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Why are we angry about tax and apathetic about low pay?

Written By: - Date published: 9:22 am, September 29th, 2017 - 49 comments
Categories: class war, tax, wages - Tags: , ,

National’s one and only strategy this election was lying about Labour, specifically Labour’s budget and their tax policy. The $11.7bn hole lie just made the Nats look stupid, but the evidence suggests that the tax lie did real damage.

Why are we so angry about tax and so apathetic about the much more important issue of low pay? Hamish Fletcher in The Herald:

Hamish Fletcher: Kiwis have given up on pay rises

Many Kiwis are giving up on the promise on a pay rise. In fact, workers haven’t been this glum about getting a pay bump since the global financial crisis.

New Zealand employees, according to the latest Westpac McDermott Miller Employment Confidence Index, are displaying “a lot of nervousness about what’s happening to wages and salaries”. “When it comes to the outlook for earnings, sentiment is really in the dumps.

Increasing numbers of workers are telling us that they don’t expect any change in their earnings from work over the coming year. In fact, the number of workers who expect to receive a pay increase over the coming year is languishing at the sort of lows we saw during the financial crisis,” Westpac senior Economist Ranchhod said.

So why are workers in the doldrums?

Westpac said that bleak mood is probably due to years of muted wage growth. Salary and wages – as measured by the Statistics New Zealand’s labour cost index – grew 1.7 per cent in the 12 months to June. That equalled the rate of inflation, meaning people won’t be feeling any richer as a result. And given private sector wage rates only grew by 1.6 per cent, there’s a big chunk of workers whose spending power fell. …

Related reading:
Business profits leap ahead while wages struggle to outpace inflation
Big Read: Hey! Where did my pay rise go?
Strong GDP makes little difference to average earners – English
New Zealand’s economic growth driven almost exclusively by rising population
Bad luck: Pay rises probably off the table until next election
Brian Fallow: Something is missing in Govt success story
Wages not keeping up with cost of living
and so on and so on.

Back to the quoted article:

But nothing would give sentiment a shot in the arm like an significant lift in real wages. Just how Labour or National – together with Winston Peters – will achieve this remains to be seen.

I’m glad you asked! In the case of Labour see their workplace relations policy here. Vernon Small on Stuff:

Labour plans to lift minimum wage with new employment relations package

Labour is promising to boost incomes and stop a race to the bottom by bad employers with an employment relations package that includes a move to base industry employment standards.

Key changes proposed by Labour include a lift in the minimum wage from $15.75 to $16.50. It would base future rises on the cost of living for people on low incomes.

To all those voters worried about lies about taxes that largely won’t affect you anyway – why not worry about your wages instead? Wage stagnation is only inevitable if you accept it.


Footnote. Don’t worry though! Bill English said before the election that pay rises are coming. He said the same thing in 2016. He said the same thing in 2014. The same thing in 2012. The same thing in 2011 (when he also tried to convince us that low wages were actually an advantage for NZ). For some reason I don’t believe Bill English…

49 comments on “Why are we angry about tax and apathetic about low pay?”

  1. savenz 1

    Exactly. National are terrible, but the opposition need to actually have a plan to win the election, because they should KNOW by now that National have only one election ploy to cheat, throw mud, lie, control media, have various individual campaigns especially against opposition in particular leaders, (Winston – pension/Andrew Little – Scenic hotels litigation, Meitria – “the fraudster”- all done by intermediaries and using the stupidity of the MSM of course. National are the epitome of fake statistics or no statistics or unpublished statistics.

    Labour should have framed the election on low wages and higher productivity not taxes, but didn’t.

    ‘Bad employers” being to blame for the crisis on wages is not a positive message, not even true (the government sets the legislation and controls immigration and courts). If these are not working and we are getting zero hour contracts, less wages and so forth, you would think the messaging would be more directed at bad government!

    aka change this type of statement which is meaningless in real terms and seems to think ‘bad employers’ are to blame for the state of the economy.

    “Labour is promising to boost incomes and stop a race to the bottom by bad employers with an employment relations package that includes a move to base industry employment standards.”

    to

    Labour is promising to boost incomes which have declined in real terms under National, crack down on immigration scams and employers paying below the minimum wages, get rid of zero hour contracts and create more jobs by investing in Kiwi businesses and using local labour in government contracts.

    • red-blooded 1.1

      savenz, you do realise that the article by Vernon Small uses his words (ie not the words of the Labour Party)? Check the difference: http://www.labour.org.nz/workplacerelations. I don’t see any mention of “bad employers” – just that a Labour government would want to be a good employer.

      • savenz 1.1.1

        Thanks for pointing that out red-blooded. Maybe Labour need to actually start making formal complaints each time their views are mis represented by the media and others?

        Otherwise how do you know if it is true or not?

        I’m pretty sure if Labour constantly point out each misrepresentation and the news has to retract – pretty soon the MSM will become better trained. Labour need to stop them getting away with sloppy misreporting.

    • patricia bremner 1.2

      The message should be positive. My mad thoughts to counter blue/green rubbish.

      L/NZF/G will lead the way to better wages by making council and all government positions based on the living wage. This will put more money into communities.

      Employers who bring their wages into line with this will earn tax breaks/rewards.

      Communities who can declare themselves part of “the living income scheme” will have access to interest free 2/5/10 year bonds towards community improvements.

      (parks/gardens/art/free internet hubs/electric bikes/education hubs/theatre/music special housing/ information centers/ meeting places for pet owners/the elderly..
      Let’s do this. Let’ get creative and positive. Let’s start community building again.

      If the vote changes to 44 37+6 plus NZF, the number who voted against the status quo is well over 50%. As much a mandate as 46% is now!!!

  2. Psych nurse 2

    Its simple, tax cut + no wage increases = employer subsidy and a low waged economy.

  3. savenz 3

    There are PLENTY of ways to be more efficient to save money on government spending other than more taxes, for example. Health care, prevention, massive savings on IT, get rid of all the troughers that have ballooned away from health care under Bill English. http://werewolf.co.nz/2017/08/bill-english-the-forgotten-history/

    The Auckland council wastes 1 billion on failed IT and their overpriced CEO structure just wants more rates. Government agencies are increasingly off on a tangent and completely unaccountable to those that provide money.

    The left catch cry of more taxes is failing to resonate for those proving the taxes but being left with less and less services for the taxes and more and more troughs diverting the money. Asking for more money is not solving the fundamental problems voters are seeing.

    Solve that and articulate it, and Labour will flourish again. They are starting to bloom, but unfortunately not quite there yet and might get a frost if they get it wrong.

    • millsy 3.1

      Re-proritise all those transfer payments that get dished out. There are people out there who get accomodation supplements of less than $20 per week. It seems rather pointless having a cash payment of $4 or $5 a week, would rather this go to bigger payments to people at the bottom end.

      • Matt 3.1.1

        This is one of the main issues with WFF and Accommodation supplements. Its just another way of keeping the wages down. Do we really think that National would have left them and even strengthened them if there wasn’t something in it for their supporters.

    • lloyd 3.2

      Donald Trump wanted to make America great again. When was America great?
      Lets ask the question slightly differently – when was the American economy doing better than almost any other? Answer has to be in the early fifties. Why? – because the rich had been taxed hard to produce the armed services that destroyed the Axis and to face the ‘Communist threat’. Unemployment was low, GIs could get a free tertiary education paid for by those taxes and the draft (paid for by those taxes) kept that unemployment low.
      The Donald hasn’t got a hope in hell of getting the USA back to the economic dominance it had in the 1950’s because he wants to cut taxes. Duhh.
      Efficiency in government spending might not be all that important in a growing economy. Increasing the amount of government spending might be far more important.
      New Zealand is not a heavily taxed country and a government that wants the social investment that produces a growing economy needs to bite the bullet and tax the rich minority – hard. Any tax cuts will only result in a faltering economy.
      Sure Auckland Council almost certainly could have done better by getting a NZ based company to provide IT services, but Auckland’s rates are not high by even NZ standards and are piddly compared to what you would pay in the USA today in most cities.
      Taxing the rich, spending money on health care, education and welfare is a good formula for developing an economy with equitable economic outcomes for all.

  4. Kevin 4

    Pretty sad when salary/wage earners only chance of having more money in their pocket is through a reduction in income tax.

    A situation that suits the current (temporary) government and employers alike.

  5. savenz 5

    I’m pretty sure that NZ First will got with Labour and Greens. They all are all turning away from 20th century neoliberalism and their combined policies reflect that. Look after your neighbour, community, country AND then look further afield.

    Neoliberalism has every one competing against each other in the global marketplace gone horribly wrong with western worlds becoming less and less equal so that the third world can work in factories 5 hours away from their families for a pittance and sell cheaper plastic goods, their babies raised by grandparents on formula milk which may or may not be counterfeit, exploit and pollute their environment and this is progress .

    Fonterra CEO has a 57% increase to 8 million plus and nobody says boo, while the farmers are going bankrupt and increasingly can’t afford to run their own farms and are being sold off to corporations under National’s watch. Blaming farmers for water quality is not helping when it is the councils and government that set and enforce the rules.

    Labour in their last decade lost their role as the people’s party. Too many statements talking about ‘bad employers’, ‘bad landlords’, ‘bad farmers’, ‘bad speculators’, ‘bad boomers’. I have yet to see Labour complain about ‘Bad CEO’s and bad councils’ in a statement. Labour have created an idea that they only stand for poorer urban working class and higher taxes in the minds of the above and support the status quo of power and money hungry government, councils and COO’s, exploiting people.

    None of this is true, but Labour have been encapsulated by bad advice and communication while National have annihilated any independent media voices and created only offshore media that serves National propaganda. National have the bit between their teeth are gaining more and more power and more and more reckless. Even importing in voters and changing the demographics which will and has already had a massive effect on the social welfare system of health, education and superannuation.

    Once Labour stop appearing to blame various (large) sectors of NZ for it’s woes and clearly focus on National government policy, they will regain the people’s party role.

    Labour should do everything they can, along with NZ First and Greens to change the government and stop National’s reckless behaviour.

    • georgecom 5.1

      One reason I would enjoy Labour/Greens/NZ FIrst is to punish National for telling lies on the campaign trail. Rather than be rewarded for their lies, justice would have them in opposition. Would be a delightful lesson for Bill English. Telling lies denies him the Prime Ministership he so desperately craves.

  6. Sabine 6

    Last year we bought a little house with a large garden for the price of a window frame in AKL. Now there are no jobs here other then a few council jobs. No industry other then dairy. Summer season is all but three month and the ‘shops’ are closed for most of the year and only open when the tourist arrive in their buses and RV’s – and they don’t use a lot of stuff or shop.

    But today i got a letter from our valuer that gasp, my little house with the large garden has increased by 45.000$ in value. Yei! all due to people buying up sections here to build sheds for their 100.000$+ boats. Nothing else.

    Beats working. And i don’t have to pay tax on it if I were to sell it. Yei, me! I made money by not working. Woot!Woot!

    Maybe we need to ask why those that work should pay taxes in the first place.

    • savenz 6.1

      @Sabine, but if you were taxed just for having a house independent of rates (yep council rates and GST payable on that increased house price) would you be able to afford to keep owing the house?

      Councils have had huge increases in rates off the back of rising house prices, in many cases they responded by cutting services and then spending it on white elephant stadium studies, bizarre wastewater or irrigation plans and corporate welfare (IT, communication and lawyers) going to offshore owned corporations.

      • Sabine 6.1.1

        yes, if i want to live in a house i ‘would’ afford to either rent or own as i consider living in a ditch not an option having been homeless before.

        No question about it, and believe me i don’t pay a quater in mortgage what i paid in rent in AKL – and i had a very cheap rent in AKL.
        Really, that is the question you want to ask yourself, are we not already charging an unnamed tax on tenants in this Country, the Job Tax, the School Tax, the Hospital Tax, the nice Road Tax, the Public Transport Tax etc etc etc plus forcing people to pay high rents, receive low wages and are taxed on their income and pay GST on anything.

        As for services here, as i said, we are surrounded by cow paddocks and a river. Other then that there is literally nothing here that would warrant an increase in the value. Not even the work that i have done on the house, i.e. hung up a few curtains, painted the house with Resene Mistints at 80$ the 10 l bucket and lay second hand carpet would warrant a 45.000$ increase. What caused the increase is very rich people building sheds to house their boats for their weekend outings on the river. No extra services offered. No people that moved here. No businesses that settled. Nothing but a lot of empty houses and full boat sheds.

        So yeah, maybe if I were to sell my garden (which i am not) i should be taxed on that income that i make.

  7. Sparky 7

    Just because the MSM says something does not make it so. My wife and I were having this conversation a couple of days back and its one we have had before. Some of our friends too are concerned about this too but the fact is no one knows what to do about increasing wages in a society where there is a surplus of workers. Oh and before someone says that does not apply to skilled workers, think again. I know of at least two cases where skilled people were dismissed and lesser paid people placed in the same role.

    Increased taxation is the visible embodiment of this frustration not something distinct and separate from it. Whilst people don’t feel they have much control over what they are paid these days they do feel they can influence taxes based on how they elect to vote.

    I chose to vote NZF because I was not thrilled by Labour and the Greens tax policies. Even people who are by definition highly paid are struggling these days. Excessive taxation of the middle classes in this country is in my view becoming almost criminal in its extent and scope. By contrast the real elites and big corporations enjoy socialist taxation policies where taxes are absurdly low or almost non existent.

    So NO people are not apathetic about wages at all. They are trapped in a system that exploits them and then has the cheek to demand ever increasing taxes they simply can not afford to pay.

    • RedLogix 7.1

      Excessive taxation of the middle classes in this country is in my view becoming almost criminal in its extent and scope.

      The odd thing about this statement is that once you have taken account of retirement income provision (NZ is almost unique in that our Super scheme is totally funded from general taxation) … we actually have one of the very smallest government sectors in the developed world. Last time I looked only Mexico was smaller.

      This doesn’t totally dismiss the sentiment behind the quotation above; both statements can be true at the same time. What is clear from this however, is just how extremely distorted our taxation system has become, that far too much burden is being placed on a captive middle class wage earner, while far too little is being paid by the business and financial sectors who can employ clever accountants to minimise their tax.

      AND at the same time; I keep coming back to this point … the cost of living in NZ is obscenely high. This represents some very poor efficiencies and miserable business productivity that successive govts have completely failed to address.

      • savenz 7.1.1

        the cost of living in NZ is obscenely high… this is because it is now acceptable business practise here to make profits solely by increasing prices and any type of cost cutting such as decreasing wages and staff or lobbying government to keep a status quo (sow crates for pigs instead of higher welfare standards and tightening of poor quality imports). The regulation is all wrong, tight where it should not be and loose where it should be tight. The processes are wrong and it is creating a situation where logic no longer applies. None of this increases productivity.

        The only way neoliberalism survives is through migration and offshore investment, pushing new money in, creating competition and thereby increasing the prices for goods and services. Without more people (aka money) the whole situation would collapse like a Ponzi scheme.

        If we just needed people then NZ could increase it’s refugee quota and actually help someone who needs it. Nope our migration is built on low level twenty year olds who will work at below market wages in the hope of getting residency and then bringing their families over. We have a 0 tax haven to help overseas investors hide their dealings here, tax free.

        At the same time skilled Kiwis have to leave because they are expected to work for below market wages and have few opportunities due to the reluctance of most NZ companies to actually innovate and invest in real terms, not just the slogan.

        All of this is subsidised by the taxpayers- rents – low paid jobs – health- education -social security- retirement. People are reluctant to pay more in taxes because there are big problems being created by the government and councils themselves that they benefit from, at the expense of those that pay taxes for it.

    • One Anonymous Bloke 7.2

      the real elites and big corporations enjoy socialist taxation policies where taxes are absurdly low or almost non existent.

      Um, that’s more like witless Libertarian/ACT policy.

      There’s nothing wrong with (what we now call) “high” income tax rates if the burden is spread fairly.

    • tracey 7.3

      Immigration is a must to keep wages low.

      No outrage , and not a word fron National over the over 50% of kiwifruit growers having no employment contracts or paying less than minimum wage. Why? Cos this what alot of employers mean by we “need” immigrants. To keep their profit margins and drawings. The “market” would see their businesses go to wall as uneconomic BUT that market reality is not wanted so we subsidise a cheap waged worker recruitment service for them it NZIS.

    • Rosie 2 7.4

      The reason that people in this country have such low wages is that taxation is so incredibly high. I lived in Switzerland for nearly 5 years. Plumbers, electricians were paid incredibly well. GST is 7%. The highest rate for tax was 19% for the highest paid. The problem in this country is the very high tax rates. Simple. If Jacinda said she would drop GST to 7% I would vote for her in a heartbeat.

      [lprent: Looking at your list of comments under various names. You do appear to be a simpleton troll who adds nothing to the debate apart from trying to stir up flamewars. I can’t find anything worthy in any of your comments and you don’t seem to be improving. For instance in this comment you are referring to two types of taxation while ignoring the totality of taxation. The total tax take in Switzerland is higher than Australia and here. https://en.wikipedia.org/wiki/Taxation_in_Switzerland – check out the chart of the tax take against GDP.

      I can’t see any point in having an idiot troll around who doesn’t check their facts and avoids defending their idiotic positions as you have before. You are now banned permanently again. ]

    • lloyd 7.5

      Sounds like you should have voted TOP

  8. savenz 8

    Auckland council are digging up the perfectly good kerbs as we speak. Anything for roading or paving! Someone should investigate who is making the money from this ridiculous process – why Auckland council can afford to constantly dig up kerbs and replace kerbs but somehow need more rates to pay for anything useful like public transport, social housing, librarians, minimum waged grass cutters…

    The other rout – Auckland Transport is now taking any money left on the HOP card after 3 months. Yep that’s right – Japan has a 10 year rule but Auckland transport can only do 3 months. That’s due to retarded IT that Auckland ratepayers have to subside to mostly offshore companies. I do not have time to point out the full retardedness of this decision.

    Yep we are being ripped off again and again with public money and our so called representatives do nothing to change it.

  9. Anne 9

    … the evidence suggests that the tax lie did real damage.

    I have several young(ish) relatives who fell for the lie. Fortunately, they chose to vote Green instead of National. I did not enlighten them that a vote for the Greens was a vote for a Labour-led government.

    In the final two weeks the tax lie turned off many voters from voting Labour. It will continue to happen until Labour learn to aggressively respond to these lies. The limpid responses we have seen thus far only means the lies continue to be perpetuated without fear of consequences. There’s no way Winston Peters lets them get away with such behaviour so what is wrong with Labour? Are they still too scared of their respective shadows?

    • Ethica 9.1

      Those lies were spread far and wide through social media. They seem to be quite carefully targeted. So questions need to be asked about the use of data analytics by the National Party and who funded it and who had the expertise to do it so effectively.

      • Carolyn_nth 9.1.1

        Some good points. And also why we need better public service media. And to take the private funding out of politics.

  10. feijoa 10

    Exactly Anne

    The answer to the question at the top is that National and its friends CONTROL THE NARRATIVE
    You don’t hear about Labours policies- You hear about Nationals OPINION about Labours policies

    ad nauseum

  11. Matt 11

    A focus on productivity in New Zealand could bring the pay rises that everyone deserves. Instead the National Government has been content to fill the country with immigrants who through their work have covered over the issue that we have around declining productivity and have also contributed to the low wages that we continue to have especially around any type of low skill manual labour.

    We have a large number of people still on the unemployment benefit who they have also failed by not supporting them to get the skills they need to get these jobs. Then there are those who are either under employed or have not required help from WINZ. A area that is just totally disregarded by the official employment figures.

    The reason you see the likes of the faming, horticulture etc screaming about Nationals small reduction in the ease of immigration is that they may have to pay a bit more than the minimum wage. Simple as that.

    What a sad country we are heading towards being.

  12. newsense 12

    better P.R.?

  13. The Real Matthew 13

    Low wages in New Zealand are a left wing myth. We have the highest minimum/average wage ratio in the OECD . Any marked increase in wages would see technology replaced low skilled workers as we are already starting to see with self check-out counters and electronic ordering.

    Wages are so high many businesses have had to cut back on labour to remain afloat. Petrol stations employ one instead of two people. Supermarkets under-employ shelf stockers. Businesses have to employ overseas call centers just to remain in business.

    It’s clear that hiking the minimum wage every 6 months is doing fundamental damage to our economy and our international competitiveness. We owe it to low skill workers to create jobs for them at a wage that reflects their contribution to the economy.

    • One Anonymous Bloke 13.1

      It’s clear that hiking the minimum wage every 6 months is doing fundamental damage to our economy and our international competitiveness.

      😆

      Gullible dupe believes lies that Treasury abandoned more than a decade ago.

      Edit: I note your sadistic low-life disrespect for your betters.

    • Matt 13.2

      Having a good day Mr Hooton?

    • AB 13.3

      “at a wage that reflects their contribution to the economy”
      When you are a very old man soiling yourself in a rest home, tell that to the low-paid aged care worker who cleans you up, scumbag.
      If you think wages are any reflection of the real value of what people do, you are deluded.

    • eco maori 13.4

      I feel for all the people living on the minimum wage that rate is pathetic and any dick head trying to justify that rate should go live in space because they don’t believe in global warming ether $22 a hour would be my choice money does not go very far these days 2 bag of groceries and there go’s a hundy . My wife and I are both working and just getting by and were not extravagant thing are expense now .
      I can remember a articule 9 years comparing our food cost with Briton and Australia and we had the lowest cost not anymore.

    • KJT 13.5

      I agree, we should pay people according to their contribution to the economy.

      http://news.bbc.co.uk/2/hi/business/8410489.stm

      Don’t think bankers and asset strippers will agree to paying 700% tax however.

      Or Mathew to zero pay.

    • Ad 13.6

      Alternatively, raising wages higher in an economy dominated by commodity exports and cheap services will force greater r&d and greater mechanization of those commodities and services, in turn requiring the less-skilled to get more and more skilled to find new and more productive employment.

      Robotised fruit-pickers and dairy farms would mean far fewer seasonal workers imported.

      Would be awesome if we had a state that would push this.
      But we don’t.

    • Rosie 2 13.7

      Also taxes in this country are off the planet. Please Jacinda, lower GST. The most disgraceful tax that has ever been introduced in this country. Please please lower it!!

      [we already have a regular commenter called Rosie, please pick another handle, thanks – weka]
      [lprent: An old troll – just banned them permanently again. Does’t look like they have learned much since 2014. ]

  14. geoff 14

    Conditioning

  15. Ad 15

    The main reason wages remain low even when inflation and unemployment is low is because New Zealand’s largest exporting industries are either traded commodities or cheap services, which can only afford to pay cheap wages.

    And we will stay that way until that begins to change.

    • KJT 15.1

      No. Wages are low because capital owners grabbed more than their fair share of increased productivity since 1984, as a result of policy decisions by successive Governments, to weaken unions and shrink public spending. Blinded by trickle down ideology. Exports are a smaller part of our economy than most people think. Barely covering the profits and interest paid offshore. NZ’s largest exports by net value are still, despite being decimated, manufactured goods from Auckland.

    • Naki man 15.2

      I am guessing milkpowder is NZ,s largest traded commodity, i could take a 30% salary cut tommorow and it wouldnt effect my lifestyle.

  16. infused 16

    Yet in the IT industry, they keep going up and up… can’t even get people now.

    • dv 16.1

      So pay more!!

      • savenz 16.1.1

        The problem in IT is that they pay peanuts and employ monkeys. It’s a world wide problem, IT firms hoovering up contracts to put cheap IT workers on them which costs double, triple or more to their clients, but often does not even produce a real result. To save face people pretend it’s working. Lot’s of cheap workers does not save money. Lesson one that neoliberal businesses and governments do not understand.

        Here’s a link to what happens…

        https://www.theguardian.com/business/2017/sep/25/deloitte-hit-by-cyber-attack-revealing-clients-secret-emails

        P.S. When one of the world’s biggest accountancy turned IT companies (and does security audits on other companies) can’t even use “two-factor“ verification, appear to have non existent best security practises and doesn’t notice major breaches for months – you have a problem! Apparently their first course was to go to their lawyers.

        P.S.S – Deloittes have done a lot of work for Auckland Council.

        Work it out.

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