Changes to taxation and other means of redistributing income are the final policy shift examined by this book. Based on the neoliberal premise that poverty is a problem of personal behaviour, rather than economic conditions, low tax has been reoriented as the best means for ensuring fair redistribution of income (Harvey, 2007). This sits in contrast with the emphasis placed on progressive, relatively high levels of taxation during the post-World War II period which was regarded as a trade-off for extensive welfare state services built around a general principle of equality (Boston and St John, 1999). In New Zealand, however, the weakening of the wage arbitration system, the wage freeze and high unemployment meant increasing numbers of low income families were facing financial difficulties by the early 1980s (New Zealand Herald – NZH, 1981a, 1981b). The universal Family Benefit had lost its purchasing power yet, at the same time, there was increasing tax avoidance among high income earners and companies (Roper, 2005; St John and Rankin, 2009). Income inequality remained low by Organisation for Economic Co-operation and Development (OECD, 2011) standards but the Labour Party opposition argued that the ‘rich are getting the richer, the poor poorer and the people in the middle squeezed’ under the Muldoon National government (Clark cited in NZH, 1981c, p 2).

Chapter Three highlighted how the 4th Labour government nonetheless radically reduced income and company tax rates from 1985, while also introducing a new comprehensive, uniform, valueadded consumption Goods and Services Tax (GST). Roper (2005, p 186) believes these reforms ‘constituted the single largest handout to the rich in New Zealand's political history, and did more than any other policy change from 1984 to 1999 to increase socioeconomic inequality’. Labour offered some new benefits and taxation dispensations for low income earners but these were narrowly targeted and largely ineffective. National abolished the Family Benefit in 1991 by merging it with the income-tested, child-related tax rebate called Family Support, whose real value eroded over the 1990s even if some improvements were made to low income assistance and tax credits after 1996 (Vowles and Aimer, 1993; St John and Rankin, 2009). after 1996 (Vowles and Aimer, 1993; St John and Rankin, 2009).