News that 28,000 New Zealanders left for Australia last year has Business NZ, the Chamber of Commerce and the National Party predictably calling for tax cuts as the solution to New Zealand’s wage gap with Australia.
Of course, they know very well that tax cuts are not the answer. Workers in Australia currently earn 30% more than workers in New Zealand, which means unless John and his business mates are willing to reduce taxes by 30 cents in the dollar they’re not going to close the gap. And as keen as they might secretly be on such a plan, it’s clearly not a plausible option.
Because the real issue, as always, is wages, and it’s the elephant in the room that National and its allied business lobby groups would rather ignore. New Zealand’s low wage economy can be traced directly back to the Employment Contracts Act of 1991, which was deliberately designed to reduce the ability of workers to bargain for better wages through their unions.
Since then New Zealanders’ pay packets have fallen behind Australia, our productivity has failed to keep up and even Labour’s Employment Relations Act has done little to repair the damage. As few as one in five New Zealanders now belong to a union, pass-on is rife, and enterprise bargaining is heavily favoured by legislation.
If we want to raise New Zealanders’ living standards to Australian levels then we need to seriously lift wages and restore industry-wide collective bargaining, and that’s something National knows it has a shameful record on.
It’s no wonder they’d rather talk about tax cuts.