Media Releases

Aotearoa top 10 in global inequality index, but tax system’s inequality impact 136th

October 12, 2022

Oxfam Aotearoa communications and advocacy director Dr Jo Spratt said about the Commitment to Reducing Inequality index:

“The inequality index shows Aotearoa is doing pretty well overall, but there is still work to be done. The fact that rich and poor countries alike have exacerbated an explosion of economic inequality since the outbreak of the pandemic from 2020 is unacceptable.

“Billionaire wealth and corporate profits have soared to record levels during the Covid-19 pandemic, while over a quarter of a billion more people could crash to extreme levels of poverty this year because of coronavirus, rising global inequality, and the shock of food price rises supercharged by the war in Ukraine.

“Tax is one of the most powerful tools we have to fight inequality. It is disappointing to see New Zealand’s tax system contributing to the gap between the rich and poor. Especially in these extraordinary times, tax is crucial to boosting government resources to support welfare systems and public services.

“An excess profits tax on supermarkets could be used to support the poorest households most hit by the increase in food prices. Excess profits and windfall tax revenues can help tackle the biggest challenges of our times like the explosion in inequality and the climate crisis.”

The 2022 Commitment to Reducing Inequality Index (CRI Index) is the first detailed analysis into the type of inequality busting policies and actions that 161 countries might have pursued during the first two years of the pandemic.

New Zealand ranks eighth overall, and seventh in the world on tax progressivity. The index found that New Zealand’s tax system is effective at collecting revenue; however, this comes at a cost as New Zealand’s tax system makes a direct contribution to an unequal income distribution. On this, New Zealand ranks 136th in the world. Oxfam says the Government has made some progress since 2020 by slightly increasing the top income tax rate, but needs to do more by taxing wealth and exploring better ways to tax corporate profits.

The table below shows New Zealand’s ranking on the key indicators that make up the CRI.

INDICATOR	RANK
PUBLIC SERVICES
Education spending	98
Social protection spending	35
Health spending	9
Public service spending average of indicators	14
Public service implementation	18
Public service impact on inequality (Gini)	33
Progressivity of public services	22
TAX
Tax policy	91
Tax productivity	3
Tax impact on inequality (Gini)	136
Progressivity of tax	7
LABOUR
Labour rights	74
Women’s labour rights	29
Minimum wage	35
Labour policy average of indicators	50
Coverage of labour rights	36
Wage impact on inequality (Gini)	53
Progressivity of Labour Legislation	35
OVERALL RANK
Commitment to reducing Inequality	8

New index shows governments worldwide stoked an inequality explosion during COVID-19 pandemic

October 12, 2022

Half of the poorest countries saw health spendings drop despite the pandemic, while 95 percent of all countries froze or even lowered taxes on rich people and corporates

Rich and poor countries alike have exacerbated an explosion of economic inequality since the outbreak of the pandemic from 2020, reveals new research by Oxfam and Development Finance International (DFI).

The overwhelming majority of governments cut their shares of health, education and social protection spending. At the same time, they refused to raise taxes on excessive profits and soaring wealth.

The index shows that despite the worst health crisis in a century, half of low and lower middle-income countries cut their share of health spending of their budgets. Almost half of all countries cut their share going to social protection, while 70 percent cut their share going to education.

As poverty levels increased to record levels and workers struggled with decades-high prices, two thirds of countries failed to raise their minimum wages in line with economic growth. Despite huge pressure on government finances, 143 of 161 countries froze the tax rates on their richest citizens, and 11 countries even lowered them.

France fell five places in the index after cutting corporate tax rates and eliminating its wealth tax altogether in 2019. Jordan dropped its budget share for health spending by a fifth, despite the pandemic. Nigeria did not update its minimum wage since before the pandemic, and the US has not raised the federal minimum wage since 2009.

“Our index shows that most governments have completely failed to take the steps needed to counter the inequality explosion created by COVID-19. They ripped away public services when people needed them most and instead left billionaires and big corporations off the hook to reap record profits. There is some good news of valiant governments from the Caribbean to Asia bucking this trend, taking strong steps to keep inequality in check,” said Gabriela Bucher, Oxfam International Executive Director.

Strong actions to reduce inequality were taken by both low and middle income countries:

Costa Rica put up its top income tax by 10 percent
The Occupied Palestinian Territory increased its social spending from 37 to 47 percent of its entire budget.
Barbados introduced a comprehensive set of laws to improve women’s labor rights, and the Maldives introduced its first national minimum wage.

As Finance Ministers gather in Washington for the International Monetary Fund (IMF) and World Bank Annual Meetings, developing nations are facing a global economy that is making it ever more difficult to meet the needs of their population. While injecting trillions in their own economies, rich countries failed to increase aid during the pandemic. Economic inequality and poverty in poor countries are further exacerbated by the IMF’s insistence on new austerity measures to reduce debts and budget deficits.,

“The debate has catastrophically shifted from how we deal with the economic fallout of COVID-19 to how we reduce debt through brutal public spending cuts, and pay freezes. With the help of IMF, the world is sleepwalking into measures that will increase inequality further. We need to wake up and learn the lessons; preventing huge increases in inequality is completely practical, and common sense. Inequality is a policy choice, governments must stop putting the richest first, and ordinary people last”, says Matthew Martin, Director of DFI.

Oxfam and DFI analysis shows that based on IMF data, three quarters of all countries globally are planning further cuts to expenditures over the next five years, totalling $7,8 trillion dollars.

In 2021, lower income countries spent 27.5 percent of their budgets in repaying their debts – twice the amount that they have spent on their education, four times that of health and nearly 12 times that of social protection.

“For every dollar spent on health, developing countries are paying four dollars in debt repayments to rich creditors. Comprehensive debt relief and higher taxes on the rich are essential to allow them to reduce inequality dramatically”, said Martin.

Despite historical precedent, nearly all countries failed to increase taxation on the richest or pursue windfall profits during the COVID crisis. After the 1918 flu epidemic, the 1930s depression, and World War Two, many rich countries increased taxes on the richest and introduced taxes on corporate windfall profits. They used this revenue to build education, health and social protection systems. Taxation of the wealthiest and windfall profits can generate trillions of dollars in tax revenue.

“Government leaders in Washington face a choice: build equal economies where everyone pays their fair share or continue to drive up the gap between the rich and the rest, causing huge, unnecessary suffering”, said Bucher.

Notes to editors

The 2022 Commitment to Reducing Inequality (CRI) Index is the first detailed analysis looking at governments’ policies and actions to fight inequality during the first two years of the pandemic. It reviews the spending, tax and labour policies and actions of 161 governments during 2020–2022. Its findings show clear lessons for governments now grappling with inflation and the cost-of-living crisis.
Co-authors Matthew Martin, Director at Development Finance International, and Max Lawson, Global Policy Lead Inequality for Oxfam, are available for interviews.
Dozens of civil society organizations have joined in a campaign to #EndAusterity. In a report they warned for a post-pandemic austerity shock. Oxfam senior policy advisor Nabil Abdo is available for interviews.
In the run up to the World Bank Annual Meeting, Oxfam launched its report Unaccountable Accounting on October 3, highlighting the inaccuracy of World bank’s accounting of climate finance. Poor countries may not be getting the crucial climate funding they need to survive. Oxfam’s climate change policy lead, Nafkote Dabi is available for interviews.
Oxfam Aotearoa reaction to New Zealand’s ranking can be found here.

Oxfam reacts to Government’s farmgate emissions pricing system

October 11, 2022

In reaction to the Government’s farmgate emissions pricing system, Oxfam Aotearoa climate justice lead Nick Henry says:

“A system for pricing agricultural emissions is starting to shape, but there are some major holes that need filing if Aotearoa is to do its part in keeping global warming to 1.5 degrees. Farming is responsible for almost half of New Zealand’s emissions. The system must be transparent, fair and effectively reduce emissions.

“The governments proposed cautious approach does little to help people across the Pacific and beyond to keep their homes and their livelihoods. This is not a business deal; this is our future.

“We already know what it is going to take to tackle agriculture emissions: we need an effective system to price and reduce emissions, with support to turn around the farming sector from being Aotearoa’s biggest polluter, into a solution for tackling climate change and restoring nature. That involves a phase out of synthetic nitrogen fertiliser, and investing billions to support agriculture to transition to low emissions and regenerative agriculture.”

Oxfam reacts to failure to extend the truce in Yemen

October 3, 2022

In response to the failure to extend the truce in Yemen, Ferran Puig, Oxfam Country Director in Yemen said:

“The end of the truce is terrible news for the people of Yemen. Millions will now be at risk if air strikes, ground shelling and missile attacks resume.

‘’The past six months have brought hope to millions of Yemenis who have seen a 60 percent decrease in casualties, a significant reduction in violence, more fuel imports and much easier access to essential services and aid. In addition, fewer people have been forced from their homes.

“Resumed fighting would further exacerbate the crisis and undermine the efforts towards the lasting peace Yemenis desperately need.

“We urge all parties to the conflict to listen to the demands of their people, who dream for a better tomorrow where they are able to rebuild their lives and future. Over seven years of conflict have devastated the lives of millions across the country, making it one of the world’s worst humanitarian crises.”

Rich countries’ climate related aid to West Africa is insufficient and dangerously worsening debt levels

September 28, 2022

Rich countries and multilateral donors have so far mobilised only 7 percent of the estimated US$198.88 billion that West African countries need by 2030 to cope with the climate crisis and pursue their own green development.

According to a new Oxfam study today, Climate Finance in West Africa, 62 percent of US$11.7 billion declared by donors between 2013 and 2019 have been mostly in the form of loans, which will have to be repaid, many with interest, aggravating the debt crisis in most West African countries.

Climate finance is a highly-contentious issue that again threatens the success of the crucial UNFCCC climate talks in Egypt this November. Oxfam and a hundred African civil society organizations are concerned that African countries will come to the summit with little confidence that donors will honour their repeated promises to mobilise 100 billion a year for climate action in developing countries (a target that has been missed by US$16.7 billion in 2020).

These organisations are calling on rich countries – historically responsible for climate change – to assume their fair share to help the region face the escalating climate crises that has hit the African continent.

The report warns that rich countries are increasingly using loans to help West African countries cope with climate change. Between 2013 and 2019 loans have increased by 610 percent from US$243 million to US$1.72 billion. By comparison, grants have only increased by 79 percent. Among the donors that have made the most use of loans as a proportion of their total climate financing are the World Bank (94 percent), France (94 percent), Japan (84 percent), the African Development Bank (AfDB) (83 percent) and the European Investment Bank (EIB) (79 percent).

“At a time when West Africa is reeling from multiple crises including climate, hunger, and security, these financial flows are grossly inadequate and not what was promised. Many of these are now loans that actually reduce countries’ capacity to cope. Most countries are falling into a spiral of debt and poverty, which runs counter to the spirit of climate justice. The consequences are disastrous for millions of people who are paying the price for the impacts of climate change yet not responsible for it,” said Assalama Dawalack Sidi, Oxfam’s Regional Director for West and Central Africa.

The consequences on debt and the capacity of countries to provide basic services to populations facing multiple crises are very real. For example:
Although Niger (7th most vulnerable country in the world to climate change), Mali (13th most vulnerable), and Burkina Faso (24th most vulnerable) all face a risk of debt distress, they have received a sizable share of climate finance in the form of loans and debt: 51 percent, 43 percent, and 41 percent, respectively. These countries are already being pushed into a new wave of austerity measures by the IMF and are planning combined budget cuts of US$7.2 billion by 2026 which will further limit their ability to invest in quality public services and protection for their citizens.
Ghana currently receives 40 percent of its climate finance in the form of loans and debt, despite already being at high risk of debt distress. In 2019, Ghana was spending 55 times more on debt servicing than on agriculture. It is planning a US$23.3 billion budget cut by 2026.

Oxfam believes that funding in West Africa should focus on adaptation measures, rather than mitigation given the region is a very low contributor to global greenhouse gas emissions. However, there is an 82 percent gap between the adaptation funding reported in 2019 and the needs expressed by West African countries.

Chad, the world’s most vulnerable and least prepared country for climate change, has the largest funding gap for adaptation with 95 percent of its financial needs not covered (US$1.49 billion of US$1.57 billion per year) by 2030. These findings are all the more alarming given that hunger is increasing at an unprecedented rate in the region, in part driven by droughts that are becoming more frequent and severe as rainfall becomes more erratic and unpredictable. There has been a 154 percent increase in the number of people now food insecure between March-May 2022 compared to the five-year average between 2017-2021.

“We demand that all donors urgently increase their climate financing and honour their promises. These funds must be disbursed as grants not loans and must respond to the priorities and adaptation needs of recipient countries and their communities,” said Sidi.

The report’s recommendations support the recent joint statement by two dozen African leaders meeting earlier this month at a forum in Cairo, where they urged the richest countries to uphold their aid pledges so the continent can tackle the effects of climate change for which it shares little blame.

The report is being published ahead of citizen caravans organised by about 100 African civil society organisations, including Oxfam, that will travel across 23 countries on the continent to Egypt. The caravans will mobilise communities and policy makers along the way to highlight the harm that climate change is causing to Africa and demand more justice in climate finance.

“As Africa heats up, African communities’ temperature is rising too. Today, people are uniting to demand more climate justice. The international community, and rich donors in particular, must urgently hear their cries,” said Sidi.

Notes to the editors

Download the report Climate Finance in West Africa: Assessing the State of Climate Finance in One of the World’s Regions Worst Hit by the Climate Crisis. The eight West African countries analysed are Senegal, Mauritania, Mali, Burkina Faso, Niger, Ghana and Nigeria.
The levels of climate finance reported by global donors in 2019 (US$2.5 billion) represent only 12.7 percent of the average annual financial needs for external climate finance expressed by West African countries in their nationally determined contributions (NDCs) (covering the period 2021-2030). However, when considering Climate-specific net assistance (CSNA), current public funding that can be considered relevant for climate action would fall to 7.1 percent of average annual needs between 2021 and 2030, representing an alarming climate finance gap of 92.9 percent. The CSNA is a method of calculating climate finance developed by Oxfam, designed to be more equitable than the tools currently used by donors. The CSNA estimate includes 100 percent grants and grant equivalent of loans, guarantees and other debt instruments.
Oxfam’s estimate of net climate-specific aid is based on climate-related development finance as documented by the OECD.
See the Aggregate trends of climate finance provided and mobilized by developed countries in 2013-2020 against the 100 billion annual target, OECD, 2022.
Follow the caravans for the climate in Africa that will crisscross 23 African countries (Senegal, Benin, Niger, Ghana, Nigeria, Mali, Burkina Faso, Chad, Kenya, Uganda, Ethiopia, Ivory Coast, DRC, Gambia, Guinea, Malawi, Mauritania, Mozambique, South Africa, South Sudan, Togo, Zambia, Zimbabwe and Somalia) and will converge in Sharm el Sheikh, Egypt, at the time of the world climate conference (COP 27) from November 7 to 18, 2022. These caravans are a catalyst for the demands of African populations -especially youth and women- on climate finance (loss and damage, adaptation, and mitigation). They are organized by civil society organisations such as Young Volunteers for the Environment (YVE), CIDSE – International family of Catholic social justice organizations and a hundred others, with the support of Oxfam.
According to Government Spending Watch, in Ghana in 2019, total public debt service (external and domestic) reached 75 percent of government revenue, with domestic debt accounting for two-thirds.
The Notre Dame Global Adaptation Initiative (ND-GAIN) index assesses a country’s vulnerability to climate disruption and its ability to mobilise investment. Chad is ranked 182nd out of 182 countries.
While some loans are concessional, Oxfam is even more concerned by the high prevalence of non-concessional finance among some donors, especially the AfDB (US$454m; 43 percent of its total), United States (US$308m; 39 percent of total), the GCF (US$229m; 73 percent of total), France (US$167m; 13 percent of total), and the EIB (US$137m; 68 percent of total).
The newly released report by World Bank Country Climate and Development Report (CCDR) for the G5 Sahel region estimates that up to 13.5 million people across the Sahel could fall into poverty due to climate change-related shocks by 2050 if urgent climate adaptation measures are not taken.
14 out of 16 West African countries plan to reduce their national budgets by a total of US$69.8 billion between 2022 and 2026 due to pressure from the International Monetary Fund (IMF) through its COVID-19 loans., based on the World Economic Outlook Database of the IMF and Oxfam’s analysis Adding Fuel to Fire: how IMF’s demands for austerity will drive up inequality worldwide.
According to calculations based on World Bank databases, an individual living in West Africa emits only 0.43 tons of CO2 per year. In comparison, a U.S. citizen emits 15.2 tons, with the global average being 4.5 tons.
Oxfam’s report HUNGER IN A HEATING WORLD: How the climate crisis is fuelling hunger in an already hungry world shows that climate change is deepening hunger in 10 of the world’s worst climate hotspots, including Burkina Faso and Niger. For food security projections, see the Food Security and Nutrition Working Group (FSNWG) estimates.
African nations meeting in Cairo from 7 to 9 September call for climate change funding ahead of COP27.

Extreme hunger has more than doubled in 10 of the world’s worst climate hotspots over past six years

September 28, 2022

Less than 18 days of fossil fuel companies’ profits would cover the entire UN humanitarian appeal for 2022

Ten of the world’s worst climate hotspots – those with the highest number of UN appeals driven by extreme weather events – have suffered a 123 percent rise in acute hunger over just the past six years, according to an Oxfam report published today.

Gabriela Bucher, Oxfam International Executive Director, said: “Climate change is no longer a ticking bomb, it is exploding before our eyes. It is making extreme weather such as droughts, cyclones, and floods – which have increased five-fold over the past 50 years – more frequent and more deadly.”

The brief – Hunger in a heating world– found that those 10 climate hotspots – Somalia, Haiti, Djibouti, Kenya, Niger, Afghanistan, Guatemala, Madagascar, Burkina Faso, and Zimbabwe – have repeatedly been battered by extreme weather over the last two decades. Today, 48 million people across those countries suffer acute hunger (up from 21 million in 2016), and 18 million people of them are on the brink of starvation.

“For millions of people already pummelled down by ongoing conflict, widening inequalities, and economic crises, repeated climate shocks are becoming a backbreaker. The onslaught of climate disasters is now outpacing poor people’s ability to cope, pushing them deeper into severe hunger,” said Bucher.

For example:

Somalia is facing its worst drought on record, and famine is expected to unfold in two of its districts: Baidoa and Burhakaba. One million people have been forced to flee their homes due to the drought. The country ranks 172^nd out of 182 countries in terms of its readiness to cope with climate change.
In Kenya, the current drought has killed nearly 2.5 million livestock and left 2.4 million people hungry, including hundreds of thousands of children severely malnourished.
In Niger, 6 million people are facing acute hunger today (up 767 percent from 2016). Cereal production has crashed by nearly 40 percent, as frequent climatic shocks on top of ongoing conflict have made harvesting increasingly difficult. Production of staple foods such as millet and sorghum could plummet even further by 25 percent if global warming surpasses 2°C.
Burkina Faso has seen a staggering 1350 percent rise in hunger since 2016, with more than 3.4 million people in extreme hunger as of June 2022 due to armed conflict and worsening desertification of crop and pastoral lands. Global warming above 2°C would likely decrease cereal yields like millet and sorghum by 15–25 percent.
In Guatemala, a severe drought has contributed to the loss of close to 80 percent of the maize harvest and devastated coffee plantations.

“We spent almost eight days with hardly any food,” says Mariana López, a mother living in Naranjo in Guatemala’s Dry Corridor. Persistent drought forced her to sell her land.

Climate-fuelled hunger is a stark demonstration of global inequality. Countries that are least responsible for the climate crisis are suffering most from its impact and are also the least resourced to cope with it. Collectively responsible for just 0.13 per cent of global carbon emissions, the 10 climate hotspots sit in the bottom third of countries least ready for climate change.

In contrast, polluting industrialized nations such as those of the G20 – which control 80 percent of the world’s economy – are together responsible for over three-quarters of the world’s carbon emissions.

Leaders of these nations continue to support mega-rich polluting companies that are often big supporters of their political campaigns. Fossil fuel companies’ daily profits have averaged US$2.8 billion over the last 50 years. Less than 18 days of those profits would fund the entire UN humanitarian appeal for 2022 of US$49 billion.

Important policy changes are equally needed to address the double crisis of climate and hunger. Unless massive and immediate action is taken, hunger will continue to spiral.

“Ahead of UN General Assembly meetings this week, and COP 27 in November, leaders especially of rich polluting countries must live up to their promises to cut emissions. They must pay for adaptation measures and loss-and-damage in low-income countries, as well as immediately inject lifesaving funds to meet the UN appeal to respond to the most impacted countries.

“We cannot fix the climate crisis without fixing the systemic inequalities in our food and energy systems. Increasing taxation on super polluters could easily cover the cost. Just 1% of the fossil fuel companies’ average annual profit would generate US$10 billion, enough to cover most of the shortfall in funding the UN humanitarian food security appeal,” Bucher said.

Cancelling debt can also help governments free up resources to invest in climate mitigation.

“Rich and most polluting nations have a moral responsibility to compensate low-income countries most impacted by the climate crisis. This is an ethical obligation, not charity,” said Bucher.

Notes

Download Oxfam report Hunger in a Heating World.

The FSIN began producing the Global Reports on Food Crises in 2017. Sum of the population in IPC3+ food insecurity in the ten countries in 2016 (See GRFC 2017, p. 21) was 21.3 million and in 2021 (See GRFC 2022, pp. 30 – 33) was 47.5. The percent rise is therefore 123 percent.
The calculations of those facing starvation in the 10 countries is based on the total number of people at IPC 4 level of food insecurity and above in 2021, according to the GRFC 2022, see Understanding IPC classification
The 10 worst climate hotspots were calculated looking at countries with the highest number of extreme weather-related UN appeals since 2000, where climate was classified as a “major contributor” to these appeals. Source: Oxfam’s “Footing the Bill” report May 2022.
The 10 countries had the highest number of appeals linked to extreme weather, where climate was a major contributor to the appeal, according to the methodology outlined in the Oxfam (2022) Technical Note UN Humanitarian Appeals linked to Extreme Weather, 2000-2021.
The figure on fivefold increase in climate disasters is according to the World Meteorological Organization (WMO) Atlas of Mortality and Economic Losses from Weather, Climate and Water Extremes (1970–2019) (WMO-No. 1267), Geneva.
The sum of cumulative carbon emissions of the 10 climate hotspots for 2020 is 0.002 trillion tons of carbon – that is 0.13 percent of the world emissions (1.69 trillion tons of carbon) in same year. Source Our World in Data.
The sum of cumulative carbon emissions of the G20 countries for 2020 is 1.299570755 trillion tons of carbon, which is 76.60 percent of global carbon emissions (1.696524177 trillion tons). Source Our World in Data.
The rank of 10 climate hotspots is 34 percent according to calculations of percentiles of the Notre Dame Global Adaptation Initiative (ND-GAIN) index scores of the 10 climate hotspots. ND-GAIN scores for 2020 retrieved from the ND-GAIN website.
For the fossil fuel industry’s daily average of US$2.8 billion in profits over the last 50 years, which is also an annual average of US$1.022 trillion, we used this 2022 article from the Guardian: Revealed: oil sector’s ‘staggering’ US$3bn-a-day profits for last 50 years. Based on the daily average, we calculated that less than 18 days of company profits would cover the full UN global humanitarian appeal for 2022 of US$48.82 billion. We used the annual average of US$1 trillion to calculate the returns from an extra 1% tax on fossil fuel profits (US$10 billion). The Guardian (2022). Revealed: oil sector’s ‘staggering’ US$3bn-a-day profits for last 50 years.
UN humanitarian appeal for 2022 is found at https://fts.unocha.org/appeals/overview/2022, last visited 30 August 2022. The food security portion of the appeal is US$15.9 billion, of which US$10.4 billion is unfunded as of 8 September 2022.