Little focuses on small business jobs

New Labour Leader Andrew Little focuses on vision for jobs and small businesses in State of the Nation address, rather than detail

28th Jan 15, 9:45am by Bernard Hickey

By Bernard Hickey

New Labour Leader Andrew Little has delivered his opening set-piece speech for 2015, saying Labour's vision was to make sure New Zealand had the lowest unemployment rate in the developed world.

The speech was long on vision and short on detail with just under three years to the next election, but the former union leader did make a centrist appeal focused on growth of secure well paid jobs in partnership with business, and small business in particular.

He shied away from talking about higher taxes or attacking businesses, but did talk about breaking the cycle of inequality, which he said was stunting economic growth. Little also shied away from attacking the National Government in any great detail, apart from calling it a 'small beer' Government. He also suggested the NZ Super Fund could be directed to invest in small businesses.

"I'm here today to make one thing clear. The Labour Party I lead is about jobs. Good jobs. Skilled jobs. Well paid jobs," Little said in his State of the Nation address at ASB's 'Cube' meeting space on Auckland's waterfront.

Little said New Zealand had the lowest unemployment rate in the developed world ten years ago when Labour was last in power, but had since slipped to ninth. Eleven OECD countries now had lower unemployment rates than before the Global Financial Crisis, while New Zealand's rate had risen 25%.

High unemployment cost the economy, communities and was costing the Government an extra NZ$300 million a year in benefits.

"That's why the next Labour Government will make sure that New Zealand has the lowest unemployment rate in the developed world," Little said.

He went on to highlight his experience as a union leader in working with businesses to improve productivity and job security.

Little cited an example where the EPMU worked with Fonterra on improving plant reliability by 1% to increase profits by NZ$100 million.

"Maintenance crews saw their pay increase substantially and they lifted plant productivity to levels even the plant manufacturers thought weren't possible," he said.

Focus on small business

Little made a point of focusing on how small businesses had generated 41% of jobs in the last year. He said Labour would ensure small businesses spent less time filling in tax forms and would ensure new business owners could set up without too much red tape. He pledged to consult with small businesses to build policies to grow jobs.

Later he told reporters Labour still opposed the 90 day trial, which many small businesses liked, but all of Labour's policies were up for review.

He also suggested Labour would "find ways for our major investment funds like the NZ Super Fund to support promising local start ups."

'Inequality stunts growth'

Little also spoke about the risks of rising inequality to economic growth.

"In fact at the end of last year, the OECD told us that in New Zealand the level of inequality is now holding back economic growth," he said.

"It's a vicious circle. More inequality, slower growth, more inequality," he said.

"We have to break that cycle if we want to succeed. And working on how we do that will be the priority for me as the new leader of the Labour Party.'

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31 Comments

by Stephen Hulme | 28th Jan 15, 10:02am 1422392542

Little also spoke about the risks of rising inequality to economic growth.

"In fact at the end of last year, the OECD told us that in New Zealand the level of inequality is now holding back economic growth," he said.

"It's a vicious circle. More inequality, slower growth, more inequality," he said.

"We have to break that cycle if we want to succeed. And working on how we do that will be the priority for me as the new leader of the Labour Party.'

Fat chance, since PM Key was recently regaling the rich about the attractions of New Zealand in Davos.

– From yesterday’s New York Times article: Middle Class Shrinks Further as More Fall Out Instead of Climbing Up

At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were already planning their escapes. “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said. Read more

by notaneconomist | 28th Jan 15, 10:52am 1422395564

Rising inequality slows growth because more money is transferred to the bureaucrats and red-tape brigades across the country!! Inequality is simply less money left on the business table due the effects of the reincarnated gestapo in the public services. You cannot close the inequality gap while growing the public sector!!!!

by Roger Witherspoon | 28th Jan 15, 10:59am 1422395940

Yes, but great that Labour is actually getting some focus on a real issue, who would have thought?

by notaneconomist | 28th Jan 15, 11:56am 1422399376

Yes, but their focus will be like that, of person, staring at the end of a ball-point pen.......they won't see anything on the periphery that will be affected.

by cowboy | 28th Jan 15, 12:40pm 1422402042

It's a re-packaging of minimum wage initiatives and capital gains tax to pay for it...yes the same policies that lost them the last two erections.

by Roger Witherspoon | 28th Jan 15, 1:15pm 1422404157

Probably, plus I am sure Bill English has some tricks up his sleeve. I expect a "prudent" budget this year (ie, a bit on the lean side); then tax cuts next year (18 month lead time for full stimulatory effect on the economy); then spending on housing the year after (6 month lead time). So at the next election the place is booming and no-one will want to risk killing the goose that lays the golden eggs by voting for tired Old Labour. Bill English is a clever and competent finance minister.

by steven | 28th Jan 15, 1:39pm 1422405552

Totally dont agree with you here.

a) Problem is tax cuts for the better off just gets put into housing which makes things worse aka 2008/9. b) I also dont believe that tax cuts take that long to be seen. On top of that Bushie did tax cuts and the US economy didnt boom. In a recession you want to stimuate then govn spending is by the looks of it the most effective and efficient way.

c) tax cuts while owing so much? but then we can look at dogma for that answer.

d) BE clever and competant? no, political animal whos judging enough ppls greed well enough to get re-elected? yes.

e) Tricks? yes if that amuses you I suppose.

by benwave | 29th Jan 15, 1:36am 1422448596

How exactly does rising inequality lead to increased transfer to bureaucrats? I don't see how those two things are correlated...

by notaneconomist | 29th Jan 15, 2:15pm 1422494115

I'm not sure where you've been looking Benwave...maybe I could have worded myself a bit better...

The bureaucracy and red-tape brigaders are constantly extracting money from business via various mechanisms e.g. taxation, fees, licensing. You can't keep extracting from the private sector and expect there to not be consequences one of which is inequality. The more you extract the worse the inequality problem will become. Both the extraction and inequality compound over time.

For business which is in the start position of all money being generation via selling goods and services the extraction behaves exactly the same way as a loss of some kind....you can only charge for your goods, job, services once, so if you have to redo a job or service etc the redo is generally for nothing and the time you are spending doing the redo should have been spent on doing a chargeout so in effect it cost you not twice but three times in time and costs etc for only the one charge out.......extractions like taxes and other fees have the exact same effect on business as the redo. Everything gets tighter and tighter as the directional flow was altered by the tax....those who are not in business or the public service are always going to be the worse affected. The public servants and bureaucrats always get paid, they set the system up so that that occurs. Business is given just enough leash to keep generating money. It pays to keep in mind that around 95% of all taxes are generated by small to medium sized business. The Politicians, bureaucrats etc heavily monitor the play via all the agencies involved.....they have to keep people in business so they need to keep people buying and they accept that a small percentage will fall through the gaps but they can manage that with minimum payments called social welfare. The public service thinks of itself as TO BIG TO FAIL !!! They are of course correct the system they designed for themselves ensures everyone else will fail before them.

by benwave | 29th Jan 15, 9:09pm 1422518981

Your argument is that taxation leads to inequality? Mate, taxes lead to a lot of things but just about the Only thing they don't lead to is inequality! Without taxes the poor would be a bit richer but the rich would be waaaaaaaaay richer. That's higher inequality. Can anyone else back notaneconomist up here? Because this theory sounds nuts on the face of it.

by steven | 28th Jan 15, 11:14am 1422396850

Yet another Pollie on the grow for ever on a finite planet junket.

by Roger Witherspoon | 28th Jan 15, 11:29am 1422397747

Yes, but usually Big Labour sucks up to Big Business. Note the example of Fonterra and the EPMU. They like cosy cartels that favour management, unionised employees and bankers over shareholders and customers. It is an insidious rort.

by steven | 28th Jan 15, 1:46pm 1422405987

I read that as a bit of mutual co-operation that benefitted both.

So if Fonterra made more profit how does that not benefit the shareholders?

by cowboy | 28th Jan 15, 7:19pm 1422425958

because the money never makes it out to the shareholders, it gets spent as interest in internal projects, lost into rubbish foreign deals, or just tossed away with the company's poor efficiency record.

Making more profit dopesn't help shareholders unless it delivers distributions.

by steven | 28th Jan 15, 11:25am 1422397503

"“I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said."

wow, maybe Kunstler's musings are not so outragous,

"I doubt that the Warren Buffets and Jamie Dimons of the world will see their wealth confiscated via some new policy of the Internal Revenue Service — e.g. the proposed “tax on wealth.” Rather, its more likely that they’ll be strung up on lampposts or dragged over three miles of pavement behind their own limousines. "

Just why pray do such people think if it comes to things that bad that they'll be OK in NZ? I just wonder how they will get along with say salt of the earth cranky south Islanders as they buy up the frams. More likely be un-wanted and end up as target practice if Kustler's vision of the future pans out.

http://kunstler.com/clusterfuck-nation/piketty-dikitty-rikitty/

no where to hide.

by steven | 28th Jan 15, 11:29am 1422397750

Good link, thanks.

"One of the main reasons we have seen such a low level of resistance to this historic oligarch theft, is due to the successful brainwashing of the American public. Despite clear evidence to the contrary, 60% of what is left of the middle-class still think they are going to get rich. They have no idea that they are really just a bunch of deluded plebs unable to see how systematically and catestrophically they are being played."

So when they figure it out...oh dear.

by Macawsley | 28th Jan 15, 11:10am 1422396634

'Rising inequality slows growth because more money is transferred to the bureaucrats and red-tape brigades across the country!!

Damn planners and council workers skimming hard working property developers and investors - so thats how they can afford to buy up farms with airstrips and drive Porshe Cayennes.

Have you seen the Council carpark lately?

Youre on to sumpving notaneconomist.

by cowboy | 28th Jan 15, 12:25pm 1422401141

At least the property developers and investors team together to produce something useful (at least by Physioeconomic theory (aka the theory of usefulness)

planners and councillors not so much...certainly not efficiently nor with their own funds (or risk !)

If current economic theories were correct then the increase in economic return would see those car parks over flowing with workers paid from the economic gains of the community - rates and costs are only important when money is tight.

Perhaps we can impliment rent control as that always brings down costs and reduces building production (ie creates supply contriction).

by Value Added | 28th Jan 15, 1:07pm 1422403632

Bang on mate! I DJ'd the Auckland Council Christmas party (I DJ at this bar - they didn't pay me) and it was the saddest thing I've ever seen - they had a tiny bar tab and a few packets of chocolates between a couple of hundred people. They smashed the bar tab in about 45 minutes - their heavy drinking and crazy antics gave the impression they were quite stressed!

Then once the bar tab had finished they all disappeared. It was like a flash mob!

by Alter Ego | 29th Jan 15, 8:38am 1422473913

It was a flash mob...

Flashed the ratepayers cash down the drain, flashed up the GST returns, no returns to you maybe.

Did they tip you..with a Value Added tax??.

Still it keeps the Party going. Len will be back for more.

Oh! Happy New Year. Awklanders....Yay.

Rate rises on the cards...Americal Express....and Visa for the unwary.

Perks for some in Awkland, Bills for the majority.

I do like the way that others have a drink at our expense.

Oh Yay?

by MortgageBelt | 28th Jan 15, 11:29am 1422397756

Job growth in Regional areas would also be good for NZ.

Well paid jobs are really the best way of getting income into the 99%.

by cowboy | 28th Jan 15, 12:35pm 1422401749

Where are the funds coming from to pay these "Well Paid Jobs".

Friedman and others pointed out that increase in monetary supply does not increase prices.

Yet it is very clear that John Stuart Mills and others were correct with the fundamental budget and mathematical realities of Wage-Fund theory. That higher wages must be funded by an increase in sales margins collected or by reduction in number of workers.

Mengher gave us the basic principles of supply and demand pricing, and the theory of value (and wealth and captial) had already been clearly and solidly rebuked by several analysts.

This can be readily show by the price of a truck or building or even a wage - to one person it might not be worth paying 10% over cost as it would never pay for itself, yet to another that same truck might produce 10 or 50 times it's price in profit (wealth generation). "Good" interest is another clear example.

David Ricardo is wrong. His theories are completely built on the view of the banker or the monopolist (eg a government body or bank that has final legal power over it's customers). In all his theories he makes the assumption that what is good for him, must therefore be good for everyone... clearly not the case when it's the spider makes theories for the flies. In Ricardos theories we should see "good well paid wages" from globalisation but we do not - instead we see the exact same pattern as we do for a singular super mall opening in a small town, it reduces the available merchandise lines to those most profitable for the company, it's reduces wages because it's hiring power in market dominant and in such it cuckoo's out other industries and markets in the town - most notably it will pick up the limited fintite cheap labour that would otherwise compete with production of its product lines (ie not only do you lose healthy competition to "production at tight margin *see first point re: wage margins required, but you also lose the supporting industries and local variety !! ) . This is the process of the monopoly and the water empire. This is the effect we are seeing the world today.... this is the sea tide that King David Little is trying to command back with little more than empty half thought out promises.

... you can bet that the only card Little is holding is the same one unions have played for decades, industrial disruption and legislation compulsion to force up minimum wage. It's their only card and it _cannot*_ work. (it'll just make Ricardo's global companies more efficiency by comparison and more automated .... more offshore, more internet sales)

Perhaps we do need a Better Deal... one with negative income taxation. (works for our big trading partner China....)

* see paragraph 3

by steven | 28th Jan 15, 1:56pm 1422406579

The problem is how?

Why go to the regions?

eg Businesses want numbers to make it worth while being in business. As an example say a small computer store in Blenheim maybe buys 20 mice? say, priced a bit much but then that is how it is. Same store in central Wellington or online would buy way more getting a bigger wholesale discount, sell at a keener price and make more $s.

So to be there there has to be an overwelming reason ie a bigger profit to be made.

Then the "well paid jobs" well I'd love to move away to SI, but the few jobs ive seen in the last decade paid less than 2/3rds my current salary and were dead end jobs. Plus if that job ever went I'd have to move back to the city to get another, there would be no alternative locally rinse and repeat for many people I suggest.

Otherwise yes I agree, well paid productive jobs should benefit all.

by cowboy | 29th Jan 15, 8:35am 1422473740

The process is now one of distribution centers.

Nelson store can buy 20 mice.

And Wellington might by 2000 mice.

But with online model, the warehouse placed anywhere in the country just have a company Online Front to service both places, and they don't even need to worry about retail space.

Although a few quick moving Cash'n'Carry type items are likely to be held locally, and act as a flag waving service. I believe DSE are currently moving to this model.

Currently they seem to have Bulk Retailing at a few sites, but a JIT inventory is held and pretty much anything of substance or not "candy aisle" grabbable , will just be drop shipped.

It appears that much of Mighty Ape's inventory is dropship.

Frogpond appear to warehouse or dropship it's stuff too, but since I can order online and 2pm and have an uncommon book arrive 9am next morning at my rural address, with less effort and time than it takes to wash and dress for town and find a park, let alone browse stores, I can't complain.

Even a full size "gamer" quality office chair from Mighty ape only took 3 days...yet to expect a retailer to hold one of each colour in stock "Just in Case" and then to be passed over because of dated or shop/storage soiled stock...the Blenhiem retailers days are numbered. Expect a return to the mail order catalogues and general stores of colonial times - those are the new logistics.

by cowboy | 29th Jan 15, 8:48am 1422474530

Getting income into regional areas would be good. But what do we need produced?

Service jobs require a productive base to sell to (ie the people buying the services, need higher income to pay for the services they buy).

New Zealand is the Regional Economy on the Globalisation stage.

Which is one reason I'm watching the economic swamplands to understand its environment.

Moving to lower cost models is always going to give short and medium term advantages.

Bought Capital (shares) is always expensive, and labour is next, and taxes/rates/compliance.

Factory forces will push production cheaper, as will warehouse/dropship. Sales-force as a Service, Webmastering (4th estate), will be the new space - with push and mobile increasing vying for front-of-the-line for consumer attention. As will sponsored services to try and buy off consumer attention ... in a diminishing effectiveness (costs of such sponsorship will rise) to meet the margin available where the price margins act as a cost barrier.

Inequality under the current system is inevitable, as it becomes easier to get by on sponsored services, and increasingly expensive for non-corporates to be productive.

This is because our productivity is too high, our currency (work hours) too worthless (on average)

by Jake Wiltshire | 29th Jan 15, 7:08am 1422468487

To stimulate small business there is the need to show these people willing to take the risks that working 80 hours a week or more for years on end is going to pay off. Either by realising gains at the time of the sale of the business being untaxed, no CGT, or the owner does more of the work to put that wage cost in their own pocket, hence the 80 hours per week, less additional employment.

Many of these people earn 60 to 70K a year (on paper) but the hourly rate is still close to or below the minimum when looked at the total hours worked per year.

Yet both apparently create inequality, because they are doing so well (on paper) according to Labour.

Numbers will always be numbers and can be looked at from different angles to be both good and bad.

In the old Soviet Union there was no unemployment (supposedly), if Labour wants to be lower then S Korea at 3.4% unemployment we are getting close to that of the Soviet Union.

Which means he wants to .......... and go back to a huge government employed labour force.

De-unionising the labour force would go a long way to create increased private sector jobs.

But he surely can not mean that with his "stimulation" package.

by steven | 29th Jan 15, 7:30am 1422469846

The problem is how do you target such growing businesses V those happy enough to get buy and even do less work if they get more income.

All gains should be taxed equally.

De-unionising actually doesnt create jobs it destroys the balance between the strength of capital and the strength of labour.

So how about less right wing un-substantiated opinion and instead show some facts.

by cowboy | 29th Jan 15, 7:48am 1422470908

De-unionising isn't so bad...Unionbusting is bad.

If we have high minimum wage etc and heavy compliance for safety then the unions become redundant (and expensive to workers) and we run the risk that Union activity becomes a commercial activity in itself attempting to prove its relevance and trying to showcase its worth.

With lower government regulation the Unions become more important as a balance to give employees a degree of power against exploitation. Although as Union power grows the temptation grows to commercialise that powerbase. ... basically doing exactly the same things that are concerned about employers doing to employees, the Unions will do to employers...and for the same reason. The is the price of power.

Annoyingly enough, the government is also full of jobsworth people. Which is why we even needed a Unemployed Workers Rights Union many years ago, to stand up against the government departments which would routinely violate their mandate and purpose.

A Union is just another service sector. Like insurance, none is bad; yet too much will cripple the system.

by steven | 29th Jan 15, 7:32am 1422469934

Oh and I suspect we will see many more people employed via Govn in the future, why? because private business wont see the profit so wont do it. As an example I suspect we'll see Govn's drilling for oil, desperate to keep the system going.

by cowboy | 29th Jan 15, 7:56am 1422471410

I don't will will see that, significantly [more people employed via Govn]. But only because of deliberate action to stop it.

Greece has shown where that leads. The Government employees increasingly look after their own interests until the lake is sucked dry (and since they're all doing their contract jobs, they all feel entitled and not responsible).

Increasing proportion of spending is put into Keynesian projects to keep people busy, who are already contracted for paychecks to the Government coffers. Increasing meetings and consultings to keep people relevant and committees afloat - a government decision legally requires contacting several groupos, paying them all,. creating expensive audit trails, to be seen to be making the correct decision. Lots of people employed...very expensive decision process...little result for the resources consumed. But the Keynesian cost of a project is recovered from the future, Keynes didn't propose Free Money only delayed taxation from future profits........and since those projects are expensive and government subsidised (ie they don't have proper ROI or IRR ...there aren't any future profits to tax ! Only future subsidises to keep the white elephant maintained. The Keynes approach can only function when there are significant future private profits to reclaim....just like any other ROI or IRR project.

by roma5 | 29th Jan 15, 10:08pm 1422522503

The big problem for Greece was that while public spending was extravagant, the wealthy and middle class evaded taxes. Meanwhile the growing gap between income and spending was covered up for years by dodgy accounting.