Child poverty requires radical change

New Zealand’s most opinionated economist Gareth Morgan says it’s society” not just cats” that needs a big shake-up. Making waves is nothing new to Gareth Morgan. Recently, uproar broke out…

New Zealand’s most opinionated economist Gareth Morgan says it’s society” not just cats” that needs a big shake-up.


Making waves is nothing new to Gareth Morgan. Recently, uproar broke out when he offered a bounty on bird-killing cats. But it all began in Putararu in the 1950s” when he spoke with his feet. He repeatedly ran away from kindergarten and junior school. “Confinement was not my bag and I struggled with the discipline.”
Back in rural 1950s, strapping and top-down learning were still the norm” “it put me off attending.”
By nature, he’s an inquiry learner. “Projects where I was left to go and do research appealed greatly to me. Without a class climate of fear I was more able to express myself and did better in those classes.”

Nothing nasty
He generally “preferred good-looking female teachers or male teachers who weren’t disciplinarians.” He didn’t like being talked at and was easily distracted, conspiring with others to “make mischief”. “Nothing nasty” just flogging stuff and wagging school. I preferred to be up at Jimmy Rata’s dad’s pool parlour than anywhere else.”

He says his biggest intellectual stimulus came from home, a hotbed of political and current affairs debates” his parents were British immigrants and he had four siblings. Echoing the findings of education academics, he adds, “The home environment is absolutely dominant in terms of forming one’s interests and attitudes.”
But he says, “School is important of course and the nature of the teaching vital” teachers who excite and enthuse will always be winners, hands down.”

After university (“a privilege and an adventure”), he worked at the Reserve Bank then started his own very successful economics-forecasting consultancy, at the same time raising four children with wife Joanne.
He was an early investor in his son’s TradeMe venture and received $50 million when the business was sold to Fairfax. With the cash, Gareth set up a philanthropic foundation, and has written a series of hard-hitting books that question the basic foundations of how we live now.

25% of children in poverty
Not least is his concern about child poverty” “it’s one of the scariest developments of late.”
Around 25 percent of New Zealand children now live in poverty, and longitudinal studies show that these children, as a group, have much lower levels of educational achievement and lifetime earnings, higher benefit needs, poorer health and higher incidences of crime than children from homes with adequate incomes.
But Gareth’s proposed solutions to the problem have nothing to do with the usual mantras of “welfare dependency” and “incentives to work”. “Society is still being organized along lines more apt to the challenges of the post-War years. The world has moved on.”

High child poverty kicked in here in the late 1980s” “the twin trends of globalization and IT have resulted in many jobs either being automated or being uncompetitively priced in the developed world.” He says this has left large tracts of our workforce without either fulfilling or rewarding work” “trapped as functionaries”” at the same time as millions in the developing world are getting opportunities that were previously denied them.

A basic income for all
“There’s no doubt it’s a net sum positive” it’s just that within the developed world we suddenly find we have over-educated, or more accurately over-trained, people in the workplace. “If you think of university degrees as vocational qualifications we have way too many, but I don’t think of degrees like that.”

He says we are now in an era without precedent. In New Zealand many jobs are overpaid by world standards and many people doing them are overqualified. His answer: “Redesign the tax and welfare regime so that this very rich country can redistribute its wealth in a manner that does not leave people without hope.”
He’s outlined his ideas in a book, The Big Kahuna. It boils down to the idea of a universal “Unconditional Basic Income”, which would be enough to live on and be funded by a flat tax that’s paid from a broadened tax base” both income and wealth. GST is a regressive tax that affects the poor disproportionately, the book says, and the wealthy can too easily avoid their tax responsibilities. “Why do volunteers have to be rich to be able to afford to do those more fulfilling tasks?”

The Big Kahuna
Win one of three copies of Gareth Morgan’s book The Big Kahuna. It makes a case for a radical shake-up of New Zealand’s tax and welfare systems.  Email with The Big Kahuna in the subject line.

Key points:
At school, Gareth Morgan struggled with discipline but liked inquiry learning.
He says child poverty is “the scariest development”.
His solution is a universal Unconditional Basic Income funded by a radically broadened tax base.