I’ve got a solution, what’s the problem?

Written By: - Date published: 9:44 am, April 23rd, 2008 - 38 comments
Categories: health, john key, slippery, tax, workers' rights - Tags: , , , ,

The junior doctors’ strike is a difficult issue. On the one hand, these are highly valuable workers whom we can’t afford to lose overseas and they do work long hours in difficult conditions. On the other hand, the pay rise they want would cost $50 million and is well above what other medical professionals have received.

Naturally, John Key thinks he has the answer. And, naturally, that answer is tax cuts.

On Breakfast this morning, Key said that junior doctors do not deserve a 30-40% pay rise like they are asking for. Asked how he would solve the strike he said tax cuts would solve the issue. Let’s examine that:

Say National blows the budget with tax cuts of $4 billion (commentators expect them to offer $3 billion max). That works out to about $2000 per worker a year. Junior doctors earn $80,000 a year. Junior doctors want 30-40%. Even at best, tax cuts will increase their pay 2.5%. Yeah, they’ll leap at that.

Even if Key were to abolish income tax, the increase in junior doctors pay would only just match the pay increase they want. And, of course, there would be no money to pay them.

Key, the money man, knows that his tax cuts can’t satisfy junior doctors’ wage demands, just as they can’t close the wage gap with Australia. Yet, in typical slippery fashion, he is trying to convince you that tax cuts are a panacea for all ills.

PS. Key said that, in addition, to tax cuts he would solve the junior doctors’ dispute by not hiring as many administrative staff. So, under National junior doctors will get a 2.5% pay increase and have to spend more time doing administrative tasks. I’m sure they can hardly wait.

38 comments on “I’ve got a solution, what’s the problem? ”

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  1. Benodic 1
    23 April 2008 at 9:53 am

    Once again we see why Key slips his way around the wage debate by always putting the prefix “after-tax” before “wages”

  2. Matthew Pilott 2
    23 April 2008 at 10:04 am

    One small correction, that figure you gave $80,000 is for the most ‘senior’ junior doctor (registrar? something like that, I saw on the news last night – Higher Standard help me out if you’re out there), they start at around $45,000.

    Still, that’s less than 5% of a tax-cut influenced “pay rise”, when they want 30%, so no biggie. Just think it’s worth mentioning before people thing that they’re greedy (wanting a huge pay rise on top of $80k…).

  3. big bruv 3
    23 April 2008 at 10:16 am

    Once again John Key comes up with a workable and logical solution, what a pity the corrupt Labour party are more interested in gambling with peoples health and scoring cheap political points while patients suffer.

  4. Edosan 4
    23 April 2008 at 10:19 am

    Junior doctors start on $45k? Thats less than some Policy Analysts! I think we know the answer then 🙂

  5. Tane 5
    23 April 2008 at 10:21 am

    But it’s not workable bruv.

    a) Tax cuts and wage increases are not the same thing. Wages are the value you receive for your labour; taxes are what you pay to keep public services running.

    b) Even if we accepted tax cuts were the same thing as wage increases, Key’s tax cuts don’t come anywhere near satisfying the junior doctors’ wage demands.

    I’ve suspected for a while that Key sees tax cuts as a way to relieve wage pressure on employers. That way workers get their take-home pay increase through cuts to public services rather than being paid a fair wage for their labour.

  6. Steve Pierson 6
    23 April 2008 at 10:24 am

    Matthew. What I got from TV3 and National Radio is that the $23 a hour figure they’re giving is based on a 65 hour work week. Their base pay is $80,000.

    $23x65x52=$77,700

    big bruv. what is that solution? Because I’ve just shown it’s not tax cuts.

  7. higherstandard 7
    23 April 2008 at 10:29 am

    MP

    Describing average earnings for junior doctors is difficult because of the variety of factors that exist.

    On average a 1st year house surgeon (1st year out of varsity) will be on around 70k base salary.

  8. Psycho Milt 8
    23 April 2008 at 10:39 am

    I get more than 30 bucks an hour for doing way less than these guys, so I’m backing them.

    I noticed the DHBs were questioning what patient services the junior doctors would like to be removed to cover the pay increases – nice tactic. However, a more interesting question would be “What administration and management services would the junior doctors like to see removed to cover these pay increases.” Now, that one would reap a rich harvest of answers, I’m sure…

  9. big bruv 9
    23 April 2008 at 10:49 am

    Tane

    I would agree with you re public services but for the horrendous level of waste we have in the system.

    What part of tax cuts mean more money in your pocket do you not understand?, of course the Doctors deserve a pay rise, how you can spend (waste) and extra 2 billion in the health system and not ensure that your junior doctors are well paid is beyond me.

    It is the corrupt Labour party that insist on having a huge bureaucracy, that money would be better spent on doctors and nurses.

  10. Tane 10
    23 April 2008 at 10:51 am

    I would agree with you re public services but for the horrendous level of waste we have in the system.

    http://www.wastewatch.co.nz

  11. Matthew Pilott 11
    23 April 2008 at 10:57 am

    HS – I think the figures I had were from some junior docs the media talked to, paints a different picture. I guess we can’t forget the average loan these guys have though…

    PM – I’d imagine there is; obviously docs wouldn’t want to have to waste their time doing admin, but a bit of consultation might not go amiss to see what is & isn’t working. Not sure if they (junior docs) would be the people to decide what admin is necessary – but neither am I!

    bruv – what is a fair level of pay? You seem to be very opinionated, so give me a solid figure right now (or admit that you’re just blustering for the sake of it).
    There are 300 new doctors since 2003 I think – are they part of your army of bureaucrats? How much paperwork and administration would you prefer your doctor to do? Or are you of the belief that this stuff happens by magic, and no administration is needed to make hospitals run?

  12. Tane 12
    23 April 2008 at 11:01 am

    Furthermore, does bruv not think it wasteful to have doctors earning $80,000 a year doing their own admin?

    They’re already working crazy overtime so that admin work is going to have to come out of time that could otherwise be spent looking after patients.

  13. mawgxxxxiv 13
    23 April 2008 at 11:12 am

    Tax cuts are not about immediate raising of after tax income, they are about stimulating long term economic growth.

    The only way to control Government spending (especially under MMP) is to limit their access to other peoples money. Otherwise pointless projects sponsored by pressure groups ( e.g. the Greens ‘buy NZ made campaign’ and homeopathic possum cures) get funded by the long suffering taxpayer.

    If people hang on to more of their money they will save it or reduce debt. These savings can then be invested in developing more wealth. Yes I know Michael Cullen reckons we are lousy savers but the resident withholding tax numbers don’t agree: http://www.interest.co.nz/images/RWTxOnInterest.gif .

    Furthermore with home loan interest rates hitting 10% even a small tax cut can be worth a lot over the life of a home loan. Even a cup of coffee tax-cut ( since we have moved on from chewing gum tax cuts) can be worth having : http://nz.youtube.com/watch?v=upiPp62K7VI .

  14. Tim 14
    23 April 2008 at 11:24 am

    I’m confused. The doctors work in the public service. Tax cuts ordinarily mean less funding for the public service. Therefore, if you cut taxes, you have less money to spend on doctors’ salaries. How does Key’s proposal fix the problem?

    I support the doctors. They work hard under difficult conditions, have huge student debt and should be remunerated fairly. We need a good public health system and we should be prepared to pay for it. However, I am concerned that medicine is increasingly becoming a more mercantile profession. The DHBs’ negotiating style and rhetoric doesn’t help solve the dispute, they could always seek facilitated bargaining.

    It’s interesting to see the support for the doctors from right-wingers and the National Party. If any other union asked for a 10% annual pay rise there’d be a whole lot of carry-on about how that’s unsustainable and why the unions are all crooks and distort the labour market. I guess they think it’s OK when doctors strike but not when any one else does.

  15. Psychobunny 15
    23 April 2008 at 11:24 am

    Here’s what gets me: the way the news media keep going “junior doctors work a 55-hour week for xyz pay”.

    Yeah. Sure they do. I’m sure their contracts all say, “55 hour working week”.

    And I’m sure the number of junior doctors who only work 55 hours to the minute per week could be counted on the fingers of a leprous amputee.

  16. Steve Pierson 16
    23 April 2008 at 11:25 am

    so. mawgxxxiv. you would agree it was dumb of Key to promote tax cuts as the solution to the junior doctors’ dispute?

    In fact, I see no-one here sticking up for Key. And it’s a growing trend: Key says something, its obvious holes get pointed out, and no-one bothers to defend him.

  17. Matthew Pilott 17
    23 April 2008 at 11:25 am

    mawgxxxiv – that’s a rather ironic example you choose to make your point.

    Tax cuts may stimulate long-tem economic growth – which is incidentally the entire point of the buy NZ made campaign…

  18. higherstandard 18
    23 April 2008 at 11:53 am

    SP ask and you shall receive.

    National leader John Key told Breakfast TV that junior doctors should not be given a 30 percent pay rise but they had to get a “better deal’ because New Zealand could not afford to keep losing them to Australia and the rest of the world.

    Asked whether junior doctors should get a 30 to 40 percent hike, he said no.

    Doctors earned “quite a lot’ and whether they earned enough to keep them in New Zealand was a different story but under National’s tax cut plan, they would “do pretty well’, Mr Key said.

    This doesn’t appear to be as you have intimated that he was asked how he would solve the issue just his opinion that they shouldn’t get a 30 percent pay rise followed by sound bite on taxes.

  19. Steve Pierson 19
    23 April 2008 at 12:09 pm

    HS. that’s the interview I’m referring to.

    He rejects a 30% pay rise and says tax cuts are the answer.. In fact, Paul Henry has him look directly at the camera and say ‘what you would do you junior doctors’ and he says

    ‘national will cut your taxes, give you a better deal [he’s referring to a ‘deal’ on taxes, I think, but even if he’s referring to pay there’s no detail so it’s meaningless and he’s explictly rejected the increase junior doctors want], and we would put the emphasis on doctors and nurses, not hire more bureaucrats like Labour has done’.

  20. infused 20
    23 April 2008 at 12:09 pm

    Tane: They wouldn’t have to do their own admin. There is too much admin there at the moment. This is due to a few things, their computer systems being one. The level of hierarchy is stupid as well.

    Why pour all this extra money into health when it all goes into admin achieving nothing?

  21. Scribe 21
    23 April 2008 at 12:11 pm

    higherstandard,

    Thanks for that info. I was sceptical of Steve’s claims and it makes it look even more suspicious when a blogger quotes a source (eg Breakfast) but doesn’t provide a link.

    HS’s version sounds much more feasible.

  22. Steve Pierson 22
    23 April 2008 at 12:17 pm

    infused. I’m sorry but are you trying to take the prize for most stupid comment of the day?

    Because, I have to warn you: it’s a moldy sock. hardly worth the effort, really.

  23. Matthew Pilott 23
    23 April 2008 at 12:22 pm

    Scribe,

    They’re saying the same thing.

    If you’re really worried, as you seem to be, you could always be proactive and find the interview. This time, I’ve done the hard work to show you it can be done. You’ll find it at http://tvnzondemand.co.nz/content/breakfast_2007_breakfast_daily/ondemand_video_skin?tab=ONDEMAND NCA – that would be better than making snarky remarks, don’t you think?

  24. mawgxxxxiv 24
    23 April 2008 at 12:29 pm

    Steve: yes I would agree that it was pointless if John Key suggested tax cuts would keep the junior doctors happy. Junior doctors or rather their clever union negotiators are using a limited supply and high global demand to drive up the price. Good on them.

    I understand that the ostensible point of the Greens buy NZ made campaign was to stimulate economic growth however the only growth it would have stimulated would have been in the pockets of Wellington policy analysts and Parnell advertising agencies. Can’t see a guy folding himself into a box, stopping the weekend pilgrimage by the masses to buy cheap Chinese whiteware at The Warehouse as suggested by our annual $5 billion differential imports over exports: http://www.interest.co.nz/images/TRADEBAL.gif

    I would suggest that the actual point of the Green Party buy-NZ-made campaign was a muscle flexing demonstration to supporters.

  25. Steve Pierson 25
    23 April 2008 at 12:39 pm

    Scribe, sorry for not putting the link in. it’s here:
    http://tvnz.co.nz/view/news_minisite_index_skin/news_breakfast_group
    a) HS didn’t see the interivew either, he’s jsut copy and pasted from a press report on it.
    b) just becuase it suits you doesn’t make it more likely
    c) HS’s account and mine are the same in substance.

    happy to receive an apology for calling my honesty into question.

  26. Chris S 26
    23 April 2008 at 1:02 pm

    How about: for each year of service given to New Zealand medical profession, write off 1 years worth of tuition from their student loan? Or play with the ratios some (1 year = 1 semester writeoff)

    Captcha: 153 hospitals…

  27. Scribe 27
    23 April 2008 at 1:52 pm

    Steve,

    I didn’t actually call your honesty into question, just suggested that I was sceptical that John Key would have said tax cuts would make the junior doctors happy.

    And I think your version and HS’s version are quite different.

    Have a nice day.

  28. Hillary 28
    23 April 2008 at 6:32 pm

    John Key’s plan is actually quite cunning. He has no policy so he won’t have to spend government money on implementing them. He can therefore cut jobs in the state sector, and use that $ to fund tax cuts. Junior doctors won’t get anywhere near the pay rise they are after, even with tax cuts, but they will be happy anyway because there is a National government.

  29. randal 29
    23 April 2008 at 7:03 pm

    tax cuts were Reagans great votecatcher in the US in the eighties when America was financing the deficit by borrowing but they have been transplanted here where that outcome is not possible. Here in New Zealand they have become another meaningless slogan with enough emotive power to overwhelm the gullible and confuse people about the real issues. Time for somebody to defuse this bomb.

  30. mawgxxxxiv 30
    24 April 2008 at 4:00 am

    Nothing wrong with cutting jobs in the state sector. Under Labour they have increased from 28,000 to 42,000 creating additional tax burden, driving up wage inflation and exacerbating skill shortages.

    http://www.interest.co.nz/images/PublicSectorStaffing2.gif

  31. Tane 31
    24 April 2008 at 7:46 am

    Driving up wage inflation? Heaven forbid. I thought you guys didn’t want to see wages drop?

  32. Matthew Pilott 32
    24 April 2008 at 9:02 am

    mawg-44 – yes unfortunately police, doctors, nurses, the people who get your passport and keep people in jail, those in the Reserve Bank and the IRD guys administering Kiwisaver, the human rights and law commission, all those useless paper-shufflers – they are ‘burdensome’.

  33. Robinsod 33
    24 April 2008 at 9:37 am

    but they will be happy anyway because there is a National government.

    I know a few junior docs and they are all Labour supporters (except one who votes green).

  34. AncientGeek 34
    27 April 2008 at 1:33 pm

    Steve: Read page 34 right column of the Herald on Sunday.

    Someone picked this post for the “Blog of the week”. Someone likes your writing. I do as well.

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