English: gap with Aussie good

Written By: - Date published: 11:41 am, April 9th, 2011 - 56 comments
Categories: bill english, Economy, wages - Tags: , ,

Bill English has given up any pretense of closing the gap with Australia by 2025. Now, he is claiming the wage gap is a good thing and admitting higher productivity isn’t the cause of the wage gap. Meanwhile, Fran O’Sullivan slams Key and English’s ‘fingers crossed’ approach to handling financial crises.

Here’s English on what he now says are New Zealand’s economic advantages over Australia:

“One is the wage differential. We have a workforce that is better educated, just as productive and 30 per cent cheaper.”

Wow. That’s third world logic: ‘We’ll do the same thing but for less! We’re the cheap option’. There’s no vision of raising the income and standard of living for Kiwis there, just being the cheapest source of labour for international capital.

For years, John Key and Bill English (along with the rest of the Right) have been saying ‘if you want higher wages, you have to lift your productivity’. That was always just more ‘billshit’. There’s no reason why higher productivity will equal higher wages and the route to higher wages isn’t in workers’ hands anyway – productivity is driven by capital investment from businesses and education investment by the government. Now, English is admitting that productivity is already as high here as in Australia.

Productivity is just GDP divided by hours of labour. So, English is saying that we produce as much per hour as Aussie workers. How come, then, that our wages are 30% lower?

Simple. Aussie workers get a bigger slice of the wealth they produce. In Australia, compensation to employees is 47.5% of GDP. Here, it’s 42.5%. That’s half the wage gap right there. We’re getting ripped off for our work compared to our Aussie comrades.

And English thinks that’s just super. So does Key – remember: “we would love to see wages drop?”

While I’m writing about National’s appalling economic leadership, I can’t go past O’Sullivan’s piece today. Talking about the AMI bailout she says:

It’s tempting to dismiss this latest catastrophe as rotten, bad luck – and it is. But a disturbing pattern has emerged.

Take South Canterbury Finance, which kept on offering above market rate debentures – thus pushing up the taxpayers’ upfront liability to about $1.8 billion – when we now know that even the Prime Minister was told shortly after taking office that the finance company was staring at bankruptcy.

Instead of taking quick action and slapping the finance company into statutory management – which would have at least put a ring around the amount the Government ultimately had to stump up to pay depositors under the guarantee scheme – it was left to limp on towards ultimate failure while ministers hoped a white knight would emerge and take the problem away.

The big lesson of the global financial crisis is that the obvious white knights frequently have problems of their own. Governments should move quickly if a company is deemed “too big to fail”.

Wipe out any shareholders in an afflicted company who will not contribute to the “bailout” and extract as much revenue back as possible after the reconstruction and ultimate sale back to the private sector. The consequences of inaction lead to bigger failure.

….

What does surprise in the AMI debacle is that the Government has extended its relatively open-ended support package without either taking full control of the insurer, or first organising a backroom deal for a better heeled insurer to buy the business off by writing a cheque to mitigate taxpayer exposure.

It’s a terrible package. We taxpayers get fleeced and we don’t necessarily get any ownership of the company we save.

The reality is that the policy holders will still jump ship to better managed companies, safe in the knowledge that the government-backed AMI must cover their earthquake losses.

If the Government had fully stepped in – instead of putting a very expensive toe into the water – the policy holders might feel more confident in their company’s medium-term prospects.

It’s possible that the May Budget was just too close for English to risk a ratings downgrade by crystallising expected losses at this point.

Just a few weeks ago, I wrote about the leaky building syndrome which resulted in our cities being decimated by rotting buildings -a multibillion-dollar disaster that wouldn’t have happened if we had adhered to top-notch building and material standards instead of “doing it on the cheap”.

Not to mention the $7 billion of savings lost in the finance companies’ collapse while the political and regulatory establishment looked on.

There’s a long-running pattern of doing things on the cheap in this country but especially when National is in charge. It was National’s de-regulations that led to leaky-building syndrome and finance company collapses. Now, we’ve got the ‘fingers crossed’ approach to handling unfolding financial crises. It all just leaves us paying more in the end.

But what do you expect from a government whose vision for this country is that we will be a nothing but a cheap labour source for international capital?

– Bright Red

56 comments on “English: gap with Aussie good ”

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  1. Draco T Bastard 1
    9 April 2011 at 12:00 pm

    Remember this? Yeah, Bill English just confirmed that promise by John Key to “lower wages”.

  2. Policy Parrot 2
    9 April 2011 at 12:33 pm

    Isn’t the phrase “race to the bottom” supposed to be ironic?

  3. Treetop 3
    9 April 2011 at 1:09 pm

    “Gap with Aussie good”  When it comes to the price of food does English really think that this is good? 

    See what Bennett had to say yesterday about how her WINZ managers interpreted needing to send a client to budgeting when a third SNG grant for food was applied for.  (Hungry client may need to wait a month to be seen by budgeting).  Bennett will write to her WINZ managers and let them know that the client has to do a budgeting exercise and this can be done with a WINZ case manager.  Also there was some mention of a budgeting form being able to be downloaded from the MSD website. 

    Surely when WINZ is having to double up as being a budgeting service there is something horribly wrong with how the government is handling poverty.  I have heard nothing from the government about affordable housing, cheaper food, affordable after hours GP care, affordable childcare or employment growth.

    • freedom 3.1
      9 April 2011 at 1:37 pm

      Bennett’s statement is a complete fucking lie. For years the rules have been very clear, once the emergency grants have been used and the person is being referred to food banks then the person applying for the assistance has to see an authorized budget service provider after their third visit to a food bank before they can receive any further assistance either from WINZ or from the foodbank. It is obviously too much effort for a journo to read the rules or talk to a current WINZ worker or even a foodbank operator, instead they will just parrot Bennett’s bs.

      So many good people in this country are being left behind through no fault of their own and shites like Bennett simply continue to lie cheat and steal

      • ak 3.1.1
        9 April 2011 at 1:56 pm

        That’s not the half of it. 

        A case manager informed me this week that since last september, all advances (loans) however minor must be approved by the service manager and after just two applications for “hardship”  which includes all SNGs (not just food) and advances,  a “budgetting activity” must be undertaken.

        The pigeons of this nasty piece of jackboot filth are now coming home to roost in droves, in an office near you.  

        Watch for a return of WINZ-office-violence headlines just in time for our Bennie-bash election.

        • Treetop 3.1.1.1
          9 April 2011 at 2:31 pm

          freedom and ak, no arguement from me on what you both say.  There has to be a directive from Bennett about the administration of SNGs.  I will have to check with a benefit rights service on what it is.  See when Bennett is cornered she blames it on the WINZ managers interpretation of her correspondence.

          Schools now have to step up to feed hungry children and watch the SNG queue become longer over winter due to high electric bills.  Are WINZ going to tell people to use less power or eat less food?

        • Deadly_NZ 3.1.1.2
          9 April 2011 at 8:05 pm

          And of course they always seem to have less and less front line staff but even more red tape.
           
           

    • Jum 3.2
      9 April 2011 at 5:41 pm

      John Key is still popular – obviously two thirds of New Zealanders want to see poor people suffering for being poor.  Get used to it because National will be voted in again if word does not get out to the suburbs and I mean the evidential word.
      There is nothing wrong with budgeting; it is the way this government is handling it, like telling people with no food to see a budgeter on a Friday knowing there is a waiting list for weeks in some places; that is criminal. The case managers would know that was going to happen, if they had any sort of grip on the client’s history, or at least had made the warning clear that after two parcels, blah, blah, blah. But, if there is a waiting list and therefore no fault of the client, then WINZ is duty-bound to treat the client humanely. We have a human rights issue that anyone with any legal training should be prosecuting the government on. Get the facts out there. Take a case. If the papers ignore what is happening get the UN involved. Better New Zealand is seen for the basket case this government had made it into than put up with one more day of treating fellow New Zealanders like human-becomings.

      Two thirds of New Zealanders make me sick.

      There should be a budgeting office in every WINZ office but totally independent of WINZ and staffed with people who know what WINZ should be helping clients to get.  The budgeting office should house the experts on affordable housing, food options, health care and should have a community lawyer, paid by the taxpayer to prosecute the government if people are left without food.  I for one do not want to be responsible for a child going hungry because so many of my so-called fellow New Zealanders chose that.  Get a moneytrader – you get greed.
      This government is also trying to limit the Community Law funded help for people who cannot afford lawyers.
      The Truck shops should be prosecuted if they take on clients who cannot afford the purchases;  laybys are not bad.  Humane wages are even better.  This country has been set up by NActMU to be a low wage economy to attract the investors who do not see New Zealanders as people only units, cheap units.  If one wears out, chuck it out and replace it with another cheap unit – no problem to them.  If the ‘units’ around New Zealand start to complain the owner of the ‘units’ ups-sticks  and goes overseas, while using New Zealand to shoulder the debt burden of the global corporates.  That is what Key has planned for New Zealand.
      Budgeters are good; this government bad.  Keep the two separate.  If budgeting had been taught in school in maths, economics, and every other subject it could be applied to, people would know early on that there is good debt and there is bad debt and when anyone to do with moneytrading or car yards tries to tell people their debt is good run a mile.
      As for a download budget sheet; Bennet’s a fuckwit.  People need one on one help.  They fall over because it takes time to learn ongoing rituals – surviving from one day to the next can do that to you.  She should be pouring money into that area; if she really wanted to help people, that is.

  4. vto 4
    9 April 2011 at 1:14 pm

    the warehouse, the warehouse, where everyone gets a bargain,

  5. ChrisH 5
    9 April 2011 at 1:33 pm

    Maybe that’s why they call Auckland “Sydney’s Tijuana.”

  6. marsman 6
    9 April 2011 at 2:20 pm

    Is this what Bill English is saying? :- NAct Zealand has a well educated, diligent and underpaid workforce ready to be exploited by overseas corporations. Interested corporations, especially monopolies,will be offered generous subsidies. Workers’ rights will be legislated away at the corporation’s request.

    • Draco T Bastard 6.1
      9 April 2011 at 4:46 pm

      Sounds about right.

      • Jenny 6.1.1
        9 April 2011 at 6:01 pm

        “Our workforce is just as qualified, but 30% cheaper”

        Bill English.

        Way to go Bill, to make the Kiwi workforce feel like dumb schmucks being taken advantage of. 

        See the crowds on Monday outside internal affairs, as Kiwi workers queue up to get their passports renewed.

  7. Stan 7
    9 April 2011 at 4:24 pm

    So NZers are better educated, Bill? Why then do we need to go through the farce of national standards, or is it because league tables can then be published, to facilitate you pushing through a privatisation of education post election?  Also, we can’t compete with the 3rd world countries on the low wage economy that is so dear to Key et al, so all we end up with is underpaid and unemployed workers, caught in this dreary half way of no ambition, no plan and no hope.

  8. Jum 8
    9 April 2011 at 5:12 pm

    “It was National’s de-regulations that led to leaky-building syndrome and finance company collapses.”
     
    Bright Red, can you give me a bit of history on the de-regulations surrounding eventual finance company collapses, please.  Thanks.

  9. Samuel Hill 9
    9 April 2011 at 8:26 pm

    Maybe the perception that NZers are better educated is because our education system is so crap. Is that analyzed on our intelligence? Or just in numbers of people finishing school? In Australia kids might be a qualified mechanical engineer at 20 years old. I know plenty of 20 somethings in this country with university degrees but no jobs. Its because we don’t have any REAL skills. Number crunching BComm graduates and form filling BA graduates, we are designed to be a service driven economy. With our space and natural resources we should be a clean, green, progressive, creative, technically intelligent economy.

    There is a massive shortage of skilled tradesman in New Zealand, the only way to actually boost real productivity is to create products – manufacturing is New Zealand’s smallest growing industry. Creativity is being discouraged in favour of – ? Low waged hospitality work? What? Milking Cows? Tell me a growing industry other than the dairy sector? 

    Its no surprise our future looks so depressing when our Prime Minister is hanging around with tax avoiding British tory advisors. Setting up NZ to be a low-wage tax-haven, a playground for the rich?

    I think so.

    • Jim Nald 9.1
      9 April 2011 at 10:40 pm

      Read that billshit and was very disappointed.
      Feeling like this is his latest way of taking the mickey out of us, pulling the carpet from under us .. indeed, even worse, selling the carpet from under us.

    • RobertM 9.2
      10 April 2011 at 9:21 pm

      In Australia the 50% with a clue and good genes are educated privately. Therefore the excess and indulgence and total devalution of the public system and labour government are far less important. Here I’m undecided whether Tolley is holding out for  some levels of categorization and standards or whether she’s just playing politics. If the standards are meaningful and NCEA level 2 meant anything, half the entrants would have to get below 50.
        Australia is a larger society with larger cities therefore the hetrosexual majority have more privacy to have more relationships. Here the ordinary people and the fundamentalist minority rule. Over the tasman the body and beauty seem to be a higher priority. Here where stuckwith Helen Kelly who wants to manage everything and still shop in NYC.

  10. Olwyn 10
    10 April 2011 at 12:02 am

    It is unbelievable that someone can confidently make such utterances in a so-called democratic country. Who is this “we” he is talking about, who have the benefit of lower wages? Certainly not the workforce; they are the things “we” have at a cut rate. He is quite comfortable speaking of himself and his friends as if they were feudal lords, and we are by now so accustomed to it we hardly bother to squawk.

    • RobC 10.1
      10 April 2011 at 8:50 am

      We = businesses, they have the benefit. Oh yeah, plenty of them overseas-owned so the profits flow offshore.

      So, we spend shitloads on a 2025 taskforce saying we must close the gap, when that gets chucked in the too hard basket we’re now supposed to believe the gap is actually good?

      If it wasn’t so serious it’d be hilarious. Honestly, Homer Simpson would make more sense and provide just as much laughs.

      • PeteG 10.1.1
        10 April 2011 at 8:57 am

        The gap is not “good”, but it’s not all bad either. Why just compare the gap with Australia? Why not compare it with other major trading partners and other recipients of our brain drain?

        The “we must close the gap with Australia” is a mantra that lacks substance, but I guess that’s how political PR works.

        • The Voice of Reason 10.1.1.1
          10 April 2011 at 9:34 am

          Nice to see you putting the boot into Key and English, but it’s not just an empty mantra. It’s empirical proof of how bad the free market reforms have hit New Zealanders. Until the late eighties, NZ and Aussie pay rates were roughly equivalent. Since then the gap has grown steadily.
          It’s also not just about the wages. Their super scheme is miles better than ours, with at least a 9% contribution. Their labour laws are also fairer and even non union employees have the protection of national awards to guarantee minimum standards.
          We’ve been royally ripped off and the wage gap is the smoking gun.

          • PeteG 10.1.1.1.1
            10 April 2011 at 9:52 am

            Would you be happy to close the gap with their level of mining? That’s a major factor in the difference.

            • The Voice of Reason 10.1.1.1.1.1
              10 April 2011 at 10:18 am

              Mining is fine by me, but it’s not the determining factor in the difference between Aussie and Kiwi wages anyway.

  11. PeteG 11
    10 April 2011 at 7:53 am

    The wage differential between here and China and here and India are substantial – and both of them are developing rapidly and increasing the standard of living for many (albeit from a lower level than us).
     
    If our wages were suddenly raised to the level of Australia’s it would make us less competitive with them, and even less competitive with China and India, which could severely affect business here. Do we want a better paid workforce with a far higher number of unemployed?

    • fabregas4 11.1
      10 April 2011 at 8:13 am

      You are correct PeteG.  We should lower our wages and standard of living to that of third world status and as a bonus people from well off countries might sponsor us at say $50 per month.

    • Olwyn 11.2
      10 April 2011 at 8:26 am

      And where do you place yourself in all this PeteG? Do you mean that you are perfectly happy to work for $12 an hour or less so as to help maintain NZ’s so-called “competitive edge” or are you happy to see others doing this, but put yourself in a category to whom such measures do not apply?

    • RobC 11.3
      10 April 2011 at 8:31 am

      Comparisons to China, India – irrelevant to a degree. Young Kiwis are not going to emigrate to those countries to any large extent.

      Comparison to Australia – fucking important. So we’re better educated, just as productive but our workers are paid 30% less. Where’s that passport application?

      Businesses need a workforce Pete. No point worrying about them being competitive if the labour fucks off.

      For the 3rd time in about a week, I need to pull out the Lincoln quote …. labour comes before capital because without labour, you don’t have capital. Think about it.

      • PeteG 11.3.1
        10 April 2011 at 8:48 am

        Comparisons with India and China are relevant – if our wages go up 30% our costs and prices also go, making us even less competitive with them. They have already sucked a lot of the lower skilled labour requirement out of the country, +30% would make that worse.
         
        Business needs capital, and businesses need a market, and businesses need to be competitive, otherwise more “workforce” means more unemployed.

        If we just increase wages without productivity we will be no better off, we just increase costs by the same amount, unless we end up with even more unemployed.
         
        I understand the Australian differential problem. Two of my kids work in Australia. One will stay there at least until she pays off her student loan, that will probably take her three years working there, that’s not a bad thing.
         
        My other daughter graduated here and couldn’t get a job in the vocation she specifically trained in. She was offered a job in Europe so moved there, holidayed in half a dozen countries a year but still managed to pay her student loan off in two years. She now wants to return to NZ with her family, bringing a highly qualified husband with her.

        So also not all cons. On the surface the “brain drain” seems a problem but it’s not all one way, expertise or money. Foreign earnings pay off a lot of student debt.

        It’s far more complex than “we must have the same wage rates as Australia”.

        • Colonial Viper 11.3.1.1
          10 April 2011 at 9:12 am

          Comparisons with India and China are relevant – if our wages go up 30% our costs and prices also go, making us even less competitive with them.

           
          This is where you start to go wrong PeteG i.e. from the start. If you want NZ to position itself to compete on labour costs against China and India, and more recently Cambodia and Vietnam, we will always lose. Every single time.
           
          We need to find differentiators which will push us ahead not further behind.
           
          You also lose the plot by not recognising that in your way of thinking, Australia must be 30% less competitive than us against China and India, because Australian wage rates are 30% higher. But the Ozzies seem to be doing just fine.
           
          You are right about one thing, this is about more than just pay rates, pay rates are the end result.
           
          It is about strengthening unions, getting a larger share of the GDP pie for the median worker, developing high tech, high value added industry.

          • PeteG 11.3.1.1.1
            10 April 2011 at 9:45 am

            getting a larger share of the GDP pie for the median worker, developing high tech, high value added industry.
            Sounds fine, been talked about for years, Cunliffe was talking on The Nation about improvements, in practice it’s far more difficult and complex than some vague idealistic sound bite.
             

            • RobC 11.3.1.1.1.1
              10 April 2011 at 11:54 am

              Pete, you’re in fine form today.

              The gap is not all good, but not all bad.
              On the surface there seems to be a problem.
              It’s far more complex than that …
              No actually, it’s far more difficult and complex than that …
              And on Open Mike, we see the decision-makers have a lot more complexities to consider

              At least get out a thesaurus and change the word every so often.

              Mate, if it’s all so diificult and complex, throw your hands up in despair and toddle off 😀

            • Colonial Viper 11.3.1.1.1.2
              11 April 2011 at 12:01 am

              in practice it’s far more difficult and complex than some vague idealistic sound bite.
               

              Yeah that’s why you’re on this blog PeteG pushing for NZ to compete with Vietnam and Cambodia on wages, while I’m assisting in drafting up the details on economic reform and other matters.

  12. RobC 12
    10 April 2011 at 9:21 am

    Sorry, back after wiping the tears from my eyes (from laughter).

    CV has covered half of what I was going to say.

    You have two kids in Oz. Says it all really. When the one with the highly qualified husband wants to come home: (a) they’ll both need to find jobs (b) they’ll prob choke when they see the salary levels and do some cost of living comparisons (c) they may just then have second thoughts

    • PeteG 12.1
      10 April 2011 at 9:50 am

      They have just been here for three months, are well aware of the reality here, want to bring up their family here, and are committed to having a go at it. They are aware that it could take a bit of time for suitable job opportunities to come up, they are happy to wait for it.
       
      Trying to stop the overseas drift is futile, it’s a natural drift, from small to bigger, and to see the world. Attracting enough of them back once they have established themselves, paid off debt, and got their OE out of the way is what’s most important.

    • Jum 12.2
      10 April 2011 at 1:04 pm

      Two more PeteGs in New Zealand; no thanks.

  13. tc 13
    10 April 2011 at 10:07 am

    Pete G passes the farrar sycophant Rose tinted everything is bluetiful test by a mile…..keep us posted on how it pans out for them….’natural drift’ that is comedy gold.

    I look forward to seeing that beauty used in future debates by other shonkey admirers.

    • PeteG 13.1
      10 April 2011 at 10:12 am

      There is a natural population drift from country to town to city to bigger city to bigger country.
       
      Or maybe you have a different theory about why populations grow?

      • RobC 13.1.1
        10 April 2011 at 11:09 am

        Populations grow when reproduction rates are greater than mortality rates. Not rocket science.

        But if you wish to talk about population drift, I suggest it occurs due to the perception of better and more opportunities, in whatever sphere. Now, if you’re the small town/city/country, you can either accept your “natural fate” or try and do something about it.

        • Colonial Viper 13.1.1.1
          13 April 2011 at 8:52 am

          English accepts that the “natural fate” of New Zealanders closing the gap with Australia is by moving there.

  14. Anthony C 14
    10 April 2011 at 11:02 am

    The mob always get riled up and push for doing stuff on the cheap anyway, especially when there are political points to score for the person raising the rabble.

    Just thinking of the original Britomart design, Eden Park/Waterfront Stadium, energy efficient lighting regulation as a couple of examples of doing it on the cheap.

  15. todd 15
    10 April 2011 at 11:29 am

    It was good to see Guys a Spinner catch Blinglish out lying again on Q + A today. I am wondering how many lies National has been caught out on now? Shonkey’s “I know nothing” re the BMW’s is just the tip of the iceberg. An iceberg that will sink this country if we cannot navigate away from the liars that are incompetently running this country.
     
    While National think we can compete with slave wage economies like China, they use this as an excuse for not closing the gap with Australia that has significantly grown since 2008. Contradicting their election promises and showing their true defunct ideology. Their election campaign was essentially a lie.

    The war on welfare and creating more unemployment is designed to keep wages low and increase the poverty gap. The slight increase in minimum wage has done nothing to reduce the welfare required so that working people can meet the cost of living, because it has not kept up with inflation.

    The April fools day increase of benefits to cover the rise in GST is so pathetic as to not be worth mentioning while John Key receives $45,000 more per anum than his Australian counterpart. No wonder we have a mass exodus from New Zealand.

  16. millsy 16
    10 April 2011 at 12:52 pm

    Well, looks like our government wants our relationship with Australia to be patterned on Mexico’s relationship with the USA.

    In 10 years a lot of families will be dependent on income sent home from Australia.

    • Jum 16.1
      10 April 2011 at 1:08 pm

      Millsy,
      I sense you are not joking.
      Captcha: terminal

      • Anthony 16.1.1
        10 April 2011 at 2:49 pm

        I already know of a quite a few families who are dependent from income sent home from places like Western Australia, Iraq and Afghanistan…

  17. Hanswurst 17
    10 April 2011 at 8:05 pm

    Bill English quoted in the Stuff article:

    So Australia already has $40 billion of investment in New Zealand. If we could attract more Australian companies, activities here, that would help us create the jobs and lift incomes.

    So we are going to push wages down for years and years, muzzling unions nad stifling workers’ protests, until some unspecified level of investment is reached, then employers will magically start raising wages? If lowering wages is the way to raise wages (?!), wouldn’t the resulting rise in wages just cause the wages to drop again?

    • Hanswurst 17.1
      10 April 2011 at 8:13 pm

      Sorry, screwed up the link.

      • Colonial Viper 17.1.1
        13 April 2011 at 8:51 am

        English is fraking with the numbers as usual.
         
        Buying up a country’s existing assets without introducing brand new capabilities and expanding employment are useless to a country and strips it of economic sovereignty. But it’s the kind of foreign investment that English counts as good.
         
        Investments are supposed to add something positive to a country. Australian “investments” in NZ like their banks, their purchase of ASB/National Bank/Post Bank/…largely just suck money and jobs out of New Zealand. On a grand scale.

         
         

  18. Haydon 18
    13 April 2011 at 8:18 am

    you Silly un-eductated Monkey… Learn the facts prior to publishing this bull shit,
    1) you obviously know nothing of the A.M.I Deal. and im not going into detail because it is not worth my time
    2) your obviously not a kiwi to blame nationals de regulation of the building industry is idiotic… only a fool could possibly come to that conclusion.

    [if you want to make your arguments convincing, you have to actually supply some information. Saying ‘you’re wrong and I can’t be bothered telling you way’ doesn’t impress anyone. Nor does misspelling ‘uneducated’. Eddie]

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