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Richard Prebble's Letter from Wellington

Richard Prebble's Letter from Wellington


Letter from Wellington

Monday, 02 December 2002

* Workers are worse off

We are poorer now than when Labour took office. The ACT research unit used answers to parliamentary questions, official data and methodology checked with the parliamentary library to determine the average real net wage (take home pay) is 3.3% lower than in November 1999. The average real net hourly rate is 45 cents lower; weekly wages have fallen $18 a week or $930 a year! Across the 1.5 million taxpayers the reduction in real take home pay is $1.4 billion a year. Since Labour took office gross average hourly wages have increased 8.9%. Inflation has been 8.1%. So it would appear wages are rising faster than inflation, But "fiscal creep" has pushed more workers into higher tax brackets. When the effect of higher taxes on increased wages is factored in, then net hourly pay has increased just 4.5%. Cash in the pocket has decreased by 3.3%.

Labour has put together a coalition of the non-producers who have been the recipients of massive income transfers from working taxpayers. The coalition is made up of superannuitants, social welfare beneficiaries and students. Labour has also targeted Maori and Pacific Islanders.

* The numbers are large

There are 450,000 people on super and Labour has increased super over National's formula by $684 million so far. There are 400,000 adults on welfare and CPI indexation means their relative position has improved at a cost of $340 million. There are 175,000 working age students who have been bribed with interest free loans - the cost to taxpayers, $300 million (students are the real losers as student debt has doubled). Maori have received $466 million in "closing the gaps" programmes and similar but scaled down programmes are in place for Pacific Islanders - the latest being $8 million for Pacific Island radio stations. (Waitangi settlements, Maori TV are all on top.) The transfers are so large Labour cannot afford to do anything for the working poor. There are 48,000 low-income workers who earn less than the community card threshold who are excluded from its benefits because they work!

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* Tax and transfer increases

The income transfer from the workers to non-workers has increased by over $1 billion a year (over the last three years).

Taxes, charges and licenses have increased a massive $14 billion over three years. Income tax has increased $8.5 billion in the last three years. 17% of fulltime workers are now in the top tax bracket (39c per dollar is taxed). Petrol taxes are up $120 million a year. Tobacco taxes are up $70 million a year. The stealth taxes are up - e.g. ACC, court fees, the cost of birth, death and marriage. A Labour government elected on a promise not to increase taxes except to 5% of taxpayers has increased taxes, charges and licenses by $14 billion a year in the biggest increase in taxes ever.

"Another day older and deeper in debt" How have working families maintained living standards? They have taken on more debt. Household debt is up a massive $15 billion. For more details go to

* Trade unions bought off

The trade union leadership know that their members' real take home pay is falling but the government has bought them off. The unions want bills like the OSH Amendment to justify their existence. The Employment Relations Act gave unions more members, and membership dues are what the officials really want.

* Illegal payments to trade unions

Rodney Hide has uncovered a scheme whereby government departments make illegal payments of up to $900 to civil servants to join trade unions. The payments appear to be widespread and the amount of money involved keeps growing, $5 million at last count.

The scam was conceived in several talks between senior Labour politicians and trade union leaders. The unions were concerned that their membership figures kept falling. The Ministers and the PSA signed a memorandum that government would work with the union to improve government services. At the time, this was regarded as harmless window dressing. The Letter has learnt that this "accord" has been used by union negotiators to demand extra, illegal payments for trade union members. Department heads who went to the State Services Commission for help were told that Minister Trevor Mallard wanted the payments!

Rodney Hide has obtained a legal opinion from a former Employment Tribunal member that the payments are illegal - the Employment Relations Act makes it illegal to discriminate against trade union members and discrimination includes different rates of pay. Rodney has further uncovered departments who have signed new pay rises with the payments back-dated only for union members. The court remedy? To order that all non-union members receive the same payments. It will only take one civil servant with a $70 Employment Court filing fee to expose the whole scam.

* Health policy shambles

The government quietly announced last week that around $200 million of Hospital Board deficits was being wiped. This decision signals the total failure of government health policy. Boards have been repeatedly told they must operate within budget. Some boards, by taking hard decisions, have introduced remarkable efficiencies - some at considerable political cost. Other boards have made no real effort and have just accumulated huge losses. What Labour did last week was to reward the inefficient boards and penalise the efficient. The strike at Auckland hospital is now futile. The union is right. The board can sign up to any agreement and, in time, central government will pick up the tab. The Letter predicts a further exit from the sector of competent managers.

* We have been lied to

The NZ media has been completely conned. NZ no longer has media representatives in Washington so the government can spin any line to the media here - and they have no way of knowing they're being lied to. The fact that NZ was referred to in US trade representative Bob Zoellick's letter to the US congress regarding the Australian/US free trade agreement was trumpeted as a breakthrough by Labour. It's all government spin. There has been no progress. Peter Hartcher in an article in Australian Financial Review reveals that the US has no intention of negotiating a free trade agreement, the reason is the nuclear issue, and Helen Clark is fully aware of the real situation. The article says, "the Bush administration is 'puzzled and perturbed at the way that NZ has deliberately spun our neutral statement into a statement of support'. In an effort to dampen NZ's expectation [US officials decided] to call in the Kiwi press for a background briefing: 'But when we looked around we realised there is no NZ press in Washington.'". And from a senior administration official: "The NZ government has spun this to give the impression that the nuclear issue is fading in the memory of the US government. It is not." It's an article worth reading –


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