Working for Families is corporate welfare

The Working for Families package is corporate welfare.

It’s our low-wage economy which is driving the policy and next week it expands as even middle income families feel the pinch. It is in effect a package of subsidies for employers paying poverty level wages. (A poverty income is recognised internationally as one which is less than 60% of the average income)

It is needed because wages have slumped over the past 20 years. In 1989 for example the average weekly pay for a New Zealand worker was equivalent to $740 in today’s dollars. However by the end of last year this had dropped to just $592.

Two factors in particular have led to this 20% slide in real incomes – the Labour Party’s Rogernomics policies and the National Party’s Employment Contracts Act.

The Rogernomic economic reforms of the 1980’s which we were told would deliver higher wages and a stronger economy delivered the opposite. Economic growth stagnated while the end of import duties saw the country flooded with cheap, low quality imports. Well paid manufacturing jobs were lost and replaced with low-paid, part-time work. The promised gains – a strong economy and high wages with real incomes rising – were a deliberate illusion generated to help us through the “pain” of economic reform. The “pain” of course was restricted to working New Zealanders while shareholders, managers and directors continued to bask in the warm glow of rising incomes and profitable returns.

This pattern continues today under a Labour government. Despite 6 years of a strong economy the incomes of working New Zealanders remain in the doldrums.

Last year the base salaries of chief executives rose by 6% but working New Zealanders had to do with just 3.1% while four in every ten workers received no increase at all. These percentages only tell part of the story. A 6% increase on $100,000 is $6,000 but 3.1% on $30,000 is just $930.

To underline the injustice, according to Finance Minister Michael Cullen speaking in January, over the past six years of Labour-led governments company profits have increased at twice the rate of workers wages!

National’s Employment Contracts Act of 1990 continued Rogernomics into the so-called “labour market” and greatly reduced the bargaining power of workers while extending the rights of employers. Under this legislation wages tracked down faster with barely a hiccup when Labour came to power in 1999.

The ECA gave businesses a free ride. For the past 16 years they have seen a steady increase in their income delivered not by innovation or increased productivity but by a steady erosion in the real value of wages. Their profitability has been built on lower incomes for workers.

The high profit, low wage economy wanted by the Business Roundtable has now been delivered to employers on a plate.

And so we have Working for Families.

It is a brutal admission that New Zealand is a low-wage economy but instead of the pressure going on companies to convert high profits to wages, the government prefers to subsidise wage levels with government funding.

The big push from business now is to increase productivity and workers are told there can’t be significant increases in wages until there are productivity gains. This message is repeated by the government. Helen Clark would prefer to see on-going pressure on workers’ incomes rather than telling businesses that low-wages are unacceptable.

So workers are told they must work even harder or smarter if they want income increases. Tell that to a breadwinner working several part-time, low-paid jobs to keep the family fed!

The next stage of working for families comes on stream next week when the income thresholds are raised so that even families with children earning up to $100,000 will be eligible for extra income. Government examples indicate such a family could expect to get $3976 extra per year.

Not so beneficiaries. It is estimated that even when the package is implemented there will still be 175,000 children living in families with incomes below the poverty line.

Because it is a package of business subsidies, to make it more efficient the government could just cut out the middle-man and pay the money straight into the back pockets of company managers, directors and shareholders.

This is not so much a cynical observation as a recognition that in our economy working New Zealanders are an economic resource rather than human beings and herein lies its immoral and unethical character. Our economy is essentially a parasitic relationship between non-working shareholders and working New Zealanders whose efforts bring them their unearned income.

It has often been said that the best economic and social structure is the one you would pick before you knew what position you would hold in it. An honest answer from our politicians and business leaders would for a start mean an end to the scandal of corporate welfare which masquerades as Working for Families.

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War in Iraq – three years on

When Bonnie Prince Charlie’s Jacobites battled English soldiers at Culloden virtually all the casualties were combatants.

With improvements in the technology of killing – gunpowder, muskets, rifles and artillery – the death toll in battle generally increased reaching a peak during World War I. Here as many as 60,000 allied troops were killed on a single day as they were ordered in wave after wave to run across the open fields of the Somme towards German machine guns which ran red hot as they delivered young male corpses, widows and grief-stricken families by the thousand.

The civilian death toll – though higher than the days of hand to hand combat – was still relatively low.

With aerial warfare in the Second World War an entirely different picture emerged. Civilian casualty numbers climbed rapidly as cities became legitimate targets. 

The single greatest crime in this new warfare was the American use of nuclear weapons to specifically target the people of Hiroshima and Nagasaki, which resulted in hundreds of thousands of civilians dying in flashes more brilliant than a thousand suns.

On the third anniversary of the US led invasion and occupation of Iraq it’s not surprising to find that with this “modern warfare” the civilian casualty rate has climbed from below 5% in Culloden-type battles to reach as high as 95% of those killed.

Credible estimates put the number of civilian deaths in Iraq at more than 100,000 in the three years since the invasion.

An accurate count is not possible because the occupation forces have specifically refused to allow the counting of civilian deaths. When challenged about this the US Secretary of State Donald Rumsfeld said he was “not interested” in the number of Iraqi civilian deaths. These lives lost are merely “collateral damage”.

Most were killed in air strikes by US forces with the greatest number of civilians killed on the ground in the so-called “terrorist-cleansing” of Falluja in which the city was largely destroyed and the thousands of remaining inhabitants obliterated.

Today the killing goes on. It was reported earlier this month that Faik Bakir, the director of the Baghdad morgue, has fled Iraq in fear of his life after reporting that more than 7000 people have been killed by Iraqi Interior Ministry death squads in recent months. The Ministry operates with a US mandate.

Rumsfeld is however interested in the number of US troops killed but only so far as this number remains below a level when it would trigger open hostility from the US public and result in a steeper decline in support for the war. The signs are that this is becoming a major problem.

It’s a problem in another way too. As the death toll rises so does the number of US soldiers injured or maimed which means more funding needed for rehabilitation etc. It is small surprise that here the US administration is moving to lessen the “fiscal risk” of these returning soldiers by cutting eligibility for invalid benefits and veteran pensions.

These were “America’s finest sons” when they volunteered and went to war but are now an embarrassing financial liability.

Like front line soldiers anywhere in the world these young Americans for the most part are from working class families – recruited from low-paid jobs and the dole queues.

Why do they do it? For the same reason that thousands of young kiwi males walked off our farms and out of our factories to join the great adventure which was to be World War I. They would be home by Christmas after fighting the “war to end all wars”

When Samuel Johnson said that “patriotism is the last refuge of the scoundrel” he could equally have said it’s the first port of call for the army recruiter.

Meanwhile the beneficiaries of the Iraq war are the large corporations with fat contracts to provide infrastructural support for the invasion and occupation. Billions of dollars in profits have now been made by US and UK corporations with plenty more to come. In the process the Iraqi economy has become almost totally privatised – a process set in train irreversibly well before any constitutional discussion and before the first vote was placed in a ballot box. The oil industry remains in state hands but the plans are being drawn up for the big oil corporations to move in.

The most encouraging sign to emerge from the invasion and occupation of Iraq was the more that 15 million who marched against the war in February 2003. The world as a whole saw through the lies of weapons of mass destruction. As the New York Times said there are two superpowers in the world today – the US administration and world public opinion.

May the second superpower win.

Local Ownership – Does it Matter?

Broadband. We can complain as much as we like but it’s a problem of our own making. Our main telecommunications provider, Telecom, is twice removed from community control, firstly through its private ownership and secondly through its overseas control.

At the time of its sale in 1990 we were told “Local ownership doesn’t matter – it’s the investment and the service that count.”

It’s one of those arguments which sounds like common sense in a single sentence and was one of the main arguments used to justify the selling of many of our public assets to overseas investors under Labour in the 1980s and National in the 1990s.

There are really two issues here – is private ownership better than public ownership? and if so should we allow them to be bought by overseas interests?

The answer from Labour and National has generally been yes to both questions with minor variations.

Labour’s Mike Moore as Minister for example insisted on keeping a token “kiwi share” in Telecom to placate huge community unease when it was sold to American interests. With Telecom’s track record since it’s something politicians would prefer we never recalled. It was always a sick joke. The punch-line was understood by the American buyers who were staggered at their good fortune. The private monopoly over our phone lines which they purchased has cost us many billions of dollars since with the current broadband debacle just the latest abuse hoisted on us by an appalling government decision 16 years ago.

It’s no surprise to learn as we did last year that the cost of business access through Telecom is the highest in the OECD; low data users pay 80% above average and medium users – families on home computers – pay 160% more than the OECD average.

The Telecom example points to some of the inevitable trouble from private ownership of community assets. This includes the shift in focus to the interests of shareholders rather than the wider community with the financial benefits siphoned off into small numbers of well-lined pockets. In the case of a monopoly like Telecom it becomes little more than legalised theft.

These same problems are present when an asset is privatised locally but they are exacerbated if the ownership is overseas.

Another good example is our banking sector. The same frenzy which saw public assets privatised also saw our trustee banks sold so that instead of being owned by the account holders they are now owned by shareholders who insist on a big slice of the financial benefit. More often than not these shareholders are overseas.

Taranaki Savings Bank withstood the privatising tide and remains the only trustee bank where the financial benefits accrue to the customers and the community. It’s not surprising TSB scores consistently highly in customer satisfaction surveys.

Overall New Zealand has the highest degree of foreign bank ownership in the world with our big four New Zealand banks – BNZ, ANZ, Westpac and ASB – all having Australian based ownership.

Besides the expropriation of huge sums of money out of the country the focus of the banks is on their wealthy Australian shareholders with barely a nod to New Zealand.

They have been far from forthcoming in paying tax here with their combined unpaid taxes estimated to be as much as $1.63 billion. 

In terms of economic direction our government has been almost pleading for us to save more and spend less. Are our big banks in tune with this policy? No. They are off on a mission of their own on behalf of their shareholders.

The BNZ sent credit cards with $3000 to $5000 limits to prospective customers just three weeks before Christmas.   This was a particularly cynical move to exploit families under pressure and was described as “ethically reprehensible” by David Russell of Consumers Institute.

Westpac has required its employees to “sell debt” to its customers with the employee pay rates linked to how much debt the customers take on. It is rare for bank staff to take strike action but the Westpac staff who did so at the end of last year did us all a huge service by drawing this abysmal practice to public attention.

Westpac also keeps its monthly credit card repayments as low as 3% of the total owed.   Again the Consumers Institute has criticised this practice as one designed to keep people “in hock” for longer.

Small wonder that Australia expressly prohibits foreign control of their banks while our so-called centre left government leaves us to the mercy of rapacious foreigners whose policies and attitudes are in sharp conflict with government policy and our community interest.  

Local ownership does matter but public ownership and quality leadership can give us the best of all worlds.

Bullying claims miss the point

In the middle of last week David Benson-Pope was in danger of becoming just another footnote to parliamentary history.

He has been under intense and sustained pressure from opposition politicians for several weeks now over allegations of bullying, insensitive and inappropriate behaviour during his time as a secondary school teacher in Dunedin.

Even he now admits that the allegations themselves could have been dealt with in a far more sensible and upfront manner from the outset. Many of the alleged actions were inappropriate even for the times in which they occurred but a forthright statement to the effect that – “Look, I’m sorry people were upset by things I did when I was teaching 20 years ago and I realise I should have handled some things differently but remember there was a different culture operating at the time and things that look bad in hindsight weren’t such an issue then.”

Virtually all parents and grandparents reading this will recall the culture of classrooms from their past where beatings were a regular occurrence and the use of ridicule and sarcasm were a frequent feature of classroom interactions.

For many children it may have been schooling but it certainly wasn’t education.

A friend of mine with an obvious disability was strapped on his very first day of school as a 5 year old and to this day has no idea why apart from the fact that the teacher took an instant dislike to him. He was a dismal failure at school but now is a solo-parent of two teenage boys and it’s a credit to many things but mostly to him that as his boys were growing up he put up signs in every room of his house “This is a no-smacking house!” and despite the wrong spelling it made a huge difference to his handling of his older boy who has serious autism.

Times have changed and for the most part school experiences for children have improved a great deal.

Seen in this context most people would say the allegations were small beer. Had Benson-Pope been straightforward last year then the public, in its generosity to those who admit their mistakes or front up to their foibles, would not buy the rubbish now being heaped on him by smug politicians.

Despite all this such has been the level of attack on Benson-Pope that this issue has dominated parliament since it opened. Likewise it has dominated the front pages of newspapers and the nightly television news for weeks. A visitor could well be filled with wonderment at the priorities and values of our community.

Most grating of all is the self-righteous mouthing of concern from politicians like Rodney Hide and Judith Collins. They express obsession with insensitivities to children 20 years ago but ignore the appalling reality of so many children’s lives in the real world of New Zealand today.

What has Rodney Hide to say about the 400 children who change schools every Monday morning in Manukau City? It’s called transience and is a product of poverty – the same poverty that policies espoused by him have created over the past 20 years.

What has Judith Collins got to say to the 175,000 children who will still be living in families below the poverty line even after Labour’s Working for Families package is finally implemented?

What has Gerry Brownlee to say to children in families where a breadwinner works 50 hours a week but can’t earn enough to keep his or her family above the poverty line?

In reality the issue for politicians has never been about what may have happened to children in Benson-Pope’s past. It’s like so much of what poses as political debate between Labour and National which in truth is a sideshow where creating perceptions about parties and politicians becomes much more important than the substance of what is happening.

This posturing replaces genuine political debate because the major economic and social policies of National and Labour are so similar as to be – for the most part – utterly indistinguishable. It would be a struggle to get a cigarette paper between them with Labour just as often found to the right of National as anywhere else.

Both main parties are increasingly arguing shades of grey which they try to convince us are black and white.

If the current debate has any positive impact it will be to remind us all just how sensitive and vulnerable our teenagers are – despite the bravado – and will remind us also how shallow and visionless are our main political parties.