackling inequality is about political will: Government choices do matter!

The Commitment to Reducing Inequality Index (CRI) ranks 152 governments on their policies in three areas critical to reducing the gap between rich and poor:

  • Social spending: The quantity and quality of government spending on public services like healthcare, education and social protection such as the provision of income support.
  • Progressive taxation: The extent to which governments redistribute wealth across society through taxes on the wealthiest individuals and companies.
  • Labour rights: The degree to which governments support workers’ rights, and particularly the rights of women in the workplace, through enforcing a minimum wage, equal pay, and paid parental leave; supporting the rights of trade unions; and providing protection against discrimination.

These three policies were selected because of widespread evidence that strong positive progressive actions by governments in these three areas have played a key part in reducing the gap between rich and poor. Key findings of the report:

  • 112 out of 152 countries are doing less than half of what they could do to reduce inequality,
  • Many poor countries are outperforming wealthier countries
  • New Zealand, Italy, US and Spain are in the bottom half of the rich nations.

New Zealand results

Overall, New Zealand is ranked 30th out of 152 countries in its commitment to reduce inequality and our current tax policy is the culprit. NZ ranks 115 out of 152 countries in the progressivity of its tax policy (and 30th out of 35 OECD countries). This means that there are 114 countries with more progressive tax policies. Refer to inequalityindex.org for country rankings. This indicator looks at the tax structure, the impact of tax on inequality and potential tax revenue available. The CRI index does not currently include data on wealth taxes, an area where New Zealand is particularly out of step with other developed countries. New Zealand would appear worse in this index if wealth taxes were captured in this analysis.

Rachael Le Mesurier, Executive Director of Oxfam New Zealand said: “We think most New Zealanders want to see an end to growing inequality, and want an economy that works for everybody, not just the lucky few. The index demonstrates that Governments have considerable powers to reduce the gap between rich and poor. What we’re saying is that the Government can - and must - act to create a fairer society and to end extreme poverty.”

What does the new index hope to achieve?

The aim of the CRI will be to stimulate similar debates and public profile to Transparency International’s Corruption Perception Index (CPI) or World Bank’s Doing Business Index. Oxfam aims to start an annual debate about the commitment of countries to reducing inequality, and also produce a tool which can be used by civil society and others in countries to assist in advocating for greater action on inequality.

If we can get policy makers talking about 'how do we reduce inequality', rather than 'should we reduce inequality' the whole debate will shift to 'something has to be done' to combat this problem says Paula Feehan, Advocacy and Campaigns Director at Oxfam New Zealand.

Just as Transparency International’s CPI gets everyone talking about the importance of anti-corruption and the World Bank index gets everyone talking about how to enable businesses to operate more easily - Oxfam‘s aim is to get people talking about inequality.

What next for the index?

The CRI index, which will be updated annually, is based on the latest available data from governments and global institutions such as the World Bank, IMF, ILO and OECD and input from country government officials on latest spending, tax and labour data and policies. The first edition has been launched as a ‘work in progress’ to encourage input, comment and debate. Subsequent versions will be refined (including wealth taxes) and provide the best possible assessment of a government’s policy on inequality over time.

If you would like to provide feedback or comment on the first draft of the index or find out more please contact Paula Feehan as Paula.Feehan@oxfam.org.nz

Link to the report: https://www.oxfam.org.nz/reports/commitment-reducing-inequality-index-new-global-ranking-governments-based-what-they-are

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