Biz NZ opposes minimum wage increase

Written By: - Date published: 10:38 am, January 28th, 2009 - 31 comments
Categories: national/act government, wages, workers' rights - Tags:

As we reported on Monday, the Cabinet is set to review the minimum wage. The Labour Department recommended maintaining its purchasing power by increasing the mw from $12 an hour to $12.50. Labour Minister Kate Wilkinson will propose keeping it at $12, a cut in the real value of the mw (many expect there will be a token increase but not enough to counter inflation).

Now, Business New Zealand has come out against any change. They argue the Government should let the minimum wage to be eaten by inflation and there should be tax cuts instead.

Any idiot can see raising tax cuts is just a way for Biz NZ to justify cutting wages in real terms, allowing business owners to protect their profits while the poorest workers bear the cost of the downturn. Tax cuts are no substitute for minimum wage increases for five reasons:
1) tax cuts for minimum wage workers have just been cancelled by National/ACT
2) tax revenue pays for the social wage healthcare, education etc; tax cuts mean cutting the social wage, or higher debt paid for in the future. If you have to spend your tax cut paying for services that used to be paid for from tax revenue, you’re not any better off.
3) You can’t cut tax year after year to counter inflation, you run out of tax.
4) The tax cuts you would need to make up for not adjusting the minimum wage are massive. You would need to reduce them by 20% to make up for not doing the 50 cent adjustment. That’s even larger than the tax cuts National/ACT cancelled.
5) Finally, if you’re going to cut tax for minimum wage workers you’re going to cut them for all taxpayers, including the very wealthy, at enormous cost (unless you put in a counter-veiling tax rise yeah right). If the purpose of the minimum wage is to ensure a decent income for workers, then tax cuts are an incredibility inefficient way of doing that.

Biz NZ knows all that, of course, but they just don’t want businesses to have to pay a fair wage.

31 comments on “Biz NZ opposes minimum wage increase”

  1. ieuan 1

    ‘If the purpose of the minimum wage is to ensure a decent income for workers’

    Hold on, am I missing something? How does $12 an hour ensure a decent income for workers, for a 40 hour week that is only $480 before tax? If the purpose of the minimum wage was to ensure a decent income then it would have to be set a lot higher than $12 an hour.

    Surely the purpose of the minimum wage is to set a low limit on what people can be paid per hour to ensure people are not totally screwed by employers. Earning more than the minimum wage is a function of the employment market and the skills that an employee has to offer.

    That said, I am in favour of at least inflation adjusting the minimum wage each year.

  2. toad 2

    ieuan, the Greens argue that it should be indexed so that it cannot fall below 66% of the minimum wage. That was the percentage recommended by the 1973 Royal Commission into Social Security. A low minimum wage requires the taxpayer to subsidies business by paying welfare top-ups and tax credits to low income workers in order that they and their families receive sufficient to survive.

  3. Peter Johns - bigoted troll in jerkoff mode 3

    Stop moaning and get a better job if you hate the min wage. Retrain, do whatever it takes.

    I am not expecting an increase this year on my $90000 salary, but I am happy to keep my job.

    The credit crunch is a real issue and employers do not have as much cash to pay for things compared to 6 months ago and credit lines are also a lot tighter.

    Also, if the min wage does not rise, then benefits should not either.

  4. toad 4

    Peter Johns, I’m not expecting an increase in my salary either, or at least no more than a very modest one, even though I earn somewhat less than you do.

    The point is that you and I can afford to tighten our belts somewhat (next holiday in Melbourne rather than Milan) if our salaries don’t keep pace with the cost of living. People on the minimum wage (holiday in Manurewa, anyone?) of $480 a week before tax cannot.

    As for your “retrain and get another job” argument, there’s always going to be people employed as cleaners, caregivers etc. Just changing who those people are doesn’t make the slightest bit of macroeconomic difference.

  5. Matthew Pilott 5

    Toad – the Peter Johns of the world can’t think beyond the individual, so they can’t see the problem that if an individual gets out of an unsustainable job, another individual will have to take their place.

    Doesn’t even register. Hell, maybe you’ve opened his eyes.

    It’s funny how few people realise that what isn’t privided by wages that is a need must be supplied by welfare. Seems the right and Biz NZ would prefer welfare churn to paying at a sustainable level. Fools.

  6. Kerry 6

    Dont you hate the tory mentality that everyone must be a millionaire or you are not worth being on this planet!!!!

    Dont expect an increase on Minimum wage….not gonna happen under this shitty government….which says alot about what impact the Maori Party are having….nil unless the Maori Party have sold out all of there values as well now that their arses are around the cabinat table! Funny how the Maori Party seem more interested in where the maori flag will be flying rather then worrying about things that really matter!

    Peter John….i’d get a better job if I were you…90 grand…that wouldn’t even buy one of my cars!!!!!!! You really should work harder and make something out of yourself!

  7. vto 7

    increase minimum wage and decrease tax rates

  8. BLiP 8

    It never ceases to amaze me that those who protest most about feeding at the public trough are the same ones who gorge themselves there.

    What else are tax cuts but a subsidy to business? What else is taking money from public transport funds to build roads but a subsidy to business? What else are government guarantees to banks but a subsidy to business? Anyone need more examples?

    It seems unlikely that Business New Zealand is working in concert with Goober John Key & Co, rather they are one of the hollow man’s puppet masters dictating how he dance..

  9. Peter Johns - bigoted troll in jerkoff mode 9

    You guys are the fools. Min wage people get other assistance such as housing assistance, WFF. These are an extension of the min wage.
    If you are single on the min wage you deserve to be if you cannot find the gumption to better yourself, there are lots of opportunities out there. I used to be on $6/hr in 1985 but I went to uni after that seeing that it was not a life I wished to carry on with.

    BTW Toad, I do not holiday in Milan, or Melb. for that matter. Since when were holidays compulsory anyway? I thought you hate keeping up with the Joneses! I stayed at home for my summer break as Auckland is peaceful & quiet once Xmas is finished. Even on $90000PA I cannot afford it anyway as I have a special needs child who takes a lot of my time up and income (not begrudging that though).

    Also, I used to live in Manurewa and I can honestly say it is not a holiday destination as well.

  10. BLiP

    Tax cuts arent a subsidy to business??????

    The money you earn is your money.

  11. Matthew Pilott 11

    You guys are the fools. Min wage people get other assistance such as housing assistance, WFF. These are an extension of the min wage.

    That’s the point, Peter. Business doesn’t pay so the state pays – we all pay. Get it? Instead of the consumers (of the product or service for which the munumim wage employee was employed to produce or provide) paying, we all pay via our taxes. Stop being such a theiving socialist and learn the meaning of ‘user pays’ or Brett Dale will gove you what-for!

  12. toad 12

    Peter Johns, I was just citing the holidays as an example, not presuming that you (or I) take holidays in Milan. Actually, it is 20 years since I’ve taken a holiday in Europe and 3 years since I’ve taken one overseas at all – I try to keep my carbon footprint small where possible.

    Yes, there is housing assistance and WFF for low income workers, and these are esentially an extension of the minimum wage. But they are funded through taxes, so essentially your and my tax as well as taxes on business subsidises those businesses that do not pay their employees sufficient to live on. Increase the minimum wage and we could reduce the taxes we all pay because much of that welfare assistance would not be necessary. And assist new businesses to get on their feet through direct wage subsidies granted on a case by case basis where necessary, rather than assisting those that don’t need the assistance by topping up their workers’ inadequate wages to a liveable level through welfare.

    Isn’t that a better idea?

  13. burt 13

    So are we saying a 16% increase is required to maintain purchasing power?

    [please be kind to Burt, everyone. He’s a bit slow. For instance, he thinks that $12.50 is 16% more than $12. When really it’s 4% more. SP]

  14. So then what should the Minimum wage be?

  15. toad 15

    Not sure about SP, but I think there are strong arguments to support it being $15 an hour, which equates to just below the 66% of the average wage that Green Party policy advocates.

    That was the percentage recommended by the Royal Commission on Social Security in 1973, but it has been gradually eroded over the years, particularly in the 1990s when it increased by only 14% over ten years.

    Increasing it to that level would also bring it much closer to Australia, and help reduce the exodus of NZ workers across the Tasman. Using latest OECD purchasing power parities, the Federal Australian minimum wage is 30% higher than the New Zealand minimum wage – an increase to $15 an hour would get us near to parity.

    A 61% increase in the minimum wage between 1999 and 2007 did not show any adverse employment effects. However, increasing the minimum wage by as much as 25% (which would be the percentage increase necessary to get it to $15 an hour) at a time of economic recession may well have an adverse employment impact, and would probably need to be transitioned through targeted subsidies to employers of low-income workers struggling to maintain business viability until economic circumstances pick up.

  16. Tigger 16

    My god, tax cuts will soon be cited as the solution to global warming, cancer and summer TV reruns…

  17. Tigger:

    No tax cuts will mean working NewZealanders will soon have some of their own money back.

  18. higherstandard 18

    “My god, tax cuts will soon be cited as the solution to global warming, cancer and summer TV reruns ”

    Well why not tax increases were cited as the solution to global warming, why not vice versa ?

  19. BLiP 19

    BD said :

    ” . . . Tax cuts arent a subsidy to business?????? . . . ”

    In that case, perhaps you can explain why the Employers & Manufacturers (Northern) Chiief Excutive said: “National’s bigger tax cuts would also put more earnings back in the hands of the private sector.’

    Just like the accommodation supplement, family tax credit, and child care subsidy assist employers to sleep at night, so too are measly little unwanted tax cuts business susbidies.

    What part of that don’t you uinderstand?

  20. vto 20

    ha ha HS, well done. Tax increases are always cited by the left (esp. the greens) as a solution to everything, so, as you say, why not tax cuts? Bwilliant!

  21. Billy 21

    Actually BLiP, I do not understand any of it.

    So, BLiP, a tax cut is a subsidy to business and social welfare payments are subsidies to business?

    Am I right in guessing that you also consider payments to business for goods and services subsidies as well?

  22. toad 22

    vto, the Greens do not support tax increases. The Greens support tax shifting, which involves taxing things like employment and enterprise less, while taxing things like waste, pollution and property speculation more (or at least starting to taxing them).

    BTW, have you seen the statement from the Manufacturers and Exporters Assn advocating a capital gains tax, which would be a componenent of the Greens tax shifting policy? Seems that at least some business interests agree with the Greens on some economic issues after all.

  23. higherstandard 23


    I tend to get sick of the tax debate at times…….. tinkering around the edges with tax increases and decreases only serves to get people frothing over very little indeed – most of the time it’s just politicians playing games. The only thing one can usually expect is that whomever has control of the treasurey benches will be giving with one hand while taking with the other.


    I agree with the Greens on the Capital Gains Tax issue but I doubt any of the major parties have the gumption or lack of self interest to go there.

  24. vto 24

    yes mr toad i realise part of that. was being a bit of a sausage. but the greens do come across as seeing taxing things as some sort of a solution to everything. and i have no problem with a capital gains tax, but i fear the chardonnay socialists would oppose such a move more than anyone…

    captcha: business saying. ha ha – i’m sure there is a little person sitting somewhere making these up depending on the subject matter,

  25. So am I right in saying that for example a young couple wanted to buy a run down shack, apiece of crap really, and then spend 24/7 doing it up, on their own sweat and tears, then selling it for a profit, the Green’s want to tax them, because they think that is bad.

    Hard work should be rewarded.

  26. vto 26

    the biggest rort in NZ ???

    Those who buy property for the capital gain profit but pretend to the IRD they are buying it for the income. Makes me bloody laugh. Especially when said folk complain about other tax cheats.

  27. Brett. the Green’s proposal is on second homes only. So, it wouldn’t apply in the situation you describe.

    Also, in the situation you discribe, the couple are carrying out a business under current law – the purchase price of the house and the expenses they incur doing up the home are tax deductible costs and anything they make from the sale is a taxable profit. captial tax would not apply, because the house, in this instance, is not a capital asset for the business.

    Honestly, Brett, get more informed. Your examples nearly always illustrate an underlying ignorance.

  28. Steve:

    Thanks for setting me straight about the ways of the world.

  29. Peter Johns,

    Even allowing for your so-stated circumstances allow me an honest answer to this serious question — is your remuneration fair?

  30. SBlount 30

    2) tax revenue pays for the social wage healthcare, education etc; tax cuts mean cutting the social wage, or higher debt paid for in the future. If you have to spend your tax cut paying for services that used to be paid for from tax revenue, you’re not any better off.

    Yes, you are. $1 given to the government does not result in $1 of social spending.

  31. Draco T Bastard 31

    No tax cuts will mean working NewZealanders will soon have some of their own money back.

    They just won’t have any of the government services and infrastructure needed to do business and will, therefore, be a hell of a lot worse off.

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