Espiner on wages

Written By: - Date published: 7:22 am, February 15th, 2013 - 141 comments
Categories: wages - Tags:

For those of you who’ve missed it Colin Espiner is back on the NZ interwebz with a new Stuff blog, the (rather earthily titled) Bull-Dust. Colin was a bit of a pioneer of journalist blogging in New Zealand. He was, I believe, the first Gallery journalist to run a proper blog and certainly the first to get in amongst it in the comments sections. That was back in 2007 – the same year the Standard started up and about the time political blogging in NZ really started to mark its mark on politics here. It’s bloody good to see him back.

Anyway, Colin’s latest blog looks at the living wage and how to get there. He’s not that keen on the minimum wage but his five top ideas show he’s clearly in favour of the government intervening:

1. Reintroduce public works schemes. A dirty word since the 90s, but as a short-term measure to mop up unemployment, why not? Real jobs at market wages, not the dole. Christchurch is crying out for labour. Why are we importing workers from Ireland?

2. Overhaul Work and Income New Zealand. WINZ isn’t, er, working. Everyone knows it’s a dysfunctional government agency. It seems to me this organisation doesn’t help people back into the workforce it actually traps them in a cycle of dependency. Why not fund private recruitment companies who actually know the market, and get them to do it properly.

3. More apprenticeships and training: I know, National has rediscovered this just recently. But take the current number of promised apprentices and double it. No, triple it.

4. Phase out Working for Familes income top-ups. They simply allow employers to get away with paying third-world wages.

5. Lead by example: Pay all government workers and those who work in government offices a minimum of $19 an hour.

There’s not much on that list I’d disagree with apart from maybe number two – I think that the real issue with WINZ is that a large part of their recruitment is already defacto outsourced – mostly to labour hire companies that keep workers in low paid casual work while taking a massive cut of their hourly charge out rate. If it were up to me WINZ would run a labour hire arm that paid workers the full charge-out rate, offered better integration with casual work and benefits, and leveraged more of these jobs into full-time work.

The other glaring omission from Colin’s list is a wage setting system such as an award system that allowed workers from across industries to bargain with employers across industries to set minimum rates – they’ve got one of these in Aussie and we used to have one and what they do is ensure employers can’t compete primarily on wages costs (a situation that has seen wages here crash and businesses fail to invest and innovate).

That said, it’s good to see a mainstream journalist breaking with the free market consensus around labour issues that’s dominated the discourse in NZ for the last thirty years. Welcome back Colin!

141 comments on “Espiner on wages ”

  1. karol 1

    Yes, I agree with all Espiner’s points pretty much, except #2.

    I think there’s probably things that could be done to improve the private business/enterprise sector: maybe also stimulating the return of NZ own and run businesses, and supporting small businesses more while decreasingthe grip of multinational corporations..

    The public services, like WINZ, need overhaul and expanding. There’s been too many cut backs to make the likes of WINZ efficient.

    • Richard Down South 1.1

      Agreed, WINZ needs an overhaul, but not the way he suggested… atm youre pushed hard to go into some full time course.. doesnt matter what, anything, as long as it gets you off the benefit and then, hey, ‘yay unemployment goes down’

      I wonder exactly how much these training agencies get

      • Ron 1.1.1

        the thing is that it’s not WINZ that’s needs reorganising. It’s the guvmint. WINZ primary functions right now are: manage the benefit payments 2: try to reduce benefit numbers. i have been told more than once by WINZ reps that “we don’t help pople find work”. That’s not what this government wants them to do. People like Espiner don’t interact at the front line with organisations like WINZ so they haven’t experienced their processes now. There is zero assistance with finding work unless you think a video instructing clients to ensure they dress properly for interviews and get their CV up to date is assistance. The process is entirely designed to drive clients out the door so that they don’t come back. there are no job on their website. There is no assistance in finding a job.

  2. RedLogix 2

    Reintroduce public works schemes.

    Restore the capacity of the public sector to act as an industry ecosystem provider. In other words provide a core platform of skilled people and business to enable a private sector to thrive in complement to it.

    For instance; it is no coincidence that the private sector building industry in this country created generations of sound, watertight homes all through the 40’s to the 70’s … during much the same period the State was also in the midst of a huge state housing build of it’s own.

    Or we can point to a Ministry of Works, a Post Office, a Railway system who not only created much of this country’s infrastructure … but trained most of our skilled technical people. And now of course we wonder why there are chronic shortages of us.

    Overhaul Work and Income New Zealand. WINZ isn’t, er, working. Everyone knows it’s a dysfunctional government agency.

    I agree totally. But the cycle of dependency he describes is not so much a feature of WINZ, but a inherent feature of a targeted benefit system that always creates poverty traps.

    The best solution is to eliminate targeted benefits altogether, eliminate WINZ (which last I looked cost close to a billion dollars a year to run) … and run with a simple, low cost Universal Basic Income administered as a simple add-on to the existing IRD run tax system.

    More apprenticeships and training

    See my point 1. Industry training is best done in context of actual industry. I’m not discounting the role of tertiary education institutions … but the best results come from actually working in an industry (and being paid for it), dealing with real live problems AND participating in a formal training course (with qualifications) at the same time.

    In fact all adults should have access to this. Skills training is a life-long process these days.

    Phase out Working for Familes income top-ups.

    WFF was a legitimate attempt to address a real problem; that families DO face much higher costs than singles. Once upon a time employers paid married men higher rates than single men for just this reason. The advent of workplace equality, with women participating in the workforce at much higher levels broke this system down.

    WFF was a response using the existing tax system to address the resulting problem. However as with all targeted benefits it has unintended consequences.

    Within the context of a UBI however it is simple and logical to implement a Universal Child Allowance. Just like we had in the 1950's.

    Lead by example: Pay all government workers and those who work in government offices a minimum of $19 an hour.

    Absolutely. Note carefully the latter part of the sentence … this includes contractors. Cleaners especially.

    • Colonial Weka 2.1

      “But the cycle of dependency he describes is not so much a feature of WINZ, but a inherent feature of a targeted benefit system that always creates poverty traps.

      The best solution is to eliminate targeted benefits altogether, eliminate WINZ (which last I looked cost close to a billion dollars a year to run) … and run with a simple, low cost Universal Basic Income administered as a simple add-on to the existing IRD run tax system.”

      Leaving aside the fact that some beneficiaries ARE dependent and there is nothing wrong with that, how would supplementary benefits work under a UBI system, and which govt department would manage that? (no way in hell that it should be IRD).

      We used to have a Department of Social Welfare for a reason. My concern with both Espiner’s post and the responses here is that WINZ is seen solely as an employment agency. It’s not, and the attempt to morph social welfare into employment has left a nasty hybrid that can’t do any of its functions well.

      • Mary 2.1.1

        “the attempt to morph social welfare into employment has left a nasty hybrid that can’t do any of its functions well.”

        It’s worse than that. The idea that getting people into work generally means getting people off benefits has confused the people working within W&I to believe that their role is to get people off benefits. One relatively less talked about but highly effective mechanism is a phenomenon called ‘gatekeeping’ where the receptionist at W&I has a quick look on the computer and tells the applicant they’re not entitled so the person walks away believing what they’ve been told and nobody’s the wiser. There’s no record of the exchange so government can’t be accused of making a wrong decision and there’s one less person getting a benefit. The practice is absolutely rife around the country. There are milder versions of it, too, like the “pre-benefit activities”, requirement, which is in fact in the legislation now, and allows W&I to put people applying for an unemployment benefit through a range of seminars and meetings to ensure all has been done to either help the person find a job or that the person is ready to take a job on. On the face of things there’s not too much to complain about, but the process gets abused by staff who just keep requiring more and more from people to a point where they give up so the benefit never gets paid. What happens to these people heaven knows because the statistics either do not say or are dishonestly recorded as the person having found work. Paula Bennett, of course, is then able to boast about how many people W&I have assisted into employment. The truth, though, is more like how many people she’s managed to keep out of the statistics – job or no job.

        • xtasy

          “One relatively less talked about but highly effective mechanism is a phenomenon called ‘gatekeeping’ where the receptionist at W&I has a quick look on the computer and tells the applicant they’re not entitled so the person walks away believing what they’ve been told and nobody’s the wiser.”

          Yes, this is really evil stuff that goes on at WINZ offices, and also via the call centres serving the 0800 number call lines, where people get fobbed off, so they do not even get proper advice and no chance to access support they need.

          I remember well, what I had to go through years ago, when desperately ill, close to a nervous and physical breakdown, but I was presented with all kinds of excuses, to sort my affairs out somehow on my own.

          It has got a hell of a lot worse over the time since Bennett has been minister and this government been running the show, and that explains the comparatively low UB numbers, compared to the figures from the Household Labour Force Survey.

    • McFlock 2.2

      Restore the capacity of the public sector to act as an industry ecosystem provider.

      Hell of a way to start a comment. As a some-time bureaucrat, I almost came when I read that sentence. Policy-porn all the way 🙂

      Tend to agree with the rest of your comment, too. Especially about WFF being a bodge using a temporarily satisfycing (but not ideal for the long term) tool.

      • RedLogix 2.2.1

        Hell of a way to start a comment. As a some-time bureaucrat, I almost came when I read that sentence. Policy-porn all the way

        This must make it one of my prouder moments….

  3. geoff 3

    What I don’t get is why most journos tow the corporate line when they get paid absolute shit. I suppose they know they’ll get the arse if they rock the boat?

    • RedLogix 3.1

      Actually I don’t think Espiner’s article is absolute shit. He’s identified at least three areas in which government policy can and should be reformed dramatically.

      My quibble is that his solutions are largely just tinkering with the existing system … and because the problems are inherent in the system (especially with WINZ and WFF) … this will not have the results he’s imagining.

      And at the expense of making myself an idiom nazi I’d suggest you look at:

      • felixviper 3.1.1

        I think you might have misread geoff there…

        • RedLogix

          Umm… yes. Guilty.

          On reflection though, it’s worth asking whether Espiner is toeing the corporate line here or genuinely challenging it.

          He’s clearly an educated, intelligent person. He can see clearly what’s not working … so why are his solutions so narrow, cramped and stilted?

          Is it just Beltway capture, or is it another agenda at work? Is it as simple as the ego strokes from having your bye-line pic in the paper and having the political establishment on your fast dial list?

          And as geoff rightly says … all on pretty crap pay.

          • geoff

            Sorry, I probably wasn’t being clear enough. My comment was more in response to Irish’s line:
            it’s good to see a mainstream journalist breaking with the free market consensus around labour issues that’s dominated the discourse in NZ for the last thirty years.

            I think Espiner has broken with the rightwing agenda here, but I’m amazed we don’t see more of this perspective from other journalists.

          • felixviper

            I wouldn’t say he’s toeing a corporate line. Ideas like using public works programs to check unemployment would’ve been corporate heresy only a couple of years ago.

            Apart from missing a UBI, in what way do you find his suggestions narrow and stilted?

            • RedLogix

              1. Public work schemes. I don’t know about you but this phrase screams something very unpleasant indeed to me. We’ve seen these before in this country during the 1930’s and they finished up with a very sad reputation indeed.

              If Espiner wants me to take this suggestion seriously he needs to explain what he has in mind, and why the scope of a modern ‘public work scheme’ would be so much wider and more beneficial.

              2. More apprenticeships. Again he’s skating over the fact that most businesses in this country can barely afford to do this (as mentioned by tracey below) unassisted. We just don’t have the large number of big corporates in this country who have the cash-flow and critical mass to drive this successfully.

              The core heavy-lifting of skill training is best done within a public-sector context, with the private sector embellishing it. Again Espiner misses this out.

              3. Phasing out WFF. Fine but zero mention of why it exists and what to replace it with.

              4. Overhauling WINZ. Just another reorganisation of the public sector. More disruption, damaged relationships and moral, more of what we’ve been doing for three decades in the public sector with nothing to show for it. Very thin indeed.

              5. Privatising WINZ functions. “The magic market solves all problems” mantra. Nothing new here either.

              • geoff

                That’s why these sorts of policies can’t be done in solitude. It’s the idea of a ‘new deal’. To give the government the ability to do things like sponsor apprenticeships you need to increase the tax take on wealthy individuals and companies.

              • James Thrace

                Actually, we do have the big corporates. About 5 of them own 90% of the products we consume.

                Luxottica, Uniliver, GSK. Think all those different “brands” are providing you choice?

                Not bloody likely, as they’re all owned generally by one organisation that is “diversifying” into alternative products.

                Fonterra, Fletchers, etc all have the ability to take on apprentices but won’t simply because it’s a profit losing venture for them. Only way they will take on board apprentices is via corporate welfare. Witness the circle jerk they all had when National announced they’d all get $1000 for taking on an apprentice.
                The only thing that’s really missing in that line up is a behemoth that has the electricity sector sewn up. AFAIK a lot of electricians are still very much “owner operated”

                WB Sutch had it on the money in his book “Takeover New Zealand”
                We just rolled over and voted in governments that were happy to be lap dogs to overseas interests.

                • RedLogix

                  Yes I did think about Fonterra and Fletchers. I agree they could do a lot more; especially given the degree of implicit government support they both receive.

                  But still it remains true that the vast majority of people in this country are employed by rather small companies employing 10 people or less.

                  WB Sutch eh … that dates you 🙂

            • Mary

              Perhaps getting sucked in to the benefit dependency bullshit?

              “It seems to me this organisation doesn’t help people back into the workforce it actually traps them in a cycle of dependency.”

              It’s not the benefit administering arm of government or receipt of a benefit itself that puts people in the situation where a benefit is needed. We can guess from the context and the solutions he offers what he might be trying to say, but he’s talking about how the organisation itself creates so-called “dependency”. It doesn’t, other things do, and if you want to call needing a benefit to enable you to put a meal on the table “dependency” then absolutely everyone is “dependent” in one way or another.

  4. tracey 4

    “But take the current number of promised apprentices and double it. No, triple it. ” Except that the apprentices have to be taken in by businesses, which are on average 3-4 people businesses. They cannot afford to take on new people. Secondly, we will NOT address the immediate shortage (we would have if in 2008 they had continued with and beefed up apprenticeship schemes) and in ten years time many of the people you are suggesting flood the trades now will be unemployed. By doing a trade in conjunction with a tertiary institution means that the worker is being trained by others while their employer and fellow employees move on with work. It takes a lot of time and effort to train people n the job and small businesses struggle to spare the time to do it properly, or the loss of productivity of the person training. The mix of tertiary with industry works. I have some experience of this at Unitec.

    The failure in this regard was that there were NEON signs warning of skill shortages int he trades. In late 2010 during the debates on the weathertight homes resolution service (financial package) amendment bill several opposition MPs again warned the government of the dire shortage of trades. They ignored it until, presumably, their daily polling showed that people were being turned off by their denial of any job shortage problems…

    Another problem is the Press gallery dont move in the same circles as the rest of us. Like MPs they move in the rarified air of parliament and politicians (and their PR doctors). Poverty and job cuts and shortages are words on paper.

  5. Wayne 5

    A big mistake to abolish WFF. As RedLogix said it covers the additional costs for families. For large families the WFF payments will quickly exceed $10 per hour. You can’t adjust wages to that extent.

    That is why every developed country has a special tax credit system for families with children, which is what WFF is. New Zealand has had a schemes for at least 50 years.

    • Jackal 5.1

      If you had any idea of the profits some private businesses make out of New Zealand by paying peanuts, you would realise that wages can be adjusted to that extent and more. However there would be a huge increase in poverty if WFF was simply abolished without first rectifying low wages, so we need living wages and the flow on effect of increased economic activity first before a reduction in subsidies.

      I also disagree with how Colin Espiner envisions that WINZ should be overhauled. Paying private businesses to undertake work that WINZ staff could easily be doing is simply a form of privatization. The way to ensure people aren’t trapped in the poverty cycle is to increase work opportunities and remove any penalties for beneficiaries who are proactive… That would include paying the costs of people who are looking for employment or wanting to train.

      I’m also not sure about reintroducing public work schemes as such… Just look at what happened with Cave Creek to see how badly such things can go wrong. Without proper training and funding, public work schemes cannot replace the skilled and cheap workforce that is currently being imported from overseas.

      So again training and more apprenticeships of the unemployed is required to give them proper career paths… The government subsidizing people to do menial work at minimum wage is not the answer to our high unemployment rate, especially when such schemes will simply take work off other New Zealanders. It’s unlikely that the people in public work schemes will be competing for the skilled jobs filled by foreign workers, and it would simply be another tool used by the right wing to drive down wages.

  6. Skinny 6

    I agree Irish Bill… bring back awards, look at the flag bearing metal award, very very successful platform. 

    Also we need to stop the likes of monopolistic outfits like Fletchers in building, that are controlling ( driving down) builders wages in this Country. Little wonder chippies are heading to OZ in droves.  

    • RedLogix 6.1

      My impression is that Fletchers are more or less a government department already. I’d like to know more about the connections going on between government agencies like CERA and Fletchers which I suspect run deeper than publicly acknowledged.

      The problem is not so much that Fletchers is a monopoly, but that being a private-sector monopoly they are immune to political accountability.

        • RedLogix

          Thanks … I hadn’t caught up on that.

          And the rest of that shareholding list is interesting too. Not a lot of ‘mums and dads’ anywhere I can see.

          • James Thrace

            Mum and Dad shareholders? About as real as Nibiru (Planet X).

            A fallacy, a myth. Some type of construct in order to make the impending sell off more palatable to the soma’d masses.

            edit: The shareholding list is a plain example of why foreign control is lessening the local populations control over their business structures and subsequent policy and procedure dictates that come down.

            Witness Fonterras latest heavy handed demands to their suppliers that irregardless of whether their suppliers set out terms of trade in payment of invoices i.e.: 15th of the month, Fonterra has dictated that payment will only be made 90 days after receipt of any such invoices.

            Has a downstream effect on smaller suppliers that’s for sure.

            • bad12

              Can you point out in the historic record pre 1996 anywhere where the NZ Government held 50+% of the shares in Fletcher Building???,

              Befor they were registered with the share register in the name of New Zealand Central Securities Depository Limited that 50+% of shares would have had to have been registered in the name of the Government or Government Department/SOE,

              Or, those 50+% of Fletcher Building shares would have had to have appeared in the share register in the name of some other nominee or depository type company…

              • James Thrace

                What’s the relevance of 1996?

                You could probably get the historical information from Companies Office under OIA

                • bad12

                  Why would i bother, where is your proof that the NZ Government owns the shares held in a private company owned by the Reserve Bank of New Zealand…

                  • James Thrace


                    Your understanding of Government Owned Enterprises is lacking.

                    The Reserve Bank of NZ is owned by Government

                    It is not a private entity

                    Companies owned by the Reserve Bank of NZ, are essentially owned by the NZ Government

                    Ergo NZ Central Securities Depository is owned by NZ Government through ownership of the Reserve Bank.

                    It’s not like the 1BN return the Reserve Bank gets through NZCSD is private slush fund money.

                    Is that clear, or do you, like other right wingers of your ilk, need to take another lesson in government ownership and how it affects the country?

                    • bad12

                      Wow, so i am a right winger, as you have obviously ascertained this little gem of information through the contortion of peering up inside your own rectal cavity perhaps you can bend over backward so to speak and tell us all who i vote for,

                      OK, my above question may have been a little hard to understand, or, you may be deliberately fudging the issue to avoid answering the actual question,

                      I fully understand who owns the NZ Central Securities Depository Limited, the comment i posted at 9,07pm on the 15th fully outlines that,

                      However, it is you that have made claim that because the NZ Central Securities Depository Limited ‘holds’ 50+% of the shares in Fletcher Building that the government ‘owns’ those 50+% of Fletcher Building shares,

                      Having asked you to prove this assertion a number of times you have begun to what i like to term ‘dance on the head of a pin’ with your answers, answering in effect questions i have not asked you, pin heads like to do that,

                      So again, where is your proof that the 50+% of Fletcher Building shares held by the nominee company NZ Central Securities Depository Limited is actually ‘owned’ be the New Zealand Government….

        • bad12

          Lolz, the New Zealand Central Securities Depository Limited is just that, a limited liability company that is owned by the Reserve Bank of New Zealand,

          It holds shares in companies such as Fletcher Building on behalf of ‘others’ acting as trustee and nominee, as the trustee and nominee for the ‘owners’ of these shares NZ Securities Depository Ltd holds a hard or soft copy recording of the names of the actual shareholders in Fletcher Building Ltd, while it is NZ Securities Depository Ltd name which appears on the companies register as the shareholders,

          A blind trust in other words, wonder if Slippery has any shares stashed there, lolz, the 50 odd % held by NZ Securities are not necessarily ‘owned’ by the NZ Government and why they would hide them in a blind trust is beyond me unless you wish to insinuate that these shares are
          to become the subject of some organized theft in the future,

          This limited liability company made a profit for the New Zealand Reserve Bank of just over a billion dollars last year,

          ACC and the NZ Super Fund between them ‘own’ 2-4% of Fletcher Building shares…

        • millsy

          Its not actually owned by the NZ government. Its a complicated system, but it just means that the shares are held on behalf of other shareholders. No big conspiracy here.

  7. Draco T Bastard 7

    2. Overhaul Work and Income New Zealand.…

    I’d agree that WINZ needs over-hauling. ATM, it’s more of a punishment system than a welfare system. They’re tasked with getting people off the UB whether it’s good for them or not. That said I don’t think that throwing it at the private sector is going to do any good – just look at the damage and extra costs that resulted from dumping Telecom to the private sector.

    The changes I’d make are:
    1.) A Universal Income: This removes the dependency that accumulated wealth and the wage system creates
    2.) Open and free learning: Make it easier for people to retrain. This not only improves the education of the populace but also allows for quicker phasing out of obsolete jobs
    3.) Have WINZ keep an eye on the demand for skills so as to produce a guide into needed skills

    Open Learning
    University and politechs to become fully government owned and funded and free to enter.

    New community learning centres, based around a technical library, where people can get together with other like minded people to study and research. These centres would also have workshops that can be used by the people learning. These centres are for the people who do better in casual learning environments than in the formal structured environments that is normal in universities and polytechs.

  8. DH 8

    This is stupid. Have an across the board wage increase to $18.40 an hour and your ‘living wage’ would quickly turn into $23 an hour or more.

    I thought Labour at least would have learnt the lesson of WFF; that giving people more money won’t solve problems which originate elsewhere. People are struggling because domestic inflation has been running higher than the CPI and those on low incomes spend more of their wages on domestic goods & services than the CPI shopping basket.

    Things like rent, power, phone, transport & food staples are mostly of domestic origin and they’ve been going up in price the most. Wages are also domestic so try adding 2+2

    Substantial wage increases will lead to even higher domestic inflation & put people further into the poor zone. It needs a two-pronged attack; higher wages AND a halt in inflation of the goods & services that low income earners spend the most on. Rent is the best place to start there, if the average person was paying 30-40% less in rent most wouldn’t even need a wage increase.

    • Draco T Bastard 8.1

      And in all that you fail to see the problem.

      • Colonial Viper 8.1.1

        Indeed, it’s not realistic to characterise power phone internet transport (fuel) bank charges etc as being domestic inflation. As for house price increases…that’s been fuelled by foreign sourced credit.

        It seems that NZ exposing itself to the vagaries and privateers of the turbulent world markets like a virgin who believes in maintaining the honour of a “level playing field” isn’t really going to work out that good for the virgin.

        Hmmmm bad mixed metaphor.

        • DH

          In the CPI you’ll find a reference to tradeables and non-tradeables, showing inflation in each. Tradeables are goods & services in the CPI basket subject to foreign competition, non-tradeables are domestic sourced only.

          Rent, power, phone, NZ produced food staples like bread & milk, (most) fresh produce etc, public services like rates, Govt services etc, are non-tradeables. A large portion of transport is also non-tradeable, costs are kept down there by the tradeable portion of it.

          A little research can go a long way.

          • Colonial Viper

            I prefer a more complete understanding how why the working poor are so poor.

            Where in the CPI does it show foreign banks taking an excess $2.5B pa out of our economy (out of the pockets of NZers)?

            Where in the CPI does it show other foreign corporates (telcos, power companies, internet, fuel) taking another excess $2.5B pa out of our economy (out of the pockets of NZers)?

    • RedLogix 8.2


      You might want to contemplate how you’ve gotten all anxious about wage-price inflation, but are quite mute on the far larger question of asset-price inflation (primarily in housing).

      • DH 8.2.1

        I’m not mute on it, I just don’t bother stating the obvious. Rents are tied to housing (asset) inflation and I said I thought rents are the first place to start on halting domestic inflation for low income earners.

        I mean, seriously, has anyone actually applied some depth to the thinking on this? WFF was supposed to solve this and look what happened. We’re back to where we started, low income families are no better off now than before WFF and now we’ve got a $2-3billion WFF bill to pay each year. Surely that should turn a light bulb on in a few heads.

        • RedLogix

          Rents are tied to housing (asset) inflation

          errrmm …no. Why all the fuss over the affordability of housing do you think? And why are rental returns in the 3-5% range instead of 8-10% as they historically were?

          Asset price inflation is driven by bank credit. Why say nothing about this, when it is the main hurdle faced by young families?

          WFF actually serves it’s purpose quite well thank you. Think of it as a tax credit for families. And it’s enabled employers to avoid the immense difficulties involved in trying to pay employees with families more than those without, in the era of workplace equality.

          The real problem with WFF is that it is a targeted credit. This means that there will always be high marginal tax rates for those who transition on and off it. It’s absolutely inherent …. and this affects not just a few people, but very large numbers of very ordinary working and middle class families.

          • DH

            Surely you must know that the return on an investment property is related to bank deposit rates. Investors get their return from a mix of capital gain and rent but there’s nothing unusual in the way the market values an investment property whether it be residential or commercial.

            Any economist will confirm that rents lag when there’s a house price boom, because capital gain makes up more of the the return, but when prices stop rising, or just slow down, rents go up to replace the lost capital gain as the return on investment.

            Why else do you think rents went up after the property market slowed post GFC?

            Sure housing inflation was down to too much growth in the money supply, but if you can stop rents going up you’ll stop people buying investment properties for capital gain…. which would result in less bank credit being extended.

            • RedLogix

              Sure housing inflation was down to too much growth in the money supply

              Which was my point. Ever wondered why all these ‘economists’ (especially ones employed by banks) get all anxious over the mere possibility that wages might drive up prices …. while they say nothing when excessive credit does the same thing to asset prices?

              Otherwise I agree with you. Except most long-term investors (as distinct from short-term speculators) capital gain is irrelevant. They are holding the property purely for cash-flow. Paper value is worthless if you never intend to sell.

              Besides property investors are only a portion of the market who buy on the numbers and tend to be hard-nosed about it. Home-owners are the ones who will push up a price because they’ve ‘fallen in love’ with the place. Behaviour counts.

              • DH

                Yes I do wonder because I can figure out the same as what you have. It’s not that difficult.

                The CPI gives them an excuse because it doesn’t cover asset inflation. But that’s all it is – an excuse. They still know it’s happening and any economist can work out the effect it has on people’s cost of living. The tacit collective denial is something I find a bit suspicious.

                It’s an often quoted fib that investors hold for cash flow. Without tax incentives they’d get more cashflow from term deposits, only commercial gives a positive cashflow there. Investors are in residential strictly for capital gain and it’s mostly because investors pay no tax on capital gains.

                (A $500k 12month term deposit pays 4.2%. That’s $403 a week and you’d struggle to nett $403 from a $500k house after deducting expenses like rates & insurance etc. No way do they invest for cashflow. )

        • bad12

          Yes i have been applying some deep thinking to the very problem of accommodation costs for those who have a household income of $45,000 a year or less,

          Am busy right now but will get onto outlining a solution to that very problem later, i dare say the solution i propose which includes canning the accommodation supplement completely will be viewed with abhorrence by both the Landlord class and those with minds still firmly trapped in the FAILED economics of the previous century…

        • millsy

          WFF could quite easily be scrapped and the money saved put into state housing, achiveing the same outcome.

          • bad12

            Not by any Government that wants to be a Government come the election following such a scrapping,

            Do you advocate the scrapping and building and stuff in that order, now that could have things getting messy, messy but fun…

    • geoff 8.3


      Things like rent, power, phone, transport & food staples are mostly of domestic origin.

      Hasn’t rent gone up because of the housing bubble? ie people are paying more for their mortgages so
      they charge more for rent?
      I think most of the other examples you raise have had inflation because of the market power of the providers of those goods/services.

      Electricity – oligarchy
      Transport – gloabal increase in petrol price
      Food – duopoly (see campebl live)
      Phone – An industry still suffering from the effects of the telecom monopoly (And actually Im confident this has actually deflated, everyone knows phone, broadband and cell services have been decreasing in cost over the last ten years)

      What doe WFF have to do with it except for the monopolies/near monopolies knowing they should be able to get away with charging a bit more for their shit?

    • geoff 8.4

      Hmm, having read your comment more carefully (ie the last paragraph) I think I’ve misinterpreted you. I think we are in agreement.

  9. NoseViper (The Nose knows) 9

    The idea of a central technical library and learning area would be of value. My son was ill and made a slow recovery in his teens and had to stop most of his secondary courses. I encouraged his interests and one was to learn about computers and the languages. I could borrow books from the Polytech so he could see check out Basic and C and ?? can’t remember them all. (He likes OCaml). He read up and looked up stuff and trained himself at home and now has a taxing job which he manages well, continually updating now of course.

    But my access to that material at the right time was basic. If I hadn’t had access his progress to this present position would not have started at all.

  10. just saying 10

    Agreed CW.

    And I’m amazed at the naivety of those who imagine a UBI would eliminate the need for a comprehensive social security system. Even if it was set at the rate of the recently suggested minimum wage of $38,000 per year, for adults (and the figures I’ve heard mentioned are closer to a third of that), some people with high needs would still require more this just to get by. (I’m just focussing on adults and leaving children and increased UBIs by their number, completely out of the equation in this argument).

    The UBI assumes individuals are consistently able in body and mind, or hold significant assets, or are able to pool resources with other resourceful people, or can otherwise generate income well in excess of the set sum. The fact that many obviously aren’t and can’t means it would be necessary to top-up the UBI for significant numbers of people, particularly of those currently on benefits.

    edit: This was supposed to be in reply to a comment by Colonial Weka on this thread, but it seems to have disappeared. I obviously need coffee stat.

    [RL: Sorry that’s my fault. I accidentally clicked the ‘moderate’ button and when I tried to undo it I got a totally different comment back instead. Apologies to CW. I’ve tried looking for your comment but I can’t find it in the system. I think I need some remedial blog administration lessons from Lynn sometime.]

    • Colonial Viper 10.1

      And I’m amazed at the naivety of those who imagine a UBI would eliminate the need for a comprehensive social security system.

      I don’t think that DTB or RL or any other commentators (including myself) who have given some support to the concept of a UBI believe that this is the case. Especially since a comprehensive social security system also includes free education, free healthcare, free support and advisory services for families and individuals, low cost social housing etc.

      However what a UBI would do is eliminate 75% of the complexity of the current benefits, allowances and minimum wage system. This would allow a lot more care, attention and money to be directed at those who individuals dependent on higher levels of support, instead of keeping an overly complex system managed.

      • Colonial Weka 10.1.1

        Who do you think should manage that CV? What rate should UBI be set at, and how would it be calculated for different people?

        • Colonial Viper

          I’d be quite happy to bring back the old Department of Social Welfare to manage these issues.

          The UBI would be a set rate say 50% of the $18.41 living wage, for every citizen.

          Additional assistance decided on a case by case basis by case managers who have significant freedom of action and budget – as well as accountability.

          • Colonial Weka

            So a single person would get $360/wk and a couple would get $360/wk each. Is that fair? How about people with kids?

            • RedLogix

              A realistic UBI would be about $12k pa, or about $230pw. Remember it would be paid as a “negative tax” so it would not be subject to tax. (There’s no point in paying everyone a UBI and then taxing it because everyone would be on the same flat tax rate. It would a silly exercise in double booking.)

              This is not too different to the current the current single person UB is about $200 pw. It is also does not matter how much another adult in the household earns. So for a couple it would be about $460 pw minimum. Still not a lot.

              Then you can throw in better access to state housing. Fixed secure rental contracts with proper enforceability for both parties.

              Then you have to remember that earning a hundred dollars or so (whatever the gig) is subject only to a flat 33% PAYE … not the huge marginal rate of 80 or 90% you get at present.

              With children you add a Universal Child Allowance. Maybe $3k pa. Also fund schools properly so they don’t have to charge ‘fees’. Maybe add in decent free school lunches like even the USA does. Subsidised school uniforms.

      • geoff 10.1.2

        And let’s not forget that the UBI would be just a single part of a set of complementary policies that would only shine when they worked together. The new deal idea we’ve talked about.

    • Colonial Weka 10.2

      No worries RL, and thank god for the Recover Text addon on Firefox 😉 I reposted below your original comment as I support UBI and would genuinely like to know how you see welfare fitting in with that.

    • RedLogix 10.3

      I do agree that a UBI by itself is not a whole solution. It needs some add-ons.

      For instance disability is at first-pass a primary health-care issue. In that case it makes sense to fund specific costs relevant to that disability via the primary health-care system. They are the ones who have the raw information, make the primary decisions … it makes sense to give them the funding to deal directly with the costs that arise.

      Or we could expand the scope of the Gold Card or Community Services Cards to allow people on low or no incomes access to essentials like power, transport and food at subsidised prices. While a targeted benefit … because the UBI would form the largest portion of an income the effect of targeting would be greatly reduced.

      The other merit of a UBI is that it would make earning a small income far more attractive. Earning a few hundred dollars a week in part-time, casual or small-trading income on TradeMe would make a real difference, instead of being penalised at 80-90% marginal tax rates as it is at present.

      Another interesting aspect that a UBI might encourage is the formation of local collective societies (perhaps under the auspices of voluntary sector organisations) to enable people to pool their UBI incomes in order to bulk fund housing, food and other essential costs.

      PS: Anyone else got any ideas here? The idea of a UBI is to provide a core income that is just sufficient to survive upon. It’s not meant to be a ‘liveable’ wage.

    • Draco T Bastard 10.4

      (and the figures I’ve heard mentioned are closer to a third of that)

      My suggestion has been around $20k/year. Enough not just to survive on but to actually go out and do something like create your own job. It would also be more than enough to support those that cannot work but I’d also recreate the Department of Social Welfare to help those that do need more.

      • Colonial Viper 10.4.1

        Check out Italy’s Marcora Law.

        NZ can do something similar with a UBI.

        Each citizen can get an 18 month advance on their UBI to start a business with, if they can find up to 10 other associates to join in with them and do the same thing, and if the venture which is started is collectively owned and democartically operated…i.e. it is a communal business enterprise.

        The government can provide specific business assistance to these communal enterprises to ensure a higher rate of success.

        edit – I see RL has hit on a similar theme

        Another interesting aspect that a UBI might encourage is the formation of local collective societies (perhaps under the auspices of voluntary sector organisations) to enable people to pool their UBI incomes in order to bulk fund housing, food and other essential costs.

        • RedLogix

          Or fund a business …no I hadn’t thought of that.

          Along similar lines it used to be possible to ‘capitalise’ your Child Benefit in order buy your first house. I recall my own parents found this really useful.

      • just saying 10.4.2

        For many people (myself included) a UBI at $20 k would create exciting possibilities. I think there would still be many who would require top-ups. However, because the rate you suggest is more managable for more people, than the rate of $12k that I’ve heard bandied around by others, there would be less so-affected, and topping-up would be less bureaucratically fraught because they would require less money as a proportion of how much everyone else was getting.

        Still need a fair degree of social security bureaucracy though, imo.

        • RedLogix

          The numbers have to be realistic js.

          3m adults each with a UBI of $20k is $60 billion pa. I don’t think we are ready to go there.

          The numbers that seem realistic to aim for are a flat tax rate of about 33% and a UBI of $12k. Combined with a moderate 15% CGT on all asset classes and a globally set FTT it could be made to work within the current fiscal paradigm.

          Moreover it would probably be desirable to phase the UBI in over maybe a decade in order to allow any adjustments to be made incrementally … and to allow time for people to understand and adapt to it.

          • Colonial Viper

            3m adults each with a UBI of $20k is $60 billion pa. I don’t think we are ready to go there.

            I prefer the question…what would we need to do to get there within 2 terms of government.

            NB $20K pa is approx the NZ super rate for a single person living alone.

            • RedLogix

              Last I looked Super was about $348 pw ($18k pa) for a single person.

              Super is already a form of UBI, so it would be simple to introduce some form of smooth transition from working to retirement based on age or disability.

              Maybe you could pro-rata from $12kpa to $18pa between the ages of 60 to 70?

              I’d also look at extending the effect of the Gold Card to include price caps on power, rates, health insurances and the like.

              • Colonial Viper

                Last I looked Super was about $348 pw ($18k pa) for a single person.

                I was under the impression this was the net after tax rate, but then realised you had suggested that all UBI values should not be taxed anyways.

                As another factoid, our economy generates $50,000 of GDP for every man woman and child. (>$200B GDP)

                • RedLogix

                  Yes .. the UBI is best thought of as a ‘negative tax’. Your total after-tax income is merely the sum of your income after ‘positive tax’ PAYE and your ‘negative tax’ UBI income.

              • Draco T Bastard

                Super is already a form of UBI, so it would be simple to introduce some form of smooth transition from working to retirement based on age or disability.

                Why even bother maintaining retirement?

                • RedLogix

                  Well that’s a good point DtB.

                  My original thinking around the UBI came some years ago when I first understood just how punitive the effective marginal tax rate was for people on benefits. But over time I’ve come to see a whole host of wider merits for the scheme.

                  One thought was indeed to eliminate Super altogether. On the other hand there is the reality that with age, the opportunity to earn other income is greatly curtailed. New Zealand can be rightly proud of the very low rates of deprivation among our elderly. (Not so our children of course.)

                  The other problem with Super is that it’s a sharp transition at the age of 65 … while a UBI greatly reduces or eliminates this wholly artificial date. Some people need to retire at 60 .. while others might happily work until they are 80. An UBI eliminates this ‘one date fits all’ straight-jacket of the existing system.

          • Draco T Bastard

            The numbers have to be realistic js.

            3m adults each with a UBI of $20k is $60 billion pa. I don’t think we are ready to go there.

            We have a ~$200b/year economy (that site is in US$). Enough for ~$45k/person/year.

            Moreover it would probably be desirable to phase the UBI in over maybe a decade in order to allow any adjustments to be made incrementally … and to allow time for people to understand and adapt to it.

            Probably a good idea to phase it in but I would do it over less than ten years. I’d say a maximum of five years. Start off with it being at the present UB rate of $12k/year and then ramp it up over time.

            BTW, I’ve come to the conclusion that a flat tax doesn’t work with a UI either and thus we would still need progressive taxation but they could be wider brackets.

            • RedLogix

              OK taking that starting point of U$35k per anum or currently about NZ $43k From memory most of the OECD has a Wages Share of GDP of about 65% (feel free to correct me). That would be an average wage income of about NZ$28k. Bear in mind this is across the whole adult population, not just the workforce.

              The idea of a UBI is to provide just enough income to survive on. And it’s not taxed. That’s a critical point.

              I actually believe a UBI is a politically achievable thing in my lifetime, but in order for it to stick it would have to be acceptable across of political spectrum. A tax-free UBI combined with a flat PAYE tax rate in the range of 33-39% would stand a chance of getting there.

              • Draco T Bastard

                OK taking that starting point of U$35k per anum or currently about NZ $43k From memory most of the OECD has a Wages Share of GDP of about 65% (feel free to correct me).


                Who benefited from the increasing output of the economy if wage and salary earners didn’t? This is shown by the share that employees get of the income the economy generates – the “labour share”. In New Zealand, it fell by a quarter from 60 percent in the early 1980s to a low of 46 percent in 2002.

                The idea of a UBI is to provide just enough income to survive on.

                Not all of us agree with that. IMO, we’d get a hell of a lot more innovation going if people had something to work with rather than merely subsisting on the UBI. It would require a societal change but it’s one of those changes that won’t happen until it’s actually put in place.

                I actually believe a UBI is a politically achievable thing in my lifetime, but in order for it to stick it would have to be acceptable across of political spectrum.

                Plan for a long term government (3+ terms), put it in place early and, IMO, by the time the government changes there’s no way that the RWNJs could remove it. Even in that short a time we’d be able to see major societal benefit of keeping it.

                • RedLogix

                  In New Zealand, it fell by a quarter from 60 percent in the early 1980s to a low of 46 percent in 2002.

                  Well spotted DtB. I was in a hurry to go out when I put that last comment together and I didn’t pull the very low Wages Share of GDP in this country into the picture. I’ve commented on the same point myself:


                  That was five years ago, but I’m not sure things have changed so very much since.

                  Not all of us agree with that. IMO, we’d get a hell of a lot more innovation going if people had something to work with rather than merely subsisting on the UBI.

                  I’m philosophically willing to go there. However the settings Gareth Morgan has proposed, and I support, are at least costed and plausible within current fiscal parameters. He’s published an excellent book and has one hell of a bigger public profile than me … and still this idea struggles for traction over the orthodoxy.

                  Maybe you’re even more idealistic than I am DtB 🙂

                  • Draco T Bastard

                    However the settings Gareth Morgan has proposed, and I support, are at least costed and plausible within current fiscal parameters.

                    Costed within the current framework that holds that wealth is created within the private sector. Change that framework so that the banks don’t print the money but the government does and the costings change.

                    Maybe you’re even more idealistic than I am DtB

                    Entirely possible but I still see it as a viable alternative to what we have and I’m quite willing to take it one step at a time. Admittedly, some of those steps do happen to quite large 😈

          • geoff

            Is your flat tax (33%)comment what you think is politically achievable in the short term or do you really think think flat tax systems are the best?

            • RedLogix


              Sorry I didn’t spot this question sooner.

              The answer is that when you combine a tax-free UBI of say $12k pa and a flat PAYE income rate of say 33% (and these are just examples) … then until your income is above $36k you receive more UBI (negative tax) than you are paying in PAYE (positive tax).

              At $72k of income you are paying $24k in PAYE and receiving $12k in UBI … so your net tax is only $12k .. or about 16% overall.

              As your income increases your overall net tax rate grows closer to 33% .. so the overall system is still in effect mildly progressive while the marginal tax rate is always flat at 33%.

              The numbers can be changed, but if you want the system to be fiscally neutral (ie pay for itself without the government having to print money) then as you increase the UBI then you have to increase the flat PAYE rate. If you accept that the upper limit for a PAYE rate is probably around 40% then this puts a ceiling on the UBI.

              The big merit of a flat tax system is that it creates vertical and horizontal equity. Vertical equity means treating people with lots of capital the same as others whose sole income is cash. Horizontal equity means treating similar cases similarly. Our present system is riven with examples where these simple principles are not applied. (Why for instance does an employee paid for his transport to work out of tax paid income; while the owner of the business does not?)

              There are other variations, and Gareth Morgan’s book The Big Kahuna explores some of them … but this seems to me a reasonable starting point to talk about.

              • Draco T Bastard

                UBI tax rate example

                The numbers can be changed, but if you want the system to be fiscally neutral (ie pay for itself without the government having to print money) then as you increase the UBI then you have to increase the flat PAYE rate.

                As long as the dead weight loss of profit and capital accumulation is in the system then more money will always need to be printed.

              • geoff

                Thanks for the explanation, RL.

  11. duncan garner 11

    Hard to diasgree with Colin on this. We’ve been banging the same drum on Radio Live Drive this week and this year. Employ New Zealanders in CHCH, get companies to pay proper wages not get ‘underwritten and subsidised by WFF’, apprenticeships after the earthquake not two years later .. I’ll interview Colin and talk about this on Radio Live again today after 3. Any texts and emails welcome text 3920 keyword is live or email [email protected]. This week it’s been astonishing to see how many workers are underpaid by employers who are posting record profits. Even English now accepts that. It’s time to act. Families can’t live on Mum and Dad earning $13.50 an hour. Cheers Duncan

    [RL: Email address and identity looks legit. Welcome to The Standard Duncan.]

    • Colonial Viper 11.1

      Welcome indeed. I’m looking forwards to more media focus on the steps needed to achieve a living wage for all NZers.

      Hoping that National will take action very soon; 2014 is a long time to leave people as the working poor.

    • RedLogix 11.2

      Employ New Zealanders in CHCH, get companies to pay proper wages not get ‘underwritten and subsidised by WFF’,

      Want to return to the old system where employers paid married men more than single men?

      WFF is an attempt to address a very real question. That families do face higher costs and there is a real need to address this. Now because WFF is a targeted tax credit there are problems at the margins. That’s inherent in any targeted system.

      But simply arguing that WFF should be abolished without any mention of what to replace it with, leaves me wondering what the motive is.

    • xtasy 11.3

      duncan garner:

      “We’ve been banging the same drum on Radio Live Drive this week and this year.”

      Yes, banging the drum you have, indeed, that is to push for jobs through mining! Now as some mining will make sense, it surely cannot be for mining anything and everything and anywhere in NZ, right?

      I just wonder what you mean with creating jobs through mining? That is the drum you banged the loudest today.

      I listened in a bit on Radio Live this afternoon (before and after 4 pm). So I know where you come from. You had allowed two callers in during that time (just before 04.30 pm), and both were enthusiastic, robust proponents for mining in NZ. They probably meant mining and drilling to be fair.

      There was no other voices I heard. So I missed a bit of “balance” there. Do you pick the ones that call in, that match your views, or do you actually offer an open and fair forum like Willie Jackson and Deb Coddington allowed this afternoon?

      Once the clock hits 5 pm I turn off Radio Live, which I rarely listen to, and it is Radio NZ National with Checkpoint, that is my firm preference and choice by the way.

      • saarbo 11.3.1

        Agree Xtasy, I’ve tried to listen to Radio Live a couple of times…drivel I’m afraid, stick to RNZ.

    • IrishBill 11.4

      Hi Duncan, I had a look on your site for the audio but couldn’t find it – is Drive archived anywhere?

      • xtasy 11.4.1

        IB – it may be archived in the water treatment ponds near Mangere, if I may presume.

        Radio Live is a bit strange a station, and I doubt that they archive too much, just to avoid legal issues.

  12. aerobubble 12

    Employers made a choice, pay their workers more OR be scared that they will miss out of the great thirty year private banking money printer windfall. To buy in all they had to do was borrow money in NZ, force the cost of borrowing up (risk premium for what? where’s the risk in the NZ economy!!!) and keep their profits off shore and in low tax domicles while reaping the capital gain free of tax windfall in NZ. This all forces up the NZ dollar.

    All Employers need to do is bring their profits home, pay off their debts (or go bust), and pay their employees decent salaries (this would increase the buying power of NZ and force down the dollar).

    Now National knew all this, when they got into government they quickly removed the free market force that was about to push the most egregious of capital farming exploiters from the market by lowering business taxes, and higher income taxes, and raising GST (thus lowering the buying power of the population).

    And a CGT and a first 10,000 dollars tax free would have decimated our NZ lordly classes who are our betters and we should all be dipping our caps to them for keeping NZ afloat. HA, like NZ is ever going bust with its massive export industries, you bleeding got to be kidding me, all of parliament know how the system is rigged, most have brought into the NZ pyramid scheme that is the NZ economy, we need a damn upper crust on our cloudy paradise.

    Vote Green and rid us of these parasites.

  13. One Tāne Huna 13

    It’s interesting to watch the media gradually turning the debate in this direction.

    To an extent it’s reminiscent of testimony to the enquiries into Rupert Murdoch’s activities in the UK, where Tony Blair (?)(curse his name) gave evidence of the impact of “sympathetic” media on policy.

  14. Afewknowthetruth 14

    Espiner is just another fuckwit who hasn’t got a clue about energy, resources or the environment, so he churns out drivel.

    However, it is the kind of drivel most people seem to like to hear, so I guess his commentary will be popular as ‘the ship goes under and the passengers drown’, utterly clueless as to why it’s happening.

  15. xtasy 15

    Yes, some good thoughts there, from Colin Espiner.

    It just makes you wonder, now, did NZ not have something along those lines a few decades ago?

    1. Public work schemes are of course not the ideal solution for creating employment, but yes, there can be work done, which “the market” does not bother with, or simply fails to do, that would offer at least some reasonably paid alternative to the dole.

    2. WINZ was created to combine services that used to be the Department of Social Welfare (DSW) and the New Zealand Employment Service, two agencies or departments run separately once, for good reasons. I remember those days, and I had to deal with both at times, and when going to NZES one did in bad times not have much of a chance for a job, but they had fairly good staff that knew about finding jobs, that treated clients seriously face to face, that in many cases established good rapport, that went out and talked with employers, and if they could not assist to get one a job, they knew about training programs and alternative activities (also subsidised work schemes), that one could access.

    WINZ staff are so busy with administering an immensely complex Social Security Act with many regulations, internal rules, processes and the likes, they are too busy to find people work. Some work brokers may help certain people, but they are too few in numbers, and in the end, if there are not jobs, all the pressuring and sanctioning will not create work. Bring back separate services for welfare payments and support, and for pro-active employment assistance and referrals.

    3. More apprenticeships: Yes, absolutely, bring in a system where that will be the alternative path for gaining skills and knowledge for all those not going into tertiary education at uni, polytechnical institutes and the likes. It should be supported by the government stepping in to give financial, tax deductible and other icentives to employers to take on and train young and also not so young trainees, to do apprenticeship type of training in a wide range of professions. Combine on the work training (3 to 3 and a half days a week) with some weekly or block course class study, so the workforce of NZ can be advanced to a level common in many European countries.

    4. Bring up the minimum wage to $ 16 over a 2-year period, and improve incomes by developing a higher skilled, more productive, efficient work-force, producing services and products of higher values, where possible, so the social and economic situation for people improves across the board. Bring in a higher tax rate of 39 per cent for those earning over 70 or 75 k per annum, and consider a 50 per cent tax rate for those earning over 100 or at least 120 k per annum. More tax fairness and better base incomes will make the WFF redundant.

    5. This point is one where I need to do some thinking to be able to agree on Colin’s suggestion. Why create a “better paid” public employee class and leave the ones in private enterprise out? Also $ 19 a week may seem fair and necessary, but will this living wage not drive up many other product and service costs, thus lead to little? Maybe look at the bigger picture to create more affordable housing, produce more affordable grocery and various consumer goods, by abolishing cartel like or monopoly situations so common in NZ?

  16. bad12 16

    A ‘living wage’ reliant upon the lowest paid workers fighting for this ‘living wage’ employer by employer??? really, surely this is a well meaning publicity campaign that has little chance of overall success for the majority of low waged workers,

    I would propose that instead of supporting an escalation in inflation that would further hurt those the ‘living wage’ is supposed to help that we examine a means of lowering the cost of living for all low waged workers who are also renting accommodation,

    Yes, i do mean all low waged workers not just those with kids to support from a meager income and to accomplish this i propose we concentrate our attention upon the greatest cost to all low waged workers, that of accommodation,

    (1), here is the problem, previous Governments have inflated the New Zealand population form 3.3 million to 4.4 million in a very short time frame when you consider the amount of years it took for that population to reach 3.3 million,

    During this population inflation the housing market failed to keep pace with demand, both for housing to purchase and for housing to rent, thus house prices rose and along with the rising prices came rising rents as the New Zealand middle class moved into the housing market on the basis of this being a good long term investment in high demand with banks only too willing to lend to this middle class who already had a good record with the banking industry through previous mortgage financing of the family homes,

    The Government, both Labour and National then added more fuel to this inflation by severely curtailing the building of State owned rental accommodation,the numbers do not lie, for a population of 3.3 million we had 75,000 State owned housing units, 20 years on we have some 67,000 State owned rental units of that population of 4.4 million,

    Such a scarcity of low cost State owned accommodation adding to demand which helped push up prices of all housing could have been an accident of failing to ‘see’ the end result of that dramatic increase in the population from 3.3 million to 4.4 million, then again it could have just as easily have been decisions of deliberation by past government regimes which created this end result,

    The first ‘oil shock’ during the Muldoon regime and the Sir(spit)Roger Douglas change of the economy to follow the Neo-Liberal economic ism along with following regimes adherence to this Ism created a ‘new’ class of people within the New Zealand society reliant upon benefits as their means of living and although large numbers of people continually move in and out of this situation the actual numbers of those reliant upon welfare has continued to grow,

    Being the cohort in society deemed to be the most in need the beneficiaries then became the majority of those who were housed by the State where befor these houses were the province of the working poor, those on low wages at or just above the minimum wage, so the cohort of low waged workers now forced into a housing market where high demand had been artificially created by previous regimes of various hues now instead of paying 25% of income as rent to the State are today in a situation of paying 50%+ as rent to the private landlords,

    (2) The above is the history and the reality today for most low paid workers whether they have kids to support or not,

    Lets now look at money, specifically where the 183-187 Billion dollars much of which is tied up in mortgages for both housing and rental housing comes from,

    Money at its root source is simply made up, yes as simple as that, the banks, not necessarily the branch down the road from you nor the head office in Auckland or Wellington simply make the stuff up,

    Wave the magic mouse when your home loan is approved and hey presto up the chain of banks it goes, magic mouses are waved in Australia and magic mouses are waved in the USA and the amount of money appears on computer screens in all those places as a home loan to you and that debt is suddenly on those computer screens as another asset the bank owns,

    Of course as recently occurred the banks suddenly ‘lose’ trillions of this mouse money and in step various Governments waving another magic mouse to give them back their ‘lost’ magic money,

    Bank of Scotland hits the wall ‘losing’ 550 million British Pounds, the English Government with one movement of that magic mouse gives it all back again and on and on it goes,

    Of course the bank having got everybody mortgaged up not only with home ownership but also with 1 or 2 rental properties doesn’t simply allow you or me to pay the stuff back the smae way we got it by moving that magic mouse which control our computers,

    Hell no, from us they take our share of the production of the New Zealand economy paid to us as wages, if you cannot afford the mortgage and are forced to rent then the chances are that the home you live in has a mortgage attached to it on behalf of the bank and your landlord, so you too are paying a big part of your share of the production of New Zealand as rent to the banks who made up the mortgage your landlord is paying to those banks on a computer screen,

    (3)Do unto other’s, i would propose this, Legislate for all people with a household income of $45,000 or less a year that rent be no more than 25% of household income,

    Simple right, one piece of legislation at least halves the accommodation costs of every low income earner in this country,

    On the same day as the Legislation to make those rentals 25% of income for those with a household income of $45,000 or less a year cancel the payment of the accommodation supplement,

    Remove from the housing legislation the 90 day law which allows a landlord to give notice to any tenant to quit for any reason leaving only damage to the property,non payment of rent, or, disturbing the quiet enjoyment of neighbors as the only means of evicting a tenant, meaning that even when a rental property is sold the tenant still has the right to reside at the property,

    Institute a new welfare benefit, the Landlords Hardship Grant, where landlords can apply to WINZ on the grounds of financial hardship and after having proved such hardship have WINZ grant them a special benefit to help pay the mortgage,

    Provide WINZ with the finance to enable the payment of these Landlords Hardship Grants using the magic mouse attached to the computer screen up at the Reserve bank of NZ,

    Do unto other’s….

    • James Thrace 16.1

      The best solution for the money woes:

      1) Nationalise all existing banks operating within NZ
      2) The government becomes the lender of first resort
      3) Trading banks within NZ, in need of funds, can approach the government lender for capital
      4) When capital is required by the government, this can be negotiated with the overseas trading banks as necessary

      This will reduce the balance of payments deficit quite drastically, remove NZ’ers reliance on overseas controlled foreign market exchange currency traders, and provide lower interest rates as the government will typically borrow in the millions, if not billions, each year.

      Government then lends out these funds to the nationalised banks at a nominal interest rate.

      It’s the true system of economic leverage and sustainable. Clinton’s repeal of the Glass-Steagall Act in 1999 is what got us all into this mess. The commentators at the time, all saying that the GS Act was “ineffective” and needed to be updated, all had links to the major trading banks – Citibank, JP Morgan, Chase, Merrill Lynch, Lehmann.

      As for the rental woes, there’s no easy short term fix. Limiting rents to incomes and the likes is a recipe for trouble as people will rent their own house back from their family trust at low incomes and then claim bigger tax deductions for “topping up the rental shortfall” to the family trust… through the LTC as they can now.

      A system developed whereby rents are limited to 10% of the value of the property on a weekly basis would be far better. So that $380,000 three bedroom apartment in Emily Place, Auckland can only be rented at $380 per week and not the current $550 – $600 that it might currently go for.

      Limiting rents to GV will have the bonus of shucking the shysters and making sure that only people with sufficient capital/equity can enter the landlord market. Lets face it, we have to have individuals supplying additional housing as the state simply cannot be relied upon, with the flip flop changes of government, to provide stability of market in the housing arena.

      Might also have the added benefit of allowing a few more people to “realise the kiwi dream” of having their own quarter acre half gallon pavlova paradise with a two stroke mower in the garden shed.

      • James Thrace 16.1.1

        Moderation? What word triggered that then?

        [RL: Fixed, not sure what triggered it, but most of the time auto moderation is the result of the spam trap. Without it sites like this would be swamped.]

      • bad12 16.1.2

        How do you rent out the rental property to family members if somebody(s) else is the tenant(s),???

        You have simply reacted with a kneejerk to what i propose, if you read the proposal properly you will find that the landlord could not remove an existing tenant as my proposal also would have tenancy law changed to remove the 90 day provision where presently a landlord can remove a tenant for no particular reason, thus a landlord could only remove a tenant for damage to the property, non payment of rent, or disturbing the quiet enjoyment of neighbors,

        You flip flop often do you, Nationalize the banks and further down you carry on about changes of Government, what do you think the banks and changes of Government would do with your nationalized banks,

        By the way, i am still waiting for an answer further back up the page providing some proof that the NZ government owns 50+% of Fletcher Building…

        PS, $380 is not 10% of $380,000…

  17. chris73 17

    I’ve always thought that NZ should extend the whole of SH1 to four lanes and as part of the works contracts make it so the companies have to hire a certain amount of long and short term unemployed (as long as they pass reasonable tests)

    • RedLogix 17.1

      With wheelbarrows and pick-axes?

      • chris73 17.1.1

        If they’re not licensed for heavy machinery operation then yes hand tools should be used. I’ve used a variety of hand tools (and heavy machinery) on the southern motorway rebuild in christchurch over the last couple of years.

        A jobs a job and it can and does lead to better jobs

        • felixviper

          “If they’re not licensed for heavy machinery operation then yes hand tools should be used.”

          And to take your idea one step further, you could also make the contracts conditional on providing on the job training and assistance to those unemployed workers who wish to get licences and tickets to operate machinery.

          • chris73

            Sure but the workers would have to prove themselves first rather than just rock up and get their tickets (maybe add a return of service)

          • chris73

            Sure but they’d have to prove themselves first rather than just rock up and get the tickets, maybe a return of service would help in this regard

            • millsy

              Im pretty sure that you have to attend courses and pass tests to get these tickets. I cannot just print out a ticket from the internet and then just hop on a bulldozer at the local Fulton Hogan depot.

              • chris73

                What I meant was someone turns up to work and the company puts them through an expensive course right away. Instead they need to show dedication and a willingness to learn, much like its done now.

                • felixviper

                  I assumed that went without saying.

                  The next question to ask is why is it necessary to hand over public money in the form of profits to companies that are virtual monopolies/duopolies?

                  If previous governments hadn’t destroyed the state’s productive capacity we could be employing and training people and building that sort of infrastructure directly.

                  Think of how much more we could afford to do without a third-party skimming a profit at every turn.

        • bad12

          And the monies to do this will come from where…

          • chris73

            Fracking,more mining, benefit slashing…all of the above or none. Where did the money come from for the works projects in the depression

            • Colonial Viper

              Printed internally and borrowed from the BoE

              • chris73

                I’m against printing money in general however for specific purposes (like mass works infrastructure spending) I could be persuaded to agree with it

                • Colonial Viper

                  fair enough. I think we could do this money printing better than the US, EU Japan etc who print billions a week but end up pouring it all into a stagnating, over-leveraged financial system. The classic benefiting Wall St but not Main St scenario.

                  • chris73

                    My worry would if its done for something good like works then it could be subverted…the right could print money to give to the banks, the left could print money to give to benes etc etc

                    Both examples are worrying to me

                    • Colonial Viper

                      I guess we could always trust in the judgement of our political and financial elite? (lol)

    • bad12 17.2

      i much prefer mowing lawns with scissors, there are far more lawns to be mowed than motorways…

  18. The Chairman 18

    There is a vital point Colin touched upon (overlooked in the header above) which I’d like to highlight.

    The OECD recently found that the gap between the rich and poor had grown faster in New Zealand than in any other country in the developed world during the last 20 years..
    The widening income gap has resulted in a growing number of the working population lacking the disposable income to save and sustain the demand local businesses require to survive.

    Low incomes equals low business demand – resulting in lower profits..

    Over the years easy credit filled the fiscal void that low incomes produced, resulting in private debt soaring to extremely high levels..

    A sustainable recovery requires a correction of the imbalance described above, hence the World Economic Forum recently named severe income inequality a top global risk.

    Moreover, a recovery also initially requires an acceptance of the problem.

    The solution:

    Reintroduce public works schemes, but think larger and go further. Incorporate the apprentice scheme and start some new exporting ventures.

    Exports are what grow a nation’s wealth.

    • Colonial Viper 18.1

      Exports, and limiting imports.

      • The Chairman 18.1.1

        Having the Prime Minister fully endorse the campaign would give it legs. Further legitimizing it in the public eye, building a political consensus and a widespread, patriotic, consciousness for getting behind the economic recovery.

        It’s an economic necessity and mush be acknowledge as such.

      • Green machine UpandComer 18.1.2

        Exactly. So you increase domestic production of petroleum, natural gas, coal, rare minerals, at the same time as alternate energy sources to lessen imports, whilst increasing the short term exports to use the dosh to find long term alternatives.

        • xtasy

          And by doing just that, keep the chimneys of coal fired power plants in Mainland China pumping CO2 and other gases into the atmosphere full steam, right, so that the global climate will heat up even faster, leading to climate change world wide, so we can in much of NZ “enjoy” more lengthy dry spells that benefit farming down under, right?

          Have you ever worked in farming or cultivated the land my friend?

          Plants need water and it helps to have some climatic (temperature and precipitation) consistencies, to keep producing what still makes most of NZ exports. Many parts of NZ had the lowest rainfall for very many years this summer, and Australia has its climate horror scenarios now. It will not get better polluting more for coming decades.

          Recent petroleum surveying and exploration down south and in other areas has not delivered any fields that are economically feasible anyway, if you have not heard this.

          But yes, maybe dig up that Denniston Plateau, cover it up again and restore it at high costs, to export and use lignite, being such climate friendly a resource.

          • bad12

            Lolz, this place is starting to read like a National Party Conference on the Saturday night when they are all so pissed that even pronouncing the obligatory ”kick the poor” can hardly be ejected from their throats,

            Yeah right strip mine the Denniston Plateau for 300 jobs and a few cents a tonne in royalties, that’s bound to fix what ails us…

            • xtasy


              “Lolz, this place is starting to read like a National Party Conference on the Saturday night when they are all so pissed that even pronouncing the obligatory ”kick the poor” can hardly be ejected from their throats…”

              Excuse me, I just wonder, who is “pissed”?

              I certainly did not suggest that in all seriousness to dig up the Denniston Plateau, it was somewhat cynical and tongue in cheek, so to say, to address what the bizarre ‘Green machine UpandComer’ contributor to the debate had on mind.

              Far from it, I would rather see the Denniston Plateau protected and only focus on mining or drilling in very limited ways, in areas that are not high risk (like deep sea areas) or of major environmental concern. Also we should move away from fossil fuels.

              Maybe you will get this later today, when the sun is up and the mind focused?

              • bad12

                Oh my aren’t we a little overly sensitive X, as you say, your comment was in effect ‘taking the piss’ in a cynical fashion of a previous comment made by another commenter,

                The fact that you failed to consider my similar comment in the same vein would suggest to me at least that it is not my mind that needs focusing, but then you have widely availed us of the shortcomings of yours right,

                As far as the National Party convention goes read some of the comments, not yours, and then consider those comments with regard my little jibe,

                Maybe you will ‘get’ more if you take something to ease that paranoia you regularly exhibit…

          • The Chairman

            Green technology is one possibility

            Aquaculture is another.

            • bad12

              Lolz, in your opinion Chairman how long do you think it will take for the grand economic recovery to occur, globally that is???,

              Land based Aquaculture do you mean, that would require the transfer of tracts of land away from what is currently being produced from them so the value of a hectare of Aquaculture as opposed to the value of a hectare of Dairy, or Crops would have to be proven,

              What you are proposing has been the proposal of the past 30 years, the smart economy, export, the smart economy, export, blah blah blah,

              It has got us no-where except the enrichment of the top 50% and the increased impoverishment of the bottom 50%,

              In a real World economy, which is the here and now being the likely future scenario we are all going to have to make do with less,which is why i don’t actually agree with driving wages up,

              Instead i believe in cutting the cost of living for those reliant on the lowest incomes…

              • The Chairman

                Sustainable coastal aquaculture.

                Yes, we have a market failure.

                The market is failing to provide a sufficient amount of jobs.

                The market is failing to match employee skills with employer demand.

                The market is failing to provide a sufficient amount of new homes.

                The market has failed to provide a second international internet cable.

                The market failed to provide UFB.

                The market is struggling to produce new companies to list on the exchange.

                The market lacks resources and scale.

                The market is failing to sufficiently liftt incomes.

                The market is failing to sufficiently grow our exports.

                The market is failing to produce the national growth required.

                A more hands on government is the way forward.

                Increased Government participation provides the Government with the scope and opportunity to further influence wages..

                Moreover, Government has the advantage of maximizing profits offshore (avoiding local inflationary pressure) while providing local services at cost, producing local savings.

                • bad12

                  Sustainable ocean based Aquaculture, now that’s a oxymoron in terminology, the more of it you have the less sustainable it becomes…

                  • The Chairman

                    The interaction between industry managers, resource managers and scientists provides a consistent and transparent management framework for moving forward with sustainable aquaculture.

                    The implementation of the LAC management framework has delivered industry confidence and demonstrable ecosystem integrity.


                    More intensive production systems can be more efficient in terms of resource use and production, thereby reducing their environmental impact.

    • bad12 18.2

      Export what and to whom would be my question, singing the same old song off of the same old failed neo-liberal song-book Chairman???

      • The Chairman 18.2.1

        Who? – we have two of the worlds best performing economies as our largest trading partners.

        China and Australia present numerous possibilities and opportunities..

        A white paper should be dome to identify the most feasible and practical options.

        • bad12

          Gosh i feel my patriotism building to an uncontrollable crescendo as i read those words, white paper’s all good,

          Everyone needs a pile to wipe their rectums with after such flatulence and defecation…

          • xtasy

            “Everyone needs a pile to wipe their rectums with after such flatulence and defecation…”

            Well, this is at least on the borderline of of being acceptable, I feel.

            Maybe get back to the topic, dear friend. As much as I may differ with ‘The Chairman’, he or she seems to be closer to the topic in this case.

            He or she has at least a point with this comment:
            “Low incomes equals low business demand – resulting in lower profits..”

            • bad12

              Oh you ‘feel’ do you X, the thing is that ‘you’ do not judge what is acceptable and what is not on this site, others have that small joy,

              overly sensitive or just trying to nit-pick and not managing a very good job of it???, i cannot quite decide,

              However, as the chairman has decided to address this post in terms of some stuffed shirt politician, (who reads as if he/she is pissed at a National Party Conference on a Saturday night), i have simply humored him/her,

              To tell you the honest truth X, i doubt anyone who comments here gives a big fat you know what about what you find acceptable considering the previous comments filled with abusive invective that you have inserted into posts befor,

              i sure as hell don’t,so save your moralizing as it has no effect upon me,

              on your last point i agree, he or she has a point on that issue, perhaps a gem amidst the dross, a golden nugget among the defecations if you will,

              1 out of 100 ain’t exactly a high score tho…

              • geoff

                When are you two getting married?

                • Colonial Viper

                  The way they go on it’s like they’re already married

                  • bad12

                    Whereas the way ‘you go on’ in multitude of posts and open mike makes it look like you are most days involved in a 3 some, or 4 some,

                    Possibly the most hypocritical comment i have seen you insert in a post…

                  • xtasy

                    Before it would ever get to that sicklish kind of “relationship”, I am trying to “divorce” bad12 due to bad behaviour prior to when I was being banned. Some like to push it on and on, and it just brings reactions, so that is where it ended.

                    Maybe “bad12” should have been looked at also.

                    But hey, I am not that “kinky” to get involved with such folk.

                    I wanted and want to focus on Espiner, his comments and what may be worthy to say to that. So I stick by what I said earlier.

                    There is always rehab, for those that cannot stop nagging and whatever, I suppose.

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