Are the beneficiaries benefiting?
There are no formal council or committee meetings this week but we have had a number of workshops for councillors to discuss key issues such as our rates and our financial strategy. This week we will be workshopping the Draft Community Facilities Strategy and prioritising Long Term Plan projects.
The Revenue and Financing Policy sets out how Gisborne District Council funds each of its activities and explains the reasons for each. In determining how activities are funded, the council is obliged to equitably share the cost of delivering services across different users as well as ensuring equity between current and future generations. In deciding how to fund each activity, the council considers the nature of the services provided and who benefits from those services.
So in other words, before setting our rates and how they are allocated between different groups, we ask “who benefits?” This was a robust discussion at a recent workshop to discuss and review rates policy. One thing is certain, we are all beneficiaries.
Often the term beneficiary is attached to those on a benefit, and this comes with a certain amount of stigma. As residents and electricity users in the region, we are all beneficiaries of Eastland Community Trust, yet many locals are unaware of this entitlement and the obligations of the trust to the region. At the trust’s last AGM I raised the issue of whether ECT’s contributions to our region have any long-term positive impacts on social issues such as employment and equality.
The Ministry of Social Development’s 2016 Household Income Report shows the highest-earning 10 percent of Kiwis used to make five to six times more than the lowest 10 percent. Now, their income is nine times higher.
So why should we care? It turns out that a high level of inequality can mean the population is less socially connected, according to researcher Max Rashbrooke.
“People begin to live very different lives. They lose that sense of other people’s lives, they lose that sense of empathy for each other so trust declines. Society is less cohesive,” he says.
It also creates an uneven playing field. The international evidence shows the children of less-privileged parents are not as likely to succeed in many areas of life — and life itself, as they die a lot younger than their wealthier peers.
It is particularly pertinent to ask the question about ECT’s commitment to inequality.
With the Eastland Group CEO being paid a salary of nearly $600,000 — 24 times the average income for the Gisborne region — ECT really needs to be asking the company it owns whether the position justifies such outrageous gratuity. Eastland Group profits come mostly from logs over the port and what they charge local residents to get our electricity over their network. While I’m no business guru, it doesn’t seem like profits are pouring in from particularly innovative investments.
While ECT maintains a focus on growing regional GDP, organisations from the International Monetary Fund to the NZ Treasury have admitted that “trickle down” economic theory is fatally flawed and simply doesn’t work. A recent IMF report concluded that “when the rich get richer, benefits do not trickle down”. Likewise the 2016 NZ Treasury report Living Standards, Wellbeing and Public Policy argues for a shift away from GDP to a more holistic Higher Living Standards Framework that has economic growth as only one of five key indicators to measure progress. The others are social cohesion, managing risk, sustainability for the future and increasing equity.
Is it time we develop a similar set of regional measures of progress?