sign up log in
Want to go ad-free? Find out how, here.

National says Labour's 14% increase in minimum wage would cost 6,000 jobs; Labour targets National on wider wage gap vs Australia since 2008

National says Labour's 14% increase in minimum wage would cost 6,000 jobs; Labour targets National on wider wage gap vs Australia since 2008

By Bernard Hickey

With 51 days left until the September 20 election, here's my daily round-up of political news from in and around Wellington on Thursday July 31, including the latest Roy Morgan opinion poll showing support for National slumping 5% to 46%, its lowest level since May.

The landline and mobile phone poll of 818 voters from July 14-27 found support for Labour rose 6.5% to 30%, while support for the Green Party fell 3% to 12%. New Zealand First support fell 1% to 5%, while Internet-Mana rose 1% to 2.5%. Conservative support was unchanged at 1%.

The poll found 6.5% would not name a Party.

Meanwhile, National's argued Labour's plan to increase the minimum wage by 14% to NZ$16.25/hour by April next year would cost more than 6,000 jobs.

Labour Minister Simon Bridges said MBIE research had found the higher minimum wage would cost at least 6,000 jobs.

"You cannot legislate your way to higher wages with the stroke of a pen," Bridges said.

“If it’s not based on increased productivity, simply paying people higher wages is a cost that gets passed on to New Zealanders as higher taxes, reduced competitiveness, inflation and fewer jobs," he said.

John Key told reporters the higher minimum wage plan was irresponsible and would hit small businesses hardest.

"If you think about the mass of employers in New Zealand, they are not the big companies like Fletcher Building or Fonterra , they are actually the hundreds of thousands of small businesses around New Zealand and they simply will employ less staff, fire people or ultimately not take on staff in the future," he said.

Labour targets National on wage gap

Meanwhile Labour Finance Spokesman David Parker pointed to a NZ$190/week widening of the wage gap between Australia and New Zealand since 2008, saying the Government had "failed utterly" to keep its promise to close the gap.

“It is remarkable that National should attack Labour’s planned minimum wage increase at the same time as having to admit that the wage gap with Australia has widened under its watch, using National’s methodology," said Parker.

“This is despite the fact that Australia’s minimum wage is NZ$18.70, or NZ$20.55 in New Zealand dollars, far higher than Labour’s proposed NZ$16.25," he said.

“Closing the wage gap is yet another election promise that National has failed to deliver to New Zealanders."

English points to slumping net migration to rebutt Labour

Finance Minister Bill English said in parliament on Wednesday that the dramatic drop in net migration to Australia showed Labour was wrong in its claims.

Net migration of New Zealanders to Australia fell to nil in June, for the first time since August 1991.

"The member is wrong, but here is a measure of it," said English. "Are New Zealanders getting on planes in their thousands to go to a labour market where they think they can get paid more? Last month the net outflow of New Zealanders to Australia was zero. That is, the Kiwi battlers are staying home because things are better here."

ACT Leader calls for Devoy to resign

Elsewhere, ACT Leader Jamie Whyte called on Race Relations Commissioner Susan Devoy to resign after she criticised his speech about Maori having similar legal privileges to the French Aristocracy.

"It is astounding that the Commissioner of Race Relations should condemn me for promoting legal equality between the races," Whyte said.

"If Ms Devoy believes that a person’s legal rights should depend on the race of her parents, and if she believes that she should use her state-funded position to promote the electoral prospects of race-based political parties, then she is unfit to hold her position as the Commissioner of Race Relations,"he said.

Earlier, Devoy issued a statement on Whyte's speech: "Equating Maori New Zealanders to French aristocrats who were murdered because of their privilege is a grotesque and inflammatory statement."

"Accusations of Maori privilege are not borne out by Maori socio-economic statistics," she said.

"Whether we like it or not the reality is that ethnicity and disadvantage are connected and found in damning statistics that on average sees Maori New Zealanders life expectancy, education and health outcomes lagging behind non Maori New Zealanders."

(Updated with Roy Morgan Poll result, Jamie Whyte's call for Susan Devoy to resign, officially corrects to make clear the NZ$18.70 is already converted to NZ$)

See all my previous election diaries here.

See the index for Interest.co.nz's special election policy comparison pages here.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

54 Comments

Updated with Roy Morgan poll showing a slump for National and jump for Labour.

cheers

Bernard

Up
0

... see how much better Labour are perceived when David Cunliffe is neither heard nor seen for a few days ...

 

If he stays in an unlit cave until election day , he'll romp it in !!!!

Up
0

They should keep  Parker rolled out also  as he has some new fresh economic ideas and seems to  connect with middle NZ ok.. 

Predict that Stuart Nash will win Napier by a landslide.  

Up
0

... was Stuart Nash born after 1945 ? ... 'cos no one else in the Labour shadow cabinet seems to be ...

 

Where's the newbies ?

Up
0

Ha ha, well Walter was born before 45 I think!

Up
0

Parker is in denial over peak oil, so if his "fresh" ideas are based on BAU, so its a rotten smell you detect.

I think you are right on choice in terms of electibility though.

regards

Up
0

Gummy - I agree, Labour appear stronger when Cunliffe shuts up :-)

He should do more than just apologise for being a man, he should apologise for getting into politics!

I like Shearer - he seems like a decent honest guy. 

Up
0

Those characteristics are a non starter for politics of course.

Up
0

After Cunny crashes in the electionapocalypse , who'd you tip in a leadership race between David Shearer and Grant Robertson ?

Up
0

So the front man again or his puppet master.

Neither frankly, not that Id vote labour with either of them anyway.

I'd suspect Parker is next in line for a beating, though the left may yet win this time. Now if Parker can clean out the vocal minorities and keep labour central.....

regards

Up
0

I'd prefer Shearer any day.

Up
0

I agree , David Shearer comes accross as honest and sincere , and shows genuine empathy for his constituents .

And , he  is almost as affable  as John Key

Cunliffe is a sneaky smart-alec fellow who is full-of-himself

Up
0

Updated with ACT Leader Jamie Whyte's call for Race Relations Commissioner Susan Devoy to resign.

cheers

Bernard

Up
0

Susan Devoy ought to be able to squash that guy .... her little black balls pack more of a punch than his Whyte ones ...

Up
0

"You cannot legislate your way to higher wages with the stroke of a pen," Bridges said.

“If it’s not based on increased productivity, simply paying people higher wages is a cost that gets passed on to New Zealanders as higher taxes, reduced competitiveness, inflation and fewer jobs," he said."

Businesses having to pay a higher wages (not high, but higher), should pass on the price to the consumer. The price of the item they sell should reflect the real price of providing it.

When a business can only stay in business because they pay their staff a age those staff can barely exist on, and have to get their income padded by the government, then that business is not really viable - it is the business that is being subsidised, not the workers.

Reduced competitiveness: we are trying to compete with businesses in developing countries, where workers get paid even less than workers here - only the cost of living is probably lower, too. Not to mention the standard.

The solution? Consumers to go back to buy on a 'need t have' basis, not on a 'nice to have'. We can afford to pay for quality.

An economic model which promotes the constant churning out/consumption of badly made goods is bad for the environment, and ultimately, bad for people.

Up
0

Exactly right.  

Up
0

"An economic model which promotes the constant churning out/consumption of badly made goods is bad for the environment, and ultimately, bad for people."

And something the world needs to get its head around, pronto
Up
0

DFTBA should pass on the price to the consumer. Yet as a farmer I see much maligning on this site of the price of milk.  I personally, cannot increase the cost of higher wages that I may have to pay.  Not all business is equal.  

Up
0

The point is iphones are "nice to haves" essentials like food are not, or shouldnt be.

regards

Up
0

That is not the point steven.  DBFTA says employers should pass their higher wages costs on to consumers.  Why should farmers have to carry that cost and Apple not?  Businesses are not equal.  

Up
0

"You cannot legislate your way to higher wages with the stroke of a pen," Bridges said.

The Higher Salaries Commission don't seem to have any trouble doing it..................

Up
0

You guys are delusional about what wages should be .

New Zealand made products are already hopelessly overpriced and thats why we import so much and we dont manufacture much at all .

And forget about the so called "quality advantage" , we are not and have never been Swiss watchmakers .

Those folk producing anything resembling quality productss already earn way over the inimum wage .

The people who will be affected are people such as cleaners , and if our office cleaning firm  come to us for an increase we will do it ourselves .

Its already too expensive .

 

Up
0

So I take it you're happy about your taxes being used to supplement the wages of your cleaners, rather than them being spent on health care, or schools, or your pension, or a decent public transport?

Up
0

No , what I am saying is that our cleaning costs have gotten too high , and an increased minimum wage will lead to more expensive cleaners , and its not on for us .

We will need a rethink on cleaning , thats a fact .

My view is that the current  minimum wage is way too high for some work , and has lead to casualisation of labour .

Look at minumum wages in the US for example .

New Zealand now employs  people in part-time work to avoid this expensive labour , so workers are worse off .

It would be lovely if were all rich ( whatever that is ) , but we are not , and if anything , the minimum wage should be an incentive for people to upskill themsleves to get off the minimum wage .

Up
0

DFTBA's point I'm sure is that your cleaners are very likely to be getting the wages you pay them topped up in Working for Families tax credits. So taxes could actually be lower, all else being equal, under a higher minimum wage. Assuming they get a net after tax increase, the cleaners will likely spend their extra money, and all in NZ, so giving the economy and all small businesses a lift. 

On one thing I tend to agree with you. Our overall incomes have become distorted by a passive approach to the exchange rate, such that in USD terms anyone's wages here have ballooned, making manufacturing and anything competing with international goods and services, considerably less competitive. Labour's approach to the Reserve Bank Act is likely to fix that.

 

Up
0

Stephen L

Not sure I agree with you about the NZD and the Reserve Bank Act

The US authorities set about depreciating the USD since the onset of the 5 different depreciation programs they implemented

 

My first preference would be to ruthlessly smash the US tax rorters like Google and Twitter and Facebook and McDonalds and Coca Cola and Starbucks and all their kin

 

Problem is not the NZD it's USD manipulation & leakage of the NZ taxation system

Compounded by the AU banks as you have already highlighted

Fix those issues first.

 

Do a David Lange and give these US nationals the two fingered salute

 

And fine them $1 billion at a time till it hurts, just like the SEC and DoJ do to all the non-US banks for billions and billions

Up
0

Actually we do have a "quality advantage" in terms of boutique gear....now if you shop at warehouse, Ok...

Sure clean your own....bet you wont.

regards

Up
0

The housing market is already slowing.

If Labour did get in power and introduce a CGT - I'm not sure how the property market would react but i doubt it would be positive for vendors.

Up
0

... a CGT will be positive , the Mother-of-all-Christmas's , for accountants and tax planners ....

 

 They're all voting Labour ....

Up
0

A land tax is far far simplier than a CGT.

And can't be evaded, just as local body rates can't be.

Up
0

Have watched these periodic proposals and discussions about CGT and Land Tax

There is a flaw with a CGT

 

Meanwhile

There is an even bigger flaw in a Land Tax regime

If you think about it, it becomes fairly obvious

Up
0

I'm obviously a bit slow tonight.

Please do share.

Up
0

A couple of years ago I posted several detailed dissertations on the flaws and weaknesses of a CGT tax
The discussions usually carried on as if I hadn't posted.
That the topic is still promoted ad-nauseum as a solution demonstrates I wasted my time, so I dont propose to re-produce them again
Several of the posters here know what those flaws are, but you will notice even they don't bother now either
You can search for them here on interest.co.nz or using google "site:interest.co.nz iconoclast CGT weaknesses Flaws Losses carried forward"
Dated about two years ago

 

As for the Land Tax: Think it through tomorrow

Up
0

Well unfortunately these threads are removed off the 'front page' reasonably quickly.

So, please don't wait too long to share your knowledge on this major flaw around land tax.

Up
0

... a land tax encourages owners to offshore their investment , to dig up the land and move it beyond the 8 mile limit ....

Up
0

Why, yes.  Could I interest you in buying some shares in Kakapo's Big-Arse Barges Ltd?

Up
0

Migrants should only be allowed to live on reclaimed land!

Up
0

There is a big flaw with land tax - developers oppose it.

Up
0

Ive thought about it, and I see few if any flaws compared to their advantages.

The biggest.

a) broadens tax base, taxing shares and other profits not taxed.

b) Helps quewl a housing bubble

c) easy to collect, and hence hard to dodge add it to rates (land tax).

So NET i see it as positive.

regards

 

Up
0

Yes steven.

Hopefully iconoclast will come on this morning and share with us.

Up
0

You are being less than energetic - it's your proposition

 

You have to try harder

 

First

 

Here's some of questions for you

 

(a) How would you assess the Land Tax (not how to charge it or collect it)

(b) would there be any exemptions

(c) would it be a flat or variable rate

(d) would there be a differential according to rural, urban or city use

(e) How much nz land, not in government hands, is not subject to rates

(f) Would you differentiate between a 1,000 sqm block of land with a single dwelling and an identical block of land with multi-story building of (say) 20 apartments

Up
0

Those are all specific policy implimentation details that experts far smarter than I would devolop.

People such as the Victoria University led Tax Working Group back in (I think 2009)

People such as (2009)

"Reserve Bank chairman Arthur Grimes, an economist, has been advocating a tax on all land for some years."

 

You wrote

There is an even bigger flaw in a Land Tax regime
If you think about it, it becomes fairly obvious

 

What is this "even bigger flaw"???

Up
0

Those were straight forward questions for you

Nothing to do with policy - you either do it or you don't

 

Not complicated - it has to be straight forward and easy to do (collect)

 

Either it's a tax based on land or it's not

Up
0

So, no big flaw then ?

I thought not.

Up
0

spottie I have discussed this some very notable tax people.... their view is that it doesn't do what is intended and extemely costy to implement and police (and capital losses would be claimable...property crash would therefore hit the tax payer and the investor) . The accountants wil love it....notice they are not publicy commenting much.  Great for them $$$$$.

And do you really believe there is any capital gain left to tax from now on in (valuations would be from date of legislation)....I suspect capital losses more like it.

Up
0

A land tax is not about capital gains or capital loses.

It is about taxing land, and thereby being able to reduce income tax.

 

Land tax - what it could mean for you - New Zealand Herald

Up
0

Spottie - the purpose of taxes is not to control prices......the purpose of taxation is to fund Government.....for goodness sake....please read some history and understand why you and the rest of us were left with the Bill of Rights 1688........when any price is controlled, manipulated or managed in a way that affects price then you get distortions in the prices.

 

All land and building prices are distorted but you would want to distort the prices further!

 

Up
0

GBH  CGT will also be postive for valuers , by the biggest margin

Up
0

There is no evidence a higher wage would cost jobs, in fact its the opposite, or at worst neutral.

Where pray is the journalism critiquing it?

 

Up
0

Just for you, check out bernards top 10 at 10 which includes a study showing higher minimum wage creates more jobs.  Makes sense, people on minimum wage are more likely to spend any extra income (especially on bad food), so diverting income away from the general populace in the form of pushing prices up and / or reducing profits, takes money away from people who don't spend it, and gives it to people who will, stimulating the economy.

 

 

Up
0

RE CGT , most people commenting here are clueless about how CGT works.

The immediate effect on property vendors will be nothing, zip , zilch , simply because a CGT has at least 2 years lead - in time .

Commentators on this site are also being delusional because CGT will never be retrospective, so your gains to date are locked and loaded .

Its introduction will most likely coincide with the tax year end .

And, it could never be effective overnight as no tax system in the world wouldor could  do this.

It would require adequate warning and timelines for valuations , etc

It would have a start date , by which time you will be required to have your assets valued .

Taxes are only paid on the excess or gain over the value (as at value date ) on  sale or relaisation of the assets .

So , No sale = no tax paid

And , it  will only have to be accounted for in the March of the following year .

Then as we know CGT has never brought house prices down , ever , and with immigration running at 40,000 a year , we will have a housing shortage for a long time to come .

So prices wil go up and up and up until they are truly unaffordable .

 

 

Up
0

I disagree Boatman.

I believe our property market is influenced significantly by sentiment. If that sentiment changed, by say the introduction of a new tax, then the market could also change prior to any CGT being collected.

Up
0

Wish I shared your boundless optimism, Boatie, but I've worked for too long in and around Gubmints not to know how their grasping little minds work.

 

If introduced, CGT is likely to be on an annually deemed value basis, for two reasons.

  • Gubmints need tax Now, not when the property owner sells, pops their clogs, succumbs to the endless stream of RE pamphlets or emigrates.  So an unrealised gains basis, estimated annually, just as for foreign shares, is the most likely because taxes on that unrealised gain are regular and stable.
  • Such a CGT would leverage the existing, well-developed property valuation ecosystem, and is easily extended to other assets:  after all, it's a routine exercise for public companies subject to IFRS, and upon any sale of a business.  It's a well-understood mechanism, and that foreign-shares precedent is the - er - Precedent.

Certain tax now, or uncertain tax at some indeterminate Future Date?  Not a hard choice for cash-strapped Gubmints, is it, now?

Up
0

Over at The Standard
The latest Roy Morgan poll records a significant swing to the left
...........
policy [whatever you like ] meets approval.
Annoying not to know what people really think about things.

David Round made some good points on refernda. He points out that people can vote for more spending and less taxes but he also says they function reasonably well in Switzerland.
He also says there is an unspoken fear that a liberal elite (who dominate politics) will be undermined.
 

Up
0