Life is certainly challenging these days, for many people.
The gap between rich and poor is widening all the time, causing serious resentment, a loss of trust in government and, ultimately, it will threaten social stability. On top of that, climate change is threatening our very survival. No wonder we all feel stressed out.
But all is not lost. There are a couple of quite simple things a government could do to address those challenges and make all our lives better.
The first thing is to address income inequality by targeting those who earn more than $270,000 a year. This is more than three times the average annual salary, and more than five times the minimum wage annual income.
There are more than 100,000 Kiwis in this group. The income tax rate they pay above $180,000 is 39c in the dollar — and many earning this much will pay less because of deductible expenses.
Rather than increasing income tax, a simpler solution is to charge those people a "social contribution" of 10c in every dollar earned above $270,000, with no deductions allowed. This social contribution is deliberately aimed at diverting funds to those in need, and those paying it could choose between two options: either they could give their contribution to the government for distribution to social services, or they could donate the money directly to any of a government-approved list of charitable social service organisations in New Zealand, and claim philanthropic credit as a sponsor.
Over $108 million could be raised in this way to support those in need without radically disturbing the lifestyles of high earners. A 20c social contribution would yield twice as much.
The second thing is to help address the impacts of climate change by requiring every new home built in New Zealand to be provided with 5kw of solar panels.
The cost of this, with a battery, is around $22,000 which will hardly be noticed in the overall cost of a new home.
Over 30,000 new homes are expected to be built in New Zealand in 2025. Each 5kw panel system saves around $2000 a year in power bills, as well as reducing the need for extra power generation for these homes.
This will not only contribute to mitigating the effects of climate change but will encourage people to become self-supporting in energy use, preparing them for the adaptation measures that will need to be introduced as the climate becomes increasingly more unstable.
Neither of these simple changes will cost the government a single dollar, except the minor costs of setting up the schemes.
And it doesn’t matter which political party champions them — there’s no reason why all parties couldn’t support them.
And wouldn’t they make our lives easier for all of us in Aotearoa New Zealand?
— John Drummond is an emeritus professor at the University of Otago.
