Written By: - Date published: 10:15 am, February 5th, 2008 - 56 comments
Categories: tax, workers' rights -
Tags: tax, workers' rights
News that 28,000 New Zealanders left for Australia last year has Business NZ, the Chamber of Commerce and the National Party predictably calling for tax cuts as the solution to New Zealand’s wage gap with Australia.
Of course, they know very well that tax cuts are not the answer. Workers in Australia currently earn 30% more than workers in New Zealand, which means unless John and his business mates are willing to reduce taxes by 30 cents in the dollar they’re not going to close the gap. And as keen as they might secretly be on such a plan, it’s clearly not a plausible option.
Because the real issue, as always, is wages, and it’s the elephant in the room that National and its allied business lobby groups would rather ignore. New Zealand’s low wage economy can be traced directly back to the Employment Contracts Act of 1991, which was deliberately designed to reduce the ability of workers to bargain for better wages through their unions.
Since then New Zealanders’ pay packets have fallen behind Australia, our productivity has failed to keep up and even Labour’s Employment Relations Act has done little to repair the damage. As few as one in five New Zealanders now belong to a union, pass-on is rife, and enterprise bargaining is heavily favoured by legislation.
If we want to raise New Zealanders’ living standards to Australian levels then we need to seriously lift wages and restore industry-wide collective bargaining, and that’s something National knows it has a shameful record on.
It’s no wonder they’d rather talk about tax cuts.
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Pascal’s bookie
It’s flipping obvious that Aussies more progressive taxation system is what allows them to have such low taxation at the bottom end of the income scale and provide more livable welfare.
However it’s not just taxation rates, it’s thresholds and it’s also fairness of the taxation that is important. Few people would argue that earning circa $200K makes you a high earner in Aussie. Many many people would argue that earning $60K in NZ makes you a rich prick. Australia (a little bit like Norway) have actively managed their taxation rates. In NZ rates and thresholds have been static and targeted benefits have been the order of the day while the govt gets richer and people get poorer.
Interesting Burt. Pay is at the top of your list, and taxes way down the bottom. Your individual case certainly supports the point of the original post, that if we are concerned about the numbers leaving for Australia, it is higher NZ wages that we need.
And family reasons always bring us home. Thank goodness there is room in life for motivations that are not economic. ‘Night.
Thanks again burt.
I’m a bit confused about a few points, given other things you’ve written. But I’m tired. So there you go
I agree with you completely that thresholds should be indexed and taxation more progressive. I think National are worse on this issue.
I agree that people on 60k are not rich pricks. Some of them are poor pricks, some are comfortable pricks and most are not pricks at all.
I don’t agree that ‘Many many people would argue that earning $60K in NZ makes you a rich prick.’ I think that’s a straw man. Cullen was talking about Key, and Cullen is but one man in any case.
I think that when the govt runs a surplus ‘the people’ don’t necessarily get poorer. In fact, (leaving election year bribes from all sides to the side for a moment*), I fear that we may end up very glad that Cullen has been such a scrooge, given global economic trends.
*Aussie pollies are worse than ours at this as well IMHO. (do they have a Fiscal Responsibility Act?)
g’night
The pingbacks on here are getting interesting. For instance this debate over at The visible hand in economics – Migrant outflows to Australia, etc.
I had to engage my brain at a rather higher level than I usually do around here. Apart from anything else I had to leave a bookmark so I can find it again when I’m not quite so tired
captcha: scored repro
??
Ancient Greek i followed you link and now my brain is fucked
I blame you
captcha data antithesis
AG – bro that link’s just bullshit. Let’s talk about something serious. Like whether Insolent Prick fucks pigs or like how our democracy’s under threat. Burt? Are you out there Burty-boy?
Robinsod Some bastard is using your handle
What the fuck??? Where? I’ll rip ‘em a new one…
Careful Robinsod, I think that the education is showing.
I must say it is more fun cutting loose occassionally.
Has anyone seen Michele recently…..
Care to comment on this allegation?:
http://www.kiwiblog.co.nz/2008/02/labour_promises_years_and_years_of_tax_cuts.html#comment-405209
[lprent - sure.
It means that some pathetic person didn't read the post and probably doesn't understand how wordpress and google operate.
The post argued that the higher wage level in aussie were more important than the differences in tax rates in aussie.
Either title would have expressed that. Tane obviously changed his mind after he pressed Publish, and changed the working title. Google scanned in the intervening period.
Since google is scanning this site almost continuously (measured in minutes between sweeps), it is hardly surprising that it might have a copy pre-update.
So would you like me to comment on my opinion of someone who finds this important?
Lynn]
Iprent/Lynn,
Do you enjoy drinking? Can I advocate that you do more of it? Your every comment bristles with an angry energy that cannot make you pleasant to live with.
I am uncertain of the chronolgy, but the following events occurred:
1. Post made under heading “Tax cuts not the answer”
2. Labour announces tax cuts
3. Heading changed
Surely you can see why that is of interest.
[lprent - I was answering the question that was implied in the link. How is it possible to change the title]
Hi Billy, as Lynn rightly suspected I changed the title immediately after pressing publish as I realised the second title – “Tax cuts and the wage gap” – was a better reflection of what I was saying in the post. If you read the post again you’ll see I said explicity said that “tax cuts are not the answer”.
It’s amazing what absurd and desperate lengths some people will go to to try and attack this blog.
What about my other point? Lynn/Iprent has turned into the angry little man of the Standard. Every thread you read lately, there he is, shouting at us in his angry black text, all defensive about the slightest thing. He sounds like a humourless bore.
[lprent - yes. I run the backend of the site - why would I need a sense of humour to do that? Just at present I'm looking at trolling.]
Billy that’s a question for Lynn, not me, but if you’d had to put up with the kind of personal attacks he has over the last few weeks I suspect you’d be a little annoyed too.
Oh Billy quick! I noticed at the visible hand they changed a title after I pointed out a spelling mistake. Goddamn lackeys. Go geddim tiger!
Yeah, ‘sod. Let’s pretend it’s about changing the title, rather thatn how and why the title was changed. Fuck me, I only asked the question. I am unprepared to die in a ditchover it. As it happened, Tane’s answer is a damn good one: the article says tax cuts are bad. I’m fine with that, so there’s no need for all the advanced ‘soddiness.
And as for Lynn/Iprent. I fear he’s taking himself too seriously. That last little ominous “just at present I’m looking at trolling” thing was creepily officious. He doesn’t get an invite to my fantasy bloggers’ dinner party. Despite his last hurtful comment, ‘sod does. He’s seated next to IP: I think there’d be a whole opposites attract thing happening.
[lprent - thats ok, I'll pass. I'm known as being anti-social. For instance, as far as I'm aware I've only ever met one editor on this site, and that was over 6 months ago]
“For instance, as far as I’m aware I’ve only ever met one editor on this site, and that was over 6 months ago”
Fascinating.
He’s seated next to IP.
Oh yes please! Will there be steak?
I thought pork.
It’s ok to think it Billy.
Billy, Every sysadmin I’ve ever known has been somewhat grumpy (in their professional context). It’s something to do with dealing with lusers all day…