At the last election we chose tax cuts and unemployment instead of stimulus and stability – which was the more ambitious, high wage way to go?
National are not fulfilling their government’s core reason for existence: closing the wage gap with Australia. No, we’re fast going backwards on that score, and it’s predictable: high unemployment causes low wages.
Bill English thought unemployment below 6% was ‘a hoax’ in 1999 – and he’s doing his best to fulfil his own fallacy. Labour got it down below 3% and wages rose as employment demands tightened – the wage gap with Australia stopped growing like it had with 90s National. National have got it back up, and the Reserve Bank expects it to remain over 5% beyond 2014 – and most workers are getting below inflation wage rises, if any at all.
It didn’t have to be this way of course. Labour at the last election had a large number of ‘spade ready’ stimulus projects lined up. We could have actually done something about ultra-fast broadband, got a lot of rail projects going, environmental projects, maybe even a few cycleways as a minor project… A lot of unemployment would have been soaked up, a lot of useful work for the country could have been done, and there would have been a lot more people paying tax instead of costing us benefits.
Instead we have do-nothing National, who let what stimulus Labour had started slowly peter out, and unemployment rise. They are spending the Labour government’s 9 years of surplus on tax cuts for the rich, paying polluters in their emasculated ETS, and increasing funds to private schools; and will now find that their GST rise to reduce the deficit falls further short as people stop spending because their pay doesn’t reach the end of the week any more.
With high unemployment the wage gap with Australia is rapidly rising, and the economy is heading back to recession. National’s rich business mates are getting laws to tighten the screw on workers and get them through tough times; but many of their businesses are doomed to fail – those workers are also the consumers who can no longer afford to buy their goods and services. Henry Ford understood that he needed to pay his workers well so they could afford to buy his cars, but National have not learnt the arch-capitalist’s lesson.
And so the government’s books will worsen – less tax in, more benefits out, even losing money on not investing in the Cullen Fund. It could have been stimulus, employment, growth, bounding out of recession – but instead we have a Finance Minister who’s too busy fiddling with statistics whilst the books burn, and a PM who’s just desperate to get a photo with a Hobbit for his scrap-book.