So the Greens co-leader James Shaw recently made a mistake. In his role as Associate Finance Minister approving funding for “shovel-ready” projects, he fought hard for a private “Green school” to get funding to expand their buildings and, therefore, their student capacity. There are many problems with what he did: forgetting to oppose private schools as per Green policy; supporting an approach to environmentalism based on individual education of wealthy elites’ children, rather than systemic change; finally showing some spine around the cabinet table and for this; being so out of touch with his party’s kaupapa and membership that he actually thought his actions would be seen as a “win” for the Greens. It was a big mistake and it doesn’t say anything good about Shaw’s political judgment.
But here’s what happened next: the Greens’ membership, supporters, and former MPs flipped out. They rightly criticised what Shaw did, instead of sycophantically defending his actions because he’s the party leader. And Shaw called an emergency meeting with members, admitted it was a mistake, apologised unreservedly, and tried to do whatever he could do to reverse his actions.
Meanwhile, Grant Robertson, Shaw’s fellow Wellington Central-based MP and carpool buddy*, was working on an announcement of his own. Robertson is also effectively the second most important leader of his party, and he’s also a Finance Minister… and not just an associate one, but the proper one.
Robertson’s announcement was that his party, Labour, are finally going to increase tax on the rich. First, they’ve brought in a new top income tax rate of 39% on income above $180,000. And second… there is no second. That’s it. In this country of notoriously low taxes on the rich, in the greatest economic crisis since the Great Depression, their revenue policy is: Bringing back the Helen Clark/Michael Cullen top income tax rate of 39c, but to qualify for that top tax rate you have to earn as much as someone working 183 hours and 10 minutes per week on the minimum wage. No wealth taxes, just a small income tax change that even right-wingers think is too low. Australia, the UK, and other OECD countries have higher income tax on the rich, lower taxes on the poor, and of course capital gains taxes, even before the COVID recession… but Labour’s pathetic approach is literally lower taxes on the rich than what Don Brash proposed as National leader in 2005.
So what happened next after Robertson’s announcement? Well, there was dismay and anger from the left and from the centre (this example from No Right Turn is characteristically concise and well-reasoned: If not now, when?). But did Labour’s membership and supporters revolt? Did Robertson, like Shaw, call an emergency members’ meeting, apologise profusely for his massive misjudgment, and do everything in his power to rectify his mistake? Nope. None of that. The leader of the country’s biggest union, the PSA, even welcomed the announcement. The policy stands, and will probably become government policy after the election, unless polls change and the Greens get some leverage. Yet another opportunity for Ardern’s and Robertson’s promised “transformational change” has been wasted.
And therein lies the difference between the Green and Labour parties.
* “carpool buddy”: My partner saw Robertson giving someone a ride in his Labour car during the 2017 election campaign, and she’s like 76% sure it was Shaw.
“National and the Greens should work together” sentiment seems to have reached an all-time high. This is not because the two parties have moved closer together in policy or philosophy. It’s because after the election, this is the only way—short of a Nat-Lab grand coalition—to lock Winston Peters out of any role in government.1
I can’t be bothered to list examples because I’m sure you’ve all seen or heard people calling for a blue-green government arrangement (or “teal deal” if you will). Perhaps you’ve even suggested it yourself.2
What I want to talk about is the suggestion that usually comes after “National and the Greens should work together”. This is how former National PM Jim Bolger puts it:
“the Greens might be quietly reflecting on whether they, unique in the world of Green parties, should only link themselves to left-wing politics, whereas the environment is neither left wing or right wing, frankly. The environment is the environment; it’s Mother Earth we’re talking about.”
The idea is that the Greens would be more effective in pushing environmental policy if they stuck to that, and got rid of their insistence on left-wing socio-economic policy. This way, it is suggested, they would have a better chance of being able to find room for compromise and cooperation with National. Other Green parties in countries like Germany have been willing to form coalition governments with right-wing parties.
The Greens’ usual response is to give reasons why environmental justice and socio-economic justice (or environmental sustainability and socio-economic sustainability) are inextricably linked. Ever since they were the Values Party they’ve pushed both, and they don’t intend to stop now.
Another response could be to say that New Zealand is not Germany. Germany has a democratic socialist party called The Left which pushes left-wing policy even if the centre-left parties (the Greens and the SDP) don’t—even if they form grand coalitions with the centre-right. In New Zealand, the Alliance and Mana have disappeared as left voices in Parliament. Moreover, Labour kickstarted neo-liberalism and haven’t really repented from it. Until Labour make a significant change from Clark/Blair-esque compromise to Corbyn-esque social democracy, the Greens are the only party significantly trying to push New Zealand in a leftward direction.
However, both of these responses to the challenge accept the terms of the challenge (like Labour accepted the terms of National’s “dead cat” “fiscal hole” challenge). These responses accept the assumption that it’s the Greens’ left-wing socio-economic stance that blocks them from working with National, and that they’d be able to find common ground on the environment.
However, I don’t think this is correct. Certainly the Greens’ socio-economic stances—making welfare more of a livable UBI and less of a punitive control mechanism; raising tax on the rich and introducing it for property investors; returning the minimum wage to 2/3 of the average wage; reducing imprisonment—are all basically the opposite of what the Key-English government have done. However, I think Bill English is actually more likely to accept these policies than to accept Greens’ environmental policies. If Bill could be convinced these socio-economic policies are good “social investment”, he could get behind them. Of course, he won’t. (This is largely because National’s vision of “social investment” is so limited by a pathologically individualist mindset, and so tantamount to Minority Report in its instinct to control the risk factors rather than healing the determinants.) But it’s not outside the realms of possibility.
The Greens’ environmental policies, on the other hand, would require National to actually seriously challenge farm owners, drilling/mining companies, and other capitalists. Currently the costs of these capitalists’ activities are largely falling on the environment, and therefore on the present and future public. The Greens want to stop these business activities destroying our shared home by preventing and internalising these external costs. They’ll ban some unjustifiably polluting business activities, such as drilling or mining or exploring for more fossil fuels at a time when even burning the fossil fuels already dug up will make the Paris target impossible. They’ll tax other business activities for their pollution—making those who produce the costs pay the costs, instead of externalising them. And they’ll use the tax revenue to clean up the damage and to subsidise farmers and other businesses moving to more sustainable ways of doing business.
Do you really see National doing that? The party whose base is farm owners and other capitalists? The party that think climate change is only an issue for “elites”, and that it’s not a “pressing concern”, and that we should adapt to climate change rather than mitigating it? The party who scaremongered on a small water tax for some big farms that are currently destroying the quality of Aotearoa’s awa and wai?3
So how should the Greens respond to this “helpful suggestion” to the Greens—and this implicit congratulation of National for their supposed hypothetical willingness to “green up”?
Well, I wonder if they should make an offer to National this election: If you let us have our way with the environment, we’ll give you confidence and supply to do everything else you want to do as the Government for the next three years. We’d pass a zero carbon act and introduce the Greens’ policies for actually getting to zero carbon. We’d follow the Greens’ ideas to clean up our rivers instead of pretending National and the “hard-working farmers“4 already have the issue under control. We’d build sustainable transport instead of roads, roads, and more roads.
National would refuse this offer. And then maybe people would stop trying to make the teal deal happen. Or at least realise it’s not Green stubbornness stopping it happening. It’s National’s near-total lack of concern for the environment.
- Special votes are extremely unlikely to change the basic possibilities. ↑
- Someone who can always be bothered finding, listing and summarising examples is my hero Bryce Edwards who has subsequently done one of his legendary political round-ups on the teal deal. ↑
- These points I’m making are not new—here‘s basically the same point made three years ago on the No Right Turn blog. ↑
- It was shrewd of National to portray criticism of National’s record on rivers as criticism of farmers who are working hard to clean up rivers, because it’s deeply ingrained in the NZ psyche to pretend we’re really farmers at heart. We all lie about being the rural type. ↑
John Key is being a Spurious George again. In explaining why he’d love to cut taxes for (mostly) the rich, but just can’t afford to yet…
Key pointedly said that when National took office the average wage was $47,000 a year but had risen to around $55,000 today, and was expected to climb to $62,000 by 2017. This was creeping towards the top tax bracket, where salary earners pay 33c in the dollar for earnings over $70,000.
“I don’t think it was anyone’s intention that someone on the average wage would be paying the highest marginal tax rate in New Zealand,” he said, echoing arguments National has been making in private for months.
Well, Mr. Key, it also wasn’t anyone’s intention for the incomes of the rich to rise so much faster than those of the poor, pushing up the average (mean) income to a level less than 30% of people reach. (Actually it was some people’s intention: right-wingers who think inequality is a good thing)
Key is trying to give the impression that the average (mean) income is the income earned by the person in the middle. But mean doesn’t measure the middle of the people, but the middle of the money; and of course the money is weighted towards wealthy outliers at Mr. Key’s end of the spectrum, who push the average up with their exponentially higher incomes.
A far more useful statistic is the median income: the amount that half the people earn more than, and the other half earn less than. This truly represents the average Kiwi. The median individual income is almost exactly $30,000 p.a. – just under the middle of the third-to-top tax rate band.
It’s actually getting more and more misleading to portray average income as a reflection of middle-income earners: As inequality worsens, the “middle of the money” (average income) is moving further and further from the “middle of the people” (median income). My eye makes it less than 10% difference in 1980, up to about 25% now:
It’s also worth noting that the increased average income Key mentions has accrued almost entirely to above-median earners:
Another problem with mean income figures is they hide inequalities like these and portray a boon for the rich as a boon for everyone.
I do agree in principle with indexing tax-rate thresholds (in fact, all thresholds… *cough*student loan repayments*cough*) for inflation, but Key’s trying to use that principle as a smokescreen for more tax cuts to the rich, spinning this as a release for the average NZer from crippling over-taxation, which is not true on any level whatsoever. Taxpayers between the median and mean incomes actually pay the lowest proportional tax:
And in the context of a supposedly progressive tax system it’s the rich who are really best off:
“At very low incomes, New Zealand’s taxes are a little above the OECD average … But for high incomes, our overall “tax wedge” … is the lowest in the developed world.
Our tax system asks too much of those with little, and too little of those with much.”
This would only get worse under National’s proposed 2017 tax cuts.
In any case, if Key is really worried about too many NZers in the top tax bracket, there’s an obvious solution: Implement a new top tax rate(s) for the super-rich, like most similar countries have:
Soooooooooo: whatever people’s intention about who should be on the top tax rate, it’s clear John Key’s intention in referring to the mean income, rather than the median, is to mislead (or perhaps he simplify misunderstood statistics in a conveniently misleading way, as with child poverty at the last debate). Sadly he’ll probably largely achieve that intention.
I’m a huge fan of minimum wage laws, which were introduced in NZ before any other nation-state, in 1894. Along with a good welfare safety net (remember when we had one of those? I don’t), they ensure employers can’t take advantage of prospective workers’ desperation to exploit their labour while paying them barely enough to survive, like upper classes have done for most of history and most of the world. They also put more money in the pockets of lower-income earners, which means more money circulating in the local economy, rather than the ‘trickle-down’ approach that directs more money to Swiss banks and Hawaiian holiday homes. All this is good for all workers, and good for society. As a Christian, I can’t help but agree that minimum wage laws as a necessary (though not sufficient) response to James 5:4-5, and enactment of Luke 6:20-21.
Employers and right-wingers often respond to the minimum wage (or proposed increases to it) in the same way they did to the abolition of slavery: countering that minimum wage laws end up hurting the people they mean to help, by making jobs unaffordable for employers, and therefore increasing unemployment. However, as the Sydney Morning Herald reports, most economists now agree that reasonable increases in the minimum wage don’t increase unemployment, and may even decrease it. They’ve found room in their theories to explain this, by observing that reality is more complex than their older models.
The SMH also offers plenty of real-life examples of minimum wage increases not increasing unemployment. New Zealand’s history, Treasury and Department of Labour corroborate this, as does recent US experience, various other research and this very rich man. The Living Wage movement adds evidence of employers actually getting more value for each wage dollar by paying employees better, as their staff are healthier, less likely to need long hours or second jobs, more loyal to their workplaces, better-motivated and often more productive. New Zealand has notoriously low productivity, so higher wages may help improve this.
If the old, baseless myths of minimum wages harming workers and employers are cast aside, there remains no economic or ethical justification for a minimum wage below a living wage, “the income necessary to provide workers and their families with the basic necessities of life” and “enable workers to live with dignity and to participate as active citizens in society.” The living wage is currently calculated at $18.80 per hour.
I thought it would be useful to survey the various political parties’ policies and past records on the minimum wage and/or Living Wage, to see what each of them may do if in power after September the 20th.
There’s some quite significant differences, which I’ve roughly quantified in scores out of ten for the sake of TL;DR readers who probably haven’t read this far anyway.
The parties on minimum wage
Alongside the below, please note that Bryan Bruce recently asked all parties “whether they would or would not support in principle the introduction of a living wage rather than a minimum wage.” “The Green Party, Labour, Mana, Maori Party. Alliance and Internet Party said Yes they would. ACT, United Future, Conservative Party, Democrats For Social Credit said No. NZ First gave no answer, while Bill English for National refused to answer saying the question was hypothetical.”
Policy: National typically don’t campaign on policy, and they have barely have any policy on their website compared to every other party – including nothing on the minimum wage. We can assume current trends will continue.
Past record: The 1990s National-led government was famously committed to lowering, not raising wages, due to similar beliefs to the minimum wage myths discussed above. They let it stagnate except when NZ First forced them to increase it in 1997 (nice graph here), and left it in 1999 at about 40% of the average wage. The current National-led government have done better; they’ve maintained it basically where Labour left it in 2008 – around 50% of average wage. They’ve increased it gradually, though much slower than the last Labour-led government – 18.75% in six years (just above inflation) compared to 71.43% in nine years (considerably above inflation; they also introduced Working for Families – see below). Their latest increase has been the highest – 50c to $14.25. They promote this a lot in their media releases. If their ‘status quo’ policy continues, it will further increase inequality, because it’s well out of step with economic growth.
National also re-introduced lower minimum wages for young and new employees, because of the minimum wage myth that it would increase youth employment. This bill passed with the support of ACT and United Future, with all other parties opposing.
Policy: Labour have a clear policy to “Increase the minimum wage by $2 an hour in our first year,to $15 an hour in our first hundred days in government, and increased [sic] again to $16.25 an hour in early 2015.” They will also “Set a target of returning the minimum wage to two-thirds of the average wage by the end of our second term, as economic conditions allow,” noting that the minimum wage “averaged around two-thirds of the average wage in the post-War period until the policies of Muldoon, followed by the neoliberal period, slashed it to just 40% of the average wage by 1999. The sixth Labour government brought it up to half of the average wage, but it has flat-lined since then.”
They also intend to reform employment law to be more in the interests of workers, and support the Living Wage movement in a number of ways: they’ll “Ensure that all core public service workers are paid at least the Living Wage, and extend this as fiscal conditions permit,” favour private sector firms who pay living wages, and “progressively address inequities in the pay of the publicly-funded aged care and disability care workforce and non-teaching staff in … schools.” The latter would be great for our huge numbers of hard-working, poorly-paid aged-care workers. Anecdotally, I’ve heard that government subsidies are currently not enough for rest homes to pay their staff a living wage.
Past record: While the fourth Labour government kick-started “the neoliberal period” they mention in their policy, the last (Clark) Labour-led government raised the minimum wage much faster than inflation, and much faster than the current National-led government, as mentioned. They also introduced Working for Families to top up sub-living wages with government subsidies – John Key called this “communism by stealth” at the time but now supports maintaining it rather than making employers pay more. They also passed a diluted version of Sue Bradford’s bill for youth to receive the same minimum wage as older adults, which National have essentially reversed (see above).
Policy: The Greens’ policy is to “increase the minimum wage and ensure it cannot fall below 66% of the average wage.” 66% of the average would translate to $17.16 as of a year ago, but as a friend pointed out, raising the minimum wage would also raise the average, so the final figure would be higher than that – it would take a smarter statistical mind than mine to give you a firm figure. The advantage of a relative measure is it deals with the material, absolute effects of inequality, as well as the material effects of poverty. Superannuation is indexed to average wages, and I think it’s a good idea for the minimum wage to be also. The Greens also say they are “committed to full employment with dignity and a living income, and reject the idea that economic stability requires either a significant level of unemployment or a low level of protection for those in the paid workforce.”
Past record: Former Green MP Sue Bradford led the charge for youth to receive the same minimum wage as adults, and the Labour-led government passed a version of this. Contrary to what right-wing bloggers and politicians say, it didn’t cause any adverse affect to youth employment; in fact it decreased youth inactivity.
Policy: Their policy is to raise the minimum wage to $16 “in the first instance.” It’s not clear what would happen next; Winston Peters has previously said that after an initial raise they will “then add margins for skill and good service,” which isn’t particularly clear either. This lack of clarity means I’ve given them a score below Labour’s, despite their increase being higher until April 2015. They’ll also make employment law better for workers, and reverse National’s policy of lower minimum wages for young workers, preferring a more constructive policy of “subsidizing wages for employers who take on young, unemployed people for trade training and skills programmes.”
Past record: In their confidence and supply agreement with Labour in 2005, NZ First asked Labour to “continue the practice of annually increasing the minimum wage, with a view to it being set at $12.00 per hour by the end of 2008,” which happened. Also, the only significant increase to the minimum wage in the 1990s National-led government was prompted by NZ First. All their media releases on the minimum wage advocate for raising it (or oppose reintroducing the youth rate), and in a speech to the Combined Trade Unions Peters boasts that “New Zealand First has supported every increase in the minimum wage.”
Policy: The policy section of their website hasn’t been updated for this election, and suggests raising the minimum wage to $16 as of 2011. More recently, they announced a policy of raising the minimum wage to the calculated living wage of $18.80. The Living Wage movement’s figure, which is updated each year, is based mostly on absolute measures. The advantage of this is that it deals with the material necessities of living a full life in society, can’t be written off as “merely relative” – though of course this writing-off misses the point spectacularly.
Past record: They haven’t let their role in National-led government blunt their criticism of its slow increases in the minimum wage, saying “The Government should be ashamed of themselves” for raising it a mere 25c to $13.75 in 2013. In the same release, they described “the increase in income inequality over the last 25 years as a major threat to our economic well-being and social cohesion,” and said “The Government should focus on reducing wage inequality by targeting high wages of excessively high income earners” as well as increasing the minimum wage.
Policy: Mana’s policy is to “Increase the minimum wage to $18.80 per hour (a living wage) and index it at 66% of the average wage to ensure it remains a living wage.” This combines the advantages of the Māori party policy (combating material deprivation by adopting a living wage) and the Green Party policy (combating the material affects of inequality and relative poverty by ensuring the minimum wage never goes below 66% of the average wage). Their economic justice, livelihoods and social wellbeing policies also include many other ways to “Raise the incomes of low-income earners,” including better protection for workers, working towards full employment by creating community service jobs for the unemployed, reversing National’s lower minimum wages for youth, finally increasing welfare support from the poverty-level it’s been at since 1991, abolishing GST which disproportionately impacts on the poor, and working towards a Universal Basic Income, as recommended by Gareth Morgan.
Past record: Mana is only three years old as a party, so their main past record has been advocating for the last three years for a higher minimum wage, and opposing the reduction of the minimum wage for young and new workers.
Policy: If ACT had their way, minimum wage laws would be “gone by lunchtime” (to quote their former leader on NZ’s nuclear-free stance). This is part of their welfare [or lack thereof] policy, which they note would be a continuation of the current government’s approach to welfare. It’s interesting that even though the minimum wage is not about benefits, but work, ACT lump it under welfare policy – presumably because it goes to poor people, not rich people.
Past record: All their releases on the minimum wage advocate for lowering it, oppose raising it, or oppose it altogether. They successfully lobbied National to have it lowered for young and new workers. They frequently repeat the minimum wage myths discussed above; that minimum wages are a “barrier to unemployment,” and that a “myth that minimum wages protect the poor.”
2/10: Seems to support the status quo, whatever that might be
Policy: The policy section of their website is in progress, and mostly still lists 2011 policy. I can’t find anything on their 2011 policy or even their media releases on minimum wage, except for saying they’d require “foreign charter vessels … compl[y] with New Zealand minimum wage laws and labour conditions,” which is a good and much-needed policy.
Past record: United Future have been confidence and supply partners of both the last National government and the last Labour government, and from what I can tell, they’ve supported what both their big sisters have done, despite the contradictions. This news report clarifies what I couldn’t find in their 2011 policy: they didn’t support a higher minimum wage last election (not sure about since). Last year, Peter Dunne’s one vote allowed National’s lower minimum wage for young and new workers to pass.
Policy: Their policies are still in progress, and I can find barely anything even being discussed on their policy forum and/or policy incubator – I found a few comments here, which aren’t too encouraging. Ironically, their media releases lack the basic internet feature of a search function, so I’m finding it hard to see if they’ve even mentioned the minimum wage anywhere (except for this release from Hone Harawira on behalf of Internet Mana). Perhaps the most solid statements they’ve made are one-off responses to questions: their affirmative response to Bryan Bruce’s Living Wage question above, Bruce’s other questions and #3-ranked candidate (#6 in Internet Mana) Miriam Pierard’s strong response to bFM on inequality.
Past record: Since they don’t even have policy yet, they certainly don’t have a past record. I suppose Kim Dotcom’s past record is worth mentioning; though here’s another perspective on it. In any case, while Dotcom does have a largely undefined “oversight” role, there are plenty of others involved in shaping policy: candidates, members and even to some extent the Mana party.
Policy: I only found one thing about the minimum wage on their website; it’s an undated response from Colin Craig to a reader’s question about the living wage and unions. Craig’s answer shows he believes in minimum wage myths as much as “tough on crime” myths, but it also clarifies his policy, which is to “increase the [non-existent] tax free threshold to $25,000” [now $20,000, and with an undefined flat tax after that] instead of raising the minimum wage.
A tax-free threshold would be great for low-income earners (and is one of the few policies the Conservatives have in common with Mana), but isn’t really a substitute for fairer wages. Quick calculations show if there was flat tax of 20% above $20,000, a minimum wage worker would end up with the equivalent of about $15.50 per hour on current tax rates (though presumably less public services). If it was 30% flat tax, they’d end up with the equivalent of $15/hr on current tax rates. If it was 40% (unlikely, given their low tax rhetoric), they’d end up with basically the same net wages as now.
Past record: I can’t find anything apart from the above.
Scores/10 according to me:
NZ First: 6.5
United Future: 2
EDIT (August 2015)
I’ve made a table showing how quickly the last three governments have raised the minimum wage.
They’ve also hinted that at some stage before or after the election campaign, they may announce what makes all our hearts instinctively leap, at least before we think about it: tax cuts. This would mark the first changes to tax since 2010, when they shifted the tax burden from the rich onto poor and middle-income earners.
Mana’s John Minto has an interesting reaction. He says tax cuts are a great idea, and suggests shifting the tax burden back again: abolishing GST and tax on the first $27,000 of income, and paying for this by finally taxing the unproductive untaxed income of the 1% – capital gains and financial transactions.
Something tells me a party of property magnates and investment bankers is not going to propose those kind of tax changes – any recovery-era tax cuts will presumedly be along similar lines to their recession-era tax cuts.
Does this strike anyone else as a little strange? Not just because they’re promising tikka masala before the chickens have hatched (the surplus is tiny, and only a projection based on fudged numbers, disguised cuts and abandoning Christchurch).
The main reason it’s strange is that when we were heading into rough financial times, they thought the appropriate thing to do was to cut taxes on the rich. And now in healthier financial times, they again think the appropriate thing to do is to cut taxes (presumedly again on the rich). Never mind the fact that they haven’t paid off their debt from the last tax cuts and tough economic times yet.
The truth is that they’re not responding to the economic climate at all. In tough times or healthy times, they’re pushing a philosophical agenda to let the rich continue getting richer while paying lower taxes, and reduce the social safety net to pay for it. Bill English recently let this agenda slip in a recent speech to the party’s Southern Region conference. They’ve already let public goods and services drop from 35% of GDP to 30% – one of the lowest rates in the OECD – and they intend to reduce that even further, to 26% over the next six or seven years. This is not what NZers want.
The obvious solution is not to let them rule for the next six or seven (or three) years.