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Wage subsidy a half-hearted gesture

Written By: - Date published: 8:12 am, September 8th, 2010 - 60 comments
Categories: business, jobs, spin, wages - Tags: ,

The unions, business, and Phil Goff have all gritted their teeth and called the Nats’ $15 million wage subsidy scheme for small businesses affected by the Christchurch earthquake ‘a start’. The problem is, it’s likely to be the end. If the government had any intention of doing more, it would have done it. This scheme will leave workers and employers severely out of pocket, killing businesses and jobs.

There are about 77,000 workers (5% of our workforce) unable to work due to the quake. To ask their employers to continue paying their wages unaided would be a death sentence for many recession-weakened firms.

The Nats’ response is a $350 a week subsidy to firms employing 20 or fewer staff. It will only be for the staff who would work if the business was open, not workers who can’t get to work due to their personal circumstances. The bill is expected to be $15 million (how the Herald got $100 million is anyone’s guess, it can’t possibly be that much)

First off, the quantum of the payment is inadequate. $350 a week is less the minimum full-time wage. It’s less than half the median wage of $750 a week. Employers are ‘asked’ to cover the difference, which will be over $400 a week for half of workers. That will be enough to send firms to the wall. Or they’ll have to stop paying, leaving families to get by on a pittance while trying to rebuild after a major disaster (let’s hope they have home insurance, because the government’s not going to help if they don’t).

Second, most workers are excluded from the scheme. The bulk of worker are employed by larger firms with over 20 employers. Those firms, if shut by the quake, are suffering exactly the same problems as smaller ones and more families are dependent on the incomes.

Third, limiting the scheme only to workers who would be able to work if the business were open but not those who can’t get to work because of their personal circumstances is an unfair and illogical distinction. Expecting those who can’t get to work to rely on emergency WINZ grants when WINZ itself is severely affected is callous.

Fourth, no word on how the self-employed or contractors are affected. I’m especially worried about the workers who are employed as ‘contractors’, they are always the ones who get screwed.

When South Canterbury Finance collapsed not one of the mostly wealthy people, who had put money into a company knowing it was risky but greedy for the interest rates, lost a cent. The government could easily afford to extend the same generosity to those who have suffered in this earthquake through no fault of their own. To fund it, it could delay the tax cuts for the rich by as little as a year or even just six months.

I saw some video of what the RNZ reporter described as John Key’s ‘roadshow’. They went to one of the emergency centres where the number of homeless families is growing as aftershocks make more and more homes unstable.

As a photo-op, Key pretended to read a book to a little girl. He didn’t tell her parents ‘the government will stand behind your family and make sure you’re not out of pocket – we’ll cover your wages and your uninsured losses’. He didn’t say ‘we’re announcing a program to get you into a home as soon as possible and, until then, we’re calling on people with big houses and spare rooms to accommodate you’. No, he pretended to read a book.

The book was titled ‘The Suspicion of Innocence’. That seemed poignant.

60 comments on “Wage subsidy a half-hearted gesture ”

  1. Peter Martin 1

    To be fair, it may well be that an as yet unknown number of businesses have insurance that covers this.
    But I agree, $350 per week before tax, is very much a token.

  2. Tigger 2

    Who on earth decided Key should read a book in the midst of a disaster scenario? Bush and 9/11 killed that warm fuzzy forever. Plus did no one see the Scary Movie where Leslie Nielsen lampooned it perfectly?

  3. joe bloggs 3

    Phil who?

    No Christchurch photo ops for the Leader of the Opposition given Kohn Key’s all over this like a rash.

    No wonder Phil’s gritting his teeth.

    • Bright Red 3.1

      You’re a poor soul if you judge the performance of our government on who gets the photo ops.

  4. more_ben 4

    National is being more Labour than Labour on this and everything else. And still the Standard is unable to give any credit at all. What would Labour have done differently?

    • Bright Red 4.1

      Marty’s told you what he would have done differently, in this post and yesterday’s.

      He’s not responsible for Labour’s policy.

  5. Roflcopter 5

    This is a subsidy on top of the ability for workers, who would not normally be eligible, to go to WINZ for assistance.

    Jeez, solidarity across parties at the top levels of parliament to deal with all of this, and more whining out of you lot. Talk about out of touch.

    • Agree wholeheartedly; I’m waiting for someone from The Standard to suggest that the PM shuld pay this all out of his personal wealth …

    • Bright Red 5.2

      do you think that it’s ok the SCF investors get 100% bailout and the workers and families of Chch don’t?

      captcha: losss

      • joe bloggs 5.2.1

        that’s a question better directed at Michael Cullen who introduced the scheme in the first place. Perhaps you remember Helen Clark introducing it at Labour’s election campaign launch in ’08?

        John Armstrong comments on the scapegoating the Govt has received over the SCF bailout. Read and learn:

        http://www.odt.co.nz/opinion/opinion/124473/govt-scapegoated-over-scf-payout

        • Loota 5.2.1.1

          Nice try at misdirection Joe, Cullen introduced the scheme to protect ma and pa investors, Bill and John used it to signed SCF on and ran it in a way that big financial speculators got a $1700M dollar payout.

          Workers? Oh guess you can have the drippings off the manor table ($15M)

          • clandestino 5.2.1.1.1

            That’s patent BS I have close family who invested in SCF along with 30,000 other people. The guarantee may upset people in hindsight given the state of the book keeping, but let’s not go all ‘9-11 Truther’ on this

      • Roflcopter 5.2.2

        No I don’t, but tell me how your incessant whining here is in step with the thoughts and coordinated response by all the political parties in this time of crisis? You keep making shit up as you go along.

        captcha: inabilitys – to which you have plenty

  6. Bill 6

    What’s the story with accumulated stat days? It’s not a solution I particularly like, but my question isn’t to do with the taking of them, but the scenario if the employer is unable to pay them.

    And then there is the annual leave option….and awarding it in advance if need be. Again. Not a particularly desirable solution. And again, the question of whether small employers can pay it.

    Of course, employers could expand the criteria surrounding sick leave and that would at least allow for holidays to be preserved for genuine breaks.

    Or how about large solvent businesses follow the rhetoric of Johnny Boy on day one when he said he was there to express solidarity, and lend to the smaller businesses at zero % interest and on a repayment time scale determined by the seriousness of the impact suffered by the smaller more vulnerable businesses…or minimally, make sure they pay their bills in very timely fashion…or extend the time they will allow affected smaller businesses to pay their bills to them…or throw up their hands, claim they can do nothing and depend on the tax payer to bail out their whole sorry system of exploitation while rubbing their hands in glee at the prospect of an increased market share coming off the back of other’s misfortune?

    The latter option.

  7. Kevyn 7

    How does this government’s worker compensation plan compare with Labour’s response to the Manawatu floods?

    The only aspect of Labour’s reponse to the Manawatu flood that I have detailed knowledge of is that they promised that the government would fund the repairs to roads and bridges but that not one cent ever appeared in the government’s budgets for that purpose. Transfund/NZTA annual reports show that the funds for the flood repairs were simply deducted from the amount allocated to Manawatu for highway improvements in Transfunds 10-year State Highway forecast. That’s a total contrast to the old politically independent Main Highways Board’s decision to share the burden of repairing roads and bridges after the Murchison and Hawke’s Bay quakes equitably accross the whole country.

  8. randal 8

    what about Joe Waitress.
    $600 a week.
    anybody know any waitresses who make 600 a weeK.

  9. tsmithfield 9

    I suspect that whatever the government offered would be criticised as not being enough.

    Newsflash. The government can’t solve everything. The $350 contribution is available immediately and is a heck of a lot better than what many would get on the dole. I suspect that Winz will also be stepping in with assistance where necessary, and people may also find they qualify for more family support than what they did previously. Banks are also offering mortgage holidays for affected people.

    So it is likely that many will find the various initiatives enough for them to get through.

    Also, as the recovery kicks in there will be no excuse for anyone who has working arms and legs to be unemployed. So, I suspect those displaced from their current jobs will soon find other jobs helping with various aspects of the clean-up and rebuilding.

    • Vicky32 9.1

      “Also, as the recovery kicks in there will be no excuse for anyone who has working arms and legs to be unemployed. So, I suspect those displaced from their current jobs will soon find other jobs helping with various aspects of the clean-up and rebuilding.”
      What recovery are you banging on about tsmithfield? If you’re right, I shall be turning cartwheels with joy, as I am fed up with being unemployed – and with waiting for this “recovery”!
      And how do you expect secretaries and receptionists to suddenly turn into builders and labourers?
      Deb

      • Lanthanide 9.1.1

        “And how do you expect secretaries and receptionists to suddenly turn into builders and labourers?”
        Pick up a shovel or paintbrush, obviously. Everything is magically easy in tsmithfield’s world. A job is a job is a job is a job.

        • Loota 9.1.1.1

          Look, during the Great Leap Forwards scientists and lecturers successfully became farmers. And given that the Right actually likes their peasantry, I’m sure this could be a model.

        • Vicky32 9.1.1.2

          To quote Bugs Bunny, it is to laugh… In his world obviously, workers aren’t office workers with no building expertise, over 60, or under 155 cm…
          Deb

      • tsmithfield 9.1.2

        Debbie: “What recovery are you banging on about tsmithfield?”

        What I mean is the recovery from the earthquake. There is a big mess to clean up in case you have just come from Mars.

        Vicky: “To quote Bugs Bunny, it is to laugh… In his world obviously, workers aren’t office workers with no building expertise, over 60, or under 155 cm…”

        What experience does it take to get on the end of a shovel?

        • Marty G 9.1.2.1

          The demolition crews don’t want any casual people. You have to have site safe certification. there was a video on it on stuff on tuesday.

        • Puddleglum 9.1.2.2

          I’ve worked in a few menial/labouring jobs and they all required a whole series of ‘knacks’ that you don’t master overnight.

          I remember once trying to shift a 44 gal drum full of cooking oil and couldn’t budge it. Spent about twenty minutes moving it a couple of yards. Some young, little guy (even smaller than me) who was an ‘old hand’ took a running jump at it, leapt on, grabbing it with his full body around the rim, started to tip it and then braced himself with his legs on the ground as it fell, (If I’d have tried it I would have become a well-oiled pancake.) He then rolled it to where it had to be, looked at me with the kind of look that only working men can give each other, spat on the ground and went back to his job.

          It’s the same on building sites – easy to mess up, whether you’re digging a ditch, stacking bricks, wheeling a wheelbarrow full of cement or whatever. There’s a way to dig, for example, that means you keep a good speed going but won’t end up with a crook back after an hour and have to be given some patsy work. And since my last experience I guess a lot more machinery gets used for the jobs I used to do.

          The jobs are called ‘unskilled’ but that’s only because nobody offers a course in them. I probably couldn’t count the number of times I’ve been embarrassed with my lack of skill at such work. What’s worse is that I’ve often felt I’ve been more hindrance than help as others have had to waste their time cleaning up after me.

  10. This scheme will leave workers and employers severely out of pocket, killing businesses and jobs.

    There are about 77,000 workers (5% of our workforce) unable to work due to the quake. To ask their employers to continue paying their wages unaided would be a death sentence for many recession-weakened firms.

    You appear to assume that employers have an option of not paying their employees. I’d be very interested to know the legal basis underpinning this implicit claim. They have employment contracts, they get paid. That’s pretty much the deal.

    captcha: staffs

    • Loota 10.1

      I hear bankruptcy or receivership is pretty good at interfering with the paying of wages.

      • tsmithfield 10.1.1

        In a bankruptcy/receivership situation, the employees would ordinarily have the prospect of the dole. The current package offered by the government is considerably better than the dole. For instance, it is available immediately (no stand down). And in the case of a family where both partners lose their jobs, then their would be two lots of $350 coming into the family.

        • Marty G 10.1.1.1

          I’m sure that will be of great comfort, $700 a week before tax is below the poverty line for a family with kids. – take off tax and accommodation, and what’s left?

          meanwhile, people who gambled on SCF walk away with millions, including their interest.

          • Roflcopter 10.1.1.1.1

            Go ask WINZ what you get on top of that… I dare you to. Then come back and say it is nothing so we can all laugh at you.

            • Marty G 10.1.1.1.1.1

              no, you provide evidence that WINZ is providing top-ups to this grant, which is being paid through WINZ.

              my plan would leave no employer or employee out of pocket over wages for work that can’t be done because of the quake. Does the Nats’ plan match that?

              • Roflcopter

                It’s already been announced that WINZ will be coming to the party for those affected, ON TOP of the $350.

                I have friends down in ChCh, who were in fulltime work but are now going to be out for a long time because their place of work is shattered, who have already been in contact with WINZ.

                They get no standdown on entitlements, can get WFF where they couldn’t before, their bank has holidayed their mortgage with no penalty or catch-up required. He also can get an emergency dole-type payment, AND the $350 as well… he is so grateful for what has been put forward as a solution, where before he was already living in rather tight times… but I guess it’s ok for you to spout off from your pedestal.

              • smhead

                no marty your plan would see a big fat blank cheque being paid to everybody no matter what their need. nice use of taxpayers money there, so generous of you. the bill for the cleanup will be in the billions already, let’s spend it wisely. sorry marty after nine years of labour the government can’t afford to write blank cheques.

                • Loota

                  no marty your plan would see a big fat blank cheque being paid to everybody no matter what their need

                  Fully consistent with Bill and John’s bail out of South Canterbury Finance.

                  What, you got a problem with that now?

                  sorry marty after nine years of labour the government can’t afford to write blank cheques.

                  Well didn’t Bill and John prove you oh-so-wrong.

                  OK it wasn’t a blank cheque exaclty but the one for SCF did have ten digits for the dollar value.

                  • Pascal's bookie

                    Wasn’t it just the other day that those comm1e bastards at the IMF were saying that the NZ govt was in a good position to be able to write cheques? Bloody Michael Cullen!!

                • Pascal's bookie

                  So I assume then that the government is in fact checking to see that the employers who are being subsidised under this scheme are not also insured?

                • Marty G

                  my plan funds workers wages for quake closed businesses by canning the tax cuts for the richest kiwis for one year. with plenty left over.

                  • smhead

                    marty every one of your economic plans involves canning tax cuts. in fact it could be said that you only ever invent economic plans as an excuse to can tax cuts and sop the rich who already pay too much tax. eat the rich yes that’s a good plan. not.

                    • Pascal's bookie

                      …in fact it could be said that you only ever invent economic plans as an excuse to can tax cuts…

                      Anything can be said, some things are too stupid to be worth saying though.

                      Take a look at these graphs:

                      http://www.presimetrics.com/blog/?p=92

                      It is simply not the case that shrinking the state produces economic benefits. What counts is whether or not the state is doing the things that the state should be doing, and whether or not it is doing so efficiently. Part of this is whether or not it is collecting enough taxes.

                      The right have become singularly focussed on shrinking the size of the state over the last couple of decades. They can’t win support to actually cut back on the things the state does, so they focus on cutting taxes. This is simply unserious. You can’t cut taxes without cutting the spending, and the pitiful spending cuts they manage never pay for the tax cuts they want.

                      The argument they have, for what it is worth, is that ‘smaller govt is better’. This is axiomatic and just assumed to be true. It’s obvious question begging, and doesn’t seem to find much support when you look at what happens empirically.

                      So instead we hear tired rhetoric like eat the rich yes that’s a good plan. not. and moronic projection like you only ever invent economic plans as an excuse to can tax cuts, when it’s obvious to anyone who pays attention that it is the right that views the level of taxation and the size of the state as ideological targets.

        • Roflcopter 10.1.1.2

          Dude, you’re killing Graeme’s whining with facts. Stick to making stuff up like he does.

          • Pascal's bookie 10.1.1.2.1

            What ts is doing is painting this policy, which I agree is good, as some sort of payout to employees. It’s not. It’s a subsidy to relieve some pressure off small employers. The fact that those businesses are not being given the ‘moral hazard speech’ about their lack of insurance is an interesting political fact.

            And Graeme is usually right. That’s like pretty much an internet fact.

    • Marty G 10.2

      It’s the govt who are ‘asking’ the employers to pay the difference between the $350 and ordinary wages… which means employers aren’t compelled to pay. I assume they know the law.
      Presumably, employers can argue force majeure.

      also, the argument is that’s not fair or possible for the employers to expect them to stump up with the cash when they have no cash flow.

  11. clandestino 11

    I don’t quite understand what more the government can do in this situation. $350 a week does not seem like chips to me (if the reports I’ve heard here and on the radio about mortgage holidays are true). Does it occur to anyone that could be a disincentive to finding work quickly in coming days/weeks when it’s around?
    The biggest problem is going to be insurance. Possibly 10k homes uninsured, at say 300k, that’s a shiteload. Does the taxpayer pick up the tab? Remember, EQC contributions come out of the premiums paid by those who took out insurance, and needs to be rationed for future disasters too.

    Coupled with the issue of subsidising select businesses, moral hazard much?

    • Vicky32 11.1

      “Does it occur to anyone that could be a disincentive to finding work quickly in coming days/weeks when it’s around?”
      I hear Bugs Bunny again… Would a temporary $350.00 a week be a disincentive to you? No of course not, so why assume that of other people? You’re being ridiculous.
      Deb

  12. infused 12

    Income protection insurance… it’s actually not that expensive. For the people that don’t have house insurance…. that’s just fucking crazy. I’m sorry, but really. Why should the tax payer pick up the tab here?

    • clandestino 12.1

      And what message does it send to those who have always played it safe and prepared for the worst, sensibly?
      If we all pick up the tab for the uninsured…what’s the point in having insurance, you’re getting shat on. I just can’t believe it’s not mandatory like bike helmets or seatbelts.

      • Loota 12.1.1

        Yeah I agree, better to let those people and their families rot and to bring down the value of the neighbourhoods around their rubble.

        Why should the tax payer pick up the tab here?

        well the taxpayer happily picked up the tab for SCF speculators, I guess you are saying that those homeless families and their children are less deserving than those big shots.

      • Puddleglum 12.1.2

        So many things for ‘sensible people’ to insure for, aren’t there. I won’t repeat myself here, but you’ve just proved my point that there’s no end to what ‘sensible people’ like yourself and infused believe those with little money should fork out for. Now it’s ‘income protection’ insurance!

        I pay the whole caboodle (health, life for me and my wife, car, contents, house, mortgage protection, income protection for me), i.e., the kind of cover you’d both be proud of me ‘self-providing’. Guess how much it costs me per fortnight? You want a cleaner or a labourer to fork out that lot from their wages just because people like you never understood the notion of ‘enlightened self-interest’?

  13. M 13

    Maybe Johnny was at the wrong meeting and is taking direct action towards improving the literacy of young new Zealanders.

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