The Dirty Poor and Their Evil Ways

This week the government – led by the benevolent National Party of New Zealand and their little shoulder parrot the ACT Party – sponsored the delivery of a report on how the country can bridge the ever-increasing wage/salary gap with Australia.

Having read the above you must be thinking, “How very benevolent indeed. Imagine thinking of the worker in this scenario.”

The point I have to make at this juncture is – Bollocks.

To understand by point let us why the report exists in the first place… About a year ago in little old New Zealand there was an election. This election was won by the National Party after they created coalition agreements with ACT and the Maori Party. Traditionally National are a right / centre right party – this means they are like the Republicans in the US – except for the extreme nonsensical gibberish about Money, Jesus and 9/11.

In terms of coalition partners, ACT are slightly more right of National and therefore obvious drinking partners. ACT stands for the Association of Consumers and Taxpayers. Ironically enough, the leaders of this party probably don’t pay any tax thanks to creative accounting. I’m not implying they are breaking the law, I’m implying that they are creative with their accounting. Things like trust funds for family homes, cars and putting things in the wife’s name. This creativity means a reduction in taxation imposed upon them by the Inland Revenue people. As part of their coalition deal with National, ACT demanded a review of things led by Dr. Don Brash, a former head of the National Party himself and a notable proponent of the low tax, low spend government that ACT so lovingly puts forward.

New Zealand has had a long history of low productivity compared to Australia. Over the years our wage gap has remained for years and this sees many New Zealanders eyeing up the sandy Ozzy shores to make a new live. And being just 3 hours away on the plane it’s very easy to return to see the family now and again. In recent years escaping the financial talons of a student loan has also been a great motivator.

Having done some backgrounding of the issue we can now move on to Dr. Brash’s report recommendations. If you can remember back to the 80s when hair was big and shoulder pads even bigger, many policies adopted by governments around the world were very much focused on cutting government spending in a variety of ways including rationalisation of health, education and welfare spending, selling off of state assets to the private sector and lowering personal income tax while lifting the level of consumption tax. Dr. Brash’s report brings us back to those heady days. He called for, among other things, cuts in government spending, cuts in income tax, lifting consumption tax, selling of assets, and cuts to the minimum wage – the argument being that the private sector is able to offer far more efficiencies to the taxpayer than the government-run organisations, and over time these changes will increase productivity and close the wage gap between New Zealand and Australia.

Again, I make my point – Bollocks.

I’m not an economist or a statistician. I don’t pretend to know everything there is to know about GDP or tax law. I am not a world leader in the sale of assets. I am, however, a wage/salary earner. If you want to increase my productivity, if you want to make me more efficient than I have ever been, then you reward me for my efforts. This seems, on the face of it, a very, very, extremely, very simple solution.

The minimum hourly wage in Australia is $A14.31 ($NZ18.32), whereas here in New Zealand it is a mere $12.50 – and Brash says this should be cut. I must be an idiot because I would have thought that if you cut the minimum wage and I can earn 50% more for doing the same job in Australia, then I’m going to move there… aren’t I???

Cutting health and education spending is not going to work either. Having a sicker, stupider workforce is unlikely to lift production or wages. I admit that this is flippancy at its extreme, but there is some foundation there. Brash and his report buddies are asking for more private sector involvement in the provisioning of health and education. The idea is that competition will cut government spending levels. This is good I suppose… but the private sector is not the great liberator of spending Brash thinks it is, and they don’t always run things better than the government. Just look at the state of ridiculousness at the end of last year where companies like AIG, Lehmann Bros and so on couldn’t do their jobs properly because they didn’t know how the system they operated in worked.

Who’s to say the same collapse wouldn’t happen if the education or health system were privatised? Once you get money involved in things then maximising profit and returning dividends to shareholders becomes the motivation, not delivering a public service and ultimately those services, and the consumers of those services, suffer.

Brash and his rich little cronies should get their wallets out of their arses and try and live on $12.5o an hour with 6 kids to feed. He never will though and therefore he will never really understand what it’s like in the real world. It’s all numbers to them. Numbers can be made smaller. Unfortunately, and this is the case for all economic arguments, people aren’t numbers.

So again I say: Bollocks. You can’t build a bridge between two things if you begin by cutting away at the coastline on one side.

Brash, you’re a dick, and you always will be (this is slightly inflammatory so I must qualify the word ‘dick’ by adding the word ‘alleged’ to it. So, Brash you are an alleged dick, you nerd).

Until next time. Word.

Boon x

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