And the Minister for Workplace Relations, Michael Wood, told Parliament that "our employment relations system has embedded low pay and conditions in a race to the bottom".
The Government's own data prove both statements to be false.
Attorney-General David Parker denies any government responsibility for inflation. Photo / Mark Mitchell
An analysis of the Consumers Price Index reveals most of New Zealand's inflation is domestic. Actions such as printing $55 billion and government deficit spending have pushed up prices more than either fuel increases or supply chain congestion.
The adult minimum wage has gone from $16.50 in 2018 to $21.20 today. Only a politician could call that a "race to the bottom".
While there are politicians who will say anything, Parker and Wood really believe their delusions. Surrounded by lackeys saying "Yes Minister", it's a struggle to keep in touch with reality.
As Paul Simon sang, "A man hears what he wants to hear and disregards the rest". Never underestimate the capacity of people to believe to be true what they wish to be true.
When it is leaders who have delusions, it is very dangerous. President Vladimir Putin's delusion that Ukraine is not a country has brought the world to the edge of nuclear war.
Ministers' refusal to accept that their reckless government spending is inflationary makes reducing inflation very difficult. At a time of full employment, the effectiveness of the Reserve Bank's anti-inflationary interest rate rises is being countered by inflationary government deficit spending.
Wood's delusion is the left swallowing its own propaganda. He was just 4 years old when Robert Muldoon was Prime Minister. He has no personal experience of centralised wage fixing. He has swallowed the myth that it was a golden age.
The minister told Parliament that union wage bargaining "will incentivise ... The quality of goods and services offered, investment in skills and training, R&D innovation ... that will drive productivity and prosperity for our country."
He is so delusional, he probably believes union bargaining will solve climate change and bring about world peace.
Awards did not result in cleaners and bus drivers being well-paid. As Minister of Railways I found that, despite unions, awards and industrial action, railway workers needed social welfare to top up their income. As a law clerk, my union negotiated an award wage that was less than the unemployment benefit.
Despite prohibitions on strikes, the system of awards allowed those with industrial power to extort high incomes. For hours worked, wharfies earned more than brain surgeons.
Michael Wood, Minister for Workplace Relations. Photo / Mark Mitchell
None of the benefits that Wood claims occurred. Under awards, productivity fell. Under free wage bargaining, New Zealand's productivity relative to the rest of OECD has improved. If there is a race to the bottom, how does Wood explain orchardists offering unskilled workers $60 an hour?
He might not know it, but Wood is spouting the economic theory of the 18th-19th century economist David Ricardo, which argued that competition between employers means wages must fall to subsistence level. It was Karl Marx who wrote that the only way to avoid wages declining was for the workers to be organised.
What Ricardo, Marx and Wood failed to realise is that productivity drives wages. Henry Ford paid his workers $5 a day because of the efficiency of his factory.
Successive studies have found that a factor such as having a fifth of all pupils leaving state schools functionally illiterate is one reason for our poor productivity. The appalling productivity in the unionised state sector is another.
One-size-fits-all union wages and conditions mean few are happy. It is why union workplaces often have industrial unrest.
If just increasing wages results in higher productivity, then why not increase the minimum wage to $60 an hour?
Wood is not completely deluded. He knows workers are sceptical that unions will bring any benefit. This is why the minister is proposing that a vote by just one in 10 is enough to force the other nine workers into union wages and conditions.
Only someone who was aged 4 at the time could be proposing to go back to the industrial chaos of union sector-wide wage bargaining.
This Labour Government is the master of gesture politics. Maybe a majority of voters can be persuaded that inflation is imported. Maybe a tenth of all workers will vote for union sector-wide wage fixing.
What we do know is that gestures cannot change reality. Just saying "inflation is imported" will not reduce our grocery bills.
Fantasies that union bargaining results in "higher quality goods and services" cannot make New Zealand a prosperous country.
• Richard Prebble is a former leader of the Act Party and former member of the Labour Party.
