CARITAS AOTEAROA NEW ZEALAND – THE BUDGET

CARITAS AOTEAROA NEW ZEALAND – THE BUDGET

25 May 2010
The Budget and its Impact on the Poorest Members of our Community - Caritas

Tax cuts which benefit the rich more than the poor do not contribute to the common
good, according to Caritas, the Catholic agency for justice, peace and development.

Caritas Director Michael Smith says the agency has consistently asked the government to take into account the wellbeing of the poorest members of our local and international communities in setting its Budget priorities.

“Pope Benedict spoke only last year in Caritas in Veritate of his concern that growing inequalities within countries, as well as between rich and poor countries, affects social cohesion and erodes social capital. This is not a Budget which even attempts to address that concern. It rather perpetuates the idea that the rich are more deserving than the poor, and that growing inequalities do not matter.”

New Zealand politicians have previously argued that increasing the wealth of the rich and of businesses will eventually “trickle-down” to the poor. However, between 1984 and 1999 New Zealand had the highest growth in inequality in the OECD, and while the rate of increase has slowed, the Ministry of Social Development continued to report an ongoing increase in inequality in each of the Social Reports.

“In Catholic social teaching, inequality matters because when a gap grows between rich and poor, it is one measure that the solidarity of the human family has broken down,” said Mr Smith. “It is an indication that we are not recognising the human dignity of the most vulnerable members of our society.”

The government tax calculator shows that a worker on the minimum weekly wage receives a net income increase (after changes to income tax and GST) of $4.13 or 0.8 percent of income, while a worker on Mr Key’s salary receives a net income increase of $242.96 or 3.2 percent of income. “This will obviously have an impact on inequality,” said Mr Smith.

“The impact of the tax changes on low-income New Zealanders was considered only after other goals had been determined. The government appears to consider taxation primarily as a revenue gathering exercise, while Catholic social teaching recognises it as a key element of delivering distributive justice.”

Finance Minister Bill English opened his speech saying that New Zealanders had voted for a “more prosperous, ambitious New Zealand”. Mr Smith said that Caritas also has ambitions for a community in which all are able to prosper and meet our responsibilities towards each other. “The government and some commentators may argue that the tax cuts will flow or ‘trickle down’ to benefit low income earners and create more jobs. Will this be the case in the short or long term? Will we see reductions in inequality? Opinion is strongly divided,” said Mr Smith.

“Our Catholic traditions call us to judge the value of public policies by the impact on the poorest and most vulnerable members of society. Jesus asked us to recognise him in ‘the least of our brothers and sisters’. However, we do not see the wellbeing of the poor as being at the forefront of the government’s priorities in this Budget.”

Caritas Aotearoa New Zealand is a member of Caritas Internationalis, a confederation of 165 Catholic aid, development and social justice agencies active in over 200 countries and territories.

For more information contact Martin de Jong +64-4-496 1742 or +64-21-909 688.
All Caritas Aotearoa New Zealand media releases are available on
www.caritas.org.nz