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