Raise the minimum wage to help the Govt books

15 May 2011

Raise the minimum wage to help the Govt books

The Government can make smart choices in next week’s Budget that raise hundreds of millions of dollars and deliver significant social benefits, the Green Party said today.

“There are nearly 300,000 employees earning less than $15 an hour. Raising the minimum wage to $15 an hour would not only significantly improve their lives at a time when living costs are soaring, it would also generate up to $173 million per year for the Government at a time when the fiscal deficit is ballooning,” Green Party Co-leader Metiria Turei said.

The Green Party estimates that raising the minimum wage to $15 an hour would immediately generate an additional $101 million per year in Government revenue in increased PAYE taxes.

In addition, higher wages would give 300,000 workers increased spending power, meaning an increase of approximately $72 million per year from GST. There would also be further savings from the accommodation supplement and Working for Families due to fewer people needing this support.

“That’s roughly $173 million more per year for the Government, and roughly $60 per week more after tax for someone working full time on the minimum wage,” Mrs Turei said.

“This is smart economics in action and makes both fiscal and social sense. It would bring us more in line with Australia, where the minimum wage is $15 AUD (just over $20 NZD), and actually advance the Government’s abandoned goal of ‘catching up with Australia’.

“Governments make choices when they set the Budget. They can choose to find ways to raise revenue that also benefit those on low incomes, or they can chose to cut social spending for those who need it the most.

“The Green Party has consistently proposed Budget measures to generate new revenue, such as a temporary earthquake levy and a capital gains tax on property excluding the family home.

“Immediately raising the minimum wage to $15 an hour is another policy that would help the Government books, and deliver solid benefits to thousands of New Zealanders.

“In future Budgets, the Green Party would commit to further staged increases in the minimum wage, until it is pegged at two-thirds of the average wage, like we do with New Zealand Super. In the medium-to-long term, this could deliver further new revenue and savings of up to $700 million per year,” Mrs Turei said.

Mrs Turei said 19 per cent of employers currently employ someone at the minimum wage.

“Many of these are large employers who can afford to absorb a staged increase in the minimum wage, but for some small and medium-sized employers, it may be challenging.

“We would therefore recommend a targeted subsidy to assist small and medium-sized businesses who need support to implement an increase in the minimum wage.”

Mrs Turei said raising the minimum wage was part of the Green Party’s ‘Mind the Gap’ strategy to combat growing inequality in New Zealand.

“We need to close the gap between the haves and the have nots. If we can do that we’ll all be better off, because a more equal society is better for everyone,” Mrs Turei said.

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