Wednesday, June 20, 2007

The effects of a Labour government

Statistics New Zealand has released the income data from last year's census, which includes the following graph about changes in personal incomes:

I think this speaks for itself about the effects of a Labour government. Increases to the minimum wage and in income redistribution through the tax system have seen people move out of poverty and up the income scale. The median income has risen from $18,500 to $24,400 - an increase of 32%, well above the 13% rise in the CPI. Compare this with the effects of the 80's and 90's "reforms", which saw the median income fall and people actually made worse off in real terms for the sake of the ultra-rich. As an ordinary New Zealander, who cares about the incomes of real people rather than just those of the ultra-rich, I know which policies I'd rather live under.


The effects on the graph are caused not so much by Labour, but by high rates of economic growth, thanks to good luck (ie good prices for exports) and the reforms of the 80s and 90s. Inflation 9asuming pay rises match it) would automatically make the graph look good for any government. if you persist in defending your failed socialist ideology, draw a different graph for Korean incomes, with North Korea, a socialist state on one side, and South Korea, a capitalist one on the other side. the same could be done for East Germany and West Germany in 1989. The figures should show which economic system is better.

Posted by Anonymous : 6/20/2007 06:35:00 PM

While labour had the good fortune to be in government at the right time they haven't done anything to stuff it up.

Had national been re-elected in 1999 they would have continued to drive New Zealand into becoming a low wage economy so the graph is very much real. I fault Labour on mnay things but this isn't one of them.

And perhaps I should also say "not now Nicholas the grown ups are talking"


Posted by Anonymous : 6/20/2007 08:17:00 PM

Yeah! Right!
And if the situation had gotten worse - you would be the first saying that it had NOTHING to do with the 80's /90's reforms of the rabid right!
In fact there are similar figures available for the incomes after taxes of ordinary NZers avaiable - for the late 80's / 90's from Stats. I suggest you go look at them too Nicholas which show just the opposite in terms of where the money goes. The 91 "mother of all budgets" (and what a mother*** it was too!) had a dramatic effect on the wealth of Rich NZers and an equally startling effect on the ability of of the low waged to sustain even the very basics of every day life. Talk about taking from the poor and giving to the rich! But its all there in black and white if you care to go looking for it. The sad fact is that the present Labour Govt has still not fully redressed the damage that was done then.


Posted by Anonymous : 6/20/2007 08:25:00 PM

Yes, of course, NZ under Labour is exactly like North Korea and East Germany. Quality argument there.

And ... and ... um ... you smell! Haha, that's told him!

(And back in the world of grown-ups, nobody with a modicum of knowledge about the history of West Germany or South Korea would cite them as examples of neo-liberal free market economics. You're actually making the case for more state intervention, not less).

Posted by Anonymous : 6/20/2007 09:36:00 PM

as for the reforms of the 80s and 90s being irrelevant, since few of them have been reveresed I think they can be given some credit for these results. the examples of North korea and east Germany was to show tthat Socialism does not work. I know West germany or South Korea weren't too neoliberal economically, they were very free market compared to their socilaist counterparts. And even if the most extremist radical neoliberal reforms conceivable were tried in any country, I'm sure it would be richer in 50 years time than North Korea (asuming N Korea lasts another 50 years with its policies). To be fair some credit should be given to labour for these results.

Posted by Anonymous : 6/20/2007 10:47:00 PM

Much of the growth that has occurred the last few years has been imaginary - boosted by increases in the money supply and very little to do with actual wealth creation or increases in productivity. I wonder how much of the increase in incomes above $70,000 comes from overpaid public servants whose jobs shouldn't exist?

Posted by Anonymous : 6/21/2007 07:35:00 AM

The German and Korean examples showed only that totalitarian dictatorships bearing no relationship to NZ remained significantly poorer than countries similar to NZ, ie it was unsurprising and irrelevant information.

The reforms of the 80s/90s are indeed relevant, but given that they actually lowered the median income and transferred wealth from the lower end of the income scale to the upper end, crediting them for the opposite under the current govt seems uncalled-for.

Posted by Psycho Milt : 6/21/2007 07:37:00 AM


Please identify which of the so-called rabid reforms of rogernomics have been reversed under this Labour Government.

We still have the public finance act. We still have the reserve bank act. The SOE model has not changed.

Public sector incomes have risen dramatically faster than in the private sector over the last seven years. That has nothing to do with "creating wealth", but everything to do with a government playing fast and loose with taxpayers' money. The core public service is 30% larger now than it was seven years ago, with no improvement in public services: waiting lists are just as long in hospitals, compulsory education is in a dire mess, the police are at an all-time low in morale, tertiary education has become a pyramid scheme of low quality providers providing poor quality courses, and Wellington is sucking resources out of the productive economy to blow on petty bureaucrats' pipe dreams. This is not a government that has any control over the economy whatsoever.

The real crunch to individual householders' incomes is inflation, which has been running significantly higher now than it was a decade ago.

Relatively, New Zealand incomes are significantly lower now compared to Australia than seven years ago, yet Australia has implemented the same kind of fiscal responsibility that governments of the 1980s and 1990s pursued. Low and middle income Australians are far better off with an economy that delivers them the benefits of their industry, rather than penalises them for their hard work.

New Zealand continues to slide down the OECD ladder, and will continue to do so as long as this government remains in power. That means that real New Zealanders, on real incomes, are missing out on wealth.

Posted by Insolent Prick : 6/21/2007 10:32:00 AM

A fine tale of woe, there, Mr Prick. Like to support it with some evidence? You aren't Garth George under a pseudonym, by any chance?

Posted by Anonymous : 6/21/2007 02:31:00 PM


you forget to mention that for the majority of the last 7 years Australian workers have had their wages negotiated by unions, where as teh opposite is true for New Zealanders.

"Please identify which of the so-called rabid reforms of rogernomics have been reversed under this Labour Government."

The minimum wage increases probably have had quite a bit to do with boosting income levels. Though it still isn't enough.

For example, between the years of 1999 and 2005 the minimum wage underwent an increase of 36 percent, while during the 10 years National was in power, the minimum wage increased by a paltry 14 percent (CTU, 2005: 2). So the minimum wage has increased at a rate of 5 percent per annum under the Fifth Labour Government, while this figure was only 0.7 percent under National during the 1990s. Many workers in the secondary labour market (100,000 new zealand workers) are paid at, or slightly above the minim wage (Brosnan, 1991: 22-23), so these increases in the minimum wage would have certainly resulted in higher wages for them. However the adult minimum wage as a proportion of the average wage, at 49 percent , is still far below its level of 53 percent set in 1987 by the Lange Government (Statistics New Zealand, 2006c; New Zealand Government, 2006; and Cutbush, 1992: 9).

Posted by Roger Nome : 6/21/2007 03:42:00 PM


the minimum wage actually increased at a rate 1.4 per cent per annum under National during the 1990s.

Still far below the corrosponding figure of 6 per cent for labour though.

Posted by Roger Nome : 6/21/2007 03:56:00 PM

Given that 10,000 has always been under the minimum wage, why has the 5-10,000 group dropped by so much? The majority of the trend is caused by that change (it's a graph of percentages).

Posted by Anonymous : 6/21/2007 10:01:00 PM

Rhys: people getting jobs - something else the "reforms" didn't deliver very well on.

Posted by Idiot/Savant : 6/22/2007 01:23:00 AM

"Given that 10,000 has always been under the minimum wage, why has the 5-10,000 group dropped by so much? The majority of the trend is caused by that change (it's a graph of percentages)."

You forget that 30% of jobs in New Zealand are part-time (under 30 hours per week)

Posted by Roger Nome : 6/22/2007 02:35:00 PM