Tuesday, May 30, 2006



New Zealand at risk?

Yesterday, Don Brash gave a speech in which he wrapped himself in the flag and proclaimed his loyalty to New Zealand. In response to which we should simply remember three words: "gone by lunchtime". But rather than laughing at that, I'd like to focus on one of the other key points in the speech - that of New Zealand being "at risk". According to Brash, this is due to the widening gap in incomes and living standards between New Zealand and Australia:

In 1999, after-tax incomes in Australia were 20% higher than those in New Zealand. Last year, the gap was 33%. On present trends, that gap could easily be 40% within three years.

And this isn't just about statistics: that gap has profound implications for the quality of education we can afford for our children, for the quality of our housing, for the quality of our roads, and for the quality of our healthcare. It's no doubt a major reason why mortality rates from breast cancer are 30% higher in New Zealand than in Australia.

As a result of that gap in living standards, we've seen a rapid rise in the net flow of Kiwis to Australia...

What's ironic is that National proposes to close this gap by pursuing policies which will actively reduce the living standards of New Zealanders. Their employment policy, for example, would limit union access to workplaces and the right to collectively organise, slash holidays and rights to take personal grievance cases, and introduce probationary employment. This will reduce conditions and keep wages low, with a consequent effect on the living standards of ordinary New Zealanders. Their "welfare policy" is actually a labour market policy, aimed at forcing people onto the labour market to reduce wage pressure - again, reducing the wages, conditions, and living standards of ordinary New Zealanders. And the monetary policies National remains committed to - and which Brash so ruthlessly enforced during his tenure as Governor of the Reserve Bank - are explicitly aimed at creating and maintaining a "reserve army of labour" in order to avoid "inflationary" wage increases.

More broadly, National remains committed to a "low wage, low skill" economy, in which employers simply hire another warm body rather than investing in capital or training. This is the same economic model which saw that gap open in the first place, and attempting to perpetuate it will not see the gap close (except accidentally, as a result of policy change in Australia - something which may happen due to John Howard's recent ECA-style "reforms").

On top of this, National's tax policy would directly reduce the funds available for that quality education, quality housing, and quality healthcare Brash claims to care so much about - again, directly reducing the living standards of ordinary New Zealanders who rely on those government-funded services.

In short, these are not policies for closing the gap with Australia - they are policies for widening it. Ordinary New Zealanders will be made worse off, so that income and wealth can be transferred from the many to the few - exactly as happened in the 90's. That's the real risk to New Zealand, and it comes from Don Brash.

15 comments:

Great post

Posted by Anonymous : 5/30/2006 02:15:00 PM

"In 1999, after-tax incomes in Australia were 20% higher than those in New Zealand. Last year, the gap was 33%. On present trends, that gap could easily be 40% within three years. "

If you'd done the comparison 6 months ago we'd have been 10% closer to AUD wages than we are now. Because it's not really about wage changes, it's more about exchange rates. International commodity prices for metals are up, so the AUD is up, and the NZD isn't. That's because they have vast tracts of desert to mine, and NZ hasn't.

What's that got to do with their or our govt's policies? Very little.

Posted by Icehawk : 5/30/2006 04:42:00 PM

Not great. It's a series of one-liners that alternate imputing ulterior motives and putting "least favorable possible constructions" on points. The usual depressing, strident, ignorant partisanship in other words.

Posted by Anonymous : 5/30/2006 04:44:00 PM

National has tended to aim it's slogans at the barely average new zealander with oversimplified comparisons and analysis.
Im unimpressed.. but maybe it works.

Posted by Genius : 5/30/2006 06:11:00 PM

reminds me of that National Front demo at Parliament a few years ago. Exactly the same issues and exactly the same language.

Hmm

Posted by Kakariki : 5/30/2006 08:11:00 PM

Perhaps you should all take a look at this graph of Australian and NZ real GDP, courtesy DPF.

Icehawk, are you saying we should set up more mines in NZ? I heartily agree :-)

Posted by Duncan Bayne : 5/31/2006 09:44:00 AM

duncan,

Your view on mining reminds me of the National Party's Energy Policy for the last election, which was to find oil and natural gas off-shore. Not "look for" but "find". As one reviewer noted: that's like me announcing a policy that I will win lotto.

Oz doesn't have more mines than us because of lower pollution and ecological regulations. They have more mines because they have more valuable minerals.

Posted by Icehawk : 5/31/2006 12:11:00 PM

You're absolutely right - ACT-national's policies are deliberately designed to shift wealth from the poor to the rich. They achieved this spectacularly from 1984 to 1999 and are still doing so today, albeit at a lower rate than the Right wants. The consequences for the New Zealand way of life have been appalling. In 2006 we're richer than ever as a nation, yet thousands of us live in poverty, mainly the young, the old, the sick and the disabled. A society is judged by the way it reats its most vulnerable members. By that standard, we should be ashamed of ourselves. Even more so if we ever let ACT-National form another government.

Posted by Anonymous : 5/31/2006 12:20:00 PM

Duncan,

That graph of DPF's is simply a lie. I've no idea how DPF created it (and he doesn't source his stats). But it's nothing like any data I've ever seen for Oz's real GDP, and appears to give figures least double any credible source of data I can find.

Please read some real data:

either govt data (thanks noddy):

http://www.rbnz.govt.nz/keygraphs/Fig2.html

or data from a private research corp:

http://www.economist.com/countries/Australia/profile.cfm?folder=Profile-Economic%20Data

Posted by Icehawk : 5/31/2006 12:31:00 PM

Whilst reading an extract from Naom Chomsky's latest book, I was struck by a comment of his - "...Though it is natural for doctrinal systems to seek to induce pessimism, hopelessness, and despair, reality is different..."

Although Chomsky is referring to the Bush administration's foreign policy, I couldn't help but draw the comparison with doom and gloom pronouncements of neo-liberals doctrinal fanatics like Brash and Key.

Posted by Sanctuary : 5/31/2006 02:17:00 PM

I love it how a barely-labelled-graph with two lines "wins" the argument. Killer reply Duncan!

What the fuck is GDP anyway?? Pretend I'm an alien from Mars, and educate me please: is it some kind of meticulously constructed measure of how happy our society is? Does it measure all those things that are important to humans, like societal bonds, traditions and sense of belonging, ability to enjoy a clean environment, and perhaps feeling at one with nature and the earth? I presume it includes all the other stuff that is important to us, like how our fellow citizens are faring, how morally we're acting, the ethical stance our government takes?

What a fantastic, comprehensive measure! I agree - we clearly need to do whatever Australia did over the last few years to catch up.

OR, think about it this way. Australian people are, on average,
*more racist
*more xenophobic
*less caring
*more self-interested
and their country
*acts less ethically in foreign policy
*is happier to destroy the environment
*is more corrupt, more greedy

What a fantastic place. Go there if you want. I love New Zealand, not money, so I'm staying.

Posted by Anonymous : 5/31/2006 02:32:00 PM

"limit ... the right to collectively organise"

Of course, another way to look at National's ER policy is that it would increase the right of workers to collectively bargain. Currently employees cannot collectively bargain unless they join a union, I understand that one of National's ER reforms would be to remove this union monopoly.

Should this happen, the half dozen school kids who work a few hours a week in a neighbourhood shop will be able to say to an employer "we think we're doing good work and we'd all like a raise, can we have one?"

At present they're not allowed to have a collective contract, if the law changes this will then become an option, and they'll be able to collectively bargain with their boss.

Posted by Graeme Edgeler : 5/31/2006 03:10:00 PM

I am certain that DPF has used nominal GDP for Australia and real GDP for NZ. In error, not malice, mind. Australia's nominal GDP goes up by about &5 pa on average, which bears out DPF's graph. I have asked hime for a source but he hasn't yet given it. I found the OECD data which has the advantage of being comparable (comparable data types have the same codes): http://www.oecd.org/document/14/0,2340,en_2649_201185_1934699_1_1_1_1,00.html

Posted by PabloR : 5/31/2006 03:33:00 PM

pablo - " In error, not malice, mind. "

If so, he's vastly more ignorant of economics than he pretends. He's got Oz showing growth rates that would make an asian tiger economy proud. 50% growth in 6 years?

DPF's got a habit of making statistical slips that someone who knows stats wouldn't make.

Posted by Icehawk : 6/01/2006 10:34:00 AM

Icehawk, I was giving DPF the benefit of the doubt, he has spotted his error but will have some work to do doctoring the figures to show a good story for the Right.

That said, he used an obviously misleading way of displaying the data in order to make his point.

Posted by PabloR : 6/01/2006 05:05:00 PM