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Preview: Roger Nome's Progressive Politics

Roger Nome's Progressive Politics

Updated: 2016-09-07T21:27:31.337-07:00


The Future


So - today we find out the National-led Government has arrogantly told the rest of us that the declining availability of energy for the running of our civilisation is not a problem. Considering the huge impact that the temporary stalling of oil production had in the 1970s and 1980s (high unemployment, inflation and general stagnation of the economy), one would think that the inevitable permanent decline of crude-oil availability would be of some concern. But National is seemingly relying on the apathy of the NZ public, for the acceptance of its "business as usual" line.

The fact is that the economic situation is going to get worse. As energy becomes more expensive, there will be less economic activity, because the economy requires energy to drive it. It really is that simple. This means that we are going to be forced to focus on the efficient use of energy, to get the maximum benefit from a resource that is becoming ever-more scarce. This will mean moving more of our goods by coastal shipping and rail, and huge investment in a modern public transport infrastructure. It will also mean, moving away from the current economic model, which provides ever more energy for the wealthy (money simply represents stored energy), toward a way of ordering society which distributes surplus energy more equally amongst people. That will require a re-focus on public life. Work for all those that want it, rather than arbitrary "market availability", and a monetary system that no longer just funnels energy/money upwards using interest and fractional reserve lending (banks lending around 10 times the reserves that they hold). We need to get rid of privately owned banks, and ensure that the printing and lending of money benefits all, not just the foreign money-lenders.

Yet - we see none of these things happening in the National government. This means that the "under-class" (the label John Key has given to the under and unemployed) suffers more, and grows ever larger, and more vocal). Eventually this will require more repression of the poor though force (police and perhaps military).

So it's nice to see that John Key has invited the US military over for a show of strength on our soils.

To avoid the collapse of NZ society in to this hole, increased public awareness of these issues will be needed, and of course, increased public input in the political decision making process.

Farrar's big beef looks like rationed greens.


Over at NZ's far-right barometer known as "kiwiblog", lord of the fries David Farrar is busy picking over the minor details of Wellington's green Mayor's spending.

Apparently Celia is recommending the availability of ball room dancing training for city councilors. Now - the Wellington City Council's spending is projected to be $352 million over the next year. So we're looking at an area which may involve 0.00001% of spending here - yet for some reason David is concentrating on this as the area of spending that needs to be critiqued.

I also recall that David composed a post some time back, concentrating fully on teachers organisations using school class rooms as a place to meet after school hours. Apparently this is a gross misuse of taxpayer dollars - as carpets will inevitably be worn quicker due to the notoriously abrasive shoe soles that teachers inevitably use (helps them waste taxpayer dollars - which all teachers love to do).

This is NZ's most read right wing blog. What does this say about the right wing of NZ politics? Well i'll leave that up to you, the reader to decide.

A little perspective


Well, I'm afraid that i'm well behind that ball on this one, but it appears that nearly a year ago there was a ripple of outrage across the right-wing blogsphere (particularly kiwiblog and whaleoil), when i suggested, in the comments section of "The Standard" blog, that we should get to know where Key goes when on his vacations, and who he meets with (when legally possible).

If he wanted the privacy that the rest of us enjoy, he should not have put his hand up to be responsible for the lives of 4 million people.

However, the fact is that Key has been the Prime Minister of NZ now for over two years, and still so little about his past and present dealings are known. Am i really the only one that is disquieted by this fact? It seems so few others, even on the left, really are. I guess i should just have more faith in a guy who rose to the top of an industry that is built on shafting the small investor for the advantage of a few at the top:

Forex trading programs - Forex refers to the foreign currency exchange market and trading in forex can be very risky. Many scams claim to have found a "fail-safe" way to invest in forex, but that's not true, and in some cases it's just a way for the promoter to take your money to fund his own lavish lifestyle.

"">see here

Regardless of his past dealings, this is about transparency - and is essential for a modern democracy to operate most efficiently.

A guy who's responsible for the lives of some 4 million people should be accountable to the people, and that means that all his business and political dealings, past and present, should be available for the public to view. That of course should apply to all of our major political representatives - left and right.

Apparently however, this level of openness is too much for the right wing shills of the blogsphere to condone. But, as they must know, it is in the shadows that corruption has and always will fester. Perhaps this is an all to uncomfortable fact for some.

I will leave you with a presidential speech from JFK on secrecy in politics, and what it means for today's world. I only hope this will give cause for some of those who oppose transparency to reflect on their motivations for doing so.

(object) (embed)

Of deception and class war?


Today the Herald has reported on the treasury department's plans to reduce spending on the welfare of our most vulnerable - solo-mothers, children and the mentally ill.

The policies, as reported include:

*Move work-ready people from sickness and invalid benefits on to dole.
*Make sole parents look for paid work before youngest child turns 6.
*Contract out welfare services to private companies and charities.
*Increase sick leave and parental leave to give employers incentives to help workers back to work.

Ever since the Fourth Labour Government of 1984-1990, the treasury has been proscribing hard-right policies, designed to maximise profits for the wealthiest New Zealanders and leave you and me with an ever decreasing share of the economic pie. So this wish-list of newly-sharpened weapons to use in the class war is hardly surprising coming from them.

What's really going to be interesting is John Key's response. Will they adopt these measures? They did after all, outline several of these concepts in a policy document that was released last year - which incidentally has now mysteriously disapeared from the internet, the file having suffered irreparable damage.

So it looks like Key will be making these suggestions appear as treasury's, when really it's what Key and co have been planning all along. They know that the reality of these changes won't make them more popular. It will only add to a growing awareness in New Zealand that the right is looking to re-entrench a late 19th century victorian under-class made up of the unemployed, ill and under-employed (As a self-confessed "classic liberal" this is the stuff of David Farrar's wet dreams). This keeps "gross profit trend growth" of NZ's companies at around 8% while wages hover at around 2% trend growth (for those lucky enough to be in paid employment).

It will be interesting to see how many of the treasury's suggestions are taken, and how much they'll resemble National's Policy Document. This will tell us how much the National Party is willing to stand up and take responsibility for its more ruthless, anti-human policies, and how much it will lay the blame at the door of treasury...

Nat's welfare policies #2 : "Stickin' it to the mentally ill."


On page one of their welfare policy background paper, National complains that there has been a "steady increase" in the number of people receiving the sickness benefit since Labour came to power.

In reality, the number of people on the SB has only grown by 5,000 since 1999. As a percentage of total working age population, the SB has gone from being 1.2% in 1999 to ... 1.2% of the population in 2007 - so no increase at all.
page 38 of the 2007 Labour Market Report and page 1 of the background paper at the National Party's semi-official blog.

The claim of a "steady rise" in the number of people on invalid's benefit also has little substance. In 1999 1.7% of the working age population were on the IB, compared to 2.4% in 2007. It should be noted however that this figure was incrementally rising throughout the 1990s under National. We have an aging population, and as people get older, they're more likely to suffer from an incapacitating illness. So the small rise that has happened during Labour's tenure would probably have occurred had Labour retained National's policies.

So for starters, the entire rational for National's proposed welfare reforms policy (an "out of control" welfare state) is invalid.

Another interesting point .... National sees it important to note that 38% of SB recipients and 30% of IB recipients are on the benefit because of psychological or psychiatric conditions. As if mental health issues aren't real, and don't affect people as physical illnesses do.

Indeed, on page 4 of the document it is stated that National
will require plans (of people on invalids and sickness benefits) to be focused squarely on preparing people for work
. But I hear you say, what if someone suffers from schizophrenia bi-polar, or some other potentially severely debilitating mental illness? Wouldn't puuting them in that situation be potentially dangerous?

On this point, National offers some soothing words, claiming that:

people who are seriously ill or disabled will be treated with compassion and will never face any kind of work obligations.

But on the same page it is pointed out that The (Social Security) Act also allows Work and Income to require a person to get a second opinion from a doctor agreed between the parties or, failing that, a doctor nominated by Work and Income.

National sees the "increase" in the number of people on a benefit due to mental health issues as a problem, and they'll appoint their own Tory doctors (rather than regular doctors) to decide which mentally ill people should be forced to meet "work obligations" (they will be required to spend at least 15 hours per week in employment, training, or job-seeking activities). If the mentally ill person fails to meet any of these requirements three times in a twelve month period (i.e. they have an "episode" etc) they will be without income for 13 weeks. Needless to say, this holds the potential for some very nasty outcomes.

The standard's piece on this issue is also well worth a read

Nat's Welfare Policies #1. Single Parents: "kick 'em when they're down".


The National Party has just announced that, should it be able to form the next government, it would require DPB recipients .... to spend at least 15 hours a week either in employment, training or job-seeking activities once their youngest child turns six.The outcome of this will be that stressed out single mothers and fathers with multiple children, will have more pressure added to their lives, and that pressure will be passed onto the dependants in the household in negative ways. The Labour Party-led Governments have offered huge incentives for welfare-dependant parents to get into work, such as Working for Families (which effectively removes all tax on work for these people), and heavily subsidised day care for pre-school aged children (things National would have never introduced). These polices, along with a buoyant labour market have lead to a huge decrease in the number of people receiving the DPB, and now, less than half of the people who currently receive it, have been doing so for over a year.So Labour has offered the carrots, and it's working for everyone. Now National wants to step in with a stick. This fits in with the Nat's historical approach to welfare policy, which has been to cut the level of benefits available and/or tighten the eligibility criteria for benefits (they did both in 1991).Successive Labour-led Governments have retained National's benefit reforms, and have continued to increase benefit levels according to CPI, rather than index them to average earnings, or something similar. So equality isn't a consideration in either main party's welfare policy any longer.As a result, people on a benefit are surviving on a bare subsistence income, and are excluded from participation in mainstream society. So it's no surprise to find out that virtually no one remains unemployed for long if they have a choice. In fact, page 82 of the 2007 labour market report shows us that only 0.5% of the working age population have been unemployed for more than 6 months.So, the people that have been on the DPB for an extended period, are likely lacking options. They have good reasons, and probably don't enjoy their position very much. National's policy of compulsion is going to be forcing people who are already enduring a situation of considerable hardship, into a position that's so undesirable, they choose their current position over it.As justification for its attack on solo parents, National decries NZ's low sol-parent employment rate (44%), whilst celebrating the success of the Nordic countries, which have comparable figures of 70-80%. See page 7 of the background paper . What National doesn't reveal is the fact that, these results have only been achieved through a generous welfare state, which provides very cheap day-care ($50 per-week in Sweden) and long periods of paid maternal leave (13 months at 80% of total normal pay). These of course are policies that National wouldn't dream of introducing, so it's a bit hypocritical for them to be citing these countries as success stories. Overall, it's classic National Party "kick 'em when they're down" stuff.[edit: it should also be noted that this policy, along with National's proposed reduction in employment rights would result in a wage cut because it will force more people into the labour market i.e. if you're forced to work at least 15 hours per week you're receiving virtually no DPB anyway, so this is about kicking people off the DPB.This will cause an expansion of labour supply (particularly in the low-skill, low-wage sector). Contrary to what Key says, it won't "lift people out of the poverty trap", it will lower wages for all low-income workers).][...]

National seeks referendum on MMP, and a return to "elective dictatorship".


The Dom-post recently reported that the National Party is seeking a referendum to find out whether the public wants to continue with MMP, or move to another system.

Publicly, John Key is saying ... "I don't think they'll go back to first past the post.", and that the public will probably vote in another "proportional system".

But given past efforts by the right's backers, aimed at opposing power-sharing systems, we can expect that if National puts our electoral system on the chopping block there will be a huge campaign for a return to a "two party" system. After all, it was this system that allowed National to rule alone in 1993 with just 35% of the popular vote, while the two major left-wing parties combined received 52% of the vote.

Further, because a party could rule alone, it could pursue its own agenda, unchecked and unmoderated by other parties.

These two aspects of the system combined lead to the situation in the 1990s, where a small group of people within the National Party cabinet were able to push through very publicly unpopular, and radical legislation such as the Employment Contracts Act and sale of NZ rail (neither of which were foreshadowed in their 1990 election manifesto).

It was these aspects of the First Past the Post system that caused academic Andrew Mulgan to refer to it as an elective dictatorship.

It would be a huge step backwards for New Zealand's democracy if we were to return to this system, and despite the soothing words of John Key, one would be foolish to believe that an agenda doesn't underly his intention to hold this referendum. Yet another good reason for us to stay clear of a National-led government.

The New Right Revolution: Business Profits Soar, Wages of Ordinary People Stagnate.


Well, the graph says it all really. According to the available data, the "Gross Operating Surplus" (profits) of New Zealand's businesses grew at an average rate of 10.65% between 1994 and 2001, while "Median Personal Income" (the income of the "average" New Zealander) grew at just 0.19% per annum between 1991 and 1996, and 2% between 1996 and 2001.

This massive reallocation of resources from the pockets of ordinary New Zealanders to primarily large corporations, which are in many cases foreign owned, was a direct result of the National Party's Employment Contracts Act, which saw wage increase levels plummet, and profits soar.

Labour has closed the gap between growth in corporate profits (average growth of 5.1% between 1999 and 2005) and growth in the incomes of ordinary people (average growth of 3.24% between 1999 and 2006), but they're still out of balance. To put more money in the pockets of ordinary New Zealanders, and less in the pockets of foreign owned corporations, Labour needs to keep on increasing the strength of work rights legislation, particularly in the areas of minimum wage, and union bargaining strength.

Certainly, we don't need National's proposed Industrial Relations Legislation, which will weaken work rights, driving wages down, and corporate profits up.



During a political campaign period it's easy to get caught up in a negative attack mindset, and forget the real reasons for being involved in furthering humane political ideals. But in fighting a monster, one must be careful to not become one.

So, with this in mind, I’ve been listening to this song recently, and have found that it really epitomises the positive approach to fighting for a better world. Aside from that, it's generally uplifting so is great when you're not feeling the best.

The lyrics aren't always audible, so I'll post them beneath the vid.

(object) (embed)

In the end you'll still be you
One that's done all the things you set out to do
There's a cross for you to bear
Things to go through if you're going anywhere
For the things you know are right
It s the truth that the truth makes them so uptight
All the things you want are real
You have you to complete and there is no deal
Stand. stand, stand
Stand. stand, stand
You've been sitting much too long
There's a permanent crease in your right and wrong
There's a midget standing tall
And the giant beside him about to fall
Stand. stand, stand
Stand. stand, stand
They will try to make you crawl
And they know what you're saying makes sense and all
Don't you know that you are free
Well at least in your mind if you want to be

Stand, stand, stand

Kiwis are overworked says new study.


Well, the Department of Labour has confirmed what we all knew. New Zealanders are working ever longer hours, and now, one in three full time employees are working over 50 hours per week.

The cause of this can be traced back to the National Party's Employment Contracts Act 1991 - which destroyed unionism in NZ (union membership dropped from 55% of the workforce in 1990 to be just 20% in the late 1990s), and consequently workers have a relatively weaker bargaining position, and are less able to withstand demands by employers to work longer hours. In fact this is an international trend, in countries with lower union coverage.

The Employment Contracts Act also did away with overtime pay for working long hours, weekends and nights, meaning that it became more attractive for employers to seek increased output/profits through requiring employees to work longer hours, rather than investing in productivity-increasing capital/machinery. As a result, our productivity growth ($ output/labour hour) has been falling behind Australia's over the last 20 years, resulting in slower wage growth. Contrary to what National has been saying, the wage gap between NZ and Australia isn't due to us being over-taxed, in fact we are the third lowest-taxed developed country on the planet (if you count Mexico as developed), and are in fact taxed far less than Australians are.

If we really want to enjoy a good lifestyle with high wages and reasonable working hours, we need to demand that employers pay a higher wage rate for every hour worked in excess of the 40 hour working week that we were promised in 1938 by the first Labour Government. Otherwise we'll just end up working longer and longer hours, and have no time left over to enjoy what we have earned with our hard work. This law change was proposed earlier this year by Labour, but was dumped after alarmist claims by the National Party, that it would be limiting peoples' choice to overwork (in fact they would still have that choice, they would just be paid more).

National's 2008 Industrial Relations Policy. A return to the Employment Contracts Act?


Well National, in acknowledgment of its potential unpopularity, has with little fanfare, released its industrial relations policy. Predictably, they're trying to paint it as moderate by equating it with the current "Employment Relations Act", but a closer look reveals that this is far from the case.As a policy statement it's very bare bones (another of their "one page wonders"), and the devil of course would be in the detail of the eventual legislation.It does however contain several noteworthy features:1) Ostensibly the worst aspects of the Probationary Employment Bill have been done away with (mediation is to be available to workers who have been unlawfully treated).However, it's difficult to say just how useful mediation would be under this proposed regime.For instance: During the trial period, either party may terminate the employment relationship for performance without a personal grievance claim being brought.So a worker may be ostensibly fired for "under performance", but because there is no requirement for due process (official written warnings, based on valid reasons like persistent lateness), an employee may be fired for having the wrong sexuality, the wrong religion, the wrong fashion sense, or refusing to carry out unpaid overtime or unsafe tasks. There will, in practice, be no protection against arbitrary dismissal.In a recent post I showed that this aspect of the Nat's IR policy will mostly impact on the poorest and most vulnerable workers. I also explained how the lack of enforceable employment rights would lead to "downward wage pressure" for the same workers who were hammered last time National were in power.2) National will allow union access to workplaces with an employer's consent, which cannot be unreasonably withheld.This is where the detail will really count, as a union's access to a workplace, will be entirely dependant on what National defines as "unreasonably withheld". My bet is that, in practice, an employer would be able to deny unions access under the flimsiest of pretexts (i.e. Employment Contracts Act 1990s). This of course is aimed at making it harder for workers to improve their wages and conditions of employment through organising collectively. The net result will be lower wages and higher profits for foreign businesses - which will mean more of New Zealand's wealth disappearing overseas.3) Restore workers' rights to bargain collectively without having to belong to a union.This will mean a return to the bargaining arrangements of the 1990s - where an employer could arrange a lawyer (or another representative) to draw up a collective agreement. Here's an extract from my thesis which show's what this meant, and may mean in practice:that the trade union role in negotiating employment contracts was not recognised with no provisions for the registration of unions as the legitimate representatives of workers (Deeks et al., 1994: 100). As such employers weren’t required to bargain with their employee’s union if they chose not to. Employers were able to appoint independent representatives such as lawyers, as bargaining agents for employees, and there were many instances where employers would just pressure employees into revoking the authorisation of their chosen representatives by way of a lockout (Danin, 1997: 202). Furthermore, an employer could legally prohibit a barging agent from seeking authorisation to represent any employee through disallowing them access to the workplace (Danin, 1997: 222). Also, unless the employer allowed it, unions weren’t able to enter workplaces in order to police the contract, so being a member of a union simply became pointless for many employees (Dannin, 1997: 223).So in practice this will likely mean that employers will be able to force employees to accept the terms of employment draw[...]

National Prepares to Make War on the Poor


In the previous post, I looked at what the practical legal implications of the "Probationary Employment Bill" would be, should National come to power. In this post, I look at the likely victims of this legislation, and just as I had suspected, it's NZ's poorest and most vulnerable.According to the 2007 Labour market report (pg 56) 466,000 people are employed in the Retail Industry, and the Hospitality Industry combined. This amounts to 23% of all people employed. Now, the vast majority of these workplaces employ less than 20 people. For instance, in 1990 the Service Workers Union (cleaners etc) covered 12,000 work sites, with an average of only 7.5 workers each - and there's no reason to believe this would have changed much since then. Also, in 1990 the Northern Distribution Union (primarily active in the retail industry), represented 7211 workplaces that employed 5 staff or less and only 166 workplaces employing 16 staff or more.So it seems likely that most of the people working in these industries would be subject to National's proposed legislation. These are the people who had their wages hit hardest by National's Employment Contracts Act in the 1990s. In fact the average hourly wage rate in these industries went from being 75% of the national average in 1991, to just 65% in 2005.Also, as can be seen in the graph below, wages in these industries fell in real terms, during the decade of the 1990s, and in the case of the hospitality industry, never recovered, whilst wage growth in the retail industry has recovered marginally since 2002.Sources: 2005 and 2007 Labour Market Reports, pages 78 and 124 respectfully.To adjust for inflation the RBNZ CPI calculator was used.Workers in these industries are also primarily employed on a part-time basis (around 60% of them work less than 30 hours per week). So these workers have the lowest weekly incomes of all New Zealand's workers (see part 6 of the 2005 labour market report). They are the poorest and most vulnerable workers in NZ, and National wants to take all their employment rights away, so they can be more easily exploited by business owners.New Zealand already has one of the highest levels of income inequality in the developed world (see page 59 of the social report), and National proposes to make this situation worse by eroding the wages and working conditions of the poor even more. Without any enforceable employment rights, unpaid/underpaid work and general denial of statutory employment rights would become common place in these industries, where labour costs are estimated to be around 70% of non-stock spending costs - Pringle (1996: 94) New worlds and fresh choices? : continuities and discontinuities in industrial relations practices in New Zealand’s retail grocery supermarkets.But what else did we expect from the National Party?[...]

National's 90 day Probationary Employment Bill. The Best Employment Rights Money Can Buy?


In the middle of 2006, the National Party succeeded in getting a private member's bill drawn, called the "Employment Relations (Probationary Employment) Amendment Bill". It provoked huge protests all around the country, and was eventually thrown out due to lack of support within parliament.Now the National Party has made this Bill part of its 2008 election platform. This is a major issue because it has the potential to affect around 20% of workers (people who are employed in workplaces with less than 20 employees).The aim of the legislation is to give small business owners the right to hire people for a three month period during which, the employer:... may at any time ... terminate the employee's employment forthwith.Under the current law, in most instances the employer must issue several formal warnings before proceeding with dismissal, and the warnings must have valid grounds - i.e. persistent lateness. Under National's proposed law an employee may be sacked for any reason whatsoever, as the employer would not be required to explain the reason for the sacking. This of course leaves employees open to all sorts of abuses. For instance, an employee could be sacked for the following reasons:1) Refusing a demand to grant sexual favours for an employer (breaches the Human Rights Act 1993).2) The employer doesn't like the religion or sexuality of the employee (Once again, Human Rights Act).3) The employer owes the employee wages in arrears, but doesn't wish to pay those wages (breaches the Wages Protection Act 1983).4) The employee refuses a demand from the employer that they work unpaid overtime (Wages Protection Act 1983).5) The employee decides to join a union (breaches the Employment Relations Act 2000).6) The employee refuses to undertake a work-related task that is hazardous (Employment Relations Act).Now currently if an employer does any of these things, the employee is entitled, under the Employment Relations Act, to seek a free mediation session (the average waiting time for this service is three weeks), through which they will most likely be compensated for being unlawfully treated.Under National's proposed law, an employee would not be entitled to seek a free mediation session in order to see their rights protected (section 69AD.3). Instead the employee would have to pursue a civil court case, which would mean many thousands of dollars in lawyer's fees, a wait of months (instead of weeks), and an intimidating formalised court setting (in fact for numbers five and six there would be no resolution process available because the ERA would be invalidated).All these added barriers to justice would mean that employees, not being able to afford the process in terms of money and/or time, would simply give up. We know this because, during the decade of the National Party's Employment Contracts Act (1991-1999), employees had to rely on the employment tribunal (which involved legal costs of around $5,000 per day) for employment dispute resolution. Consequently, only 5,000 employment-related cases were resolved per year, whereas now twice as many such cases are received and disposed of every year.Through re-introducing an expensive, legalistic approach to employment dispute resolution, National would in effect be removing all employment rights for many thousands of workers.Edit: jafapete and the standard have also done some interesting work on this subject.[...]

The link between Imprisonment Rates and Inequality


A common difference between the left and right has to do with the perceived impact of wealth or income inequality on society. That is, people on the right commonly seem to think that inequality has little in the way of negative impact on society, where as people on the left assert that the negative impacts are severe and many. One of the primary concerns for many people on the left, including myself, is that extreme income inequality creates a large and separate disenfranchised group of people that lack the resources to effectively participate in mainstream society. Or to put it more specifically, to socialise within mainstream society often costs money - driving the kids to rugby or cricket practice, go to the cafe or bar, etc... So the people that lack the resources to do these things become a separate class that exists within, but at the same time outside of society. This alienation from mainstream society subsequently leads many within this separate class to feel little investment in, or loyalty toward society and its rules/laws. So it's hardly surprising that many academic studies have found that there are pervasive linkages between measures of socio-economic disadvantage and crime (Conger et al., 1992; Dodge et al., 1994; Farrington, 1990; Furgesson et al., 2004; Kazempiur & Halli, 2000; Kramer,2000; Ludwig et al., 2001; Sampson & Laub, 1993).

So, if this line of reasoning is at all valid it would be expected that societies with higher levels of income inequality would also have higher imprisonment rates. This is indicated in the graph below, and although correlation doesn’t equal proof of cause, it does go some way toward supplementing the argument of the above model. Comments are welcome.

Median personal income over time


Ok - over the past couple of hours I've been doing a bit of number crunching in response to a post on median wage increases over at kiwiblog. First up, I have a few contentions with David's analysis. Specifically they are ....

A) He provides no links to his sources, and gives no account of his methodology, which means his results are dubious at best.

B) He only measures increases in the median wage of full time workers - this leaves out around 40% of the working age population - so to me this is hardly a useful measure of how ordinary New Zealanders have fared comparatively under National and Labour.

As such, in my assessment I've used the median income of the entire working age population (provided by the 1991, 1996, 2001 and 2006 census data) - and I provide links to my sources, and a run through of my (simple) methodology, so my results can be replicated by whoever pleases.

So my findings were that "median personal income" in New Zealand rose at an average rate of 1.4% during the decade of 1991-2001 (roughly National's time in power) and 3.26% during the period of 2001-2006 (roughly Labour's time in power so far).

So, how did I arrive at these figures? Well - first I got the census data, which can be found here:

and here (this link was too long so I had to cut it half - really need to learn that html coding stuff):


Then I adjusted these figures for tax:

I deduced the 1991 and 1996 tax rates (19.29%) from David Farrar's post.


And I calculated the after tax figures for 2001 and 2006 using this official IRD tax calculator.

Then converted all of the after-tax figures into 2006 dollars using this CPI calculator:

And vola - there you have it.

(hat-tip: Sam Dixon)

Yet another reason why New Zealand needs its unions back


Well as statistical associations go it doesn't get much clearer. Workers who live in countries with strong unions work shorter hours and vice versa - period. In case anyone is wondering, New Zealand is one of the dots down the bottom right of the graph. Our "hours worked" figure is 1767 (6th highest out of the 20 countries), and our collective bargaining coverage is 27.5 % (3rd lowest in the OECD).

So it's established then: National's De-unionisation of New Zealand in the 1990s has created an economy that's characterised by low wages, low productivity levels and long working hours. If only the Labour party had the courage of conviction to turn this around.

A responce to IP


In the comments section of my previous post about the connection between Collective Bargaining Coverage, and Labour productivity growth the famed "Insolent Prick" had the following to say ...

"What your post shows is no correlation, whatsoever, between union coverage and labour productivity. Unless you choose to highlight a couple of examples, and ignore the rest of your data. Which isn't a pattern at all."

This made me think, well a simple scatter graph could solve this. So I whacked the two data sets into excel, and this was the result .....


In addition, I calculated the Average Annual Labour productivity growth for those countries with a collective bargaining coverage figure of below 40% and above 60%. The respective averages were 1.7% and 2%. So there's certainly a significant pattern, if not a drastically pronounced one.

I will say however that calculating any statistical significance is nigh on impossible because of the numerous other factors that would need to be included and accounted for. As such these findings should be taken as indicative evidence rather than concrete proof of any correlation between collective bargaining coverage and labour productivity growth.

Why New Zealand needs its unions back: #5 - Labour Productivity


This has given incentive to employers to source increased output from labour rather than machines. Consequently New Zealand's comparitively lower rate of wage growth has lead to labour being much cheaper relative to capital than is the case in Australia.


(Source: Hall and Scobie, 2005: 20)
This has lead to a stagnation in the ratio of capital to labour (in terms of thier dollar value) within New Zealand's economy.

(Source: Black et al., 2003: 24)

This has obvious implications for New Zeland's labour productivity (output measured in $ per labour hour) growth as greater capital investment leads to greater efficiency and output. Hall and Scobie (2005: 32). estimate that 70 percent of the difference in labour productivity growth between New Zealand and Australia from 1995 to 2002 could be accounted for by New Zealand’s comparatively lower capital intensity (capital value/hours worked) growth rate. So because of this slow wage growth and concomitanat stagnation of capital intensity New Zealand’s labour productivity has fallen from being 85 percent of Australia’s in 1987 to 79 percent in 2003 (Parham and Roberts, 2004: 4). Labour productivity growth is extremely important as any growth in wages that isn't matched by growth in productivity leads to inflation (inflation 'eats up' what is gained in wage increases. Or as Dalziel and Lattimore point out, the most important source of sustained improvement in a country’s standard of living is growth in the productivity of its employed labour force (1996: 61). For these reasons the issue of labour productivity is extremely important.

Why New Zealand needs its unions back #4


Over at DPF's blog a commentator has objected to the findings of the research that I've presented on this blog, claiming that ...

"No doubt you will say that the decline in wages as a percentage of GDP has come at the expense of workers (and this is a global phenomena not just NZ)"

Well, ok I say. Let's do a little comparison Australia to see how well this assertion stands up in reality.

In contrast to New Zealand, Australia had, until recently, retained it’s centralised bargaining regime and has kept its minimum wage amongst the highest in the world (NZERI, 2006: 29). Indeed, in 2004 80 percent of Australia’s workforce was protected in terms of base pay and conditions at least by multi-employer Awards and Industrial Tribunals (Wilson, 2004: 182). Consequently Australian workers have benefited more from the economic growth that has occurred since the early 1990s.


So, wage growth from 1991-2004 in Australian was robust at an average of 3.35 percent (0.6 percent higher than in New Zealand) while GDP growth was 0.2 percent higher than New Zealand’s averaging 3.7 percent annually. So during this period annual average weekly wage growth was 90 percent of average annual GDP growth (21 percent higher than New Zealand’s comparable figure) (Economagic, 2006 and OECD, 2006). Consequently labour income share (percentage of GDP paid out as wages) has remained steady at around 53 percent from 1991 to 2002 (Parham and Roberts 2005: 5).

Why New Zealand needs its unions back #3


So what has this meant for workers in terms of their material position?

Well, in 2003 a Canadian research report found that a drop of 6.5 percent in real hourly earnings occurred between the years 1980 to 2001, the worst of the sixteen OECD countries studied (in the same study Australian workers were up by 69.4 percent(Osberg and Sharpe, 2003: 22, cited in: Wilson, 2004: 178).

This is in spite of high levels of GDP growth, averaging 3.5 percent (well in excess of the OECD average) over the entire post labour market liberalisation period (1991-2004) (NZIER, 2006: 3, Statistics New Zealand, 1997, Statistics New Zealand, 2005: 76, and OECD, 2006).

So where has all the benefits of New Zealand's robust economic growth over the last 20 years gone if not to workers? The answer of course is that it has gone to capital. The is indicated by the fact that labour income share (percentage of GDP paid out in wages) from 53 percent in 1991 to be 49 percent in 2003 (Parham and Roberts 2005: 5).

Why New Zealand needs its Unions back #2


Ok, so this section follows on from my last post ..


During the 1990s, an extensive shift occurred in both structure and content, in the determination of employment conditions for most of the workforce (Harbridge et al., 2000: 74). The Awards system disappeared, along with the controls on the use of non-standard employment such as casual and part-time work, resulting in a rapid increase in part-time employment (see Appendix 2) (Anderson, 1999). In the absence of Awards, the primary protection against exploitation that existed for most workers was the bare statutory minimum standards (ibid). With the predominance of enterprise bargaining under a purely contractual regime, the balance of power had tipped. decisively in the direction of the employer. This allowed employers greater flexibility in organising the supply of labour to their enterprises and in managing the labour process within them (ibid). Decisions regarding recruitment, redundancy, dismissals and the allocation of labour effectively became the domain of managerial prerogative (Deeks et al., 1994).

The ECA did not require employers to negotiate with an employee’s designated representative. This allowed employers to take unilateral control to determine who would bargain for their workers … because the law permitted it and the environment did not constrain them (Report of the Minority. 1993 cited in Danin 1997: 177). Indeed, a Labour Select Committee Minority Report found that no real negotiation was occurring, and that in most cases employers insisted and workers gave in out of fear of not being accepted for employment (Report of the Minority, 1993 cited in Danin, 1997:176).

Why New Zealand needs its unions back


Some may not remember but 1991 was a disastrous year for workers in in New Zealand, for it was in this year that the newly elected National party instituted the 'Employment Contracts Act' (ECA). The ECA was purposefully designed to limit the involvement of unions, by literally destroying the union movement, and it did this with great success as it was only three years after the introduction of the ECA when the union movement was all but an irrelevancy in New Zealand's labour market. For workers, the destruction of the union movement has meant two decades of pathetically low wage growth. This is demonstrated by the figure below, which shows a drastic reduction in wage growth relative to economic growth in the years following the introduction of the ECA.


For example, during the 6-year period prior to 1992, wage growth held consistently above GDP growth, whereas, during almost the entire ECA decade, annual GDP growth was higher than wage growth. This fall in wage growth relative to economic growth during the decade of the ECA seems to have resulted from the stultifying effect that the ECA had the industrial strength of unions, which was reflected in declining rates of industrial action.

Peak Oil Revisited


Ok, I've just re-read my last post on peak oil and decided that, for the benefit of people who haven't read a lot a bout peak oil I should provide a more detailed rescripition of peak oil. The explanation below comes from a fantaistic energy-focused website called "energy-bulletin". For a full explanatoin of peak oil I recomend visiting the page linked to below. What is Peak Oil?Peak Oil is the simplest label for the problem of energy resource depletion, or more specifically, the peak in global oil production. Oil is a finite, non-renewable resource, one that has powered phenomenal economic and population growth over the last century and a half. The rate of oil 'production,' meaning extraction and refining (currently about 84 million barrels/day), has grown in most years over the last century, but once we go through the halfway point of all reserves, production becomes ever more likely to decline, hence 'peak'. Peak Oil means not 'running out of oil', but 'running out of cheap oil'. For societies leveraged on ever increasing amounts of cheap oil, the consequences may be dire. Without significant successful cultural reform, economic and social decline seems inevitable. Of the 65 largest oil producing countries in the world, up to 54 have past their peak of production and are now in decline, including the USA (in 1970/71) and the North Sea (in 2001). Hubbert's methods, and variations on them, have been used to make various projections about the global oil peak, with results ranging from 'already peaked', to the very optimistic 2035. Combined oil and gas, are expected to also peak around 2010. Other researchers such as Kenneth Deffeyes and A. M. Samsam Bakhtiari have produced models with similar or even earlier projected dates for oil peak. Other quite different types of analysis have provided supporting evidence to these 'early peak' scenarios, most notably UK Petroleum Review editor Chris Skrebowski's Oilfields Megaproject reports, and energy banker Matthew Simmons' analysis of Saudi Arabian oil fields. But it's just oil - there are other fossil fuels, other energy sources, right?To evaluate other energy sources it helps to understand the concepts of Net Energy, or the Energy Returned on Energy Invested ratio (ERoEI). One of the reasons our economies have grown so abundant so quickly over the last few generations is precisely because oil has had an unprecedently high ERoEI ratio. In the early days of oil, for every barrel of oil used for exploration and drilling, up to 100 barrels of oil were found. More recently, as oil recovery becomes more difficult, the ratio has become significantly lower. Certain alternative energy 'sources' may actually have ERoEI ratios of less than one, such most methods of industrially producing biodiesel and ethanol. That is, when all factors are considered, you probably need to invest more energy into the process than you get back. Hydrogen, touted by many as a seamless solution, is actually an energy carrier, but not an energy source. Hydrogen must be produced using an energy source such as natural gas or nuclear power. Because of energy losses in transformation, the hydrogen will always contain less energy than was invested in it. [...]

Peak Oil - What is it? Should we be Taking it seriously?


I've personally been interested in Peak Oil for some 4-5 years now, primarily because of the potential drastic impact that it could have on our economy and way of life.

This is the first of a series of posts that I'll be making on the issue. It's main pupose is to show that it is now very much a mainstream issue, that is being taken seriously by many well recognised media agencies.

This article by business week serves to exemplify this point:

Here's a noteworthy passage from the article:

"Peak oil refers to the point at which world oil production plateaus before beginning to decline as depletion of the world's remaining reserves offsets ever-increased drilling. Some experts argue that we're already there, and that we won't exceed by much the daily production high of 84.5 million barrels first reached in 2005. If so, global production will bump along near these levels for years before beginning an inexorable decline.

What would that mean? Alternatives are still a decade away from meeting incremental demand for oil. With nothing to fill the gap, global economic growth would slow, stop, and then reverse; international tensions would soar as nations seek access to diminishing supplies, enriching autocratic rulers in unstable oil states; and, unless other sources of energy could be ramped up with extreme haste, the world could plunge into a new Dark Age.

GIVEN SUCH UNPLEASANT possibilities, you'd think peak oil would be a national obsession. But policymakers can hide behind the possibility that vast troves will be available from unconventional sources, or that secretive oil-exporting nations really have the huge reserves they claim. Yet even if those who say that the peak has arrived are wrong, enough disturbing omens—for example, declining production in most of the world's great oil fields and no new superfields to take up the slack—exist for the issue to merit an intense international focus."

My next post will be looking at the issues involved with Peak Oil in a little more detail. In particular I will be looking at what peak oil could mean for New Zealand's economy and New Zealander's lifestyles.