Joyce nationalises Novopay

Labour plans Fair Workplace Commission; Jamie Whyte says Maori legal privileges same as French aristocrats; Winston rules out working with Mana and Maori

30th Jul 14, 10:18am by Bernard Hickey

By Bernard Hickey

With 52 days left until the September 20 election, here's my daily round-up of political news from in and around Wellington on Wednesday July 29, including Economic Development Minister Steven Joyce announcing the Government is taking over the operation of the troubled Novopay payroll system for teachers from Talent2 after a settlement worth NZ$22 million.

"After lengthy negotiations, the Ministry of Education and the existing school payroll provider, Talent2, have settled both on the amounts payable by Talent2 towards the costs of remediating the Novopay service and a new operating model for the school payroll system," Joyce said.

"The new model involves a new government-owned company taking over the operation of the payroll service, and Talent2 licensing the core Alesco software to that company, he said.

Under the settlement, Talent2 has agreed to pay the Ministry NZ$18 million to $22 million, including NZ$7 million in cash, a license for the Alesco software used by Novopay and discounted fees for support and maintenance. Joyce said the settlement represented less than half the NZ$45 million the Government had spent fixing Novopay.

Joyce said he was pleased with the 0.5% error rate rate over the past 15 months for all but the three 'start of year' payroll cycles at the beginning of this year.

"However further changes are required to the system and the service model to make the system easier to operate for school administrators. On top of that, keeping the system performing at its current level under the current operating model has remained very expensive for both taxpayers and the payroll provider," he said.

Labour's labour plan

Labour announced its wages and work policy, including a planned increase in the minimum wage from NZ$14.25/hour now to NZ$16.25 an hour by April next year.

“New Zealand’s productivity gains of 50 per cent over the last 20 years have not led to corresponding increases in real wages. Forty-six per cent of Kiwi wage earners didn’t receive a pay rise last year despite the economy growing by around 3 per cent. Wage earners help create economic wealth; it is only fair they share the benefits," Cunliffe said in releasing the policy.

He said a Labour Government also aimed to lift the minimum wage to two thirds of the average wage over two terms "as conditions permit,", would ensure all 'core public service workers' were paid at least the Living Wage (currently NZ$18.80/hour) "as fiscal conditions allowed," and would abolish the 90 day dismissal law.

Labour would also set up a Commission of Inquiry into wage setting and other workplace practices "with a view to developing labour market regulation that makes it easier to negotiate fair pay and conditions, and encourages productive workplace relationships."

Elsewhere, the jockeying for position ahead of the government-forming talks is already under way and well before the actual election results.

Winston's race-based decision

Winston Peters was surprisingly clear in ruling out working in any government with either the Internet-Mana Party or the Maori Party, which would on the face of it consign New Zealand First to the opposition benches, assuming both those other parties get in to Parliament.

"We are not going to line up in any arrangement with race-based parties," Peters told reporters before question time in Parliament.

"We are not going to be in any combination that is race-based - that's with the Maori Party or the Mana Party. We think separatism is extraordinarily damaging for this country and we'll keep on saying that until we get the message across," he said.

Elsewhere, Laila Harre announced she would stand against John Key in the Helensville electorate. Both she and John Key live in Epsom, which opens up the curious possibility they will both be personally voting for the National candidate, Paul Goldsmith, in their electorate.

Key has said that he as National leader has to vote for the National candidate in his own electorate, even though he is guiding National supporters to vote for ACT's David Seymour. Harre said last night she would vote for Goldsmith to try to reduce the chances of Seymour getting in.

ACT plays race card

Meanwhile, ACT Leader Jamie Whyte used a speech in Hamilton to rail against race-based laws around the Maori seats.

"Maori are legally privileged in New Zealand today, just as the Aristocracy were legally privileged in pre-revolutionary France," Whyte said.

Maori Party MP Te Ururoa Flavell was not impressed with the comments, calling them "straight out racism."

"Our nation has come leaps and bounds over the last 10 years in improving race relations and addressing the disparities between Maori and Pakeha," he said. "It's sad that political parties feel the need to attract some attention by making outlandish claims.

Nick Smith and irony

Elsewhere, Conservation Minister Nick Smith backed down on his threat of launching defamation action against Association of Freshwater Anglers president David Haynes.

Smith said he would still send a stern legal letter to Haynes over his claims in a Radio New Zealand interview that, in a July 18 meeting, Smith threatened to 'tweak' Fish and Game's statutory obligations to stop its advocacy against dairying over water quality.

Smith later told Parliament that he stood by his views that Fish and Game needed to be "pro-freshwater quality and not anti-dairy and anti-farming." He said his decision taken after the meeting to increase Fish and Game's fees showed the conspiracy theories about his bullying were wrong.

He also cited a blog by David Haynes that cited Smith's "professional" delivery of his views at the meeting as proof he had not acted in a bullying way.

Here's the full quote from the Haynes blog: "Smith delivered his opinions and thoughts as professionally as ever, albeit the medium outshone the message on several occasions."

This was only proof that irony rarely works on the Internet...

I'll keep updating this through the day.

(Updated with Steven Joyce nationalising Novopay and Labour's wages and work policy launch detail)

See all my previous election diaries here.

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44 Comments

by Boatman | 30th Jul 14, 10:34am 1406673256

Oh for goodnes sake , do we really need another Commission with all the bureacracy and nonsense that goes with it , like taxpayer funded Six figure salaries and overseas junkets for their leftwing academic mates ?

What exactly is a "fair workplace Commission" anyway ?

It sounds supiciously like some kind of politically correct nanny-state interferance with business activities , with a whole lost of compliance issues that have costs , levies and hurdles for struggling small businesses

Don't we already have robust labour legislation to protect workers from abuse , ensure gender equality , non-discrimination , non-racism and human rights in the workplace ?

Labour has well and truly got itself hoplessly out of touch with the real issues affecting real people on a day-to-day basis .

by Kate | 30th Jul 14, 11:24am 1406676275

Don't we already have robust labour legislation to protect workers from abuse , ensure gender equality , non-discrimination , non-racism and human rights in the workplace ?

We've got problems - some of them are legislative, but more are a matter of poor monitoring/enforcement. Lots of examples in the news of the exploitation of migrant workers (particularly on foreign fishing vessels in NZ waters and skilled labourers associated with the CHCH rebuild), poor/inadequate safety standards in both forestry and mining industries, and below minimum wage payment to workers, particularly in the owner-operated restaurant/fast food industry.

Not that another Commission is the way to go - bolstering the monitoring/enforcement area of DoL is more likely what is needed.

by notaneconomist | 30th Jul 14, 12:20pm 1406679615

Just as well Labour won't get in Boatman..........saving the poor old tax payers some money.

Labour is discrinimating against employers.....they seem to only care about you if you're an employee......and screw you if you're the employer.......

That "fair workplace" should have included employers!!!

by steven | 30th Jul 14, 1:05pm 1406682304

Actually after decimating unions/union power it appears that employers by and large have been able to unduly get their own way. A symptom of this is greater in-equality.

regards

by notaneconomist | 30th Jul 14, 5:05pm 1406696715

So what is your actual issue here?

It is not mandatory to belong to a Union!! But perhaps you endorse compulsion!

There is nothing to stop workers striking, protesting or using the media....you don't have to belong to a Union to undertake that activity.

There probably is a minority of employers who will treat staff badly.....there is also ikely to be a minority of employees who do dishonest things to their employer as well.

Don't go bringing in the equality debate when you are broadly discussing all employment acrosss the country.....what would you prefer all business going bankrupt trying to pay employees more when they can't afford to do this?????

The trouble is people like you turn up to work....do the tasks required.....and get paid each pay period.......your employer has to find the work, the goods, the services, undertake all the costings, breakeven points, etc and then set the prices within the parameters of the market. Your employer has to constantly make changes, find new products, find new customers etc. The employer has to ensure all the budgets, all the regulatory requirements etc are up to speed..........your employer doesn't just turn up and do a simple job.......he shows up day in day out......keeping the work going......and then people like you want to kick him/her in the gutse when you know nothing about business.

As I said regulatory costs are what stop employers increasing wages.....you can't have some greedy little bureaucratic regulator being paid and increase the employees wages too.....and if your so good at business why the hell don't you go into business and show us all Steven how it is done !!!!!! I hope you now understand what is causing inequality...

by steven | 30th Jul 14, 9:44pm 1406713475

My problem is one of balance. Now I'll add having been a manager on the one side and a union member on the other, both halves of me generally detest unions and unions reps (some notable exceptions but very few). Oh and I worked as a contractor fixing a union's IT equipment once, never again. So I guess that's 3 1/2s of me disliking unions.

;]

Equality is the core of the matter, simple.

Back to balance, both sides are in effect trying to become an effective monopoly, so with 2 equally powerful players we will hopefully get some balance. In the last 20~30 years however the unions have pretty much been eviscarated and inequality has climbed as a result. So its not that I like unions, quite the opposite, but I consider they seem to be an essential part of the game to counter the strength of the employers.

In terms of what you mention, these are not new or unknowns. Like I said balance, we also dont want unions too strong and even so strong they try to bring down the country, Arthur Scargill will be a name I and my extended family never forget.

The rest of it is your usual drivel...I'll point you back to "the division of labour". I have my skills the "boss" cannot do and he has skills I cannot do, or at least do well. It is a team effort, something I suspect you have no concept of.

PS At the end of the year I usually get a bonus btw, so the boss cannot be too displeased.

regards

by notaneconomist | 31st Jul 14, 9:14am 1406754863

Raising the minimum wage might appear on the surface to be a good thing for low paid employees........but this should not be confused with balance!

Firstly the raising of the minimum wage is inflationary.....so on the one hand you are raising low wages and then increasing inflation.....how is inflation good for minimum wage workers? And then individuals who are above the minimum wage threshold also have an expectation that they should expect a pay increase.

Secondly raising the minimum wage would give the Government an increase in taxes which is what this is really about for Labour......they don't mention the increase in tax take from PAYE that they would receive in raising the minimum wage........they also don't mention the increase in costs to the employer for kiwisaver.

If business was thriving in NZ there would be an increase in the tax-take......however this is not showing up in figures so far published. The first thing that has to be considered is whether a business operation can afford the minimum wage increases implemented however Politicians never have to consider these implications as their only consideration is vote buying.

If business was thriving in NZ (good profit margins) then wages naturally go up as the employer can afford to pay higher wages and is encouraged to by the simplicity of the free market......can't keep paying low wages or employees walk to the opposition or set up in opposition etc.

In regards to your division of labour comments maybe consider how these processes work for the individual......the individual might be highly efficient in one particular area through repitition but have poor knowledge and skills on how things intergrate across the board.......a kind of dumbing down factory style operative involving limitations on types of tasks undertaken.......personally I think humans have a higher potential but it is up to each individual to tap into their full potential. You also have to consider when there is a lack of integration throughout an organisation that this can drive down efficiency and effectiveness......you only have to look at the public service organisations to see how this division of labour causes widespread issues.

The division of labour is the specialisation of cooperating individuals who perform specific tasks and roles. Because of the large amount of labour saved by giving workers specialised tasks in Industrial Revolution-era factories, classical economists such as Adam Smith and mechanical engineers such as Charles Babbage were proponents of division of labour. Also, having workers perform single or limited tasks eliminated the long training period required to train craftsmen, who were replaced with lesser paid but more productive unskilled workers.^[1]

http://en.wikipedia.org/wiki/Division_of_labour

by dh | 31st Jul 14, 10:14am 1406758474

Because some U.S. states raised the minimum wage and some didn't, there is interesting actual data coming out on the association of raising the mimimum wage to job growth (rather than arguing from economic or political theory). While it is too soon to say decisively that rasing the minimum wage is associated with stronger job growth, it is becoming clear that raising the minimum wage is in no way associated with any slow down in job growth.

http://time.com/3007429/minimum-wage-job-growth-states/

by steven | 31st Jul 14, 10:42am 1406760133

Good point.

I think I read this somewhere ie because the poor can now spend more that causes an increase in demand and hence more jobs.

regards

by steven | 31st Jul 14, 10:48am 1406760492

In fact here it is,

http://www.theguardian.com/commentisfree/2014/jun/11/the-evidence-is-cl…

http://krugman.blogs.nytimes.com/2013/02/16/minimum-wage-economics/

The "oh my god we are all going to die if you raise the min wage" effect simply has not happened.

regards

by notaneconomist | 31st Jul 14, 11:23am 1406762592

How about lowering the regulatory costs, which will increase productivity from decreased slothful spending lowering the RBNZ's inflation which reduces interest costs across the board and give the POOR a real helping hand up and increase job growth?????

by steven | 31st Jul 14, 1:47pm 1406771225

How about getting on with a job and not yet more libertarian whinning about regulation we choose to have.

regards

by Ms de Meanour | 31st Jul 14, 1:58pm 1406771881

On what basis exactly do you state that "we choose to have" regulation? Is it your position then that everything done by an elected Government is what "we choose to have"?

by steven | 31st Jul 14, 2:39pm 1406774383

Yes, in effect, all else being equal, in context, etc.

regards

by Ms de Meanour | 31st Jul 14, 4:16pm 1406780173

fine, then how about getting on with a job and not yet more malthusian whinning about the fossil-fuel based economy we choose to have

by notaneconomist | 31st Jul 14, 11:14am 1406762074

Interesting in the article was the point on Dakota where the minimum wage has not been increased but job growth has risen. There could well be some other very simple explanation in the areas that have increased job growth e.g.new business ventures, innovation etc. Anyone can throw up figures that suppport a specific case, but you have to look out for what has also been ommitted.

In Stevens post above he brought in the "inequality issue"......if the inequality issue was simply solved by increasing wages then it would have worked previously of which it obviously hasn't as all reports suggest that inequality has increased and is growing.

Increase in job numbers is a seperate but interelated issue.....if business can do well then of course they expand and job growth improves.

NZ business has many problems at the moment and I'm seriously concerned that Labour who is shooting off at the mouth should be held accountable for such policy that they know will damage the NZ economy.

The Fonterra payout is not good for NZ

GST and income taxes from business are down.

Interest rates have risen.

Off shore investors are low contributors to the NZ taxation system.

Then there is the NZD....implications for exporters when it is high, implications for importers when it moves down.

Then there is that Government debt issue.....

Rediculous house prices.

The high cost regulatory regime which has added significant costs to business overheads in the last 20 odd years.

And did I mention the GFC..

NZ is still in a precarious position and I believe it is completely irresponsible of any wannabe Politician to be advocating enforced increases that have the potential to cripple business and those on lower incomes will be affected the most and what will that do for inequality and job growth?

by steven | 31st Jul 14, 1:53pm 1406771582

dakota is a shale play, you hiding under a duvet? rock?

"The rate of job growth was the highest in North Dakota, where the local oil and gas boom has spurred the economy but there has been no minimum wage increase."

by notaneconomist | 31st Jul 14, 4:50pm 1406782215

Steven - I think you took what I said out of context.....however I take full responsibility for not wording myself as well as I should......I made the assumption that everyone knows about Dakota and was using is as an example of no increase in minimum wage but having job growth and that other regions may have growth because of other factors...so yes I should have explained myself better......sometimes I just plain old forget that simple writing rule of tell it like you would tell it to a 5 year old.

by steven | 31st Jul 14, 1:50pm 1406771453

So more ppl with jobs as opposed to being un-employed and on the dole doesnt reduce in-equality?

oh boy.

regards

by dh | 31st Jul 14, 3:22pm 1406776923

North Dakota is having a resource boom- doing an Australia with massive growth in unskilled manual jobs.

The main thing it shows is the assumption that raising the minimum wage leads to lower job growth is not supported by evidence, so people who start from that as a arguing position are begining their arguement from false principles.

by steven | 31st Jul 14, 10:29am 1406759389

Raising the minimum wage is not necessarily inflationary. In fact it may have a neutral effect as a buyer of that service (that is provided by minimum wage workers) may well spend less elsewhere as a consquence.

Even if it is, a small increase in inflation would be a one off and acceptable. It would also be spread over all NZers, so NET poor paid should be better off.

The pluses could well be that WFF payments to those ppl for instance would now be less.

"individual" much work in NZ now no longer requires such un-skilled and semi-skilled workers. Even then with highly capable workers IT for instance is so complex that you need specialists in a team to get an outcome.

Im not sure about what the rest of your comments relate to, its simple labour is best divided if at all possible/practical.

Im not sure where you are going with,

Adam smith and Babbage point to production of a good, where the division of labour as it says "having workers perform single or limited tasks eliminated the long training period required to train craftsmen". this, yes refered to a simple item. The problem is much of what we do now today is so complex that you actually need many different craftsmen such as myself to manufacture a complex IT item working as a team. The difference is much of this sort of work isnt repetitive (which suits productionisation) and division to simple tasks, its bespoke.

regards

by steven | 31st Jul 14, 11:23am 1406762623

"If business was thriving in NZ there would be an increase in the tax-take"

Actually I thought there was a recovery in the tax take.

http://www.treasury.govt.nz/budget/forecasts/befu2014/011.htm

Also,

"The next forecast will be the Pre-election Economic and Fiscal Update (PREFU) 2014 which will be published on 19 August 2014."

Should be interesting.

regards

by notaneconomist | 31st Jul 14, 12:04pm 1406765060

You crack me up laughing..........have you been hiding under a duvet or what?

Forecasts......Actuals.........ra..de...ra.......

And the biggest industry in the economy is in choking position so do you really expect those treasury forecasts to hit the target?

Are there any dairy farmers out there....probably not......they'll all be taking to their budgets with an axe......And every $1 they don't spend will have an enormous impact it is like shrink wrapping the balage, all the air gets sucked out.

by Stephen Hulme | 31st Jul 14, 12:09pm 1406765348

Results for the eleven months ended 31 May 2014

The operating balance before gains and losses (OBEGAL) was in deficit by $1.1 billion, which was $332 million more than expected. Core Crown expenses of $64.2 billion were 0.1% less than forecast and core Crown tax revenue of $56.5 billion was 0.8% less than forecast.

Core Crown tax revenue was $2.5 billion or 4.6% higher than in the year‐earlier eleven month period. This year‐on-year growth reflected positive macroeconomic conditions leading to growth largely in source deductions and GST.

While tax revenue has increased year‐on‐year, the result was $459 million below forecast with both GST and corporate tax being less than expected ($238 million and $120 million respectively).

The GST revenue variance mostly reflected lower than forecast domestic consumption growth, although some of the variance is expected to have reversed in the month of June. The corporate tax variance was partially due to lower than forecast terminal tax assessments and the timing of provisional tax assessments differing from forecast. Read more: http://www.treasury.govt.nz/government/financialstatements/monthend/pdfs/fsgnz-11mths-may14.pdf

by benwave | 30th Jul 14, 8:38pm 1406709536

Indeed. State legislature has turned out to be a remarkably poor substitute for actual worker organisation.

by Kate | 30th Jul 14, 10:31pm 1406716313

Indeed. I saw a program recently about the forestry sector - a guy with 15 years experience was on $16.00 an hour. Long unpaid hours just to get to the site, physically demanding and dangerous - shameful pay.

by steven | 31st Jul 14, 11:24am 1406762694

Agreed.

regards

by Berend de Boer | 30th Jul 14, 11:07am 1406675224

I just went to the ACT site to see the full quote and context. And I have to say Bernard, your quote is a complete misrepresentation. Here the full quote:

I suspect the reason is confusion about privilege.

Maori are legally privileged in New Zealand today, just as the Aristocracy were legally privileged in pre-revolutionary France.

But, of course, in our ordinary use of the word, it is absurd to say that Maori are privileged. The average life expectancy of Maori is significantly lower than Pakeha and Asian. Average incomes are lower. Average educational achievement is lower.

Leaving that out is complete mischaracterisation of what Jamie is tryin gto say, as there is a whole discussion and definition of the word "privilege" .

by dh | 30th Jul 14, 3:23pm 1406690633

Here is Jamie White explaining himself on Morning Report

http://podcast.radionz.co.nz/mnr/mnr-20140730-0709-act_party_calls_agai…

by Bernard Hickey | 30th Jul 14, 12:12pm 1406679169

Updated with Steven Joyce nationalising Novopay

cheers

Bernard

by waymad | 30th Jul 14, 12:54pm 1406681691

Makes sense: Alesco is joined at the hip with Oracle and Hyperion BI, and there is a longstanding partnership with Oracle via the shared-services back-offices movement which is sweeping through Government.

Bringing it in-house means that some synergies will result, and avoids the external-consultants' rates and disbursements. Sensible move.

by Kate | 30th Jul 14, 2:19pm 1406686794

Surely you're up to speed on the criticism of the Auditor-General on that back office (CASS) project?

http://www.zdnet.com/shared-services-leadership-effort-flawed-says-nz-a…

by steven | 30th Jul 14, 10:06pm 1406714814

That reads like the usual disaster. The problem is really they use (or end up with) second rate ppl up front and have huge political interfence, un-realistic expectations and frequent scope changes.

Personally I think projects should be 6 months at most 12, anything bigger just seems to get lost and flops.

regards

by waymad | 31st Jul 14, 12:04pm 1406765074

Not important, Kate: most roll-outs have their thrills and spills and CASS will have been no exception.

Point is that Oracle and the NZ Government have a very longstanding relationship (check for example, what's in behind most Health sector systems) and my outsider's bet is that a three-way deal has been stictched together:

Oracle supply some software heft (remember it was Software that sailed that yacht around to victory - software tuned between each race by some of the most cleverest brains in the world)
Alesco get the ongoing licence revenue (standard BAU practice)
A small team inside MinEd tweak things to suit our Education HR environment with full recourse to the above two resources.

Logical and sensible, really.

And what's to bet (the Farm, perhaps?) that O may well be involved in the much bigger fish: IRD systems replacement???

Incumbent inertia......

by steven | 30th Jul 14, 9:57pm 1406714271

Just abandoned a project, spent several years and 2~3million with little useful output and the prospect of doing that again, with some of the private entities software you mention above.

The only part that (still) works is the stuff I put in as a stop gap for the bits that got dropped off as the project was over-budget, overtime and didnt work. Right now Im expanding it into AD and then we'll have most of what the above was suppoed to do for the grand total of my spare time in the last year. Oh and a pretty much off the new shelf front end for <50k, the payback? about a year at most 2.

The good thing is the d***head manager who pushed for the original left of his own accord, just.

regards

by Ms de Meanour | 30th Jul 14, 2:52pm 1406688777

But you're not going to update with a correction of your complete misrepresentation of what Jamie Whyte said?

by steven | 30th Jul 14, 3:31pm 1406691080

the complete speech is in the link already.

and actually if you read it he is speech comes across even worse...

regards

by steven | 30th Jul 14, 1:01pm 1406682070

typo?

"The minimum wage would be lifted to NZ$15/hour in April from NZ$14.25/hour currently, and then NZ$15 an hour later in the year, ......."

by Bernard Hickey | 30th Jul 14, 1:29pm 1406683799

Many thanks for spotting that.

Full detail in there now. Labour actually going for NZ$16.25/hour next year

cheers

Bernard

by Morley | 30th Jul 14, 1:22pm 1406683357

novopay proves once again that the goverment should leave all business to the private sector.

As once again the goverment will fail and the private sector will be efficient and succeed.

YEAH RIGHT

by raegun | 30th Jul 14, 1:27pm 1406683620

Oh phew, could not read your last two words there when I clicked on your comment to read it

by rastus1 | 31st Jul 14, 12:23pm 1406766239

...indeed. I have been waiting for the left wing to pick up on this. What happened to the ideology that the private sector performs best? isn't this a case of govt getting into business (that of software develoment) ?? Private sector fail...tax payer to the rescue (via the purchase of their dodgy product). Any bets on the final cost?

by Bernard Hickey | 30th Jul 14, 1:30pm 1406683829

FYI updated with Labour's Labour policy.

Labour announced its wages and work policy, including a planned increase in the minimum wage from NZ$14.25/hour now to NZ$16.25 an hour by April next year.

cheers

Bernard

by steven | 30th Jul 14, 3:27pm 1406690866

The problem with such policies is its a policy to please the faithful who will vote Labour no matter what, even if Labour shaft them time and time again.

ergo its probably not gaining them many votes and probably costing them the swing voter votes.

Maybe Cunliff should review what he's trying to achieve because he seems to be just digging himself and Labour into a bigger hole, and its so big already he's isnt getting out I suspect....

et tu brutus.

maybe we should take bets on how long he lasts after the election night capitulation?

8hours?

gone by lunchtime?

regards