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Aussie pay gap widening, Key does nothing

Written By: - Date published: 12:32 am, March 2nd, 2010 - 20 comments
Categories: employment, jobs, unemployment, Unions, wages - Tags: , ,

A survey out yesterday shows that the gap between New Zealand and Australia is set to widen in the coming year with 78% of Aussie firms planning on giving inflation or better wages increases this year, compared to just 55% here.

In fact, the gap has already grown since the Key Government took office. The total weekly pay packet to Kiwi workers fell by 0.4% in 2009 compared to 2008 after inflation*, and the increases that there were nearly all went to unionised workers who bargained for decent pay rises. In Aussie, the total pay packet for workers is up 2.5%**.

It’s going to get worse. While Aussie steams ahead we’ll be going backwards or treading water at best. Treasury thinks the country’s total wage packet will keep falling in inflation-adjusted terms and it won’t get back to its peak until 2012. And that’ll be shared among more workers than ever before.

So, where’s the plan to close the wage gap with Australia? To date, John Key and his gang have a perfect record in opposing all pay increases and they have done nothing to create jobs.

Key says he wants wages to catch up to Aussie’s. Well, it won’t happen while there are quarter of a million too few jobs to do around, that means employers can be picky and offer lower wages. NZIER gets it, writing in their latest Quarterly Update [not online] “intense competition for few jobs will restrain wage growth for some time.” Wage increases will come when unemployment drops, not before.

And if Key is really serious about getting the economy to grow faster his first order of business should be working out how not to waste day after day the skills and energy of 276,000 Kiwis who want to work but can’t get a job and 115,000 who want to work more hours than they can get.

The solution in both instances is a full employment policy. We’re getting nothing like it from this government that does nothing for Kiwis while offering favours to the elite.

* (total weekly pay here, CPI here) ** (average weekly pay here, number of employed here, CPI here)


20 comments on “Aussie pay gap widening, Key does nothing”

  1. tsmithfield 1

    Sorry Marty, but you can’t legislate for profitability. I know you hanker back for the days when we had a prime minister who believed she could command the sun to rise and set. But it doesn’t work that way.

    So far as Australia is concerned, their huge natural resources and the voracious demand for these from China means that Australia can’t help but be more profitable than us despite the politicians meddling in their society.

    In order to get employment up, we need businesses to be profitable so they can afford to hire workers and increase wages. The way a government can help to get businesses profitable is to reduce tax and reduce compliance costs. In other words get TF out of our lives. We spend around 20k per year just on compliance costs to keep the government happy. Thats approx half a salary that could have been used to employ someone to do something productive.

    Of course there is another way for devout socialists. Jobs could be created by increasing the size of the public service and running huge deficits to fund their wages. We could set ourselves the goal of becoming the PIIGS of the south Pacific.

    • Jenny 1.1

      Smithfield, it is not huge their huge natural resources, as compared to Australia our, (mainly agricultural), resources are even greater per head of population than Australia’s, if you don’t believe me go to the Farmers Federation website.

      As well as that, in the profitability and productivity stats., New Zealand also outperforms Australia, NZ being somewhere like number 3 in the world profitability stakes. Though you wouldn’t know it from all the moaning and griping from employers.

      The main difference is the strength of the Aussie unions, who are able to wrestle more of the wealth created by their work off the bosses. This of course means that the average Aussie has greater spending power, which creates greater demand and means more jobs.

      In contrast, in New Zealand where because of lower wages, more of the wealth created tends to stay in fewer hands, the resulting falling spending power among the majority, has seen a major drop in demand, escalating unemployment.

      Smithfield by the nature of your comment, I can tell that the last thing that you would ever want in this country would be a resurgent union movement.

    • Marty G 1.2

      ts. It’s Key’s promise. Not mine. Take it up with him.

      Oh, and an unemployed person costs the government over $10,000 a year just in lost tax and dole costs. Worth spending something to get them working, eh?

    • Marty G 1.3

      “The way a government can help to get businesses profitable is to reduce tax and reduce compliance costs. In other words get TF out of our lives. We spend around 20k per year just on compliance costs to keep the government happy. Thats approx half a salary that could have been used to employ someone to do something productive.”

      Sorry, regulation is necessary for well-functioning markets. You think that Aussie doesn’t have compliance costs? In fact, we rate best in the world in terms of doing business.

      • Lanthanide 1.3.1

        “In fact, we rate best in the world in terms of doing business.”
        You wouldn’t know that listening to NAct who keep banging on about “red tape” and “compliance costs” and how we need to cut the business tax rate, etc.

    • In TSmithfield’s eyes it all seems so easy. We should look around the world at places where the tax take is minimal and the power of the state is poor. Somalia, Bangladesh, Afghanistan?

      And we should keep well away from those states that rob their citizens of their wealth so that the money can be poured into vast centralised machines of state like er, Sweeden, Germany, Denmark.

      I know where I would prefer to live.

    • Clarke 1.5

      I see you’ve been drinking the right-wing Kool Aid again.

      As someone who’s run companies on both sides of the Tasman, I can testify to the fact that compliance costs are much lower here than in Australia. But let’s be clear about what those compliance costs actually are – they’re what you pay as a business for the privilege of operating in a first-world economy.

      If you want the rule of law to apply to your business dealings, if you want level playing fields and constraints on big companies predating smaller ones, then some regulation and associated compliance costs are the price you pay. Although I notice that the typical right winger wants these things – they just don’t want to fund them. Which rather undermines the logic of “user pays” that they are so keen on in other areas.

      • Draco T Bastard 1.5.1

        Although I notice that the typical right winger wants these things they just don’t want to fund them. Which rather undermines the logic of “user pays’ that they are so keen on in other areas.

        Right wing logic usually amounts to “the rich use, the poor pay”.

  2. tc 2

    This whole bridge the gap with Oz is a strawman/red herring/load of crap trotted out by Johnny Clown to fill up some column inches and make it look like they’re doing something.

    Reality is you can lump it in with cycleway/financial hub/job summit etc as more style over substance and snake oil to keep the ignorant/apathetic voters believing that somethings being done.

    Just like in the 90’s under Bolger/shipley the gaps growing again. Coming soon….monorail probably to run alongside that piece of temporary crap they’ll get taxpayers to fund on Queens wharf for a few games of Rugby.

    • Draco T Bastard 2.1

      This whole bridge the gap with Oz is a strawman/red herring/load of crap trotted out by Johnny Clown to fill up some column inches and make it look like they’re doing something.

      He had to say something after he got caught telling the truth

  3. Craig Glen Eden 3

    Have you ever been to Australia tsmithfield or worked there because if you have, you would know that their OCC Health compliance is way stricter than ours, and their public service is way more cumbersome than ours.
    I cant help but laugh at tories who’s own party when in opposition went on and on about wages and the economy gap that was so much bigger across the ditch. It was all due to Cullens miss management of our economy and how we needed to lower taxes because that would help us catch up to the Aussies. The amazing thing is the Aussies seem to have found all this stuff that they are now mining that they didn’t mine when Labour was in power. Oh well at least we have pineapple lumps aye.

  4. Paul 4

    John Key and Anne Tolley are both on record as saying that teachers pay should be cut! That with stupid national standards may see the mooted reduction in teachers salaries as they all head off to Oz with the doctors and nurses.

  5. Red Rosa 5

    The Nats are looking more and more like a tired bunch of old Tory reactionaries, who have learnt nothing and forgotten nothing since the Shipley era.

    And, like the Bourbons, they have brought back titles! Fortunately the guillotine only for Parliament….

  6. tsmithfield 6


    “Oh, and an unemployed person costs the government over $10,000 a year just in lost tax and dole costs. Worth spending something to get them working, eh?”

    Bad maths, Marty. $10000 dollars a year per person is chicken feed compared to what the bloated public service gets paid, which is also a major cost on the economy. It is cheaper to have surplus public services on the dole rather than drawing a wage cheque at multiples of that figure. Personally, I would start by making at least 1/2 the politicians redundant.

    • Marty G 6.1

      god, don’t tell me you run a business.

      Something over $10,000 is the fiscal cost the government faces from people being unemployed, doing nothing.

      Public servants do work and produce value. I know that doesn’t fit with your prejudice but it’s true, that’s why National has been unable to find lots of jobs to cut. The public service is not bloated, no sensible government would bloat the public service when it could be using that money to provide more services or tax cuts.

      The idea of making half of MPs redundant is typical small minded, petty thinking. MPs do a hell of a lot of important work and firing half of them would only save you $10 million or so a year.

    • Captain Rehab 6.2

      The “bloated public service” is a figment of right-wing propaganda that most people have seen through by now. You really are a total fucking dunce aren’t you tsmithfield.

      What’s your next tired fact-free line going to be? “Corrupt”? “decade of deficits”? “ambitious for New Zild”?

      What a loser.

  7. Santi 7

    I am very disappointed in John Key. He has shown very little during his first year in office, and the second year looks the same.

    He appears incapable of making decisions, flip-flops too often, and generally comes across as a very weak leader. On top of it, some of his ministers are either fools (Smith), crooks (Heatley) or dim-witted (Tolley).

    The National Party has lost its compass. As someone who despises Labour and its socialist policies, I feel Key’s government is more of the same rubbish that squandered the last nine years.

  8. the sprout 8

    excellent graphic

  9. “Capricious for New Zealand?”


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