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We could do much better

CTU Media Release

21 December 2012

We could do much better

2012 was a hard year for many people. It didn’t need to be so hard. Bill Rosenberg, CTU Economist said “yes, we live in difficult times, but government policies should be judged by how it dealt with those difficulties, not by the lazy criterion: “we muddled through”.

In 2012 –
• We saw income inequality reach its highest ever in New Zealand despite increasing international evidence that it drives many economic and social problems. The Ministry of Social Development also showed that in 2011 two-thirds of households had falling incomes. Median weekly incomes in 2012 had their smallest increase since 1999.
• Levels of poverty among children continued at levels described by experts as “unacceptable” when our aging population makes it more important than ever that we should be helping all our children make full use of their abilities for their own and society’s wellbeing.
• A just released report from the Tertiary Education Commission[1] showed that student numbers fell by an astonishing 11% in 2011 at a time when we should be increasing skills and encouraging people into education and training.
• Unemployment reached a high of 7.3 percent not seen since 1999, deteriorating from 3rd lowest in the OECD in 2006 to 15th lowest, with many more jobless or seeking more work, despite New Zealand escaping the bank failures that hit other countries. It is now not far below the falling 7.7 percent rate in the US – the heart of the bank failures.
• The economy continued to stagnate, with little sign of rebalancing away from reliance on property investment and low value commodity exports towards productive high-wage high-value industry and exports.
It doesn’t need to be like this. The Government could be
• Moving from employment relations which see workers and good pay, job security and working conditions as costs to be reduced, to treating workers as valuable assets and encourages collective bargaining, skill creation, and cooperation between unions and employers to increase productivity as a way forward – as it is in the highly successful Nordic societies. It should be scrapping its proposals to further reduce work protections and union rights.
• Taking its focus off an unrealistic budget surplus target to job creation, raising benefit levels to take children out of poverty, encouraging more people into tertiary education including industry training, building more good quality low cost houses and increasing the quality of private rental housing, providing food in schools, and taxing high incomes and capital gains (excluding the primary home) to bring in more revenue and reverse growing gaps between rich and poor.
• Greatly expanding programmes to assist people who are jobless through community job schemes, more help in retraining, matching skills to jobs, and relocation assistance.
• Assisting manufacturing and other local employers through government procurement, expanded support and funding for research and development, export marketing, and venture capital to create good jobs.
• Intervening to manage the exchange rate to make exporting more profitable and less risky.
Bill Rosenberg said “unfortunately, instead we are likely to see damaging asset sales, further attacks on working conditions, unions, and beneficiaries, and industry policies which look more like a repeat of the failed policies of the 1990s than learning the lessons of those policies and the global financial crisis. But with the right policies, New Zealand could do better.”


[1] 2011 Tertiary Education Performance Report, Tertiary Education Commission, 20 December 2012, p.24. Available at http://www.tec.govt.nz/Documents/Reports%20and%20other%20documents/TEC-Tertiary-Education-Performance-Report-2011.pdf

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