Chris Hipkins delivers pre-Budget speech at the Wellington Chamber of Commerce. Video / NZ Herald
Chris Hipkins and Nicola Willis will deliver speeches this morning.
It comes as the debate over the Government’s pay equity reforms heats up with the Government refusing to disclose how much money it has cut from funding for future pay equity settlements.
The Budget will be delivered on May 22.
Labour leader Chris Hipkins accused the Government of “gaslighting all Kiwi women” over what the pay equity reforms will mean for pay.
In one of two pre-Budget speeches on Tuesday morning - the other will be delivered by Finance Minister Nicola Willis - Hipkins said theGovernment was not being honest about what the pay equity changes will do to pay.
The Government has pushed back on Labour’s attacks, accusing them of being misleading and untrue.
The Government has said the pay equity reforms will not “cut” womens’ pay - pay rates will continue to increase under the reforms.
However, Labour says the reforms amount to a pay cut because existing pay equity claims will be cancelled and those claimants forced to reapply.
“Let’s be clear - this Government is gaslighting all Kiwi women.
“Telling them they aren’t cutting women’s pay on one hand, while cancelling 33 active claims representing hundreds of thousands of women with no due process on the other,” Hipkins said.
Hipkins added that the Government was not being honest in saying the reforms were not related to the Budget.
He said defended the last Labour Government’s record on growing the economy.
“GDP per person grew by $18,000 under the last Labour government—more than under either the Clark or Key governments, despite the fact we were in office for 3 years less than both of those predecessor governments," Hipkins said.
However that figure is not adjusted for inflation, which accounted for a large amount of New Zealand’s nominal GDP growth in Labour’s second term. In inflation-adjusted terms, Labour’s record is more mixed, with World Bank data collated in inflation-adjusted US dollars suggesting Labour’s record more in line with predecessor governments.
Figures from Stats NZ show GDP per capita grew under the last Labour Government by by about $3,745 per person in inflation-adjusted terms, slightly less than under the Key-English Government when GDP per capita grew $3,943 by the same measure - although that Government lasted nine years compared to Labour’s six.
Pay equity fight deepens
On Monday, Prime Minister Christopher Luxon defended the Government’s decision not to release the figure for the “billions” of dollars it was saving thanks to its pay equity reforms, saying it was “Budget sensitive”.
However, Luxon made those remarks as he released other Budget information in what the Government calls a pre-Budget announcement. This time, it was nearly $100 million in maths education.
“It’s Budget sensitive… the impact of these is Budget sensitive,” Luxon said.
Luxon said that arguments made against the reforms were “disingenuous” and that there was some “scaremongering going on”.
Finance Minister Nicola Willis will speak on Tuesday morning. Photo / Marty Melville.
The Government has accused its opponents of conflating pay equity with equal pay, pay equity being that people in female-dominated sectors should be paid the same as people doing similar work in male-dominated sectors.
Equal pay is the simpler concept that men and women doing the same job should be paid the same.
He also accused the unions of using pay equity as a “backdoor” for collective bargaining.
Luxon said neither pay equity nor equal pay was ending. Instead, he said Labour’s allegedly unworkable pay equity regime was being made more workable.
While the Government has released a Cabinet Paper on the changes and old Treasury papers on previous problems with the pay equity regime, it has yet to publish papers on the law Parliament passed last week.
No Regulatory Impact Statement was commissioned.
This means there is very little in the way of information from the public service to back up the Government’s claims. Treasury papers do say that the agency disapproved of an effort to have the Government underwrite pay equity claims in the private sector.
“We suspect the cost of pay equity claims to be less than previously forecast,” Luxon said.
Prime Minister Christopher Luxon refused to release pay equity saving figures. Photo / Dean Purcell
When asked why the Government could not release this figure, which is effectively the amount of money underpaid workers in female-dominated sectors will lose out by under the reforms, Luxon said, “it will be revealed at the Budget”.
Willis, speaking to Heather du Plessis-Allan Drive on Monday, said the saving figure was “a really big number, I’m going to reveal it on Budget Day”.
She said the Government had retained funding for future pay equity settlements under the new regime.
“We’ve kept money in contingency. That money I can’t disclose because it is a sensitive figure for commercial negotiations that will occur.
“There is some complexity in what I can reveal about how big the costs had got, what we’ve saved and how much we’ve kept in reserve, but I’m going to be as candid as I can within those constraints on Budget Day,” she said.
Luxon defended the reforms, saying the comparators (the jobs in male-dominated sectors used to benchmark what people in female-dominated sectors should be paid) that were being used under Labour’s regimes were too broad.
He cited examples of “librarians being compared to fisheries officers” and “admin workers to civil engineers”.
“That’s a pretty loose comparator set. Those jobs are not equivalent or the same,” Luxon said.
Under the old regime, the parties to the pay equity claim negotiated comparators together, meaning the Government had some say over the comparators that were being chosen.
Under the new regime, a hierarchy will be used that will dramatically restrict what comparator jobs will be used to benchmark pay equity claims.
Hipkins said it was “manifestly unjust” of the Government to withhold the amount of money it was saving from the reforms.
On Monday, Luxon was asked by Morning Report on RNZ whether the Ministry for Women was consulted about the changes.
He refused to say whether the ministry was consulted.
The Herald asked the Ministry for Women whether it was consulted and it said it was not.
A spokesperson for the ministry said it “was not involved in the development of the Equal Pay Amendment Bill”.
Workplace Relations Minister Brooke van Velden’s Cabinet paper noted the Public Service Commission and Treasury were the lead agencies on the reforms and worked with the Ministry for Education and Health NZ.
Willis accused those opposing the changes to the bill of scaremongering.
A particular bugbear for the Government is a Labour post saying, “National is cutting women’s pay… National forced through a law change that will take money directly out of women’s pockets across New Zealand”.
In reality, the pay equity reforms fall short of the most common and obvious definition of a pay cut.
The reforms will likely mean fewer pay equity claims and would likely mean that those claims are smaller, meaning smaller pay increases - although with the Government not releasing any papers on the reforms, it is impossible to say for certain.
However, women, or men in women-dominated sectors, will not have their pay reduced in nominal terms.
Instead, under the reforms, their pay will go up by less than it might otherwise have done - a cut to someone’s future earning potential, but not a literal cut to someone’s nominal pay.
“Those women are going to end up being paid less, I don’t think there is anything dishonest about that,” Hipkins said.
Thomas Coughlan is the NZ Herald political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.
