Heading into the election home stretch, voters have a clear choice about the best way to help low and middle income New Zealanders. They can do so by gradually lifting the minimum wage (as the Greens propose ) or by a small tax cut, as the government seems about to announce. The minimum wage boost – by 75 cents an hour to $15 in December, and then by gradual annual increments to $18 an hour by 2017 – that the Greens are talking about is just one part of a packet of employment measures that would include scrapping youth rates and the 90 day trial period, introducing a redundancy package of four weeks, offsetting any abatement effect of the policy package for those receiving Working For Families, and finally… ditching the exception made by the government (during the Hobbit negotiations) for workers in the screen industry, which denies them normal workplace safeguards and entitlements.
The Greens minimum wage package is estimated to cost $1.1 billion, although the resulting increase in spending power will see much of that recouped via taxation, both directly and by GST. As the Greens policy document puts it:
Increasing the minimum wage will cost $1.1 billion over three years, owing to higher Government staffing costs, especially in the health sector. However, that will be offset by increased tax revenue from wages of $1.9 billion over three years.
Predictably, the nay-sayers are claiming this will cost jobs, a plaint repeated by Prime Minister John Key in his Press debate last night with David Cunliffe. Hmmm. If, as Key claims, Treasury has done research that shows major job losses would result from gradual increases in the minimum wage, then this amazing information would be world news – because the vast weight of academic research around the world ever since the groundbreaking David Card/Alan Krueger work in the US fast food industry 20 years ago, is that it would do no such thing. The most recent comprehensive summary of the minimum wage literature by the US Center for Economic and Policy Research is tellingly entitled “Why Does the Minimum Wage Have No Discernible Effect on Employment? “ It is easy reading, and available here.
In fact, the Greens should ‘fess up. Doesn’t the logic of their minimum wage policy go all the way back to that crazed socialist nincompoop Henry Ford? A century ago, the Jazz Age equivalents of John Key and Business NZ’s Phil O’Reilly were shaking their heads and saying that Ford was going to destroy capitalism with his harebrained idea of paying his workers a decent wage:
It’s been exactly 100 years since automaker Henry Ford announced one of the most famous business decisions of all time, cited to this day as an example of the economic benefits of boosting workers’ wages.
In short, Ford decided to more than double the pay for his assembly-line workers. The impact of his strategy generally is characterized in terms of benevolent leadership and shrewd salesmanship. Ford employees were suddenly able to afford the vehicles they produced, which expanded the market.
The “modest” tax cut being proposed by National is a quite different kettle of fish. Nearly 500,000 workers stand to benefit from a gradual minimum wage hike – many of them working for peanuts as carers and cleaners in our rest homes and hospitals. For a single person on the minimum wage, the Greens calculate the increase will amount to $125 a week, or $6,400 more, annually, in the pocket.
In recent weeks, the differing messages from Key and Finance Minister on the wisdom and size of tax cuts for low to middle income workers – Key upbeat, English warning in not so many words that only something less than $20 a week would be affordable – have yet to resolve into one single, coherent message. The announcement on the policy is being delayed until next week, possibly to give the government something to distract attention from the long promised September 15 announcement by Kim Dotcom.
The cynicism of the exercise is breathtaking. Clearly, all the talk from English for the past three years about the need to tighten our belts and accept cutbacks in public services has had precious little to do with prudent fiscal management. In reality, the public has been paying to subsidise (a) a wafer thin Budget surplus and (b) a wafer thin round of tax cuts, to hold out as an election bribe just before people head into the polls.
Don’t Look, Don’t Touch
Yeah, this all sounds okey-dokey. Apparently we’re going to have :
(a) an inquiry by the SIS Inspector-General into the suspiciously speedy, selective response to an OIA request via the SIS – and the subsequent release of an email to blogger Cameron Slater, apparently in order to embarrass and undermine Labour leader Phil Goff. But hold on, we’re also going to have :
(b) an entirely separate inquiry looking into the suspiciously speedy, selective response to an OIA request via former Justice Minister Judith Collins and the subsequent release of an email to blogger Cameron Slater, apparently in order to embarrass and undermine Serious Fraud Office head Adam Feeley.
Goodness. Is there a pattern here? What is this strange lightning that strikes so regularly to illuminate the pathway of Cameron Slater, blogger extraordinaire and alleged force of nature?
We may never know. Thanks entirely to Prime Minister John Key, the terms of reference for inquiry (b) will not involve any inquiring at all thank you very much, into the dealings between the Prime Minister’s office and Slater. Let’s not spin a web of conspiracy here. Let’s put it down to the fine, discerning mind of the Prime Minister who can sack Judith Collins on the basis of one Slater email, while totally ignoring the plethora of other equally compromising Slater emails contained in Nicky Hager’s book. Emails that happen to directly link senior staff in the Prime Minister’s office in a series of vendettas against public servants, public figures and anyone else who strayed into the gunsights of Slater, Jason Ede and the rest of the whole sick crew.
Key is gambling – maybe accurately – that the public are suffering from Dirty Politics fatigue. That’s understandable. Who, apart from the Prime Minister, would want to stand for long in the same cesspool alongside Cameron Slater? On this issue, things have gone beyond parody. On the weekend for instance, Winston Peters said that a Royal Commission of inquiry into the Dirty Politics affair would be a deal breaker for him, in any coalition talks post -election. As the prime target of the Establishment during the Winebox inquiry, Peters knows what this sort of thing entails. Yet incredibly, while Key was announcing that the Collins inquiry would be tightly focused and would exempt his office from scrutiny, he was almost simultaneously informing Peters that no worries, a wide-ranging Royal Commission of inquiry had not been entirely ruled out!
Despite Key’s best efforts to gerrymander the Collins inquiry and distract the public – look over there, tax cuts! – the elephant in the room remains in plain sight. By their own written evidence, some of Key’s senior staff were actively engaged with Slater in planning and executing some of the sleaziest takedowns in our recent political history. Nope. Completely irrelevant as to whether we re-elect the guy in charge for another three years.
Talking of inquiries and witnesses and stuff, its too bad that Marvin Gaye isn’t still around to do it right, and get it on. “Is it right to be treated so bad / when you’ve given everything you had?/ now all you chicks agree, that this ain’t the way its supposed to be…” Amen to that.