KEY POINTS:
I was at a farewell recently for 15 families headed for Australia. They weren't leaving because the Government hadn't given them tax cuts; they were on a mission to save Australian souls. Having apparently discerned a greater need for their ministry among Australian youth, they were off to
start a church in Brisbane. So they didn't exactly fit the favourite image of departing Kiwis, as go-getters altogether too clever and talented for these shores.
But then, neither did a couple I know who moved across the ditch to be with their adult daughter and new grandchild. And neither did the well-qualified friend who reluctantly took one of two jobs offered him in Sydney, after months of applying unsuccessfully for New Zealand jobs in his field.
Lots of people think we should be exercised about this, including John Key. Kiwis are leaving, he has said, because of better wages and conditions in other countries. That's undoubtedly true for many.
But Key isn't, as far as I can see, offering to improve the wages and conditions of working New Zealanders in any meaningful way. His party's solution is tax cuts, which is undeniably attractive to those of us starting to ration our consumption of butter, cheese and petrol, or struggling to pay school fees and rising interest rates on our mortgages.
But I'm not sure that a tax cut in the vicinity of $20 a week (just enough to buy a 1kg block of cheese in some supermarkets), or even $69.23 (the best possible tax-cut scenario $1.8 billion can buy, according to the NZ Institute for Economic Research, for a couple on a combined income of $150,000), is worth the great expectations, or the cost to the country of lost tax revenue.
If we're to take lessons from Australia, we should go the whole hog and look at how we can make New Zealand's business-friendly environment as worker-friendly as Australia's seems to be.
As Laila Harre, who leads the National Distribution Union, has noted, New Zealand workers would be better off today if our unions had been more like their Australian counterparts.
In the face of John Howard's reforms, the Australian Council of Trade Unions embarked on an "aggressive political, industrial and community campaign" which made industrial relations a major political issue and gave unions a high and positive profile.
By comparison, New Zealand unions dropped the ball after the introduction of the Employment Contracts Act in 1991, "the bosses' charter" which abolished the award system in favour of direct wage and conditions bargaining between employers and individual workers.
Faced with an assault on "its most fundamental job" of collective bargaining, the Council of Trade Unions made a "monumental blunder" in not organising industrially and politically against the new act. Instead of uniting, "opportunistic" unions competed with each other for members.
The result has been a "toxic mixture" of low wages, long and insecure working hours, and under-investment in education and skills, which is economically and socially unsustainable.
Since 1991, union membership has fallen from 50 per cent overall to the current 22 per cent. In just three years, from 1991 to 1994, youth wages in supermarkets fell 40 per cent and adult wages 11 per cent. While real wages here fell 6.5 per cent between 1980 to 2001, Australia's increased by 28 per cent.
Meanwhile, a Reserve Bank study shows corporate profits increasing by 11 per cent from 2000-2004 and the average CEO in 2006 earning 19 times the average wage, compared with about eight times in 2000.
A 2007 paper by the Child Poverty Action Group argues that our income tax structure needs urgent reform to make it more progressive and less inequitable and confusing, and that while the greatest pressure for tax reform (in the form of tax cuts) is coming from middle- and high-income earners, it's low-income earners who have the greatest need of additional income.
Its authors, Auckland University economists Dr Susan St John and Dr Steve Poletti and health researcher Donna Wynd, blame our regressive tax regime for "a good part of New Zealand's rapid growth in inequality".
OECD figures show New Zealand with the greatest growth in inequality in disposable incomes of 15 OECD countries between the mid-1980s and 2000, while Australia had the lowest.
And the poverty action report concluded that we ought to be lifting the bottom tax threshold of $9500 to around $20,000 at least. We ought to be taxing housing investment which advantages individuals at the cost of the country. We shouldn't be giving tax breaks on KiwiSaver, which benefits the better off, and is unlikely to increase the nation's overall rate of growth or savings.
Because, as they say, "there is really no such thing as a free tax break, one group inevitably pays to support another's reduced tax burden".
* Tapu.Misa@gmail.com
