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Back to the Future Past with Paul Goldsmith

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On 25 June, Amy Adams (the National MP, not the actor portraying Lois Lane, Superman’s on-again/off-again love interest in the movies) announced she would be retiring from politics next year, not contesting the 2020 General Election.

National appears to have been short on experienced talent when they quickly announced her replacement as Opposition Finance spokesperson as Epsom’s Not-MP, Paul Goldsmith. Mr Goldsmith’s two stand-out political achievements thus far have been;

1. Standing for the Epsom electorate in 2011 as a “Clayton’s” Candidate in a wink-wink-nudge-nudge deal between National and ACT. The cuppa-tea-deal for (first) John Banks (and subsequently David Seymour) allowed him to secure the Epsom Electorate in an effort to bring in additional MPs on the ACT Party List. (Winning only 1.7% of the Party Vote, the cunning plan failed.)

2. Being the only known political candidate in recorded human history to deliberately remove election signs so voters would not vote for him.

National appointed Mr Goldsmith’s as their latest Finance spokesperson barely three hours and three minutes after Ms Adams’ announcement was made public.

Whatever experience Mr Goldsmith has to propel him into the Opposition Finance spokesperson position is unclear. His experience in the private sector is questionable, as his own National Party bio reveals:

Before entering Parliament, Paul created his own business as a historian and biographer focusing on New Zealand’s history and economic development. He has published 10 books, his last were biographies of Alan Gibbs (Serious Fun) and Sir William Gallagher (Legend). Between 2007 and 2010 he served as an Auckland City Councillor.

According to the same bio we are informed that  “he is an enthusiastic pianist”. (Good to know. As the fate of the Titanic showed, musicians are always handy to have around when a doomed ship goes down.)

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Despite lacking any personal experience in the commercial sector, it has not prevented Mr Goldsmith expressing firm neo-liberal beliefs. In 2015, as  National’s Minister of Commerce and Consumer Affairs, he stated his categorical opposition to regulating corporate activities such as incentivising insurance brokers from selling products to clients who may or may not need them.

Instead, he opted for the usual “light handed” approach;

“I can’t rule it out, but I think it’s highly unlikely. I don’t personally like the idea of Government directly regulating such things.

The preference would be devising a disclosure regime, which is clear and simple and effective. There are countries around the world that ban commissions, full stop, and I think that’s probably carrying it too far.”

As Jenée Tibshraeny explained for Interest.co.nz;

“The main argument against commission is that it risks distorting the advice clients are given, as they’re often unaware of the perks their broker or adviser may receive for recommending different products.”

It appears obvious that Mr Goldsmith’s sympathies align more with corporate interests and defending the laissez-faire status quo rather than protecting consumers. (Only National could so blatantly subvert the role of “Minister of Commerce and Consumer Affairs” until the “Consumer Affairs” part of the ministerial title became meaningless.)

As if to underscore his disdain for safety in pursuit of unfettered de-regulation, in July last year, Mr Goldsmith drafted a Private Member’s Bill that would remove the 10pm “curfew” for new drivers on Restricted-class car licences. His rationale was that Restricted Licences potentially interfered with late-night work shifts;

“A lot of people at that age – in their last year of school or at university – have jobs in the hospitality sector. Very often, those shifts don’t finish until 10.30pm or somewhere around there, and it’s just a pain in the neck [to get home].”

However, Mr Goldsmith seemed oblivious (or simply did not care) to existing provisions where the New Zealand Transport Agency regulations permitted flexibility to Restricted licence requirements. As Fairfax journalist Damian George pointed out;

New Zealand Transport Agency regulations allowed for exemptions in special circumstances. The agency said 750 of 1585 exemption applications, primarily for driving hours, were approved for restricted drivers last year.

Automobile Association road safety spokesperson, Dylan Thomsen, was clearly not impressed.  He also pointed out that young  (under 25) drivers were predominantly involved in crashes and fatalities on New Zealand roads, especially at nights.

In early June this year, Mr Goldsmith slammed proposals from Associate Transport Minister, Julie Anne Genter, to reduce the speed limit on some open roads in this country. The NZTA revealed that “87 percent of speed limits on New Zealand roads are higher than is safe. An agency risk assessment tool, Mega Maps, suggests only 5 percent of the open road should have the current 100km/h speed limit. In most cases a speed of 60-80 km/h should apply, and in most urban areas 30-40 km/h would be appropriate“.

Mr Goldsmith’s extreme knee-jerk reaction on the same day bordered on “shower head-style” mischief-making;

“The reality is, New Zealanders lead busy lives and don’t want the Government telling them they need to operate at a slower pace. They would rather see their tax dollars spent on new, high-quality roads that are safe for them drive on at 100kmh, but this Government hasn’t built a single new road.

Drastically cutting speed limits to improve road safety is too simplistic. It would further isolate people living in regional New Zealand and pull the handbrake on our economy by hindering the movement of freight.”

Mr Goldsmith’s comments run counter to National’s previous Associate Transport Minister, Craig Foss, who recognised that some speed limits were inappropriate for certain stretches of roads. In November 2016, Mr Foss announced;

“New Zealand roads are unique and conditions vary from towns to cities, north to south. The Guide strongly encourages community involvement as local knowledge and perspectives, backed by the information and data provided in the Guide, will help ensure the best possible safety results.

Changes made under the Guide may include altering road design, lowering speed limits, or in certain circumstances, raising them.”

It is no secret that many of New Zealand’s roads are utterly unsuitable for high speeds. For Mr Goldsmith to “play politics” on this issue sadly demonstrates his willingness to exploit people’s lives when it suits his personal political agenda.

On 3 July, Mr Goldsmith told quasi-National Party chat-show host, Duncan Garner, on TV3’s ‘The AM Show;

Goldsmith also wants to look at dialing back excessive regulations, such as by reforming the Resource Management Act and reviewing health and safety laws.

“The health and safety laws were ones that we brought in and I think we need to just make sure we haven’t gone too far.”

Health and safety… “gone too far“?

Mr Goldsmith’s memory and grasp of recent historical events must be very poor indeed. He has apparently overlooked (or is ignorant of) instances of de-regulation in the early 1990s – the height of Small Government mania where common sense gave way to free market ideological purity – which has  cost us dearly. And not just in monetary terms.

The de-regulation of the New Zealand building industry can be pin-pointed with the “reforms” of the Building Act 1991. In essence, the Act “changed building controls from a prescriptive system to a more self-regulated regime“.

The resulting self-policing resulted in a free-for-all where caveat emptor  became the new standard for buying a home in New Zealand. Minimal regulation; self-policing; hands-off government… what could possibly go wrong?

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In 2009, Price Waterhouse Coopers stated in a report on leaky homes that there were up to 89,000 homes affected throughout New Zealand. Remedial cost: $11.3 billion dollars.

Another leaky homes consultant put the true cost of remedial work at a staggering $23 billion.

“Legal Vision” – a firm of barristers and solicitors wrote a lengthy, detailed analysis of the failures of our building industry in the 1990s. With regards to de-regulation and the Building Act 1991, they concluded;

There was a lack of accountability for those responsible for construction mishaps/defects. The market forces in themselves were not sufficient to protect the key stakeholder being the home owner. The power imbalance as between home owner and the supplier was significant, such that you cannot rely upon market forces alone to protect the home owner. There was little to protect them within the 1991 Act and other legislation.

The financial and legal consequences from rotting homes would make send many in the industry – from builders to private certifiers (outsourced from local bodies) bankrupt – often to escape their liabilities.

The financial, political, and social fall-out would last for decades. As then-North Shore Mayor Andrew Williams said nine years ago;

“The Government must accept its own liability for the deregulation experiment inflicted on the building industry and local government and take responsibility for the liability accumulated by the private sector builders, designers, architects and certifiers who are now insolvent and unable to meet their responsibilities to leaky-home owners.

Unless these wider issues are dealt with, and dealt with soon, the ratepayers of the new Super City will be burdened for years, and the Government’s brave new world for Auckland governance will never be fully realised.”

As economist, Brian Easton, assessing the failures of the “reformed” Building Act, said in 2010;

The early 1990s was a period when the market extremists were still triumphant, and there was frequent reference to ‘light-handed regulation’, referring to a regulatory system in which the government is not very active but the regulation is based upon normal market practices, including litigation for breach of contract (perhaps under the Consumer Guarantees Act in cases where the contract was not very elaborate). Ideally, the threat of litigation is sufficient to ensure that the contractor maintains the agreed standards.

It appears that little thought was put into considering the issue of what redress the house owner would have if the performance standards were not attained. Suppose the cladding fell off after 14 years? Under light-handed regulation the aggrieved party can take the matter to litigation, but who exactly is to be sued? The above account suggests that there are many involved, and all, to some extent, may be at fault: the local authority, its building inspector, the builder, the architect, the buildings material supplier, the developer, the home owner who onsold, and even the legislators and their advisers who passed the relevant legislation. In such situations fault can be very difficult to establish in law.

Or perhaps Mr Goldsmith is thinking of the de-regulation of the Labour Dept, Mining Inspectorate, and safety legislation – also in the early 1990s.

The Health and Safety in Employment Act 1992 (HSE Act) now “impose[d] the obligation on employers to take all practicable steps to ensure safety at work“.

Then, Pike River happened.

An independent review commissioned by the then-Chief Executive of the Department of Labour revealed the nature of the new, de-regulated environment which dangerous workplaces such as mines, now operated.

The report optimistically set out expectations of of the HSE Act;

11. The nature of the Department’s regulatory role is set out in the Health and Safety in Employment Act 1992 (HSE Act). The principal plank of the legislation imposes the obligation on employers to take all practicable steps to ensure safety at work. The Department sees its role under the Act as being to ensure that employers are aware of their obligations, to support and assist them to understand and give effect to these obligations and to enforce as appropriate.

And then revealed a staggering flaw in the Act;

15. There was one gap in this picture. The inspectors did not conduct general safety systems audits. They were not required to do so by their work plans. The approach the mine inspectors took in scrutinising specific complex and technical mine safety issues confronting the mine, is an appropriate one for a technical and specialist area involving high hazards. However, this approach should be complemented by also paying attention to general systems. In high hazard industries, inspectors should engage in an integrated approach that involves systems audits and in-depth scrutiny of specific, often technically complex safety issues. We note that in future the Department plans to complement its regulatory approach with a greater level of emphasis on safety system audits. When it does so, it will need to equip its inspectors with the training and support tools to successfully perform this role.

The report was damning in pointing out the utter failure of the so-called Health and Safety in Employment Act to actually do what it’s label demanded of it: to provide health and safety in employment;

45. In broad terms, the HSE Act replaced heavily prescriptive standards (telling duty holders precisely what measures to take in a particular situation) with a performance-based approach, primarily by imposing general duties (sometimes referred to as goal setting regulation) such as to take ‘all practicable steps’ to ensure health and safety, leaving it to the discretion of the duty holder how they achieve that standard. This approach was coupled with greater use of performance standards that specify the outcome of the health and safety improvement or the desired level of performance but leave the concrete measures to achieve this end open for the duty holder to adapt to varying local circumstances. There was also a focus on systemsbased standards. These identify a particular process, or series of steps, to be followed in the pursuit of safety, and may include the use of formal health and safety management systems.

46. New Zealand embraced the Robens philosophy of self-regulation somewhat belatedly, but with particular enthusiasm and in the context of a political environment that was strongly supportive of deregulation. Indeed, in various forms, deregulation (and reducing the regulatory burden on industry more broadly) was strongly endorsed by the Labour Government that came into power in 1984 and by the National Government that succeeded it in 1990. The HSE Act was a product of this deregulatory environment and in its initial version was stripped of some of the key measures recommended by Robens, not least tripartism, worker participation and an independent executive. It was regarded, so we were told, as a ‘necessary evil’ at a time when the predominant public policy goal was to enhance business competitiveness…

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50. Put differently, whereas under the previous legislation, inspectors had been expected to go into workplaces and direct duty holders as to what safety measures they should introduce (the expectation being that the inspector rather than the employer would take the initiative) under the HSE Act employers bear primary responsibility for health and safety while providing information and support, particularly when it comes to establishing and developing health and safety systems and processes and takes enforcement action where the employer fails to meet the practicability standard.”

Again, “reforms” replaced set prescriptive standards of safety with individual self-policing and self-regulation.

As well as deferring health and safety to individual companies, the government mines inspectorate was reduced to a shadow of it’s former self.

Amongst other things the Coal Mines Act 1979 took a strong, proactive approach to safeguarding health and safety in the country’s mines. The Royal Commission on the Pike River Coal Mine Tragedy described the role of the mines inspectors;

“…provided for a chief inspector, district, electrical and mechanical inspectors of coal mines. Chief inspectors could support and review the actions of the inspectors. They held first class coal mine manager’s certificates and had significant coal mining expertise, usually as manager of a large and challenging New Zealand mine such as Strongman, which had problems with gas and spontaneous combustion.

…District inspectors had coal mining expertise and inspected mines within a particular geographical area. Inspections occurred with and without notice and following notification of incidents and accidents. Small mines were inspected monthly and large mines inspected weekly“.

The coal mines inspectorate was a unit with the then Ministry of Energy.

From 1993 to 1998 the MIG consisted of about 20 to 25 people. In 1995, for example, there were three coal inspectors, three mining engineers, five quarry inspectors, one electrical/mechanical engineer, two petroleum/ geothermal inspectors, two regional managers, one group manager and eight support staff.

In 1989, the Mines Inspectorate Group (MIG) was transferred to the Minister of Commerce. After considerable opposition from the MIG, the group was transfered to the then Department of Labour.

Staff rationalisation then proceeded with a vengeance.

Mines inspections were reduced from once every two months  in 1993/94 to every three months by 1995. By the time the Mines Inspectorate Group was incorporated into the DoL, it ceased being a separate entity and became part of general workplace safety inspectors.

Most mines inspectors resigned.

Only three dedicated mines inspectors remained by 2001.

From 2001 to 2011 the number of mines inspectors fluctuated between one and two – for the entire country. When one of those inspectors resigned in 2011,  one  was left by himself, for several months, to monitor every mine in New Zealand.

The gutting of the Mines Inspectorate over several governments and decades was a breathtaking act of stupidity for what was undoubtedly one of the most dangerous industries in the world.

The consequence was inevitable. On 19 November 2010,the ticking time bomb detonated:  a series of methane explosions at Pike River Mine killed twentynine miners.

In an almost perverse understatement, The Royal Commission on the Pike River Coal Mine Tragedy reported,

DOL now appreciates the importance of, and deficiencies in, its leadership of health and safety. As the minister’s proposal noted, ‘the Pike River tragedy and Royal Commission hearings indicate areas of weakness in the effectiveness and credibility of the regulator, and the ability to support industry-led activity and effective employee participation’.

As if to underscore the findings of the Royal Commission, another government enquiry, the  Independent Taskforce on Workplace Health and Safety in 2013 wrote scathingly of our current mania for de-regulation;

Ultimately, New Zealand implemented a much lighter version of the Robens [workplace health and safety self-regulated by employers] model, and much later, than other countries. This light implementation reflected a range of New Zealand-specific factors during the late 1980s and 1990s, notably resource constraints (including public sector staff cuts), changing attitudes towards the roles of government and business (including an ethos of business self-regulation), and liberalisation of the labour market with weakened union representation.

As if to drive home the point, the Taskforce spelled it out for us:

Our national culture includes a high level of tolerance for risk, and negative perceptions of health and safety. Kiwi stoicism, deference to authority, laid-back complacency and suspicion of red tape all affect behaviour from the boardroom to the shop floor.

For those who see human life in purely monetary terms, the Taskforce estimated that the cost of workplace injuries was approximately $3.5 billion a year – nearly 2% of GDP.

Then-Labour Minister – and currently holding the position of Leader of the National Party – Simon Bridges, accepted the Taskforce’s report;

“The Working Safer package represents a major step change in New Zealand’s approach to meet our target of reducing the workplace injury and death toll by 25 percent by 2020,” says Mr Bridges.

The reforms recalibrate our approach so we are working smarter, targeting risk and working together to improve performance in workplace health and safety.

Working Safer addresses the recommendations of the Independent Taskforce on Workplace Health and Safety which provided Government with a solid foundation to work from.

We will improve the legislation and back it up with clear guidelines and enforcement, and investment in a strong new regulator WorkSafe New Zealand.”

So when Paul Goldsmith recently said to Duncan Garner;

“The health and safety laws were ones that we brought in and I think we need to just make sure we haven’t gone too far.”

– he had obviously missed the memo from his current Leader.

The cost of de-regulation in our building industry is estimated in excess of $23 billion.

The cost of de-regulation and watering-down of safety practices in our work places: injuries; permanent disabilities; and lives lost. In other words: incalculable.

If the definition of lunacy is to repeat the same thing over and over again, expecting differing results, then the National Party has been wildly successful: it is a party of lunatic ideologues.

It has not learned a single thing from our recent, well-publicised, recent history.

Who else will be injured, maimed, or killed, in the name of de-regulation if Paul Goldsmith gets his way?

Mr Goldsmith should not be allowed anywhere near a ministerial position. He is not fit for any role of responsibility.

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Postscript

Since December 2010 – one month after the Pike River Mine disaster – 422 people have been killed in workplace accidents:

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References

Parliament: Hon Amy Adams

Youtube:  Lois & Clark | In My Veins ( Batman vs Superman Drawn of Justice)

Radio NZ: Senior National MP Amy Adams to retire from politics

NZ Herald: Leaky homes a disaster and a $2b tax windfall

MoBIE: Dept of Labour – Pike River Mine Review

Parliament: Paul Goldsmith

Wikipedia: 2011 New Zealand general election – Epsom and the Tea Tape scandal

The Standard: Goldsmith removing Goldsmith signs

Scoop media: National Party Caucus reshuffle announced

Scoop media: Amy Adams to retire from politics at election

National Party: About Paul

Interest.co.nz: Minister Paul Goldsmith admits he doesn’t like the idea of the Govt directly regulating how insurers incentivise advisers to sell their products

Fairfax/Stuff media: Member’s bill to scrap curfew for restricted licence holders so they can get to work

Scoop media: Minister shows how misguided she is on speed limits

Radio NZ: ‘Huge majority’ of NZers would prefer lower speeds on some roads – Genter

Scoop media: Showers latest target of Labour’s nanny state

Scoop media: A new approach to safer speeds

Mediaworks/Newshub: National Party Finance spokesperson Paul Goldsmith outlines plan for cutting regulation, taxes

Wikipedia: Leaky homes crisis

Merriam Webster: caveat emptor

MoBIE: Building Performance – Signs of a leaky home

Leaky Homes: A New Zealand Crisis

NZ Herald: Leaky homeowners on suicide watch

NZ Herald: Leaky-home bill estimated at $6.3b

NZ Herald: Repaired leaky homes worth 1/4 less

Fairfax/Stuff: 15 years of leaky homes and the brutal economics of owning one

Homes to Love: 10 tell-tale signs you have a leaky home

NZ Herald: It’s not if – it’s when for our dripping time bombs

Interest.co.nz: Price Waterhouse Coopers – Weathertightness – Estimating the Cost

Legal Vision:  Failings of the Building Act 1991 – Were these a cause of the leaky building crisis?

Brian Easton: Regulatory Lessons from the Leaky Home Experience

MoBIE/Dept of Labour: Review of the Department of Labour’s interactions with Pike River Coal Limited

Royal Commission on the Pike River Coal Mine Tragedy: The decline of the mining inspectorate

Royal Commission on the Pike River Coal Mine Tragedy: Chapter 24 -Effectiveness of the health and safety regulator
– Leadership of health and safety

Independent Taskforce on Workplace Health and Safety: Key Findings

Scoop media: Major reform of workplace health and safety (alt.link)

Worksafe: Workplace fatalities for all industries, all regions, all ages, from Dec 2010 to Jul 2019

Additional

Ministry of Labour: A Guide to the Health and Safety in Employment Act 1992

Other Blogs

Tumeke: The myth of over-regulation and the delusion of self-regulation

The Standard: Two faced John Key on Pike River

Previous related blogposts

This will end in tears

A hole they all dug?

A lethal lesson in de-regulation

Heather Roy – head down the mine shaft?

Health and safety jobcuts? Haven’t we been down this road before?!

W.o.F “reforms” – coming to a crash in your suburb

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This blogpost was first published on The Daily Blog on 30 July 2019.

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John Key’s track record on raising wages – 5. The Minimum Wage

11 November 2012 7 comments

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Continued from: John Key’s track record on raising wages – 4. Rest Home Workers

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5. The Minimum Wage

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From 2004 to 2008, the minimum wage rose from $9 to $12 – an increase of $3 in four years.

From 2009 to 2012, the minimum wage rose from $12 to $13.50 – an increase of $1.50 over three years.

See: Dept of Labour – Previous minimum wage rates

Last year, Labour, the Greens, NZ First, and Mana campaigned to raise the minimum wage to $15 ($16 for Mana).

When a worker at a fast-food outlet asked John Key to raise the minimum wage to $15 an hour, he  rejected the proposal, saying,

It will go up, but it won’t go up straight away.”

See:  Raising minimum wage won’t cost jobs – Treasury

Key’s right. At the glacial speed that National increases the minimum wage, it will take another three years to deliver $15 an hour.

Yet it took only a couple of years to implement two massive taxcuts that gave hundreds, thousands,  of dollars a week, to the top income earners.

Priorities, eh?

The real insult is that  Key and English both admit that the minimum wage is difficult to live on.

Key said,

Look, I think it would be very difficult for anyone to do that.”

See:  Ibid

GUYON:  Okay, can we move backwards in people’s working lives from retirement to work and to wages?  Mr English, is $13 an hour enough to live on?

BILL ENGLISH:  People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity.  It’s like being on a benefit.

GUYON:  What do you mean for a short time?

BILL ENGLISH:  Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position.

See: TVNZ’s Q+A: Transcript of Bill English, David Cunliffe interview

The Department of Labour claimed  a rise in the minimum wage  would cost 6,000 jobs.

But Treasury disagreed, saying,

This has not been true in the past. The balance of probabilities is that a higher minimum wage does not cost jobs.”

Raising the minimum wage would certainly benefit SMEs (Small-Medium Enterprises), as low-income earners spend their entire wages on goods and services. Any rise in paying wages should be offset by increasing till-takings with customers spending more.

So it appears blatantly obvious that no good reason exists not to raise the minimum wage.

After all, in 2009 and 2010, National gave away far more in tax cuts for the rich.

And precisely how does this raise wages, as per Dear Leader’s promises?

Next chapter: 6. Youth Rates

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Treasury’s verdict on raising the Minimum Wage? – Part II

19 November 2011 3 comments

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Throughout this election, John Key has been criticising Labour’s policy to increase the minimum wage from $13 to $15 an hour, citing a Department of Labour (DoL) report that such a move would cost the country 6,000 jobs. Key even referred to this in his Leader’s Debates with Phil Goff.

Except… that Treasury has dismissed the DoL’s “claim” by stating that raising the minimum wage “has not been true in the past“.

John Key has been well aware of  Treasury’s debunking of DoL’s “claims”, according to a Official Information Act request made by TV3,

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Full Story

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Unless Treasury has become a  satrap of Socialist International, it seems pretty hard to dismiss their  conclusions. The DoL’s case is not helped by their own contradictions,

“…research from the United Kingdom suggests minimum wages may have no effect on employment, or that minimum wage effects may still exist, but they may be too difficult to detect and/or very small.” Ibid

I believe that the so-called  DoL “report” can be safely dismissed as not very intellectually rigorous.  And not even half clever.

The government claims that recent taxcuts, last year and in 2009, were “fiscally neutral”. But even this is not true.

National’s first round of tax-cuts, which took effect in April 2009, benefitted high income earners the most. Low income earners recieved very little,

The cuts are proportional to wages. Those earning $100,000 or more a year will get at least an extra $24 dollars a week. Anyone on the average income of $48,000 a year will get an extra $18 a week, and low income earners will get a $10 a week tax credit.

On a monthly basis, both tax cuts together will see those earning $100,000 pocketing an extra $225, and low income earners an extra $95 a month.” Source

The October 2010 round of tax cuts were just as bad for low income earners, and generous for high earners,

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Source

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Those on minimum wage recieved an extra $6.36.  Meanwhile someone earning $120,000 benefitted from between $46.08 to $89.04.

With growing inflation reaching a 21 year high, to 5.3%;  increasing ACC charges and rates; any gains made by low income earners and those on social welfare and superannuation were quickly eroded.

Little wonder that the end result was a transfer (“trickle up”) of wealth from the poor and middle classes, to the wealthy.

The report’s 2004 data – the latest available – reveals the richest 10 per cent collectively possess $128 billion in wealth, with median individual wealth of $255,000. In contrast, the poorest 10 per cent collectively possess $17.2b, with median individual wealth of $3200. While the richest 1 per cent held 16.4 per cent of the country’s net wealth, the poorest 50 per cent owned just 5.2 per cent. ” Source

Which, unsurpringly, means we are seeing more headlines like these in our media,

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Full Story

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The Dominion Post article goes on to state,

Data from the Organisation for Economic Co-operation and Development shows New Zealand’s income inequality climbed dramatically in the 1980s and 1990s after sweeping economic reforms and deregulation of labour markets.

Disparities have plateaued since 2000, largely thanks to Working for Families tax credits, bigger pay packets for middle and low-income earners and declining investment returns for the rich.

But the gap between rich and poor still ranked ninth worst in the developed world in 2008.” Ibid

How well have the top richest done in New Zealand?

About this well,

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Full Story

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The top 150 Rich Listers’ wealth grew by 20%.

That’s quite an achievement during one of the worst recessions in recent history. But even that increase in wealth isn’t sufficient for the Rich Listers. They wanted more,

Jeweller Sir Michael Hill, worth $245 million, told NBR: “Could not the Government give us a little freedom to be able to make common sense decisions for ourselves?”

John McVicar, managing director of a forestry group that puts his family’s worth at $70 million, said economic policy should be based on reducing costs for business and increasing productivity and revenue.

Construction company head Sir Patrick Higgins, worth $100 million, said: “The country needs to address excessive regulation if it is to improve wealth creation.”Ibid

Although at least one  United States think-tank and the “Wall Street Journal”  “rank New Zealand as already having the highest level of freedoms for business in the world.  The Heritage Foundation’s “index of economic freedom” puts New Zealand fourth overall, with a score of 99.9 for business freedom.

Clearly, tax cuts and increases in profits have shifted wealth upwards – not shared it around. Certainly the “trickle down” theory now applies only to meteorological services predicting upcoming rain falls.

This “gushing up” of wealth has been written about in the US “New York Times”. A very simple illustration showed where wealth has been accumulating – and who has been missing out,

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Source

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Interestingly, the great divergence of wealth, productivity, and incomes started around the late 1970s, early 1980s.  It was also about the time that Ronald Reagan and Margaret Thatcher were elected into office, and began neo-liberal, “free market” policies commonly referred to as “Reaganomics” and “Thatcherism“.

The New Right were ascendent, and implemented their policies with ruthless efficiciency. Those policies benefitted the rich – to the detriment of the unemployed, low-paid, and middle classes (who were too busy fighting each other to notice what was happening to them them).

New Zealand’s turn for a dose of  New Right came only a few years later, when Rogernomics took effect in 1984.

As wealth is accumulated upward (as the NBR so vividly illustrated), the real reason for denying low-paid workers an increase in the minimum  wage becomes more apparent; the rich would be forced to share some of that wealth. Their profits would be a little less.

Of course, this doesn’t stop some from gaining some very substantial wage increases,

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Full Story

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How They’re Paid

PRIME MINISTER New salary (backdated to July 1): $411,510. Was: $400,500.
DEPUTY PRIME MINISTER New salary: $291,800. Was: $282,500.
CABINET MINISTER New salary: $257,800. Was: $249,100.
MINISTER OUTSIDE CABINET New salary: $217,200. Was: $209,100.
SPEAKER AND OPPOSITION LEADER New salary: $257,800. Was: $249,100.
BACKBENCHERS New salary: $141,800. Was: $134,800.

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So remind me again, why we can’t increase the minimum wage? I’ve heard all the nonsensical, reactionary reasons – but they seem more predicated on a pathological disdain for the poor,  from  uninformed  middle class aspirationists, rather than any clear logic.

If New Zealanders want to continue  down the road of increasing wealth for the rich; growing disparity in incomes;  worsening poverty – this is the correct way to go about it. Our current policies and inequalities will achieve a society where the 1% Haves control most of the wealth; the vast majority remain in poverty or near-poverty; and the middle classes stagnate, blaming those on social welfare (the worst victims of these wretched policies) for their lack of upward mobility.

But the middle classes are looking the wrong way.

This may all sound like extremist left-wing politics. Maybe it is. But I don’t think so. The information I’ve gathered is freely available and easy to gather. The realities are all around us and the media – despite it’s glaring faults and preoccupations with trivia and crime stories – does present us with a view of what’s happening around us.

Many of us just choose not to look.

It’s easier to blame the poor; the unemployed; those of welfare.  And yet, if the current economic situation was not as distorted as it currently is – we wouldn’t have so many poor, unemployed, or on welfare.

An increase of $2 an hour would be a step in the right direction. Just ask the Prime Minister – taxpayers are paying him an extra $11,000 a year.

I wonder if paying all our MPs  those wage increases will result in any job losses?

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It’s a simple matter of choice.

1 September 2011 2 comments

With Labour’s release today, of their youth skills/employment policy, voters are now presented with the clearest choice yet between the two main parties. Aside from the issue of asset sales, where National has announced a programme of part-privatisation, and Labour opposes any/all privatisation, employment policy is the real litmus of both party’s essential core philosopies.

National prefers to step back and allow the “free market” to work it’s magic.

Labour has no hesitation in using the power of the State to address social-economic problems.

The National Business Review – hardly an organ for marxist-leninist groups – was  moved to report on an opinion piece penned by Duncan Garner;

“In a lengthy blog post, Unemployed youth would fill Eden Park, Duncan Garner declares that ‘this government’s biggest failure to date is our young people’.  With 58,000 youth not in work or education, ‘We are at crisis point. 27.6% of those aged 15-24 are out of work and out of luck. It’s even higher for Maori and Pacific youth’. And how has the Government performed on this issue? Garner says ‘there is a yawning gap between Key’s rhetoric and the reality’, and asks, ‘So what did Key do in the weekend to target the problem? Very little’. He suggests that ‘Key needs to be bold, he needs to take risks’.”

Source

In stating that Key had done “very little” to target the problem,  Garner was referring to the Prime Minister’s policy speech at National’s Conference on 13 August.  Indeed, thus far National’s track record at addressing unemployment has consisted of the following;

  • Building a cycleway. Anticipated new jobs: 4,000. Actual new jobs created: 215.  (Source)
  • Hiring an advisor for Finance Minister, Bill English, at $2,000 a day. (Source)
  • A new payment card for 16,17, and some 18 year old beneficiaries that could not be used for things like alcohol or cigarettes; (though it’s already illegal for 16 and 17 year olds to purchase these products)
  • … and… that’s it.

Source

It is worth noting the seriousness of youth unemployment in this country. According to the Department of Labour;

“Youth aged 15–19 years have an unemployment rate over three times that of the entire working-age population. Young workers are more vulnerable to downturns in labour market conditions due to their lower skill levels and lesser work experience. The latest official figures show that 17.2% of youth aged 15 to 19 and 8.4% of those aged 20 to 24 years were unemployed, which represents a deterioration of the trends found in the report. Maori and Pacific youth had significantly higher unemployment rates.”

Source

Ducan Garner seems in no mood to respond to John Key’s “smiles and waves” politics when he opens his piece with this caustic observation;

“58,000. This is the crucial number that should be ringing in John Key’s ears every night he bunks down in the refurbished Premier House.

58,000 young people between the ages of 15-24 are not in education, training or work. The majority of them are on a benefit.”

Garner adds,

“Sure the recession has been tough on young people worldwide. 81 million youths are now unemployed around the globe, it was 71 million before the recession. It is a ticking time bomb. In London, it’s already exploded.”

Source

And there we have it:
  1. Problem: growing, lingering unemployment.
  2. Potential disaster: social unrest, exploding into mass-violence.
  3. Solution – ?
To demonstrate how utterly vacuous National’s policy has been to date, let me juxtapose two media reports  outlining policy releases from both Labour and National.  Have a good look at these;

[click to expand]

Labour would cut dole, increase training

National to clamp down on youth beneficiaries

Which offers new jobs, and which offers tinkering with welfare?

At a time when New Zealand has 170,000 unemployed – of which 58,000 are aged 15-24; when we will be needing thousands of skilled tradespeople to re-build a broken city that has endured massive earthquake devastastion; the current government has done next-to-nothing during its three year tenure.

Except create 215 new jobs in building a cycleway; hire some very expensive advisors; and give tax cuts to some very rich people.

In doing so, we do not have the skilled tradespeople required to re-build Christchurch.  Because we are currently losing around 20 skilled tradespeople a day to overseas destinations such as Australia.  At the same time, people are losing their jobs in Christchurch and unemployment is rising.

To show how badly this government has failed, nothing better illustrates that failure than this;

 

 

Only the most die-hard National/ACT supporter will believe this this situation is acceptable. (And they usually come up with all manner of excuses why it is acceptable.) But I suspect – or at least hope – that ordinary New Zealanders who look at this situation and will ask the inevitable hard questions;

  1. Why are we not offering training for unemployed?
  2. Why are we not planning  to put our people to work?
  3. Why are we hiring workers from overseas?
  4. How will this help unemployed New Zealanders to get back into the workforce?

On the 13 of August, at the National Party Conference,  Prime Minister John Key stated,that “the current system “is not working and needs to change“.

Unfortunately, he wasn’t talking about job creation or training for unemployed. He was talking about not letting 16 and 17 year olds buy booze and ciggies.

Goff says it is ”crazy”to have high youth unemployment alongside a growing skills shortage crisis“.

Which one resonates with you?

Postscript;

 

A bouquet  to Hutt Gas and Plumbing Systems Ltd ,  a Lower Hutt company that is one of the many thousands of small businesses in our communities, quietly ‘beavering’ away in the background,  that make  our economy work.

 

 

Hutt Gas & Plumbing featured on TV1’s evening news where Phil Goff released Labour’s youth skills and employment package.

Hutt Gas & Plumbing train several apprentices, giving young people an opportunity to learn a trade; earn a wage; and contribute to their local community.  These folk are the real pillars of our society. Not the big, flash corporations and financial institutions that shuffle bits of paper around, and make their profits on speculation.

These are the small companies that deserve our support and encouragement. They are the ones that some of our children will rely on for jobs’ training to get into a trade.

Kudos to Labour for planning to increase apprenticeships. This is the hard policy planning that will create jobs and give our kids opportunities.

And a bloody big brickbat for Minister for Tertiary Education Steven Joyce, for  saying that Labour’s proposal was just National policy dressed up,

They’re basically doing what the government is already doing, they just want to throw more money at it.”

It’s rather revealing that National thinks that creating jobs for our young people is  “throwing money”.

Because buying 34 new BMW limousines, for National ministers, is not “throwing money”?