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Enough for us all, but they want it all for themselves

Written By: - Date published: 7:37 am, September 2nd, 2013 - 180 comments
Categories: capitalism, class war, david cunliffe, grant robertson, wages, workers' rights - Tags:

The howls of outrage from the Right elite were predictable. Robertson and Cunliffe promising a living wage for all government workers, are they crazy? Decent pay for cleaners? That’s not what their granddaddies fought for (well, sold war munitions for). It was predictable but it still makes you angry. These are the same people who cheered when the elite got billions in tax cuts. These are the people we have to throw out of power.

[Bunji: Some context –  Key scoffs at paying people enough to live on; says plans are ‘unbelievable, unworkable.’ also: DimPost]

180 comments on “Enough for us all, but they want it all for themselves ”

  1. Tracey 1

    Labour and Greens need to get canny on this.

    Point out that even though National sold the house they have actually increased the mortgage. At the same time they gave the head of the bank a pay rise.

    Living wage is about fairness for all NZers. It wont come in overnight for everyone and many businesses already pay workers over the minimum even though they don’t have to.

    I’d also like to see a higher minimum threshold of NO tax.

    15,000 before anyone pays tax. That is a cut that benefits everyone.

    Lower wage earners put 100% of their earnings straight back into the economy.

    EVERYTIME national and act accuse the others of lolly scramble they need to reply

    National has sold the house but still has the mortgage and they are growing the mortgage every week. They did this so people earning over $100,000 a year can have more money.

    • Lanthanide 1.1

      “I’d also like to see a higher minimum threshold of NO tax.

      15,000 before anyone pays tax. That is a cut that benefits everyone.”

      Labour campaigned on the $5,000 tax free threshold, which IIRC started at $3,000 in 2012 and rose to $5,000 over a couple of years.

      It is a great policy, but unfortunately being able to afford it is difficult.

      • Colonial Viper 1.1.1

        Well, the resistance to applying the taxes required, or issuing the money required, to afford the measure, is what the real problem is.

      • Tracey 1.1.2

        understood… obviously I haven’t done the numbers 😉

        I like it in principle because it can be :”sold” as a pay rise for everyone.

        • Lanthanide 1.1.2.1

          “I like it in principle because it can be :”sold” as a pay rise for everyone.”

          But it won’t be, because the money has to come from somewhere. Realistically, since we’re already at very low taxation rates, this means new taxes on people. So not everyone gets a pay rise – some people will necessarily pay more tax so that others can have a tax break.

          • aerobubble 1.1.2.1.1

            You mean like the tax switch National peddled, that increase GST, ACC levies, Petrol tax, or just that Labour aren’t allowed to talk out the side of the mouths about tax like Key is allowed.

      • aerobubble 1.1.3

        So people will get their first $5,000 dollars they pay in tax back, like the tories used to say, why take taxes off people to give it back to them as housing allowance, as welfare, as working for families. Its won’t cost a dime if the government lowers other welfare. What you mean to say surely is that you’d rather help landlords and employers keep forcing down wages and raising rents, and remove the economic stress on them. Basically those without kids, or kids have left home, and those who aren’t so under paid that they need housing allowance, are carrying those who are, all so the wealthiest can take profits. I mean imagine a moment being without kids, with a salary suddenly getting $5,000, enough to put a down payment on a home, enough to but and rent property, enough to risk starting a business on the side. Oh, oops, sorry I just exposed why productivity is so poor in NZ, because competition is, the big welfare programs actually help the elites strip mine the core Labour voters. This is not to say we can’t support families, i.e free lunch for all kids, and there be a lot more people around with cash to take risks, build homes, lobby council and govt to reduce regulatory capture. The problem with the western democracies is that the lobby groups that used to hold government accountable have no cash.

    • Polish Pride 1.2

      I’d like to see a system that doesn’t necessitate taking from one to give another for it too work (regardless of whether it is the right or the left doing the taking!) Why aren’t we instead looking at a System that doesn’t rely on the underlying premise of wealth redistribution for it to work, especially when what you are proposing still only gives the ability of those receiving it to afford basic needs and little more.
      It most certainly doesn’t provide the requirements under Maslows Hierarchy for people to be happy, yet it is possible to have a system that does this and takes from no one. It shifts the key goal of society and the system we live under from being one that we essentially work for, to one that instead is set up to serve the wants and needs of its society.
      Surely the goal of any successful system should be the happiness of those the system is for. The fact that ours fails this for more than half the people in society is a sign of a system that is not fit for purpose.
      Unfortunately the ideals being touted by the left of redistributing wealthfrom one group to those in need will only ever be a temporary fix at best in a system that shifts from Right to Left and back again every 6-9 years. It is at best a poor and ill thought out halfway when compared with what is possible for society and the system we live under.
      It is time we evolved.

  2. Melb 2

    So anybody that earned over $50,000 are the elite?

    • Tracey 2.1

      you do understand that a few years ago Labour actually stated that the new threshold would be over $100,000. You and others keep harking back to the 60,000 (you 50k is wrong). I hope you are equally repetitive regarding Mr Key’s ever growing list of lies?

      • Melb 2.1.1

        The top tax rate kicked in around $70k, not $60k.

        National’s range of tax changes (including GST increases) meant most people gained more than they lost, and I picked $50k as an easy example to make this point. So maintaining that the billions of tax cuts went to “the elite” is just spouting off nonsense designed to reverberate in this echo chamber.

        • felix 2.1.1.1

          You say “most people gained more than they lost“, but you don’t seem to have any idea where “most people” are on the income scale.

          You do realise that the vast majority of people are paid less than $50,000, don’t you?

          The only point you’re making with your “easy example” is just how far out of sync the commentariat is with the general population.

        • Tracey 2.1.1.2

          sources???

          by “echo chamber” do you mean you are talking to yourself?

        • framu 2.1.1.3

          “and I picked $50k as an easy example”

          then you need to demonstrate why a number you made up is a)relevant and B) supported by evidence

          and youve just admitted that the top rate kicked in even higher than both your imaginary number and the reply number – which makes your 50k even LESS relevant

          Basiclly this is just your opinion – nothing wrong with opinions, but dont expect people to take them seriously if you cant even spot that its not backed up with facts yourself

      • alwyn 2.1.2

        You may understand that the threshold was $60,000/annum but David Cunliffe doesn’t.
        He is on record as saying that the figure was $150,000/annum.
        Given that he was there, and I believe in Cabinet, one really has to wonder what he was smoking, drinking or injecting to have such an amazing effect on his memory.
        After all he did say on Q&A that “what we did last time round was 39 cents with a pretty high threshold of $150,000”
        You are complaining about people who say the limit was $50,000. What do you think of people who are as far off as David C?

        • Ant 2.1.2.1

          39c @ $150K was the proposed top tax rate for Labour’s tax package last election. That’s what he was talking about.

          So it’s probably you who has a problem with understanding things, it was pretty clear.

          • alwyn 2.1.2.1.1

            If he meant that it was something that had been in their policy, but never implemented he would surely have said so.
            Why, if he meant that did he say that “what we DID last time round” if they never did it at all?
            Are you saying that he is just a bit loose with his words.

            • felix 2.1.2.1.1.1

              What the fuck are you talking about? Did you even bother to check out the context of that quote? I did and it was very obvious what he was referring to.

              In fact I would go so far as to say that it would be impossible to misinterpret it so badly unless you did so intentionally.

            • Mike S 2.1.2.1.1.2

              Go back to sleep Alwyn. or at least learn to read. No, just go back to sleep.

    • Lanthanide 2.2

      Labour had implemented a tax policy in the 2008 budget that rose the top tax rate from $60,000 to $70,000 and then $80,000 two years later.

      National got into power and scrapped the $80,000 threshold.

      It is National that believe if you earn $70,000, you must be “well off”. That’s the “only” explanation for why the top tax rate is set at that level.

      • Tracey 2.2.1

        Great work Lath… and also a great line for any MPs opposing this government…

      • A.Ziffel 2.2.2

        That’s a bit misleading.
        It’s fair to consider the threshold for 33% moved as it replaced the 39-38% rate.
        38,001 2007-2008
        40,001 2008-2009
        48,001 2009-2010
        70,001 2010-2011+

        • Lanthanide 2.2.2.1

          No, you’re being misleading.

          In 2009-2010 the top two rates were like this:
          48,001 = 33%
          70,001 = 38%

          This became:
          48,001 = 30%
          70,001 = 33%

          Clearly the least change in this situation is to consider the rates going from 33% to 30% and 38% to 33%, not to say that a ‘new’ rate of 30% was introduced and the existing 33% rate moved up.

          Anyway your dissembling point is irrelevant: my point is that National have set the “top rate” at $70,000. As the “top rate” in a progressive tax scheme is supposed to only apply to “rich” people, it stands to reason that National must think anyone earning $70,000 is “rich”.

          • A.Ziffel 2.2.2.1.1

            The only thing that stands to reason in a progressive tax system is that higher earners have a higher rate. As to whether the top rate is consigned to the “rich” only, that’s obviously subjective, contrast Cullen’s 2008 budget of $80k for 2011-2012 with Labour’s 2011 election policy of $150k.
            By your theory, if National flattened the rates further, that would indicate their increasing delusion as to the number of “rich” people in NZ.

            • Lanthanide 2.2.2.1.1.1

              You’re still not getting it.

              During Labour’s term in office, many people on the right criticised the top tax rate of having a threshold of $60,000, saying that this meant “Labour thought if you earned $60,000 you must be rich” and that in turn they didn’t consider $60,000 to be much of a salary at all.

              So, to extend that attack, National must also think that if you earn $70,000 you are rich, or they would have raised the threshold on this top tax bracket – which is a move that Labour had made that National deliberately repealed as one of their first actions in taking office in 2008.

              This is not “my theory”, this is reflecting the ridiculous claim of many on the right back at them.

      • alwyn 2.2.3

        Well that is a kind interpretation of what Michael Cullen did.
        He said that in a year or two you would get an increase in the threshold. Michael Cullen had form on this sort of thing, as you may remember. In the budget before the 2005 election he proposed tax cuts. After the election he then cancelled them. Do you really think he wouldn’t have done it again?

        • Lanthanide 2.2.3.1

          1. He cancelled them because the opposition (and media) decried them as “chewing gum tax cuts”. Perhaps it would suit people not to look a gift horse in the mouth?

          2. The tax cuts were passed in the 2008 budget, ie, in law. The “chewing gum tax cuts” were only promised, never actually passed as law.

    • Colonial Viper 2.3

      People earning over $50,000 pa are well into the top 30% of NZers. That’s how pathetic and low our wage structure is.

      • Lanthanide 2.3.1

        That statistic likely includes a lot of part-timers and casuals. I’d like to see a comparable distribution that only includes full timers (35+ hours a week).

        • Colonial Viper 2.3.1.1

          You could do that but what is nz’s full time work force participation rate? 50% maybe? Not counting half the people is going to skew the statistics.

          • Ant 2.3.1.1.1

            Not to mention a lot of people are underemployed: part-time or casual because that’s all they can get.

    • Lightly 2.4

      it’s $70,000. and only 11% earn over $70,000

      • Tracey 2.4.1

        Yes, BUT it’s those aspiring to it that keep voting for the policies that hurt themselves.

        • Colonial Viper 2.4.1.1

          That’s because Labour never showed how a higher tax rate at the top would be used to help them (and the rest of society) climb the ladder. Cullen mainly used those higher tax rates to pay off foreign bankers. Not much use in helping people climb the ladder from the median wage of $41K pa.

          • Jackal 2.4.1.1.1

            I guess Cullen was looking at the long term thing, whereby once the debt was paid off, the government could look at helping out low waged New Zealanders. Unfortunately National has once again stuffed it up by increasing debt by 380% since they gained power in 2008.

            Such a huge amount of debt easily dwarfs Piggy Muldoon’s borrowing regime for his Think Big projects and at least some of them are economically viable. New Zealand pretty much has nothing to show for around $65 billion in additional debt National has mismanaged us into.

            Labour will once again have a choice of spending more on New Zealanders or paying off debt. Because of the way the current system works, I would recommend that Labour looks at small reductions in debt levels and more spending on building up New Zealand’s resilience. Having a more vibrant local economy can only help to increase the tax take, which would in turn increase the ability of the government to pay off debt.

            In some ways Cullen did things the wrong way round as there is simply no point in paying off debt if National borrows and spends like a drunken sailor when they gain power.

      • Colonial Viper 2.4.2

        Lightly – is that top 11% of all NZers or top 11% of all workers?

  3. Richard Christie 3

    Even any reference to material the poster is writing about might be helpful.

    • karol 3.1

      Cunliffe’s press release from yesterday morning:

      Mr Cunliffe has pledged that in Labour’s first year in government he would:

      · Raise the minimum wage immediately to at least $15 an hour

      · Introduce industry standard agreements to ensure New Zealand workers have a real choice to join a union

      · Use the Government’s purchasing power to promote the Living Wage campaign in both the public and private sectors

      · Ensure the government takes a more hands-on approach to lifting pay and providing job security for all Kiwis

      · Work with unions to protect vulnerable workers, including restoring Part 6A protections to all workers

      “I’m committed to making Labour’s work and wages policy central to my plan to lift living standards,” said Mr Cunliffe.

      From RNZ this morning:

      Grant Robertson has pledged to introduce the wage for all Government workers while David Cunliffe wants to work towards a living wage for all New Zealanders.

      TV One yesterday reported:

      “I’m absolutely committed to seeing the sixth Labour government roll out a living wage as a minimum for public servants and as we can afford it through our contracting process,” Mr Cunliffe told Q+A.

      “And yesterday I launched the idea of having an accreditation system where living wage employers could get a preference in government procurement,” he added.

  4. Tracey 4

    His government procurement idea will have infuriated the CEO of Fletchers who recently announced Australia needed a new Thatcher to deal to unions because wages are too high.

  5. vto 5

    The myriad regulations, statutes, common law, employment law, tax rates, imposition of various taxes and neglect to implement other taxes, working for families, dpb, dole, state health care, education, etc etc etc result in a certain proportion of this nations wealth going towards the top and a certain proportion going towards the bottom. The bottom level does not pay enough to live on.

    These proportions need changing so that, first and foremost, every member of our society earns enough from a decent days work to put a roof over their heads and feed their family.

    The spread of the nation’s wealth is governed by regulation settings today. That spread needs changing. Change the regulation settings.

    On a personal note, I am very pleased to hear these sounds from labour leaders. Go hard.

    • Colonial Viper 5.1

      The stronger and more left wing the Labour Party, and the more accountable we hold potential future leaders to that Labour Party, the more we will see those Leaders following through on commitments to the ordinary people of NZ. Don’t simply rely on trust for any politician, rely on the application of pressure.

  6. Lanthanide 6

    “Decent pay for cleaners?”

    Since it doesn’t apply to government contractors, eg cleaners inn hospitals, I suspect the only cleaners that would get this money would be those that clean the Beehive and other parliamentary buildings.

    • Tracey 6.1

      I assume that’s where the “preference” in govt procurement comes in?

      I certainly would love to see the new living wage in rest and care homes.

    • Colonial Viper 6.2

      IIRC Robertson has said that he would apply this to all govt contractors, so I suspect Cunliffe will have followed and done so as well.

      • Lanthanide 6.2.1

        So we’re going to have to have a large increase in the health budget that basically ends up being inflation.

        I’m sure if they pay cleaners more than they’re paid right now, the standard of cleaning will probably improve somewhat, but I would also expect that the level of cleaning at the moment must be good enough to meet the guidelines.

        • Tracey 6.2.1.1

          That’s a slight red herring because the purpose is not to improve the standard of cleaning per se, but improve the standard of living for the cleaner. Ergo an improvement in the gleamingness of the toilet is a great by-product but not the main goal.

          IF inflation rises, then so will interest rates?

        • Colonial Viper 6.2.1.2

          So we’re going to have to have a large increase in the health budget that basically ends up being inflation.

          I think you are following a bullshit neoliberal theory around NROU.

          Real inflation is extraordinarily hard to generate, and can be easily controlled unless around specific circumstances of war or total currency collapse.

          • Lanthanide 6.2.1.2.1

            Not entirely sure what your point is here.

            One day, x is sufficient to cover the health budget to provide the output of people being healed. The next day, it instead costs x + y, but their primary output remains unchanged. You’re paying more for the same output.

            • Colonial Viper 6.2.1.2.1.1

              You’re paying people more for the same output.

              fify

              Yes, you are. The assumption and value system being that people should be paid enough to live on if they do a full time job. And that this is not happening at the moment.

        • Colonial Viper 6.2.1.3

          We’re in a stupid economic system. One which doesn’t recognise how important cleaners are in a hospital concerned with hygiene. Its mad.

          • Tracey 6.2.1.3.1

            I agree… all toilets in parliament not cleaned for a week… see what importance is placed on them then.

            • Foreign Waka 6.2.1.3.1.1

              With those high earners in Parliament, why not add this to their job description. We all have to “do more with less”,

          • chris 6.2.1.3.2

            “One which doesn’t recognise how important cleaners are in a hospital concerned with hygiene.”

            Is there such a thing as “unskilled” (I dislike that term … ) workers?

            Surely even the most menial job requires some skills. It really irritates me that people (and there are many) consider these menial workers are not worth valuing as highly as we do Doctors etc.

            Someone has to do these tasks so why on earth are they paid such a pittance… obscene in my view.

        • One Anonymous Knucklehead 6.2.1.4

          Citation needed Lanth. Lots of right wing zombie arguments persist about the effects of the minimum wage.

          Have a look through empirical studies: time and time again you will find researchers expressing surprise that the negative effects they were taught to expect fail to materialise on Earth.

          • Lanthanide 6.2.1.4.1

            “Citation needed Lanth.”

            in·fla·tion
            /inˈflāSHən/
            Noun
            1. The action of inflating something or the condition of being inflated.
            2. A general increase in prices and fall in the purchasing value of money.

            In this case #2 applies. In this case purchasing the labour of a person for 1 hour to clean something goes from costing $13.75/hour to $18.40/hour. The actual output or quality of output will remain largely the same, but it costs more to attain.

            I’m not talking about inflation in the wider economy here, just that the health budget will have to increase, but the everyday patients of the hospitals are unlikely to see any improvement in their care, on the assumption that the existing cleaning regimen is already meeting the required standard.

            • McFlock 6.2.1.4.1.1

              Seeing as we’re making assumptions, I’d also assume that hospital visits for minimum wage workers and their families would decrease significantly as living standards improve, overcrowding is diminished, and primary healthcare becomes proportionately more accessible to the working poor.

              • Lanthanide

                Good point.

                • One Anonymous Knucklehead

                  So, no in-fla-tion-ar-y effect then?

                  Perhaps that explains why “price pass-through” has been measured as insignificant.

                  • Lanthanide

                    There’s a direct inflationary effect because you are now paying more today than what you paid yesterday for the same good. Whether that inflationary effect ripples through to affect the wider economy is an entirely different matter. McFlock has presented an example of a counterbalance that would help to offset any wider inflation caused by the pay rise.

                    • One Anonymous Knucklehead

                      Yep. Price pass-through is insignificant.

                    • McFlock

                      But there’s also the assumption of increased cost for no increased productivity.

                      Doubtful. Happy workers work faster and better, even cleaners. Take some life stresses away from them, see how they go.

            • Colonial Viper 6.2.1.4.1.2

              The actual output or quality of output will remain largely the same, but it costs more to attain.

              That’s a change in labour market pricing. It is not inflation, in the sense of a general economic environment of rising prices unconnected with the underlying value of inputs.

              Bottom line – do we believe as a society that people in NZ should be paid a living wage, or do we believe that NZ should try and compete in a global market with wages in India, China and Bangladesh.

              • Lanthanide

                “Bottom line – do we believe as a society that people in NZ should be paid a living wage, or do we believe that NZ should try and compete in a global market with wages in India, China and Bangladesh.”

                I don’t think there is much competition with people in India, China or Bangladesh to clean the Beehive, or Auckland Hospital.

                “That’s a change in labour market pricing. It is not inflation, in the sense of a general economic environment of rising prices unconnected with the underlying value of inputs.”

                Yes it is. Yesterday it cost the government $13.75 to buy the labour of 1 person cleaning for an hour. Today it costs the government $18.40 to buy that same labour of that same person. Just because it’s a service rather than a good, doesn’t magically mean must ignore the input costs and value of the output.

                • Colonial Viper

                  That’s not inflation.

                  You’re bandying about a term which has a specific meaning in economics.

                  Not all price increases are due to, or result in, “inflation”.

                  Austrian economics regards inflation as a monetary phenomenon, and something which results from an increase in the money supply. That is not what is happening here.

                  http://wiki.mises.org/wiki/Inflation

                  Just because it’s a service rather than a good, doesn’t magically mean must ignore the input costs and value of the output.,

                  Right, so if you think that the market should have the last say on what people are worth as workers, then you are a neoliberal in philosophy.

                  Me personally, I think that society should have the last say on what people are worth as workers.

                  • Macro

                    Agreed. It may even mean that with increased wages workers choose to work less hours for the same take home pay (as they do in Europe). People might actually begin to enjoy life rather than slave.

                • Foreign Waka

                  You do overlook the fact that government is contracting most of the services, from cleaning to food prep and laundry to specific providers. These are not necessary NZ based companies. When the tenders go out it is the cheapest that wins the contract. If a company promises certain services at a set price the only way to achieve this is often by reducing staff to the bare minimum and paying them pittance. This has been practiced since deregulation became en vogue. It looks though that this administration is taking the cut cut cut without thinking what is being cut to new heights. So the first step in the right direction would be quality over cost, this could mean a separate keying off of staff support and their cost component. All accepted contracts should be accessible via the official information act under proviso that sensitive information is not being published. Whats god enough for the spying department must be good enough for the people who actually pay for that. Remember, politicians are suppose to do the betting on behalf of all people.

            • Mike S 6.2.1.4.1.3

              Inflation isn’t an increase in prices of goods and services. Those increases are a symptom of inflation. Inflation is an increase in the overall money supply, so paying people more is not necessarily inflationary if the money comes from money already in circulation in the economy.

              • alwyn

                In economics inflation is defined as a rise in the general level of prices of goods and services in an economy.
                It is also generally agreed by economists that a long sustained period of inflation is caused by the money supply growing faster than the rate of economic growth.
                It is not sensible to say, as you do, that “Inflation isn’t an increase in prices of goods and services”.
                Your premise on paying people more without it being inflationary is simply confused. If you pay people more without productivity rising it will be inflationary and I doubt you could find any economist who would disagree.

                • Macro

                  “It is also generally agreed by economists that a long sustained period of inflation is caused by the money supply growing faster than the rate of economic growth.
                  It is not sensible to say, as you do, that “Inflation isn’t an increase in prices of goods and services”.”

                  Economists – particularly of the neo-liberal persuasion – by and large live in la-la land, so what they say generally amounts to nothing more than a tin of fish (the price of which they would have great difficulty predicting from one day to the next).

                • Tracey

                  ” If you pay people more without productivity rising it will be inflationary and I doubt you could find any economist who would disagree.”

                  The assumption many, including Key make is that there will be no increase inproductivity with a pay rise. I have read research which suggests there will be an increase in productivity, moral and lowering of absenteeism.

                  • srylands

                    I doubt that a legislated living wage of $18+ per hour would be financed by productivity gains. If $18.40 became a legislated minimum wage, it would be the second highest miniumum wage in the world, only very slightly behind Australia’s (with a GDP per capita of about 35% less!).

                    You really think such a policy would not be inflationary?

                    • Tracey

                      well, if you doubt it srylands that’s enough for me.

                      I dont think anyone is suggesting it will only be financed by productivity gains, I know I am not. For example sometimes a government does something which it recognises is the right thing to do, is best for the society it governs. Like borrowing some money to give a tax break to some folks during a recession even though it knows that will not stimulate the economy. It just believes it’s the right thing to do. No extra productivity, no extra stimulus to the economy adding a bit to borrowing…

                      You’re up early this melbourne morning and straight on here.

                    • srylands

                      “You’re up early this melbourne morning and straight on here.”

                      What on earth makes you think I am in Melbourne this week? I am looking out on Molesworth Street, with the Beehive sparkling in its temporary blue shroud.

                      (BTW you have I assume been on those shiny things called airplanes? The ones that transport business and leisure travellers between the east coast of Australia and Wellington and Auckland?)

                      Given your ignorance of New Zealand’s wage inflaion history, have you ever actually been to New Zealand? You sound like a UK sociology student to me.

                    • KJT

                      Labour raised the minimum wage every year for 9 years, Srylands. Where was the inflation.

                      What there was, even treasury had to admit is caused by housing price pressures and increased prices due to profit taking.

                      In comparable parts of the USA, the areas which INCREASED the minimum wage had higher productivity and DECREASED inflation. Partly becuase firms invested in plant instead of competing to see who could pay the least.

                      Not to mention Germany which has 3 time the wage rates of NZ. And low inflation.

                    • James

                      It goes to show that paying workers less is an idiot construct out of the idea that profit margins are the most important part of a business’ success. When in reality, overall profit can be higher from the productivity gains of paying employees what they are worth.

                • Foreign Waka

                  Please accept that economics is based on THEORY and when set in practice, it often takes a few months if not years to show the result. The ordinary people will be the ones in the “test tube” who have to make a living and survive. Economics is not a science, despite so many trying to make it one just to confuse everybody even more. One wonders how the Phoneticians traded all across the Mediterranean without all these theories.

                • Mike S

                  Alwyn, productivity has ridden steadily for the last 30 years. Wages, particularly for those on lower incomes, haven’t risen to match the productivity increases. This means that business owners and executives have kept all of the profits from productivity gains instead of sharing them with the workers who produced the profits. Paying people more and taking less profit is not inflationary. Although, with more in workers pockets, prices would eventually rise as more demand = higher prices

        • Matthew 6.2.1.5

          Paying the cleaners more will have very little impact on the health budget & wont touch inflation. We are talking about the lowest paid workers in the place… no-one argues about inflationary pressure when doctors get a payrise do they? and a 2% rise for doctors probably costs more than a 10% rise for cleaners.
          The vast majority of government workers make over the ‘living wage’ anyway, so bringing all other govt employees or contractors up to that level would make barely a ripple overall. For NACT to whinge about the costs & pressure on the economy is laughable, considering they like to give millions at a time to corporate beneficiaries.

          • Lanthanide 6.2.1.5.1

            “and a 2% rise for doctors probably costs more than a 10% rise for cleaners.”

            We’re talking about a 33.8% rise for cleaners.

            • Colonial Viper 6.2.1.5.1.1

              We’re talking about persistent long term trends where the top 10% of earners have got consistently higher pay packet increases than the bottom 10% of earners.

              And now doing something about it.

              What’s the fucking problem, mate?

              • Lanthanide

                You seem to be arguing that it isn’t inflationary, for reasons that don’t make any sense to me. I’m trying to understand your reasoning and so far can’t.

                • KJT

                  Of course the 17% rise for the highest paid last year was not inflationary.

                  Or the 12% rise in costs of basic necessities.

                  • Lanthanide

                    “Of course the 17% rise for the highest paid last year was not inflationary.”

                    Which is actually something I’ve thought about before. Because that money is invested/saved, rather than spent like money that ends up in the hands of the bottom 50% tends to be, it really is less inflationary.

                    • KJT

                      It also tends to end up offshore, permanently lost to New Zealand.

                      Increasing the money supply is not automatically inflationary. Especially if it mops up spare capacity.

                      Like the USA where inflation has stubbornly refused to occur despite trillions in “printed money”. And NZ in the 30’s.

                      Those of us who grew up with 28% mortage rates in the 80’s, have a horror of inflation, which makes us forget that some inflation is essential and even beneficial.

                      Especially in offsetting the theft from the economy by the wealthy, net savers, from workers, net borrowers.

                    • Colonial Viper

                      Lanth is just promulgating economic theories designed to suppress the pay of the bottom 50% of workers, while giving a big thumbs up to the pay received by the top 10% and especially the top 1% to 2%.

                      It’s just fucking sick and nothing more than an intellectual figleaf for the rich getting richer.

                    • Lanthanide

                      @ CV: No, I don’t say that giving pay increases to the top 10% is good at the expense of the bottom 50%. I’m merely saying that I’d thought about it in the past.

                      People like to go on about the rich fat cats who don’t spend any of their money and it’d be much better if it were in the average workers pockets. But that’s a shallow argument: it doesn’t ask “what happens next”. What happens next is, likely, more inflation in the economy. Sure, the average worker will be better off, but probably not as much better off as the nominal pay increase would tend to suggest.

            • Matthew 6.2.1.5.1.2

              Still a drop in the bucket. & if a 33% rise for cleaners is inflationary, how come a $2 billion PA tax cut isnt inflationary?
              Inflation is being used as a scapegoat to stop people earning a decent living.

              • Colonial Viper

                Yep, its orthodox economists pushing theories which will benefit their paymasters – i.e. the banks and other large financial institutions.

        • Bunji 6.2.1.6

          2 Things:

          1. Robertson said they’d have to cost the applying to all contractors and phase it in over time (so not one big dollop of wage inflation)
          2. Living Wage costs often aren’t as much an increase as initial impressions suggest – the significant drop in staff turnover in particular leads to improved efficiency.

          • Lanthanide 6.2.1.6.1

            “2. Living Wage costs often aren’t as much an increase as initial impressions suggest – the significant drop in staff turnover in particular leads to improved efficiency.”

            I think that would depend on the industry. In a very competitive industry such as the cleaning services industry is, I don’t think there’s much scope for moving between jobs for pay rises.

            • Bunji 6.2.1.6.1.1

              People change jobs for reasons other than pay rises…
              If your wages aren’t enough to live on, it may be which job can fit in around child care / your other job, it may be that you need to shift house as the rent’s gone up, etc.

              If you’re paid enough you’ll have a less precarious existence – you won’t need that 2nd job, you’ll be able to focus on this one, you will be able to keep renting where you are etc.

              People also move between industries – eg they rapidly discover that this cleaning lark is shite, and search for a job that suits them better (even if it pays no more).

              • Lanthanide

                Right, but if you are balancing a job and child care, the fact that the job now pays more than it used to probably isn’t going to be a factor in making you decide to stay on in that job as opposed to getting some other one?

                I mean, doing a job that is paid $13.75 being incompatible with your childcare arrangements suddenly isn’t solved by being paid $18.40 at the same job.

                “People also move between industries – eg they rapidly discover that this cleaning lark is shite, and search for a job that suits them better (even if it pays no more).”

                If they didn’t like cleaning for $13.75 an instead did another job that also paid $13.75, they’re unlikely to like cleaning at $18.40 when they could likewise get another job that paid $18.40.

                So yes, I can see some circumstances where increasing the minimum wage could reduce staff turnover, but since we’re talking about the *minimum* rising, not all arguments make sense.

        • mac1 6.2.1.7

          I’m a cleaner right now, on a casual basis after a career as a teacher. I clean schools, offices, houses, do builders’ cleans, cleans for new tenants and landlords. The standard is high, very high. The owners of the buildings can be very fussy, very picky so we have to do it well.
          One school has a board upon which teachers and caretaking staff can note work not up to standard. The Air Force have a ‘white glove’ inspection procedure. Landlords and their agents know where dirt accumulates. They generally want more than the specs agreed with my boss who does the pricing.
          Another of my bosses, a man of my age, told me that eight hours work as a cleaner is enough for a day. He is right.

          It is tiring work. It is necessary work. It is repetitive, and at times physically difficult with reaching, ladders, corners, heights and the gear itself can be heavy and cumbersome.

          Try cleaning an oven for three hours, wearing gloves against the caustic cleaners used. Try steam cleaning a ceiling that is covered in fly dirt, grease and smoke. Try going into a house formerly occupied by a pipe smoker where the air itself made you retch and the stains in the wall paper kept running yellow application after application.

          Some cleaners work unkind hours as we often have to fit around business work times.

          It can also be satisfying work, as the finished product of our labours can be seen, and are often appreciated. My bosses are good to work for, and my colleagues are top rate.

          For $14.68 per hour. Transport is mostly at own expense even though there might be two or three different locations in a day. My travel over a distance say to the next town or into the country is recompensed.

          I had my classrooms cleaned by good people for forty years. I appreciate their work even more, now. Cleaners deserve better pay.

          • Lanthanide 6.2.1.7.1

            Yip, it’s a shit of a job and I’d hate to do it. Definitely worth more than you’re being paid.

            • KJT 6.2.1.7.1.1

              You can be proud of doing an essential job.

              Note: Cleaners contribute 5 times more to the economy than they are paid. Bankers cost the economy 7 times more than their pay.

              • Molly

                UK reference from 2009, but valid in light of this discussion.
                A Bit Rich: Calculating the real value to society of different professions:
                ” Hospital cleaners play a vital role in the workings of our healthcare facilities. Not only do they clean hospitals and help maintain standards of hygiene to protect against infection but they also contribute towards wider health outcomes. The importance of these cleaners is often underestimated and undervalued in the way they are paid and treated. We estimated, however, that for every £1 they are paid, over £10 in social value is generated. “

                Can pick up some good information and discussion from the New Economics Foundation site – have not been able to find a comparable Kiwi one as yet.

                • mac1

                  I’ve heard a similar figure in NZ of ten fold which meant for every hour’s wage of $14.68, a hospital cleaner gives $150 per hour social value.

                  One thing about being a cleaner is that you know where to look for dirt, and the cleaners in the hospitals are spot on, to coin a phrase. I’ve seen a few hospital rooms in recent years and studied the walls and ceilings. They were all extremely clean.

                  The thing to worry about in hospitals is the hand-washing which falls below the recommended standard, I read recently.

          • Greywarbler 6.2.1.7.2

            mac1
            I noticed how I didn’t rate as a person when I was cleaning. But the work was regarded as essential. When I didn’t empty the bins one night because the replacement bags I’d asked for weren’t supplied, there was consternation.

            I could be given a key to the office, but I didn’t rate as a person of worth.
            Complaints occur, but never praise.
            The work is often at anti-social hours. All alone, working away tidying up, cleaning up, wiping, mopping and vacuuming over seeming acres of floor, at daybreak or past evening mealtimes.

            In the days when we as a country were still interested in real people, there was an item on tv about the Samoan cleaners in Auckland. The woman getting up to catch transport for a 4 or 5 am start on the job, the husbands getting the children up and starting breakfast, then leaving for work. The women coming home perhaps in the bus, getting to the house, and getting the school children off to school. Then putting the baby or toddler down to bed, and having a sleep, and then doing the daily work, and looking after the young ones. Getting dinner on and then going to bed early ready to rise again before the sparrows.

            These are probably the people who are preyed upon by store-trucks that come right to the neighbourhood with their wares and offer time-payment and will offer to accept a guarantee of their car or house if they have managed to buy one, on the hire-purchase of a frig or washing machine. And the interest they charge is something that governments don’t want to know about. They deserve better wages and protections than now with so many traders preying on them, sucking away every bit of cash they have and tying them hand and foot for every bit they will get in the future extending to infinity.

            • Lanthanide 6.2.1.7.2.1

              The permanent cleaner at my work was given an award for recognition at our last work christmas function.

              • Colonial Viper

                Do they get paid more than $13.75/hr.

                • Lanthanide

                  I don’t know, but I’d suspect probably yes, although it probably wouldn’t be more than $16-17/hour. That’s mostly just guesses on my part though.

                  • Colonial Viper

                    $16/hr today is very close to a living wage, if it’s a 37.5 or 40.0 hr/week job…outside of Auckland. In Auckland not so much 😛

              • mac1

                When I worked as a cleaner during ‘Varsity holidays at Firestone, we cleaners got a 20% bonus to recognise the work we did to keep the factory running especially since the rest of the workers were flat out earning production bonuses making more mess for the cleaners. Good, strong union and we cleaners were part of Rubber Workers.

                That job paid most of my way through ‘Varsity.

                • Macro

                  🙂 I cleaned at Dunlops in UH and it paid my way thru Varsity too. My dad was president of the Rubber Workers Union for 20+ years. A very good family friend “Uncle” was General Manager for Firestone. We often had our Xmas Hols staying at their place whilst they went to the family bach. Talk about the Union getting in to bed with the management! 🙂
                  But those were the days when NZ was a much more egalitarian society than it is now. We are all the poorer for this dismal neo-liberal “experiment” (and that includes those who think that more possessions means more wealth, and those at the top of the tree – not necessarily one and the same).

            • mac1 6.2.1.7.2.2

              greywarbler, I know the look that you can get from some who don’t see you, the cleaner, as a person.

              Your point about folks getting preyed upon, is very true for many sectors of our society- the computer scammers; door to door merchants selling with pressure and cynical manipulation of often the elderly, the poor, the vulnerable; the expensive food stores; the legal high vendors; el cheapo liquor stores; money lenders, to name a few.

    • Lightly 6.3

      I think it does apply to contractors.

      Cunliffe says “Use the Government’s purchasing power to promote the Living Wage campaign in both the public and private sectors” – ie. they’ll only hire contractors that pay their staff the living wage.

      I’d like to see them help the cleaners set up a co-op.

  7. Rich 7

    Many organisations (Wellington City Council is one) could pay for a living wage by adopting a salary ratio policy, where the highest paid employee is limited to earning five times the lowest paid – if senior management want more money, they have to share it with the workforce. (As implemented at Mondragon – an enterprise larger than anything in NZ).

    Combine this with the rule used in that well known hotbed of socialism, the US, that no public employee can out-earn the head of government (actually parity with the VP is the cap) and you’ve funded it at zero cost.

  8. amirite 8

    The AIR NZ CEO has pocketed a hefty six-monthly bonus of $1,23 million after the company made a profit of $182 m, I wonder if his lowly employees have received any payrise at all.

    • Tracey 8.1

      you mean other than the ones laid off?

      • Colonial Viper 8.1.1

        His bonus will reflect his “success” in laying staff off. And if it didn’t, his next one will reflect it.

        This is the sociopathy of capitalism.

  9. James 9

    Universal Basic Income is a better idea:Pay EVERYONE approx $210 per week after tax. Replaces most benefits. Sounds outrageous right? But it is affordable… Adjust/flatten income tax and the UBI will still make everyone below the median income better off, as well as paying for it mostly (supplemented by CGT) and massively simplifying both the income tax system and the social welfare system.

    Mainly though, it would incentivise people to work, and allow people to work on fairly low hourly rates while still having enough money to get by each week. In a way it becomes a kind of subsitdy for employers paying low wages – but subsidising people who need it directly instead of employers.

    This is something Gareth Morgan (of all people) wrote about in his book the Big Kumara. It’s also been a policy plank for Social Credit (aka Democrats for Social Credit) for some years.

    If we want a fair go for all AND full employment we should be considering this policy seriously, and I support any candidate who does.

    • Colonial Viper 9.1

      If it was combined with a guaranteed full employment programme for everyone up to the age of 25, I’m all in.

      • James 9.1.1

        This is a common mental block for a lot of people, as KJT mentioned. There’s a common misconception that people won’t work if they don’t HAVE to. But this is a BASIC income that is barely enough to get by on. People are incentivised to work because they don’t get their income taken away when they earn like people do now with the UB – they get to keep money they earn regardless.

        I picked $210 because that was approx pension level at the time Morgan wrote his Big Kahuna, it might need to be more like $225 now – and indexed to inflation.

        The side benefits for this as KJT points out with Canada’s example are enormous, overall prosperity and health of the community will go up. Nobody will get left behind, everyone will get a fair go – exactly the kinds of things Cunliffe is saying, that’s why I brought it up here.

        • Colonial Viper 9.1.1.1

          NZ Super has been much higher than $210 for a very long time now I suspect…when did Big Kahuna come out? Or are you talking about the dole?

          • Foreign Waka 9.1.1.1.1

            NZ super for a single person is around $ 350.00 net per week. The living wage that is argued in this forum would get a single person (FT) around $590.00. What makes anyone think that an older person needs so much less? Or could it be that most have the notion that the “unproductive” are parasites?

    • KJT 9.2

      I’ve been a supporter of a UBI for decades.

      Needs to be set at least at current pension levels to work, however.

      I suspect we would all end up better off, including business owners who will have a much wider customer base.

      Look up Canada’s mincome experiment.
      Contrary to the ideas of the right, who cannot conceive of anyone working if they could survive while being idle, the only ones who stopped working were students, who took the opportunity to extend their work skills, and new mums. The overall increase in prosperity and health of the community was striking.

      • weka 9.2.1

        “Pay EVERYONE approx $210 per week after tax.”

        Why that rate?

        “Needs to be set at least at current pension levels to work, however.”

        Why?

        I would love to see some dedicated posts on ts about a UBI, where we can thrash out mroe detail in the comments section. The idea of a UBI is great, but I rarely see anything specific enough that tells me how it would work in NZ.

        • KJT 9.2.1.1

          To work a UBI needs to be enough to live on and also be a part of the community.

          As less than 3% of our elderly are in poverty, thanks to universal super, a UBI for the over 65’s, it’s success should be extended to our children.

          It has been stated elsewhere that super is enough to live reasonably comfortably, if you own your own house, so it is a good starting point for the level to set the UBI.

          Anyway. As requested I will try and do a post on current UBI initiatives, and pro’s and con’s.

        • Draco T Bastard 9.2.1.2

          There’s been some discussion on it in the past:

          Universal Income & the Minimum Wage

          Universal Income Revisited

          Gareth Morgan’s Big Kahuna

        • Foreign Waka 9.2.1.3

          I don’t understand that you guys argue for a living wage and then advocate for a minimum amount like the pension. You do realize that there is a $ 240.00 nett difference in favor of the living wage? And it does not work at all, 40% of older people live in poverty. Why is such a large proportion of people denied any dignity? The same is true on the other end of the scale, NZ has the lowest maternity provision in the OECD. If you want to change something you have to start with the most vulnerable. But all I see is the shifting of poles just a little bit further in, just not closer to those who needed.

          • Greywarbler 9.2.1.3.1

            Foreign Waka
            The OAP has been enough to prevent deep poverty. Why is having to watch your pennies not living in dignity? The days of expecting to live in self-centred comfort are gone IMO. With larger numbers expected to live to 100, with growing numbers with alzheimers and very expensive and difficult to care for, with the present expectation of being able to choose to do nothing for the community, and still get paid living expenses for the equivalent of one third of your life, well it is not viable or reasonable. Unfortunately many believe in Santa Claus for older people.

            I think that pensions should enable people to live comfortably but there still may be relative poverty. There could be an incentive of extra for volunteer work of some sort to alleviate that. Where I work we couldn’t get one lady to leave, while she could stagger to the shop and lean on the counter she came to do her bit. She was last working a fortnight ago, and has just died at over 90. An extreme case, but far more should be expected from the old, they have refused to think out their situation, while at the same time wanting medical attention enabling a longer life. While young people often have shitty lives.

            • Foreign Waka 9.2.1.3.1.1

              Many of the cases in poverty are women, many are also looking after grand kids as well. And there are plenty of people who worked in very physical jobs and end up with many ailments and of cause health costs. Alzheimer’s or any disease is not a choice and a portion of those who suffer take their life, often because of the stressors inflicted by financial hardship.
              Watching pennies has nothing to do with dignity when most of those UNDER the poverty line have nothing to count. $ 345.00 per week is not enough, full stop. Self centered comfort is for those in extreme need not even entering the picture- not ever!
              Your assertion that older people should get an incentive to do volunteer work sound great in theory but what is it you want them to do? Cleaning floors in schools? trimming trees? So in other words, after having all their lives contributed to the community via their taxes and many have been swindled out of their savings by so called “investments to secure the pension” now is the time to “earn” their meager 350 bucks by “giving more”? The “old” lady you mentioned in your shop will most likely not get any work today as efficiency, technology and balance sheets dictate outcome. And not everybody wants to “die with their boots on”.
              As to your statement that young people have shitty lives, this is really not true. The generation Y have more comfort then any generation before, not that anything can always be improved. Of cause this is not true for everybody as it is also not true that ALL elderly living in poverty. The ones who got the retirement savings through fraud and did a runner for example must be doing pretty well.

  10. Sable 10

    Coming from Cunliffe and co, well, frankly I’ll believe it when I see it. Lets not forget it was Labour who started the neo liberal ball rolling not the Tories, they just kept it in play.

  11. Greywarbler 11

    I’m getting on super about $800 a fortnight, and haven’t much to come and go on. How are people expected to live on $210net a week. Live in tents? On common land, in a circle with a big fire in the middle for warmth and cooking?

    When people on the low income level had made a community at a camping ground in Auckland the police closed it down. Too many criminals lived there. Don’t know whether they were petty thieves, tinny sites, car hijackers, sex fiends with 15 year old partners, or smooth liars who had pretty ways and sophisticated fraud methods who had, despite all educational advantages and access to good salaries, chosen to defraud hard workers and good taxpayers and savers of millions to hundreds of m’s. You can guess that they were not amongst the happy campers. These people had housing stability usually in caravans, and often with adjunct little gardens, and they put up with their sometimes problematic neighbours. The balance of petty from small-time criminals and strugglers and petty from police who have a linear idea of approach to society as a whole, with them excluded from the equation, I think comes down on the police side.

    Reducing income to as low as $210 and hoping that the amount would quickly rise before hardship set in seriously, and instead a fast flourishing of job opportunities with rising wages as an incentive to work, sounds like pie in the sky. I suggest that the idea is good, and would save millions of administration dollars from so-called welfare workers and fewer prison wardens. Less people should spend less time in prison but be given opportunities to redeem themselves with one month in then suspended sentences.

    But for goodness sake be realistic. Not everything with rigid targets. Not severely budgetted. Look for outcome and offer sufficient rewards for effort. And to encourage change and continuous improvement what about a low-cost holiday for families, and also for singles. A holiday would be a wonder and incentive for people who have never had it so good before.

    • weka 11.1

      “Reducing income to as low as $210 …”

      The dole is currently $206/wk (net) for over 25s.

      http://www.workandincome.govt.nz/individuals/brochures/benefit-rates-april-2013.html

      The point about the UBI is that people that have jobs (of any kind) get the UBI and then the rest of their income comes from their employer. For people already employed, I assume this means their income remains the same. For people one benefits, it’s better because they can earn on top of the UBI in ways that they can’t on the dole (presumably. Again, it would be good to see some detail on how this works).

  12. Ennui 12

    Years back I was driving home into a beautiful red sunset when the news came on the radio…Ruth Richbitch and the “Mother of All Budgets”. I was earning a packet, and all of a sudden I heard I was to have a lot more cash as my tax was to be slashed. I got a sinking feeling, stopped and reflected on being out of work a few years before. That had been barely livable, yet here was Ruth announcing pain for the bottom, gain for the top. I did not need the extra $s…who really does when they have more than enough?

    Being on the bones of my arse was seminal for me in terms of making cash and working for myself. Which is fine if you have all the advantages and support you need to go forward. Most people don’t, and even then luck plays a big part. What Ruth was doing was to strip away any ability for people to pull themselves up, she was punishing them as well. The cartoon images of her as a big bad witch in bondage gear, sporting a vicious whip are appropriate. Fast forward, Key, Bennett, Collins..the same image resonates.

    It is time that the rich were reminded that wealth and fortune comes with an obligation. It used to be called “noblesse oblige”. It is a reminder that no one is an island, their fortunes are interconnected to the rest of society, that which has fed you needs to be nurtured in turn. Key and his cronies have a psychological disconnect to this, bordering on psychopathy. Like the French aristocracy who forgot this principle our wealthy are in urgent need of a metaphorical guillotine reminder moment. Tax is a good methodology to deliver this.

  13. Bob 13

    Why isn’t anyone championing a Maximum wage which is then linked to Maximum profit?
    Lets say the Maximum wage is set at 25x, and the Maximum profit is set at 100x the Maximum wage. So a company that wants to pay their CEO $1,000,000 (as we keep hearing, you need to pay well to get the best) would need to pay their lowest paid worker $40,000. This company would then be capped at a $100M profit. If they earn’t a higher profit than this, they would then need to pay a bonus to their lowest paid workers, to increase the bonus to their CEO to increase the dividend to shareholders. This way it is in everyones best interests to look after their staff as the shareholders profits are directly linked to the wage of the lowest paid worker.

    Is this too simplistic?

    • Lanthanide 13.1

      It sounds like a nice idea, but I’m not sure it would work in practice.

      Effectively you’re saying, where a company would previously pay out X for dividends to share holders, it will now pay out X-Y.

      If I was looking to invest in your company that pays X-Y% return, vs a company that pays X% return, why would I invest in your company?

      Companies generally require outside investment to prosper, so if your company is going to give less returns for the investment, in turn you can expect to receive less investment. Chicken and egg situation.

      Since it’s a global market place, I can choose to invest in Australia companies instead if all NZ companies are hamstrung by this regulation.

      If NZ was a closed market where people didn’t have any choice but to invest in NZ companies, then it could work.

      • McFlock 13.1.1

        but immediate % is not the only factor in an investment decision – there’s risk and likely lifetime, too.

        So the hot money goes to Aus, the colder money comes to a much more steady and stable NZ. Investment-wise, we then specialise in long term solid investments in a sustainable economy with good fundamentals, rather than looking for boom/bust speculators.

        • KJT 13.1.1.1

          Companies, and shareholders, were once happy with steady 4 to 10% profits.

          Unfortunately you can now get much more by financial gambling in the USA, for one, with returns guaranteed by tax payer bailouts.

          Getting investment in entrepreneurial firms in NZ is difficult to impossible anyway.

          Maybe we need to get away from shareholder capitalism altogether.
          Fonterra (Before it was financialised), building societies and Mondragon are good examples.

          • Bob 13.1.1.1.1

            KJT, the current system is obvously flawed, but I can’t see the global market moving away from it any time soon, and without the global market NZ would fall over in a real hurry.
            The only option at this point is to find ways to make the current system work better for everyone and the way I see it, this would at least be a start.

            • KJT 13.1.1.1.1.1

              Actually I can see the real “smart” money moving to a country that has a more sustainable and stable system, whether the rest of the world follows it or not.

              The financial sector was in a real rush to get their greedy paws on the success of Fonterra, a co-operative, for example. Unfortunately the Western share holder model rewards short term, cost cutting and differed maintenance/capital investment over prudent long term management and capability building.

              Realistic “smart” investors must realise the capability of countries to continually reward financial gambling, with bailouts, must be limited.

              • Bob

                Exactly, and this is what an maximum wage and maximum profit system would encourage, a sustainable and stable system. This would in part remove short term profit by walking over employees. It would mean that companies would have to re-focus on building a good balanced company that looks after their employees rather than simply an out-and-out money making tool.

        • Lanthanide 13.1.1.2

          Good point, again.

        • Colonial Viper 13.1.1.3

          That’s a solid concept, McFlock.

    • alwyn 13.2

      A system that specifies a maximum wage ratio between the highest and lowest paid worker might be possible, although I think it would be fairly easily gamed.
      You could simply split up the business into a number of companies where one employs another to do the low-paid work. A company wanting to pay its CEO $1,000,000/year, but also wanting to employ cleaners at $25,000/year would be able to set up a new, cleaning, business and pay that business to do the cleaning for them. You would simply get vast holding company structures to segment the various income levels.
      The limitation on a maximum profit for a business is also very problematical. There are some businesses that need to be very large. Electronic chip manufacturing is one of them. I remember reading a couple of years ago about Intel building ONE new plant that was going to cost more than $US 5 billion. I don’t think that they would be happy with getting $100 million per year profit from that, even if you could set Intel up in such a way that there was a separate business for each of its plants.
      Another example would be, I imagine, wide-body aircraft manufacture. That is why there are only two companies in the world, Boeing and Airbus, that manufacture the very large two-aisle passenger jets.

      • Draco T Bastard 13.2.1

        You would simply get vast holding company structures to segment the various income levels.

        We already get that. It’s why tax havens exist.

        • alwyn 13.2.1.1

          Of course. You are quite right.
          I was only considering the details of the proposal that was being put but what you say is the general situation, at least for multinationals..
          I was looking at the trees instead of just offering the whole forest.
          I don’t think it invalidates my opinion but yours certainly saves a lot of typing.

          • Draco T Bastard 13.2.1.1.1

            I was only considering the details of the proposal that was being put but what you say is the general situation, at least for multinationals..

            You were putting forward an argument as to why the proposed system wouldn’t work. The problem with the argument you put forward is that it’s already common practice. The solution to that practice is to legislate against it and thus making it no longer applicable.

            I don’t think it invalidates my opinion

            Your opinion, as per normal, is worthless.

            • alwyn 13.2.1.1.1.1

              Wonderful. Legislate against it the man (person) says.
              Well what is the legislation you are proposing going to say and how will it work?
              Nobody that I am aware of has managed to come up with an approach that would stop a holding company structure circumvent a maximum salary for anyone in the way I propose except setting a purely arbitrary maximum figure on a salary and expenses. Even that doesn’t stop multi-national company arrangements.

              • felix

                Simple. The legislation would say “No company shall be established for the purpose of circumventing the maximum salary requirements”.

                And your next question is “but who determines whether it was established for that purpose or not?” to which the answer is “Whichever department is in charge of the legislation.”

                Or are you talking about some parallel dimension where we don’t get to decide who does business here and how they do it?

                • alwyn

                  We are to some degree already in that parallel dimension I would imagine. There are an awful lot of treaties to which we suscribe that limit us in that regard.
                  There would also, I hope, be a great deal of resistance to the idea that a government department can make a ruling and that it cannot be challenged in Court. Even the Green Party seem to be opposed to that happening. On the other hand they may, like all politicians, come down on the side of unchallengability (I wonder if that is a word) if it is their views that aren’t to be reviewable by the courts.

                  • felix

                    1. Parliament, as representative of the people, is sovereign in NZ. We may legislate for anything at all, without limitation, regardless of arrangements made by previous representatives. Furthermore if any treaty limits our ability to determine who does what business within our borders, then it should be broken immediately.

                    2. Who said anything about govt departments not being challenged? I simply propose that if the relevant department has reason to suspect that a company is structured deliberately to avoid the requirements of the law, then that company should prove otherwise. And if they can’t come up with a compelling reason that their company needs to have an unorthodox structure, they can restructure it to meet our standards or fuck off.

      • alwyn 13.3.1

        I do think my argument, just above, would make this very hard, rather than easy to do, don’t you think?
        What are going to be the limits of the company concerned?

        • McFlock 13.3.1.1

          Let’s say that the corporate family has three tiers. Assuming the CEO of the bottom tier has the same income as the lowest income in the middle tier, and similar for the middle CEO to the top tier, that’s 12*12*12.

          Let’s also assume the corporate family only runs cleaning companies.
          Bottom tier pays 30% tax on the income it makes. Middle tier pays 30% on the remaining 70%. Top tier pays 30% on the remaining 49%. Of course, this is assuming sensible tax practises, and I’m no accountant or tax lawyer. Even if the CEO is the major shareholder, they’d be better off taking dividends.

          So there’s a natural limit on what extent the company owners are prepared to go to simpy to feather the CEO’s paycheque, even if they’re one and the same person.

          • alwyn 13.3.1.1.1

            You are not, as you say, an accountant or a tax lawyer. That is NOT the way the tax system works and the tax payments do not esculate as you suggest.

            • McFlock 13.3.1.1.1.1

              lol fair enough.

              I figured that profit-taking by the holding company would be taxed. And the holding company’s profits taxed also.

              • alwyn

                Actually, although my answer is true that wasn’t the situation I was talking about with my proposal.
                The subsidiary company, which I suggested would employ the cleaners, doesn’t do cleaning to make a profit. It in fact would only do the cleaning for the parent company and be paid at cost.
                The reason it would be set up is just to be able to argue that the parent company doesn’t employ any low-paid staff but only high income people. Thus the CEO of the parent companys salary would only have to be compared to the other high salaries in that company and not to the people in the separate, at least in law, business that did the cleaning.
                Incidentally, if you want to see just how complicated corporate structures and subsidiary companies can get have a look at Fletcher Building. They have no fewer than 268 subsidiary companies. I kid you not.

                • McFlock

                  ah, gotcha.

                  Although I think there might be a way around that – there’re a couple of private members’ bills in the ballot about dealing with contractors and collective agreements (here, and here). Have a similar clause in the maximum wage legislation including wholly-owned or majority-owned subsidiaries in the calculation. Still an advantage to contract out, but not the break-even dodge to which you refer.

                  • alwyn

                    There may be very simple ways of limiting my idea. It was, after all, only put forward after a couple of minutes consideration as a way that might avoid the problems of intra-company salary comparisons.
                    On the other hand if any Government put forward proposals like these for limiting maximum salaries to, say, $450,000/annum I suspect there would be a number of very high-priced and very smart lawyers looking for loopholes. We might spend forever plugging them and have innumerable court cases.

                    • McFlock

                      True, the practicalities need to be considered.

                      I suspect that like taxes the obvious loopholes get plugged as they appear, and every so often the most outrageous transgressors get locked up in their holiday mansions for an inconvenient moment…

                    • alwyn

                      Tax cases tend to get very complicated, very messy and drag on for ages.
                      Some old lawyer may remember the details a bit better than me but there were a couple of cases back in the 1970s between Todd petroleum and the IRD regarding the real prices being paid for oil by Europa (then owned by the Todd family).
                      The first case covered the years 1959-1965 and the second 1966-1971 (I think).
                      In the first case the High Court ruled for the IRD, The Court of Appeal reversed it to favour Todd and the Privy Council reversed it again to favour the IRD. In the second case the High Court favoured Todd, the Court of Appeal reversed it to favour the IRD and then the Privy Council reversed it again to favour Todd.
                      Apparently the situation was subtly different between the two periods.
                      Even the best lawyers in the land couldn’t agree on things.

                    • McFlock

                      What was the one from Bleak House: Jarndyce v Jarndyce? 🙂

                    • alwyn

                      My god that brings back happy memories. Thank you for reminding me. I always mean to reread Dickens but somehow never seem to have the time.
                      The case went on for generations didn’t it and then only finished because the estate had run out of money?
                      Not quite the same with the Todd family. The last NBR rich list says they are worth $2.9 billion.

                    • McFlock

                      life doesn’t always imitate art, then. Pity.

          • Bob 13.3.1.1.2

            McFlock, this is why a maximum wage has to be linked to a maximum profit, otherwise it is too easy to rort the system by giving the CEO a dividend payment on excessive profits

  14. Paul 14

    Neil Miller on the Panel mirroring Key on the issue.
    “If you can legislate at $18.40 a hour and have no implications, why not make it $30 and hour – and show me one country in the world that has legislated for higher wages and it has been successful,” Key said.
    Miller repeated this.
    Is Miller ACT?

    • Saarbo 14.1

      Neil Miller is aligned to the Right, he is also incredibly boring.

      Bring back Bomber.

    • Colonial Viper 14.2

      ” and show me one country in the world that has legislated for higher wages and it has been successful,” Key said.”

      Well, New Zealand for one.

      • vto 14.2.1

        Exactly CV. All these nincompoops that think that income and wealth spread in New Zealand is not currently set by legislation and regulation…. what a bunch of dumbos…

        Wealth and income spread is legislated already via income taxes and their rates, GST and its rate, the lack of a capital gains tax, the lack of a land tax, the minimum wage, working for families, on it goes, on it goes…..

        Suggesting that such cannot be legislated for is the height of stupidity.

      • miravox 14.2.2

        Well, why legislate for WFF or minimum wage or any other legislation at all, Mr Key, if it’s not successful?

        Oops that’s right, he’s all for removing legislation that protects workers.

        “Well, New Zealand for one.”

        Germany for two, plus a few more.

    • Tracey 14.3

      if low wages is really good for NZ why dont we have slaves instead of employees?

      Answer

      Cos slavery is wrong.

      So is slavery with a stipend which we call the minimum wage.

      • Macro 14.3.1

        No slavery actually costs more because you have to feed and house your slaves! Much better to externalise that cost to the tax payer.

      • Macro 14.3.2

        No slavery actually costs more because you have to feed and house your slaves! Much better to externalise that cost to the tax payer.

  15. biohazard 15

    Someone prime ministerial once said in a serious tone of voice “We’d love wages to drop…” Someone really ought to quote that back when the PM is on the high horse and dismissing the patently ridiculous concept of paying people enough to live on.

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