- Date published:
8:54 am, January 27th, 2023 - 26 comments
Categories: Christopher Luxon, minimum wage, national, nicola willis, same old national, the praiseworthy and the pitiful, wages, workers' rights - Tags:
National has always claimed to be the party that is really good with the economy.
This is an undeserved reputation. Historical analysis shows that the economy performs better under Labour Governments and that ordinary wages and employment rates increase at a greater rate under Labour Governments. Perhaps there is a link?
In its never ending quest to sound like it knows what it is talking about when it comes to inflation National Deputy Leader Nicola Willis said yesterday that it was a great shame that the minimum wage had increased by so much because it means the Government can’t do it now to help low-income Kiwis make ends meet without stoking inflation.
From Radio New Zealand:
“The great shame is that Labour increased the minimum wage so much in previous years, but what you’ve seen has happened is that they have not been able to increase it as much in these inflationary years because they know it will be passed on.”
In his first Budget as finance minister, Grant Robertson hiked the minimum wage by 4.7 percent, followed by a 7.3 percent boost in 2019. Since then, the increases have been 6.8 percent, 5.8 percent and in 2022 – the first year of abnormally high inflation – he put it up 6 percent, more than the year before.
This year’s minimum wage hike, if there will be one, has not yet been announced. National and the ACT Party have opposed Robertson’s hikes in the past, but warnings they would boost unemployment have not come to pass.
Last year Christopher Luxon came out with similar nonsense when he said last February that National supported increases to the minimum wage at the right time but weirdly could not say if it was the right time or not.
From Henry Cooke at Stuff:
National leader Christopher Luxon says his party supports raising the minimum wage “at right time” but can’t say whether he supports the upcoming boost.
The Government has announced the minimum wage will be hiked to $21.20 an hour on April 1, up from the current $20 an hour – a boost of 6 per cent.
In opposition, National has generally opposed minimum wage hikes, with former leader Simon Bridges repeatedly saying the hikes went too far too fast.
Asked again if that meant National supported the proposed boost, Luxon said National supported a “consistent increase in the minimum wage, that’s what we did in Government, and we will continue to do so here”.
National raised the minimum wage every year it was in Government by either 50c or 25c, from $12.50 in 2008, reaching $15.75 when it left office in 2017 – an average of 2.9 per cent every year. Labour in Government has hiked it from $15.75 in 2017 to $21.20 in 2022, an average of 6.9 per cent every year.
Willis’s proposal would mean that workers on the minimum wage would have felt the effects of inflation even more keenly because they were starting from a very low base. And can you imagine National deciding that a large increase is justified because of inflation if they were in power? They would come out with the same rhetoric about how small businesses could not afford it.
And here is the essence of why this debate is so frustrating.
Wage increases depend significantly on what has happened in relation to inflation in the preceding year. It is a catch up adjustment designed to ensure that the real level of wages do not drop. A wage increase below the rate of inflation is a wage cut. Insisting that workers should shoulder the responsibility of dealing with inflation pressures means that employers and companies do not.
At a time when inequality is still growing insisting that workers should carry the burden of inflation through effective wage cuts will only make things worse.
If, and I hope this does not happen, National gain power it will be a sure bet they will cut taxes and minimum wage increases. The poor will be subsidising the wealthy.
When the next minimum wage increase is announced I would hope that it will be at least at the rate of inflation. Otherwise workers on minimum wages will be going backwards.
Update: And National has walked back Willis’s statement.
Leader’s Office issues statement completely reversing Deputy Leader and Finance spokesperson’s position on the minimum wage, just in time for the 6pm live cross. Chaos.
Relevant bit is right at the end. https://t.co/S2ogiA7Jct
— Neale Jones (@nealejones) January 26, 2023
Labour have increased the MW by 35% 2017-2022 (15.75 to $21.20 an hour) and will do another in April this year.
Base Job Seeker benefit went up 34% (237 to $315). (the amount one can earn before abatement from 90 to $160), the Power Income Supplement and the 2018 AS adjustment on top of that.
Rents rose 32 % in that time (and seem to have peaked in Auckland and Wellington).
MW 13.50 (2012) an hour to $15.75 (2017) an increase of 16.6%
So under National, rents went up faster than MW and under Labour this changed.
204.96 (2012) to $237 (2017) an increase of 15.6%
rents went up 24%
So under National, rents went up faster than the MW and the base benefit despite the fact that inflation was not a problem.
PS Related to this is the difficulty faced by workers in sectors with little increase in pay. The recent fair pay legislation or industry awards will be important to them in the year ahead.
It has always amazed me how some people cannot grasp this. Wages are always playing catch up to the current times.
My view is that the minimum wage is still pretty low for a developed country like NZ. Perhaps we should gradually transition to a living wage concept that is adjusted more often.
Wouldn't we get some RW screams then?
While I know that SMEs (small to medium enterprises) are the power house of the NZ economy those whose business model requires the employment of staff should 'taiho' on doing this until they can pay the staff adequately.
How many liquor, fast foot and other restaurants do we actually need?
The Living wage is tracking about $23.65ph
Jenna Lynch's last sentence or two in that piece really took National to task, and rightly so.
To give him his due, Todd Muller's first press conference as National Party leader (remember those halcyon days…) committed to regular annual increases in the minimum wage, so at least someone in National has some form of conscience (or political radar of lost votes).
Luxon's first policy on becoming leader was to announce removing the top tax rate, giving himself apparently an $18,000 tax cut. I can never understand why those on the upper rungs of the ladder think it is justifiable they be always well rewarded, no questions asked, but limits should always be put on those further down the ladder.
It seems every other day Luxon has to clarify or step back on what he has said earlier. One of his major shortcomings.
The track-backtrack team of Willis & Luxon are at it again trying to confuse the electorate and especially those so-called ‘swing voters’ who have no firm party allegiance and allegedly hog the political centre.
Remember the supposed walking back of comments by National not matching spending increases on health and education with inflation?
"Walking back to happiness." Helen Shapiro 1962. https://www.youtube.com/watch?v=QWWDyCkpsiw
I think that some of the lyrics will well apply to Luxon and Willis, though I don't wish them electoral happiness. They certainly have done some walking back recently.
The phrase is a newish one and its meaning would have much more punch and accuracy if stated in terms such as "altered, withdrew, changed, revised, reconsidered, rewrote, resiled or repealed (thanks Incognito below 🙂 )."
The need for such alteration, withdrawal, change, revision, reconsideration, rewriting resiling from or even repeal can be accepted from time to time as facts and figures are always being refreshed and made public.
These however seem to be the product of hasty, immature, unconsidered, and lazy thinking which is not what we want our decision makers to be practising should Luxon and Willis et al accede to the Treasury benches.
You forgot repeal!
I take it all back!
Text amended to include your recommendation.
I suspect that Luxon and Willis are speaking to a larger and less aware audience. Luxon showed that at the Ratana gathering where his comments were not aimed at his listeners there but at the Hobson's Choice cohort.
What we have to do is show the reasonable middle uncommitted voters that his rhetoric is actually duplicitous and dangerous, that attaining power through such means is inherently flawed and leads to very undesirable consequences.
Peter Bradley at #9 on the post "Luxon blunders again" refers to a measured and deliberate misinformation campaign aimed at Finlayson's "KKK cohort".
Characteristically, they're even too late to walk backwards for Christmas, unlike Spike Milligan & Co:
This. This is the kind of stuff the left should be talking about and focusing on in a cost of living and global economic storm rather than spending all our time debating and fighting over social policy.
Labour needs to stick to it's traditional strengths of being seen as the party that cares about regular people not the rich.
Labour should constantly challenge the perception that national are somehow better economic managers, which even some labour voters believe, because it's not true.
The left needs to spend it's entire energy on shifting the public perception ATM that labour is more concerned with social policy, bureaucratic restructures and identity and have labour be seen as the party protecting the living standards of the ordinary kiwi and the kiwi dream.
We need to focus less on national/acts social policy, cos thats more popular than the left want the admit, but national/acts economic policy is about as popular as dried sick and the more we focus on their social policy the less we focus on what will actually lose them votes: The untold economic harm their vicious austerity will do to kiwis.
Labour and the wider left can win and election based off economic policy and protecting kiwis from Liz Truss style economic vandalism, Labour cannot win and election thought on culture wars and social policy.
Also Hipkins should come out and say the pension will stay at 65 under him before Luxon says it. It may be kicking the can down the road but the side wanting to raise the pension usually loses because boomers, older gen x'ers and manual Labour and hard graft workers don't like it.
Some suit or office worker in a cushy job telling people with tired bodies from decades of hard labor that they'll have to work an extra two years when their bodies are stuffed is never gonna be popular. Labour shouldn't be the party trying to inflict a couple more years of hard work onto tired workers bodies, let the Tories do that, not us.
Actually there are other occupations where the workers are also worn out. Such as nurses, doctors, teachers.
I agree. National bang on about being the party of prudent fiscal management. Their lies can, and should, be loudly refuted by Labour. They do not talk up their own game enough, either historically or recently.
Good post. Economic injustice and class is what really matters and Labour should change back to being the party of working / poor / average people. Be a winning strategy I reckon.
National and the 'business' men they purport to represent fail to understand that employees are also customers. If your customers have a reduction in disposable income you will likewise have diminishing sales. Pay workers well and they will spend it.
They might have a different line of thought: There's also money made from desperate people that don't earn enough for a living, like payday loans, credit card interests.
Agree totally that if employees don't get a wage rise equal to inflation rate then they are ending up with a pay cut. What's worse is cost of living goes up 7%, if employees get 7% wage rise to compensate (if they are lucky, most will get less), but lose some of that higher pay in income tax, so increased wages 7% = 5% after tax, you still have a pay cut.
But to slow inflation, spending needs to reduce in the economy (government included, which I don't think is happening) – the wealthier won't reduce their spending as they don't have to worry about weekly cost of groceries, etc.
So guess who has to cut back spending to slow inflation – lower & middle class. Problem is now they need all their pay to survive, so they are screwed, which ever way you look at it. So people are pissed with their governments in most countries.
Also have to agree that under previous labour governments the purse strings were handled well, although I don't think the Nats did too badly.
For so long we had very little inflation & people forgot about how destructive it is to ordinary hard workers on low to middle incomes. Sadly will take some hard times to fix it.
Is too much spending the cause of the inflation?
The inflation of the 1970's began with the oil price shock, as the cost of this went through the economy.
This time it came with disruption to international supply lines and otherwise decline in production (lockdowns and days off with covid) and pandemic QE resulting in rising asset wealth and work from home lockdowns leading to a spend up on home renovations (consequently pushing up the cost of new builds). All made worse by the corporate monopoly in gib board supply unable to meet demand (new factory starts up this year). But this will ease.
Then recently the late start to planting and harvesting of some food – this is temporary.
Some cost increases come from adopting higher standards – the cost of eggs has risen with the move to the either barn or free range basket. The same would have happened with pork as we improved local standards but we placed no rules on imports.
We actually need to spend more on productivity (reduce need for labour) – such as automated milking and investment to move away from tourism by volume.
Wondered about the reason for low interest rates years go. I couldn't spot the source of all the easy money that kept them low. I assumed the Chinese government was pumping in liquidity, ready to pull it back strategically when it wanted.
But honestly, I don't even think economists know – they perhaps tap their nose and say 'market forces'. Fortunately, Ardern's government were very fiscally responsible on covid response spending, and only bumped up borrowing to 30% GDP compared with many other counties (https://tradingeconomics.com/new-zealand/indicators
great info site, by the way), leaving the govt with a level of control over debt servicing.
Most regressive incarnation of the National Party for a long time. It's not being said out loud though.
Last time this high inflation happened they put a tax surcharge on. I know my Mum paid tat. It pushed her tax up hugely, and her extra kiwi sorting work ended up paying her tax for two years?
That was an oil shockin the 70s and and later loose fiscal caps in the 80s.
Some may remember that. It was after 1984, as my Dad died in 1982 and we helped Mum into a unit, and I paid a mortgage $12000 out of the $52000 @ 18%. I think from memory, inflation was high then twice what it is now 14%. We got through by helping each other.
I meant to add, both Labour and National tried to overcome inflation back then..
We have had 44% inflation after World war 1. That was our highest,
7.2 seems quite reasonable in comparison.It could be worse.
Mark Twain was on to the widespread confusion between wage levels and purchasing power over 120 years ago. See Chapter 33 of A Yankee At The Court Of King Arthur.
Actually I think one of National's biggest problems is that they don't understand class at all. It is not synonymous nor interchangeable with money. Ardern has class, Luxon has what he sits on. Nothing sheds votes quicker than a clear indication that the aspiring candidate will say absolutely anything to get his sticky fingers on the levers of power.
Nice to see Labour is once again focusing on the needs of their core supporters. A lot of votes there, and no-one else is courting them.
I believe a bigger demon is the policy of using the OCR to "… stop the economy from overheating".
Joe earns! $1000 per week of which $650 goes in mortgage payments. He struggles and prays for a pay rise or the government to increase the minimum wage, so he can live a better life.
The government increases the minimum wage and Joe now gets $1100 per week, along with other people in his income bracket. Meanwhile, to stop the economy overheating, the central Bank raises the OCR and Joe now pays $750 in his mortgage payments.
The only outcomes are that the government of the day gets to publicise its good deeds, and the banks make more profits (some of which go to shareholders and the rest to senior management for their acumen).
Grocery is maybe a big chunk of Joe's (and Family) pay. This needs action sooner..than later.
AB, you wrote: "Most regressive incarnation of the National Party for a long time. It's not being said out loud though."
Absolutely right. Luxon fulfils the very worst and most destructive version of what an Opposition leader is expected to do, and his Opposition party achieves the same.
That is – to simply oppose everything, propose nothing, and do whatever is possible to undermine, or preferably destroy, the government that is in power, even if the country is facing a national crisis, and with no consideration for the wellbeing of the nation whatsoever. As you observe, Stuart Munro, the aspiring candidate will say absolutely anything to get his sticky fingers on the levers of power. And I think this shows.