By Lucy Mullinger elocal magazine
It’s easy to drive past those less affluent areas around New Zealand and say “it’s not my problem, the government needs to do more,” or “they could get a job if they wanted to”. It’s a lot harder to really get into the social fabric of New Zealand and look at ways in which our people can thrive as one society.
In New Zealand, it’s a case of “the rich get richer and the poor continue to get poorer”; we scoff at the politicians when they get it wrong and we yell at our TV screens when we hear another child has been killed at the hands of their guardians. But the majority of us leave it to someone else to deal with.
When Trade Me founder Sam Morgan sold the business to Fairfax Media in 2006, his family was left with a large wad of cash sitting in each of their bank accounts.
Economist and social commentator, Gareth Morgan, had bought a substantial amount of shares in his son’s business and both Gareth and his wife Jo came out with almost 50 million dollars. When he asked what he would do with it, he joked that he would probably throw the lot away.
Concerned about the state of the worldwide economy, Gareth put his money where his mouth was and with the help of his family, he developed the Morgan Foundation, a philanthropic organisation which helped those in need all over the world. Instead of “throwing it away”, he used it to enrich the lives of those less fortunate.
The decision behind starting a philanthropic organisation stemmed from a holiday Gareth and his wife took overseas. During their free time, the couple enjoy motor-cycling around the globe and have visited every continent on the back of their diesel-powered steeds.
“Riding around the third world on a motorcycle made me acutely aware just how impoverished and helpless so many in the world are. They work their guts out, they retain their dignity until the end but they simply can’t get ahead because of the dog-eat-dog nature of those in positions of power,” he says.
On his return to New Zealand, he found the complete opposite to be true. “New Zealand is the least corrupt society on earth,” which begged the question for him, why were we in such dire straits?
A self-proclaimed supporter of the underdog, Gareth admits that it was a “basic strand of my being” to do something directly for those in the most helpless positions.
Since its inception, the Morgan Foundation has not only invested in assisting communities all over the world, it has also assisted in raising money for charities both in and around New Zealand.
But it’s his views on New Zealand’s infrastructure that have been a thorn in many New Zealand politicians’ sides. With child poverty rates at an all time high, Gareth has made it his mission to give New Zealand a kick up the backside and wake up to the issues on our back door-step.
The entrepreneur has co-authored two books highlighting our shocking economy. The first book, ‘Health Cheque’, which was completed in 2009, showed that money spent on preventative health yielded a greater return than money spent on people who had already contracted diseases. This led to the book ‘Prescription for Change’ which explores the changes that need to be made to improve the current system.
A system so below par, that one in four New Zealand children live in medium to high risk housing. Medium to high risk housing can be defined by over-crowded living conditions and homes where children are not getting the food they need and much needed warmth and protection from mould and mildew.
At the beginning of the year, a UNICEF report into child poverty found that New Zealand was ranked number 20 out of 36 OECD countries when it came to child poverty, with more instances of child poverty than our cousins across the ditch. When it comes to beating Australia, this was one race we didn’t want to win.
The one country that has been winning the race for excellent child care does not have the mild climate that we enjoy, nor is it surrounded by sandy beaches and waving palm fronds. Instead, Sweden is a cold country with a warm heart.
Gareth believes there is a good reason why Sweden is doing so well when it comes to childcare and New Zealand is just not there yet. “Look at Sweden’s income compared to ours; we simply are not that rich.”
But it’s not just money that Sweden has over the rest of the world it – also has a far more comprehensive and progressive tax regime as well as a commitment to universal benefits. “We only have the latter for old people, whereas I advocate a minimum guaranteed unconditional income for all.”
This is where Gareth’s ‘Big Kahuna’ tax reform comes to light. He believes that New Zealand’s tax and welfare policies are in a real mess. As an economist with years of experience and understanding of the New Zealand economy thanks to his experience at the Reserve Bank, then running his own business (Gareth Morgan Kiwisaver), he believes the solution could be to abolish the current welfare system and put into place a system where everyone aged 18 or over gets an unconditional, tax-free basic income (called the UBI).
This income would replace all other government-provided cash transfers including New Zealand Super, DPB, unemployment benefit and Working for Families. All income would be taxed at a single flat rate and all capital would make a minimum required return every year with no exemptions for your home.
Currently the social welfare system hands out the same money to families earning up to $100,000 a year but doesn’t help those who have no money to live on.
If his idea went ahead, many pensioners would be forced to pay a higher capital tax and possibly lose their homes. It could also decrease the value of homes all over New Zealand; however, Morgan believes this would free up homes for young people to buy who couldn’t have afforded a new home in the past.
He is also not of the belief that we need to make life too easy for the parents of New Zealand. According to Gareth, breakfast, lunch and dinner are a parental responsibility. “The moral hazard is that if schools do it all, then parents will abdicate their responsibility.”
Having said that, he also believes that children should not be guinea pigs in the middle of some moral agenda. “That’s where income and employment policies become crucial and even then, there is obviously a role for the state as the last resort.”
In dire consequences where families just can’t get it together, he believes that the government should step in, bringing back ‘free milk in schools’ and assisting with free dental health in the same way we benefit from public health. However he concedes that it is all too easy to blame the government and not look at the way we are bringing up our children in a country which has so much to offer.
“In New Zealand, I see the most rewarding activity as public education and appreciation of what an incredibly wonderful environment we have at our fingertips.”
Although New Zealand has not breached the huge gap between the haves and the have nots, we do have an excellent reputation when it comes to overseas trading.
In 2005, the World Bank referred to New Zealand as the most business friendly country in the world, and Gareth believes in embracing our positive reputation. “A free market is one where entry and exit are uninhibited and everyone is equipped to participate – so they have sufficient education, health and proximity to play.” He says this is about as far away as you can get from a dog-eat-dog law of the jungle which most people confuse ‘free trade’ with.
“We could have a mass ignorance of what the capitalism preached by Adam Smith (the father of capitalism) was actually about. He preached for progressive taxes realising in the wake of the industrial revolution that the poor were rendered poorer in relative and absolute terms.”
To read more about what Gareth Morgan stands for, or to find out more about the Morgan Foundation, check out the website: http://www.morganfoundation.com