Book Reviews

Adults in the room – Yanis Varoufakis

Global Financial Crisis, 2008. Wall Street was in meltdown. The crisis sparked by reckless lending by American banks had spread way beyond the USA. They were giving loans to the rich, the poor, the poor and elderly, without any risk review. Banks granting the loans knew they shouldn’t be giving out these loans, they wouldn’t get their money back. ‘No doc loans’ and ‘liar’s loans’ issued by major banks and some smaller banks. Stuff which appeared like a scene out of a fantasy story playing out in real life. Banks for whom risk management should be the first precept in the bible ignored all rules, laws, principles and ethics.

Financial deregulation had led to ‘exotic products’, bad loans bundled up with the good and sold as triple-A-rated. You could mix good apples with rotten, sell them at the price of good apples, making a profit. Pack them in brown paper bags; people bought the apples without being able to check their condition. They, in turn, would sell these to someone else, who sold to someone else, who sold to someone else etc. all making a profit. It does look and feel like a fantasy story.

Banks in other countries would join the charade; they didn’t want to miss out on lucrative profits. Then it came down a house of cards.

Some of the more affluent countries were able to bail out the banks. Greece was less affluent. The structure and politics of the EU are not conducive to helping these countries in an economic crisis.

The government of Greece collapsed. Fresh elections saw the left-wing Syriza party, campaigning on an anti-austerity platform win 10% of the votes. The newly elected government collapsed within a few months. Yet another election; Syriza won 36% of the vote, enough to form the next government. The dramatic swing to the left reflected the deep dissatisfaction of the Greek people. Yanis Varoufakis found himself as the Finance Minister of the new Syriza led government.

Post -World War11 Greece was led twice by the armed forces, following coups overthrowing democratic governments. Yanis’s father was a political activist who was imprisoned by a military-junta, tortured to make a false confession, which he resisted. This experience left a deep impression on his young son.

Yanis was an obscure economics professor in an American university; shoulder tapped by Syriza party to be their economic advisor and later appointed Finance Minister.

To say that the Greek government was in an economic crisis at that time was an understatement. They were nearly bankrupt and fighting for survival. Negotiations held with a ‘troika’ of three parties- European Union (represented by their finance ministers – Eurogroup), European Central Bank and the IMF. A tough negotiation, made worse by troika’s prejudice towards a left-wing government.

The new government, with a strong mandate from the Greek people, expected flexibility and a realistic approach from the troika. What they found was an inflexible foe, who wanted even tighter conditions than they had conceded to the previous government. The Eurogroup led by the Dutch Finance Minister Jerome Djesselbohm proved to be the harshest party in this negotiation.  They embarked on a course of ‘maximum pressure’, which nearly brought the Greek economy and the banks to a complete shutdown. The inflexible position effectively shut off the possibility of a deal. While many people in this story came off poorly, Jerome was probably the most disliked.

Long hours of negotiations came to an impasse and conditions the troika were demanding were extremely unpalatable and unrealistic.

Syriza was extremely unhappy with the ‘deal’ that was offered but agreed to hold a referendum so that the Greek people could have the final say. Syriza would campaign against the deal and outline what rejecting the agreement would involve- leaving the EU and a hard road ahead. The Greek people would retain their pride and independence, instead of bowing to the troika. The Greek people voted to reject the deal.

Then came an entirely unexpected twist in the saga. The Greek Prime Minister and leader of the Syriza party, Alexis Tsipras blinked. He rejected the will of the people and opted to accept the deal offered by the troika.

Yanis resigned as he could not agree to reject the people’s will, the primacy of the people. Nearly a third of Syriza MPs refused to back Tsipras, triggering the 5th election in 6 years.  Syriza won the election, which Tsipras considered as a mandate to reject the referendum vote and accept conditions laid down by the EU.

A few passages from the book are so memorable that they stick in my mind till now. Christine Lagarde head of IMF at the time admitted privately to Yanis that the deal was not viable. Still, they had too much politically invested, and it was too late to back down. As ‘adults in the room’ they had to go ahead with the deal, hence the title of the book.

 Greece would be in ‘debtors prison’ for a very long time. The troika was pushing for a fire sale of Greek government assets, at a time where the market was at it’s lowest ebb. At one point they were insisting that even the Parthenon be on the block! Suicides by Greek pensioners, whose pensions were cut by 30% or more. Remarks by Larry Sommers to Yanis, ‘You need to be an insider to get a deal. If you are an insider, you cannot criticize other insiders’, effectively saying criticism of those in power meant shutting off the possibility of a deal.

German Finance Minister Wolfgang Schauble ‘we cannot negotiate a deal just because there is a new government’. A government of an EU nation elected with a mandate from their people to renegotiate terms of an agreement had no right to do so. Yanis expected negotiations with the EU to be tough and challenging; but most disheartening was the lack of support from his party. Especially the Prime Minister, Deputy PM and people he considered close friends.

Lack of support from American President Barack Obama, whose words turned out to be empty. The only American politician to support him was Bernie Sanders, an obscure senator from Vermont at the time. Writing to Christine Lagarde that American funding of EU shouldn’t inflict more pain on the Greek people, threatening to block funding.

The book is a blistering criticism of EU, IMF and ECB, prominent figures in those establishments and their approach towards economically less affluent countries like Greece and Spain in a crisis. The Greek economy shrank by 30%; a result worse than the US economy at the height of the Great Depression. The unemployment rate reached 26% (youth unemployment rate of 50%) and is still around 15%, ten years on from the crisis. Economic targets proved to be unrealistic, debt repayments which were supposed to end by 2040, look unlikely. A recent proposal by the IMF aims to end repayments by 2080! Greece is in ‘Debtors Prison’, and it appears for a very long time.


EU approach to economic crisis now caused by COVID19 appears just as ineffectual. Funding released is far less than required, with some commentators casting doubts whether EU itself will survive.


Tax Injustice

The wealthiest companies and people in the world are avoiding paying billions of dollars in taxes every year, money that could have paid for better public services, decent pay for our essential workers and help the neediest people in our society

The accountancy firm Grant Thornton worked out that the UK’s 54 billionaires paid income tax totalling just £14.7m (0.01%) on their £126bn combined fortunes. The Observer, 2007

In 2018, Amazon paid $0 in USA federal income tax on more than $11 billion in profits before taxes. It also received a $129 million tax rebate from the federal government. Apr 4, 2019- CNBC.Com

Apple has faced mounting criticism in recent years for avoiding taxes in the US and Europe. Wednesday, it offered critics 38 billion replies. More precisely, Apple said it would pay an estimated $38 billion in tax .…, but it’s also a pretty good deal for the company; they saved $50bn. Wired, Jan 18, 2018

General Electric is a multinational giant that made $27.5 billion in profits from 2008-2012 but got a total of $3.1 billion in federal tax refunds and paid an effective tax rate of negative 11.1 per cent, according to Citizens for Tax Justice

Our wealthiest companies and billionaires are siphoning off billions of dollars from the public coffers every single year. And leaving a hole in public coffers that could have paid for better schools, hospitals, decent pay packets for our teachers and nurses, better housing and welfare for our neediest citizens. They do it in plain sight, flaunting it in our faces. They make billions of dollars in profits for their shareholders while paying little or no tax. You and I, the ordinary taxpayers, make up the shortfall getting less and less in return.

Apple said it would pay an estimated $38 billion in tax .…but it’s also a pretty good deal for the company, they saved $50bn

The international tax system is broken. The losses to people and countries throughout the world are staggering. You are probably wondering if we know which companies are not paying taxes, why don’t we just knock on their doors and collect the amounts owed. It is legal to ‘avoid’ taxes; using loopholes in our tax laws. You might ask why we don’t seal the holes which are causing this leakage? Large, powerful companies use an army of lobbyists and millions of dollars in donations to politicians to keep the loopholes open, change current laws to their benefit, get tax rates reduced. Even when the IRS charges them, they often fight in court using expensive law firms to delay judgement for years. Landing taxpayers with millions of dollars in legal fees.

It’s not just the large multinationals who avoid paying taxes; it’s also the billionaires and some smaller fry.

Robbing a bank or stealing a car, spells a lengthy jail sentence. You can hardly be regarded as a respectable member of the society, live in a fancy suburb. Or play golf with the most powerful people in the country.

Tax avoiders can don a cloak of respectability – exploiting gaps in the laws they helped create – saying they abide by all the laws and pay all due taxes.

The Panama papers leak and investigations cast a light on how rich listers’ and powerful politicians use tax havens. Lux leaks showed how major corporates used Luxembourg to avoid taxes.

A Brief History of Taxation

History of taxation is as long as the history of civilisation. First records of taxes were in Egypt around 3000 BC, where a fifth of all crops was given to the Pharaohs. Taxation was also prevalent in other ancient cultures like Greece, Roman, Aztec, Mughal emperors in India.

Early forms of taxation related to sales, purchases, import duties, taxes on property and even a head tax. During Greek and Roman times property taxes were levied to provide additional funding to fight wars. Modern forms of taxation began with the growth of imperial Europe and industrialisation, when taxes on doing business, became as valuable as taxes on farming.

Then as now, taxation was often a topic of political controversy. It was the refusal of American colonists to pay tax to the British which sparked the war for independence and the slogan – “No taxation without representation’. Resentment of taxation was also a significant factor in the French Revolution.

First World War saw an escalation of taxation and taxes continued to be high after the war to fund increased public services. The New Deal in the USA in the late 1930s, the 2nd World War, the funding required for public services like health, education and the Cold War led to high levels of taxation being a permanent feature in most countries. Rise of capitalism also required taxes to be levied to transfer wealth and reduce levels of inequality.

The last major shift in taxation began in the 1980s with the advent of neoliberalism. Ronald Reagan and Margaret Thatcher supported by neoliberal economists like Milton Friedman started a shift towards smaller government and lower taxes. A belief that this would spur economic growth which had stalled following the oil price hikes in the 1970s. Spur growth, it hasn’t, economic growth between 1950 and 1970 was higher than the periods following.

We have a seen a wide divergence in tax and welfare policies since the 1980s between countries like Scandinavia, France, Germany and the Anglo-American countries – USA, UK, Australia, New Zealand. Anglo American countries have moved to cut taxes and reduce public services and welfare, along with deregulation leading to sharply increased inequality. European countries have managed to retain relatively higher levels of taxation, a good standard of public services and lower levels of equality.

 The starkest extremes are in the USA. Tax cuts have been so lopsided that the wealthiest 400 billionaires now pay a lower level of tax than everyone else including the bottom 10% of earners. The billionaires now pay less than half the rate they used to pay in 1962, while their wealth has increased a staggering 24 times at the same time.

Impacts of reduced taxation

“The missing money means schools not funded properly, hospitals not built. For Russian people it’s not funny money, it’s killing them.”
– Elena Panfilova, the Moscow head of Transparency International, on élite Russian money stashed in Europe

Since the 1980s we have been cutting taxes for the rich and corporations while cutting benefits for the poor, Robin Hood in reverse. Tax cuts sometimes by more than 50% and a plethora of loopholes have led to poor healthcare, education, food insecurity, higher mortality rates etc. Deregulation and vastly reduced influence of unions has led to very insecure jobs while at the same time reducing the safety net for those who lose jobs.

In developing countries, the effects are far worse. Governments are struggling to provide even the most basic services, people starve or even die due to lack of food and healthcare.

Helping hands

“At some point . . . such conduct passes from clever accounting and lawyering to theft from the people.”
– US Internal Revenue Service, in a case dealing with KPMG’s “phoney tax losses.”

“The agents who create and maintain this secrecy space include some of the most powerful and privileged elites with society.  It is bankers, lawyers and accountants who create and operate the corruption interface linking illicit activities to the mainstream economies.”
– John Christensen, Director, Tax Justice Network

“Offshore companies bled Guinea’s resources, facilitated by western lawyers, accountants, advisers.”
– Alpha Condé, president of Guinea, Jan 2014

The enablers- tax accountants, lawyers, bankers make large sums of money helping these companies to avoid taxes. These professionals, along with trade associations like The Institutes Chartered Accountants and CPAs lobby to influence tax regulations favourable to their clients, loopholes open. Our accountants and lawyers, use our public education systems to get their education, use the same knowledge to rob public coffers that paid for their education.

Our accountants and lawyers, use our public education systems to get their education, use the same knowledge to rob public coffers that paid for their education.

The Big 4 Accounting firms like KPMG and Deloitte are particularly pernicious in lobbying and peddling their ‘products’ to help avoid taxes. PWC wrote Luxembourg’s tax regulations to establish the tax haven.

They will tell you that tax avoidance or using loopholes in the law is legal and acceptable if not ethical. What they conveniently forget is that they influenced and lobbied to keep these holes open, in some cases reopen those that have been closed. They even push authorities to punish whistleblowers with criminal charges. In Luxembourg, it was the good guys, the whistleblowers who were charged, on a complaint by PWC. They push schemes which are likely to be considered illegal, because any penalties will be wet bus tickets, compared to the money they stand to make.

Tax Havens

Have you ever examined UK trust law? All our bankers and financial lawyers say that if you really want to hide money, go to London and set up a trust
Luxembourg politician talking to UK MP Dennis MacShane, after he had complained about bank secrecy

However hard it is for them to enter the Kingdom of Heaven, the super-rich has no difficulty entering the United Kingdom of Tax Haven.
– Michael Meacher, UK Labour MP, writing about Britain’s domicile rule, 2007.

Tax havens are countries or states or territories, who charge ultra-low tax rates, sometimes zero tax. To help corporate and wealthy individuals avoid taxes in other countries. The name tax haven may sound like a tropical island in the middle of nowhere; the reality is different. The USA now ranks as the 2nd largest tax haven in the world in terms of tax dollars avoided; over twenty states offer significant tax benefits to foreign corporations. Five of the major tax havens are British territories, including the largest tax haven in the world – Grand Cayman Islands. Two biggest financial centres of the world – Wall Street and the City of London are the hubs that act as conduits to tax havens. It doesn’t end there, many prosperous, seemingly respectable countries are also tax havens – Netherland, Luxembourg, Ireland, Switzerland, Singapore, Hongkong, Dubai.

The USA now ranks as the 2nd largest tax haven in the world

Most of these countries are supposed to be bastions of democracy, hold the interests of  ‘We the People’ supreme, it doesn’t appear to be the case. In the words of Leona Helmsley, property heiress “We don’t pay taxes. Only the little people pay taxes”. In the words of Warren Buffett – “I pay a lower tax rate than my secretary”.

The effect on developing countries is a significant drain of funds on people who can least afford it, live below the poverty rate of $2.50 per day.


“A Labour Chancellor will not permit tax reliefs to millionaires in offshore tax havens.” 
– Gordon Brown, Hansard,  1998

Not just a light touch, but a limited touch . . . a million fewer inspections every year
UK Chancellor Gordon Brown, 2005, as he launches his “Better Regulation Plan.”“In 1995, Congress adopted legislation intended to limit securities litigation … insulated from the suits, the accountants now willing to take more ‘gambles’.
– Joseph Stiglitz, in his book The Roaring Nineties

Ronald Reagan and Margaret Thatcher made taxes unfashionable. Tax cuts for the rich and corporations were staggering, some nearly halved overnight. Politicians are part of the problem. Many of them held a misconception, without any evidence that lower taxes boost the economy or lower taxes encourage greater compliance.

They are also highly susceptible to lobbyists who promote loopholes, especially if they come bringing gifts, hefty campaign donations. Laws are often designed to fail. They are also hypocrites – what they say during the election campaigns are quite different from what they do once in power as quotes above from Gordon Brown illustrate. What they say in private to their backers is quite different from what they say in public. Tax cuts are often followed by slashed welfare for the neediest people in society.

The Good Guys – The Tax Activists

Several activist organisations are fighting against overwhelming odds to make a dent in the tax avoidance/evasion industry. Tax Justice Network, operates out of UK with branches around the world, including in New Zealand They use their website, a monthly podcast, lobbying to create awareness and push governments, regional and global organisations like the EU, OECD.

International Committee for the Reform of International Corporate Taxation (ICRICT) is another prominent activist organisation; who include Nobel prize-winning economist Joseph Stiglitz and another influential economist Gabriel Zucman, amongst its members. There also US-centric organisations like Citizens for Tax Justice.

Whistleblowers, journalists and news organisations are essential assets in the fight against tax theft. Several high-profile investigations which have received attention include the Panama Papers, Paradise Papers and Lux Leaks.

Global Tax Action, or is it inaction?

”It does not surprise anyone when I tell them that the most important tax haven in the world is an island. They are surprised, however, when I tell them that the name of the island is Manhattan. Moreover, the second-most-important tax haven in the world is on an island. It is a city called London in the United Kingdom.”
Marshall Langer, a leading pro-tax haven analyst, Tax Notes International, 2001

“The game plan is to be positive but hope as little as possible happens,” is how Paul Oosterhuis, a tax partner of Skadden Arps, the US law firm

There is an OECD initiative to reduce tax avoidance since June 2016. There is some progress; however, significant problems remain and significant roadblocks. The primary and possibly intractable problem is that OECD countries account for 50% of tax avoidance globally, therefore unlikely to agree on any significant reduction to their revenues. For some of them like Ireland and Luxembourg, tax haven revenues ‘stolen’ from other countries are a substantial part of government revenues.

There could be progress if major countries like the USA and UK support these initiatives. Unfortunately, they are both significant tax havens. The Trump administration has even gone to the extent of threatening retaliation against any attempt by countries who are initiating tightening of tax avoidance laws.

EU has been trying to reform international taxation in Europe for years. These initiatives have failed to produce any significant reforms or even transparency, blocked by tax haven countries within the EU.

How are taxes avoided?

Corporates and Rich Listers

The same mechanisms allow tax evasion, tax avoidance, corruption, and organised crime money to flow — it’s all the same. We have left these loopholes open because it’s beneficial to multinationals and the rich. To be able to structure their money to minimise tax, we let a hell of a lot more going on under this.
Anthea Lawson, Global Witness

A recent news item highlighted the ‘Double Irish Dutch sandwich’ used by Google to avoid tax. Tax avoidance typically involves a company that is a subsidiary of a multinational group registered in a tax haven charging for services to companies in the group operating in other countries. Income in the tax haven is taxed at a very low rate, while the company gets large tax deductions in high tax countries.

Royalty payment, Licensing Fees – while R&D for product development or brand building is done mainly in their home countries. For some inexplicable reason, corporates are allowed to register these in tax havens. These payments can be quite large as they are unique and cannot be easily compared to a market price. For companies like Google and Apple, these fees can be $billions for just one year.

High Value, High-Interest Loans between branches –Loans are given to subsidiaries in high tax countries at high-interest rates. Tax on interest income in tax havens is minimal while saving in tax bills around the world.

Round Tripping –Sending money to countries like Singapore, Hongkong as Foreign Direct Investments and getting cash back as Foreign Investments.

Complicated transactions using tax havens – An example would be the ‘Double Dutch Irish sandwich’ which uses Netherland, Ireland and Bermuda.

Using Foreign Trusts – Used primarily by rich listers, income is transferred to a Trust in a tax haven, paying little or no tax on such income. New Zealand is highlighted in the Panama papers scandal as a place used to register foreign trusts. No beneficiary information was required at the time, making it an ideal place to hide assets and income.

How the little guys do it

Trusts – A high earner using a trust to distribute profits to children, who will pay at lower tax rates is a legitimate way to reduce taxes.

An article in Spinoff, written by Michele Duff outlines some of the ways commonly used by small to medium tax cheats. Most of the tax saved by the little guys is tax evasion or breaking the law and punishable if caught.

The hidden economy or the ‘black’ economy is a significant part of small to medium tax evasion. A contractor might tell you that he can give you a lower price if you pay cash, as part of the bargaining process. A restaurant will fail to ring through cash sales and pay some wages in cash, avoiding GST, PAYE and Income Tax, a triple whammy. A construction company will pay some salaries in cash, avoiding PAYE.

Cash is king for tax cheats, including restaurants, retailers, contractors, it’s easy as pocketing it instead of putting it through the books.

They have their helpers too, from friendly accountants who identify loopholes to money launderers and suppliers in the black economy.

How to make them pay

The solutions are not technically challenging, but politically almost impossible, presently

The good news is that we can fix tax injustice, right now. There is nothing inherent in modern technology or globalisation that destroys our ability to institute a highly progressive tax system. The choice is ours– Gabriel Zucman and Emmanuel Saez

Tax Justice Network and economists Gabriel Zucman/Emmanuel Saez propose a Unitary Taxation system. Country by country reporting of revenues can be used as the basis to allocate worldwide profits to each state. Each state will collect their tax based on its Corporate Tax rates. Any uncollected tax will be paid in the home country. This ensures that taxes are paid where the economic activity takes place, rather than where tax rates are lowest. Removing the incentive for companies to book their taxes in tax havens.

Gabriel Zucman and Emmanuel Saez also propose a wealth tax, supported by a global wealth registry and adequately resourced audit function. Furthermore, sanctions against tax havens.

The oft-repeated mantra that the current tax issues due to the advent of digital and online businesses are just a red herring. We do have a problem collecting taxes from digital companies. However, we lose much more money due to the inability to collect taxes from traditional brick and mortar multinational companies. Tax havens didn’t spring up overnight; they have been there for decades.

The mantra that the inability to collect taxes is due to the tax system not keeping pace with globalisation is also a red herring. The problems are due to our politicians looking away and even colluding with the rich and powerful. To weaken our tax system, winking at those who are avoiding and evading taxes.

It is no longer seen as unpatriotic to avoid taxes, not since Reagan and Thatcher started attacking the government as the problem.

New Zealand

“That $500m could pay for 26,000 hip operations, 4,000 doctors or 7500 cops. A boatload of money” -James Shaw – Leader Green Party

“Certain industries are more susceptible to profit shifting and playing games with us. Logically that’s where we put more resources in terms of monitoring”- John Nash, IRD Manager, International Audits

A New Zealand Herald investigation in June 2017, into multinationals operating here highlighted that 20 of them paid only $1.8Mn tax on $10Bn revenue in New Zealand. Just two companies BP and Caltex paid only $4Mn tax on $5Bn of income, some of them even claimed tax refunds! Herald estimated tax lost at $490Mn.

Two companies BP and Caltex paid only $4Mn tax on $5Bn of revenue

World Bank estimated the size of our ‘hidden economy’ in New Zealand at $20bn per year, that is 10% of our GDP. If we calculate the loss in taxes at say 20%, that is $4bn every year. Which could have paid for hospitals, better wages for our public servants, a more decent life for our beneficiaries and less tax for all of us ordinary taxpayers.

Progress on tax avoidance and evasion

“The new law will address the problem of companies operating cross-border and using aggressive tax structuring to reduce the tax they pay, the first step towards a better, fairer tax system” – Stuart Nash, Revenue Minister

The Taxation (Neutralising Base Erosion and Profit Shifting) Bill passed in 2018 is a ‘first step’ on tackling multinational tax avoidance. Inland Revenue has also given guidance on maximum acceptable charges for intercompany loans and royalty charges, aimed at putting pressure on these companies. They estimate an increase in the tax take of $200Mn from these changes. We are yet to see if these changes will have the desired effect.

How they do it

No Tax Haven Involved

Company Straight A– Makes profit of $100Mn operating in Country X. Pays Tax of $30Mn at a corporate tax rate of 30%.

With Tax Haven

Company Crooked BB a subsidiary of Company B– Makes profit of $100Mn in Country X

Company Crooked BC, a subsidiary of Company B, is registered in Tax haven Bermuda, where the tax rate is 1%. BB pays tax on royalties of $50Mn at the 1% tax rate, $0.5Mn.

Company Crooked BB now makes only $50Mn after paying royalties; the tax bill is now half of what it should have paid – 30% X $50 Mn = $15Mn

Total tax for Company B who owns BB and BC is now $15.5Mn, compared to Company Straight A who paid $30Mn for the same profit.

A saving of nearly 50% or is it theft?


  • The triumph of injustice – Gabriel Zucman, Emmanuel Saez
  • The Hidden Wealth of Nations: The Scourge of Tax Havens – Gabriel Zucman, Emmanuel Saez
  • Tax Justice Network -
  • NZ Herald
  • The Guardian
  • Stuff-
  • The Spinoff -

Diabetes kills – 6 times more people than car accidents

Diabetes, along with closely linked heart disease, is responsible for the deaths of more New Zealanders each year than any other condition.

My mother died of diabetes complications. She struggled with this disease for years. She took insulin orally at first, as her condition worsened she had to go to the hospital for injections. She was hospitalised many times and finally became another casualty of diabetes. She took her medicine faithfully, lifestyle changes- probably not.

John’s story is probably typical for a diabetic and highlights challenges faced in tackling the disease. “The word is relentless because that’s how it feels. My first response to being diagnosed with Type 2 diabetes in 2009 was one of frustration and resentment. I didn’t want to be diabetic. I was frustrated that it meant changing my lifestyle, which at the time, I hadn’t prepared to do. I did nothing.

My wife and I were with my daughter up in Ripon one day in 2017, and I remember waking up Friday morning and being very, very breathless. They rushed an ambulance to me. Looking into the eyes of my wife and daughter and thinking ‘I’m not ready to die’. Self-inflicted and I’ve done this to them; a result of my non-engagement.

I vowed then if I got through it, then I would start to make some changes to the way I lived. I would take this seriously”

6% of our total population have diabetes (another 2% have diabetes without being aware of it). Incidence of diabetes has nearly doubled over the last 12 years, population increase, aging of the population and rising obesity, being the contributing factors. People of Māori, Pacific and South-Asian ethnicity, and the socioeconomically disadvantaged; bear a disproportionate burden of obesity and type 2 diabetes.

The prevalence rate for Maori/Pacific is three times that of European. The mortality rate for Maori/Pacific is even higher, nearly five times that of European/Other. Prevalence of diabetes among people aged 65 and over is 15 to 20% of the population. The aging population and rising obesity mean that the number of diabetics is likely to increase further.

The age at which we get diabetes is also getting younger. Those who get diabetes below the age of 40 have a much higher rate of developing other complications like heart disease and early mortality. Incidence of diabetes for the age group 30-39, while still low, has doubled over the last 12 years.

New Zealand has a diabetes problem, fuelled in part by high rates of obesity. It is the largest and fastest-growing health issue we face in New Zealand. Our pacific island neighbours have some of the highest incidences of diabetes in the world. While the Ministry of Health doesn’t have an estimate of the budget spent on Diabetes, NHS in the UK estimates they spend a whopping 10% of their total budget on diabetes.

What is diabetes?

Diabetes is a disease where your body cannot control its blood sugar levels properly due to a lack of insulin. Or your cells have become resistant to insulin. There are two types of diabetes. About 10% of people with diabetes have Diabetes1, which is more likely to be hereditary and not preventable. The vast majority have Diabetes 2, which is closely linked to obesity. There is no cure for diabetes, but it can be prevented and controlled.

What is pre-diabetic?

Pre-diabetics have a high sugar level, but below the threshold considered diabetic. 16% of the population aged 45 and younger is pre-diabetic. An estimated 40% of Maori, Pacific and Indian population aged 35-39 in Auckland are pre-diabetic.

Diabetes Prevention

For most of us, diabetes can be prevented by eating healthy and exercising. It can also be detected at the pre-diabetic stage with a simple blood test, with a good chance of preventing from progressing to full-blown diabetes.

Living with diabetes

In theory, this is an easily solvable problem, Screen and blood test everyone at high risk. Prevent or control with medication and lifestyle changes. Unfortunately, this is easier said than done, numbers are on the rise in almost every part of the world. One of the most challenging issues is changing lifelong habits of diet and sedentary lifestyle.

Diabetes Initiatives – New Zealand

‘Living well with diabetes 2015-2015’ project launched by the Ministry of Health is the main initiative to reduce diabetes. This plan targeted a 20 to 30 per cent reduction in the rate of new cases by 2020 as well as targets for reducing deaths, life expectancy and reducing complications. The broad action areas targeted by the plan are sound, and it aims to reduce diabetes using a mixture of awareness, information, screening and intervention. There is a lack of detail on which parts of the plan are complete, and the ministry has no status update (it is currently gathering this data from the DHBs). The program has not achieved ambitious goals set; however, the increase in the prevalence of diabetes appears to have slowed down.

There are broad-based initiatives which will reduce diabetes. ‘Healthy families NZ’ promotes the diet and an active lifestyle. Health star rating a voluntary code for food labelling.

Diabetes New Zealand is a non-profit aiming to provide information and support, also an advocacy group for people with diabetes and those at high risk.

International Initiatives

International Diabetes Federation has done a comprehensive analysis of over 70 trial programs carried out all over the world to come up with some of the success factors in tackling diabetes. Many of their recommendations have come from studies done in Australia,

Some of these ideas are

  • Diabetes screening- Using an online risk assessment tool.
  • Blood testing for those identified as high risk.
  • Comprehensive lifestyle intervention programs, through group counselling sessions, telephone or webchat. Currently, all states in Australia run these programs.
  • Medication where appropriate
  • Public Health initiatives- A sugar tax, promotion of healthy diets in schools and kindergartens, prominent food labelling and regulation of food/soft drink marketing.

Is there value in screening the whole population say over the age of 45?  Probably, this is not something current practised. Is it worthwhile running public awareness campaigns, similar to drink driving or dangerous driving? Possibly.


Getting people identified as diabetic, pre-diabetic or high risk to get tested and make the diet and lifestyle changes required has been challenging. Changing a lifestyle and diet, bedded in over many decades, is not easy. Psychological support is very much an essential part of treatment and long-term care.

Keeping safe- what can you do?

  • Healthy diet and exercise would be a perfect place to start.
  • If you don’t have diabetes or unsure, use ‘Are you at risk’ online monitoring tool from diabetes NZ,
  •  If you are high risk, arrange for a blood test, with your GP.
  • If you already have diabetes, nothing is important as following your GP’s advice and making those lifestyle changes stick!
  • Diabetes NZ recommends an annual diabetes check-up and has a range of resources to help you. Their Facebook page has an online community for support, and there are also several other Facebook groups.

Diabetes by Numbers

  • 6% of the total population has diabetes          
  • 2% of the total population have diabetes without being aware of it
  • 15-20% of the population aged over 65 have diabetes
  • 85% increase in diabetic patients since 2005
  • 5-10% of our health spending is on diabetes
  • Three times – the prevalence of diabetes amongst Maori, compared to non- Maori
  • Five times – the mortality rate of Maori vs Non -Maori
  • 16% of population below 45 are pre-diabetic
  • 40% prevalence of pre-diabetes among Maori, Pacific, Indian aged 35-39



Child Poverty in New Zealand -Out of sight, out of mind?

Should we accept poverty rates double that of the 1980s? A quarter of children in poverty?

Moving houses, always moving – stressful. Having to move in the middle of the night – unable to pay rent, scary. – From a young persons’ group, Paeroa

Cold – got hardly any clothes, looking for some. Wonder if there’s any money in here [clothing bin]. No money, no clothes! Desperate. – Anonymous, Paeroa

Not getting proper opportunities like going on school trips, hard to take part in things like sports and other activities. – From a young persons’ group, Dunedin

It’s a tough night’s sleep. It’s normal. It’s better than listening to my parents fighting and drinking all the time… I’m hungry, I’m cold, and I don’t want to go home. It’s no use going back to no food in the cupboards. I’m alright here! – Mere, Paeroa [wrapped in a mat and sleeping under a bridge]

Teachers were causing shame to students in front of their peers because they have no stationery, uniform etc. Schools should deal with parents and not punish the kids for not having shoes, books, etc. – From a young persons’ group, Whanganui

The quotes above from an excellent article on the subject by Dr Renee Liang, consultation paediatrician- initially published in North and South Jan 2020, conveys the reality of poverty, better than any statistics.

Poverty rates in New Zealand (after housing costs) are double that of 1982. Almost a quarter of children live in poverty (in households earning less than 50% of median income). In the words of Dr Liang – “If we had a rock star economy, we forgot to invite a lot of people to the party”.

Economic reforms in the late 1980s have been particularly harsh on the poor. We changed from a society where one could leave our doors open for the neighbours to pop in and borrow sugar, to a community where we install alarm systems to stave off burglars. Gang memberships have soared in poverty-ridden parts of the country.

“History is written by the rich, and so the poor get blamed for everything.”  — Jeffrey D. Sachs, economist

Many of us have little or no connection with the poor and attribute poverty to lack of will or effort. We judge them from our armchairs without any evidence as spongers, living on our tax dollars, spending their money on drinking and gambling. The reality of poverty is very different; budgeting services will tell you that a vast majority of those on low incomes are conscientious about their spending. Poverty is a lack of cash, a lack of opportunity, not a lack of will.

Deprivations from a very young age leave lasting scars. If you start a race fifty metres behind the rest and face more obstacles along the way, only a few fastest and fittest will catch up with the rest of the pack?

We are an affluent country in the developed world, is poverty a lack of resources or how we are using them?

Economics of poverty

As well as a terrible human cost, there is an economic cost for poverty. An investment to lift people out of poverty is one that will be paid back in full, with interest.

Higher healthcare cost from diabetes, asthma and other poverty-related diseases. Higher labour cost due to low productivity, higher spend for a prison population at an estimated $100K per person, and higher social housing cost can be reduced significantly.

There are also issues which can be solved without spending a dime, where the government refuses to act because there is a political cost. A sugar tax and restrictions on the sale of food and drinks with high sugar content to curb diabetes and obesity. Limits and restrictions on the promotion of payday loans, curbs on gambling and pokie machines.  Should we in the 21st century accept cash trucks driving around poor neighbourhoods enticing vulnerable people with easy cash and charging over 500% interest?

Reducing poverty and helping them to become more productive members of society is a saving, not a cost, money well spent. Economists estimate the cost of poverty at 3 to 4% of GDP, which in the case of New Zealand is $6 to 8bn every single year.

What causes poverty and how does it affect the poor

‘I believe that every American should have stable, dignified housing; health care; education – that the very basic needs to sustain modern life should be guaranteed in a moral society’- Alexandria Ocasio-Cortez

The causes of poverty are closely related, an interwoven web feeding each other, compounding and causing lifelong, even intergenerational impacts. A lack of cash impacts on everything – food, housing, health and education. Poor houses cause health problems. Hunger and obesity adversely impact education and health. A lack of a good education means a lack of cash, later in life.


Part of any successful strategy to reduce child poverty must involve increasing the level of assistance to families on benefits. – Michael Fletcher, Senior Research Fellow, University of Victoria, Wellington

Increases in Families Package will have a significant impact and expected to lift 64,000 children out of poverty by 2021. Taxes are certainly part of the answer. Introduction of GST in the late 1980s and subsequent increases have impacted harshly on the poor; decreases in Income Tax and the abolition of wealth taxes have mainly helped the well off.


The single largest cause of poverty in New Zealand today is housing, there are 70,000 more children in poverty after housing cost (compared to before housing cost). A sell-off of public housing and rising rents due to long neglect of housing issues, especially by the National governments has led to a severe deterioration of housing affordability, for the young and the poor.  We have started increasing social housing, on the flip side, the signature affordable housing program hasn’t got off the ground, which has meant rising rents. Over 30% of our housing is too cold in the winter. Crowded houses often meant there is no quiet space for studying, no internet or a computer.

The number of social housing units built by the current labour government, mandatory insulation standards for rental housing, winter energy subsidy are all steps in the right direction. We need more social housing units, many more.


The poor children are poor in health as well, the hospitalisation rate for children in the lowest income segment is double that of the wealthiest 20%. The cost to the health system is high; just the cost of diabetes estimate is 5 to 10% of the total health budget. Impacts of poor health can be lifelong. The cold and draughty homes and high cost of heating lead to poor health, high rates of respiratory illnesses and asthma/wheezing. The new insulation standards and winter energy allowance will make a difference.

Obesity and closely related diabetes and heart diseases are the single largest cause of death in New Zealand. Child mortality rates of all New Zealanders decreased significantly in recent years due to medical advances. However, the poorest are still dying at three times the rates of the wealthiest. Our child death rate is much higher than in Australia, twice as high as Ireland and Finland.

Food Insecurity

“Poverty is a very complicated issue, but feeding a child isn’t.”  — Jeff Bridges, actor

An excerpt below from Dr Liang’s article.

In 2010, different research suggested the problem had increased. In a survey of Dunedin and Wellington families, 47% of low-income families reported they often ran out of food due to a lack of money. This group could also afford fewer vegetables per week, highlighting that many families may need to choose between quantity and quality when it comes to food.

Yes, we’re back to the issue of “poor lifestyle”. It is a sad irony of our globalised world that the cheapest items in our supermarkets are the most processed items from the furthest away. These are often high in processed fats and carbohydrates, resulting in higher cholesterol intake and increased risk for obesity. And yet, we still judge people at the checkout counter for the “choices” they make.


Education is perhaps the success story of the recent past; we have significantly narrowed the rich-poor gap.

Poverty by Ethnicity

Nearly one in four Maori children (23%) live in households with material hardship, the rates are even higher for Pacific (28%). Material hardship for Maori and Pacific is approximately two and a half times that of European. These inequities transfer in later life to unemployment, earnings, health issues and higher imprisonment rates.

International Comparison

New Zealand’s poverty rate has been improving but still below the OECD average, and worse than Australia while Nordic countries do much better.


The previous National government refused to even agree on how to measure poverty, let alone set a target. Prime Minister Jacinda Ardern made reduced child poverty a central plank of her economic program and set 3 and 10-year poverty reduction targets. Child poverty rate (children in households earning less than 50% of median income) has declined by 2% points for the year 2019, lifted 18,000 out of poverty. Children in material hardship, however, has gone up marginally. We begin 2020 with 151,000 children in households with material hardship and 235,000 children in poverty

Lifting children out of poverty

The two things that can make the most impacts on improving poverty in New Zealand are increasing the benefit and building more social housing. Budget 2020 promises 8,000 more houses, more money for winter heating and free school lunches, but not a great deal of extra cash, considering the massive $ 50bn in additional spending. Perhaps more could have been done. At least we are moving in the right direction. Let’s hope this government is serious in its efforts to reach the targets set for reductions in child poverty; succeeding governments will not move the needle backwards.

  • Poverty rate compared to 1982 – double
  • Number of children in poverty – 235,000 (21%)
  • Number of children in material hardship – 151,000 (13%)
  • Increase in hospitalisation for under 15s since 1991 – 56%
  • Hospitalisations for the poorest 20% of population vs the wealthiest – 2 times
  • Respiratory hospitalisations- poorest 20% vs the wealthiest – 3 times, asthma – 2 times
  • Infant deaths compared to Finland and Ireland – 2 times

About me

Hi All,

Kushlan from Auckland, New Zealand.Welcome to my blog. I am semi retired and looking forward to doing something different with my life and hopefully make a difference to yours and a few others.

I am passionate about social justice and climate change issues, of which there are plenty of, even in New Zealand, a reasonably affluent country in the developed. New Zealand is part of the Anglo American world and affected by the shift to a globalized and more capitalist economy, which happened here in the late 1980’s and early 1990’s.

We have become a less caring society, less ‘tax dollars for me’ has taken priority vs what the same dollar can do for the society and giving a helping hand to the less fortunate.

I hope my writing can cast a light on social issues like poverty, inequality and climate related issues. I want to simplify what is on 500 page technical to a readable blog length article. I will focus on New Zealand, but many of these issues are universal.

I am very interested to hear about how these issues are tackled in all parts of the world and connecting with like minded folk