Restraints on workers while the wealthy thrive

A friend once said to me that the problem with Labour was it never charted a true course. Instead it was “5 degrees to the left in good times and 20 degrees to the right in bad times”.

At the time I thought this was an overly cynical view but 30 years and two Labour administrations later I appreciate it’s fundamental truth.

I thought of this 10 days ago when reading Minister of Finance Michael Cullen’s comments to a parliamentary select committee where he called for “wage restraint”. He was backing up Reserve Bank Governor Alan Bollard who had earlier in the week warned that he would need to put up interest rates if workers received “extravagant” wage increases.

Cullen then went further saying “You can’t expect wage and salary increases to compensate you for what are major shifts in relative prices over which we ourselves have no control. If we try to compensate ourselves for those then there is a serious risk that we move into a more strong inflationary cycle…”

However the recent facts point to where the problem lies and it’s not with workers’ wages. The official inflation rate for the year to March 2006 was 3.4% but over the same period wages increased by just 3.1%. In other words working New Zealanders are continuing to go backwards and suffer cuts in their real take-home pay. At the same time those on the biggest salaries received increases well above the inflation rate. Alan Bollard himself received a 7% rise – a $30,000 increase, while Cullen received an 8.1% increase – up $18,300.

When talking extravagant these men need to look in the mirror.

Wealthy New Zealanders continue to race ahead while the average wage has decreased in real terms by 20% in 20 years.

A good example are our cleaners. Just a few weeks back the largest contract for cleaners in the country was settled for a two-year term. These workers have received just a 35c per hour increase this year and will get a 35c increase next year. Unlike Michael Cullen, these low-paid workers are effectively getting a pay cut because again their pay increases are less than the rate of inflation. 

Under Labour these cleaners had a right to expect a better deal. Not just because Labour claims to represent the interests of people on low incomes but because no less than seven current Labour MPs were once officials of the Service and Food Workers Union which represents cleaners. These MP’s (Lianne Dalziel, Mark Gosche, Sue Moroney, Taito Philip Field, Dave Hereora, Rick Barker and Darien Fenton) may have entered parliament with the most honourable intentions towards working New Zealanders but have failed to stem the slide in wages, let alone chart a new course for the economy. From a distance their union work seems to have been simply a stepping stone into parliament with their commitment to the low-paid left on parliament’s steps.

Labour can’t used economic excuses for the failing to address the plight of working New Zealanders. The party has overseen six years of strong economic growth but working New Zealanders have continued to slide further behind. Is Labour’s real role just to keep working New Zealanders quiescent and pliable? It seems so.

There has been barely a ripple from Cullen’s comments. National are hardly going to complain when their business backers are those who will benefit the most from wage restraint but similarly outside parliament. Carol Beaumont of the Labour aligned Council of Trade Unions described Cullen’s comments merely as “unfortunate”. She said it was unfair to expect workers to “magically deal with inflation by themselves”. True enough but hardly a voice ringing in support of those who can’t earn enough in a 40-hour week (or even a 60-hour week) to support their families.

Once upon a time Labour MPs would have led the charge for low-paid workers but Labour now expects, as a matter of course, that those on basic wages will continue to make sacrifices to keep high income earners like Cullen and Bollard in clover.

What about CEO salary restraint? What about politician salary restraint? What about profit restraint? Or dividend restraint? Or even price restraint? What about sharing the economic pain?

Instead Labour talks only of wage restraint. This party is a vivid blue imitation of what it once was. It’s entire purpose now appears to be to keep National out of power rather than driving forward and charting a new economic direction so desperately needed across our middle and low income communities.

It has now charted a course which is 90 degrees to the right even in good times. The problem with Labour grows by the day.

Politicians huff and people while people cope well

Infrastructure breakdown brings out the best in our citizens but the worst in our politicians.

We experienced both in Auckland last week when an earth cable broke loose in high winds and wrapped itself around a couple of supply cables at the main electricity substation bringing power to Auckland. The massive short circuit which resulted brought a power blackout to most of the city for more than 4 hours.

People adapted well. I was driving across town when the traffic lights went out. Passing many major and busy intersections in the pouring rain with no traffic lights was a recipe for chaos but it was amazing how courtesy replaced frustration in rush hour Auckland traffic. Such was the considerate nature of drivers that the trip across town was just a bit slower if at all and possibly even safer than normal. It was almost as though an inverse relationship existed between convenience and courtesy. Courtesy increases as convenience decreases. Later when it became apparent the power would be off for some hours again people adapted in a community-minded manner. Central city worksites closed for the day and most people made their way home. The greatest crisis for some appeared to be a lack of coffee for a morning fix. Patience can be a rare commodity in a big city but it was on display everywhere.

This is in fact a common human experience. In cities where so many live isolated lives a sudden disturbance which affects everyone in fact brings people closer together. Aucklanders were people unified in adverse conditions. It brought almost a light-hearted relief from the tedium of work routines.

Parents at home had bigger worries. Would they be able to heat the baby’s bottle for the next feed? Pensioners huddled in blankets while everyone expressed anxiety about the food in the freezer should the outage continue longer. But people coped with patience, consideration and helpfulness.


By all accounts the same human spirit in difficult circumstances applied during the week of snow and storms in the South Island which brought isolation to many homes and small communities. It was summed up in a headline from our paper here “Southern spirit helps town cope without power” in a story of snowbound Geraldine. The snow was a less unexpected event than Auckland’s blackout but still the human spirit of collective endurance which unites communities facing a common problem has surfaced everywhere.

What a contrast then to the reaction of politicians – both local and national – and some of our so-called business leaders.

Before the temperature in Auckland freezers had risen by a single degree politicians and businesses were attempting to spin the outage in their favour.

Bizarrely, for what appears to be essentially a freak accident, National spokespeople blamed Labour for not investing in our electricity infrastructure. For once Labour was on strong ground and able to point out that spending on electricity infrastructure has been six times greater on average under this government than under the grim years of National rule through the 1990’s.

Opposition politicians have also taken potshots at the Resource Management Act, blaming it for the outage, while others suggested it showed we need nuclear power stations. Figure that one out if you can. All we needed was someone to claim a lack of tax cuts caused Auckland’s blackout for the comedy to be complete.

Possibly even worse in this instance were our local body politicians and businessmen. The huffing and puffing from the Mayor of Auckland was positively embarrassing. He told us he’d been given assurances blah, blah, blah and now he was angry blah, blah, blah. It was churlish of some business leaders to wail long and loud about loss of income and the silly, smug comments from Michael Barnett of the Auckland Chamber of Commerce about overseas investors losing confidence in Auckland are best forgotten. If our lives depend on the capricious behaviour of greedy foreign speculators then we are undone already.

If the waste products of bulls could be tarsealed these politicians and businessmen could finish the Auckland motorway system tomorrow.

Are these people representing our interests? Of course not. But in a world where it’s all but impossible to fit a cigarette paper between the policies of National and Labour on most issues the debate shifts from policy differences to public perceptions. Spinning a story and hoping the public buys it has replaced positive leadership and policy ideas. Politics is a drab portrait in shades of grey – as colourless as it is visionless.

On last week’s performance we would do better to invest more democratic control in the inherent strength, common sense and common humanity which exists within our local communities than in the tiresome tirades of politicians.

Warmongering Rakon profits from death

Wars are hugely profitable.

Most of us greet them with reactions from dismay to horror but for large companies involved in the arms industry they are a welcome boon.

When a country goes to war the provision of uniforms, supplies, weapons, ammunition, transportation and all the other paraphernalia of war is via “defence contracts” usually with large corporations. 

The US economy in particular is so war-dependent that it may well collapse altogether with an outbreak of world peace. The phrase “military-industrial complex” describes this co-dependency between businesses and warfare. The situation is so extreme that estimates have been made that as many as 80% of all US scientists are working either directly or indirectly on research for the benefit of the arms industry. The search for more efficient means of killing our fellow humans is never ending.

This industry is not known for its morality. A typical example would be reports of French arms companies simultaneously selling fighter aircraft to Egypt and anti-aircraft guns to Israel as the Middle East moved to war in the 1960’s. Grotesque obscenities such as this are commonplace. 

Here in New Zealand we don’t see ourselves as being part of a war machine but we have always had companies involved in the arms industry.

Readers over 50 will recall protests against the production of ingredients for the defoliant “Agent Orange” which was sprayed in millions of litres across the jungles of South East Asia during the Vietnam war with appalling effects for the local people as well as lasting damage to our own servicemen. These ingredients were produced at the then Ivan Watkins Dow chemical plant in New Plymouth. Like most companies fingered as part of the war machine they dissembled with misleading untruths.

Our latest entrant in the arms race is Auckland based company Rakon which has proudly asserted its intention to dominate the “lucrative and expanded guided munitions and military positioning market” within the next 5 years. Since 1997 the company has been making sophisticated crystal oscillators for the US military which are used in the guidance systems of so-called “smart bombs”. These are bombs which can be guided to their target using GPS technology with Rakon components doing a crucial part of the job.

No morality here. Just pride in a profitable business. They are happy making bullets for other people to fire and apparently have no qualms at the deaths of many thousands of civilians from smart bombs dropped in Kosovo and the 6,500 dropped on Iraq in 2003 alone.

Neither do Rakon’s shareholders have any pangs of conscience. When the New Zealand Herald released the report of their investigation into Rakon’s bomb building technology two weeks ago the share price rose and has continued rising since. Investors who were not aware that the company is at the heart of US plans to bomb its way around the world saw this as a good thing. The demand for smart bombs can only increase. Rakon is onto a winner and the shareholders are loving it. Obviously none of their children have been blasted to fragments by smart bombs in Iraq.

In the face of public questioning the company has tried to muddy the water by saying it has not designed products specifically for military applications and doesn’t necessarily know how they are used. Neither of these statements is credible. Company documents baldly state that “Rakon’s military products include: Mainstream TXCO’s (crystal oscillators) for inclusion in smart bombs…G-hardened crystals for use in smart shells…”. It’s not surprising the company’s eager visitors have included the US Ambassador and high ranking officials of the US Air Force. Rakon relishes the lucrative income from the 21% of their sales which are to military and aerospace customers.

Meanwhile the company is working to develop a crystal oscillator specifically designed to withstand nuclear radiation and operate at the high altitudes associated with nuclear missile strikes. This is a company living in the belly of the war beast.

New Zealand has rules around the export of equipment which has military applications but our government’s reaction has been lukewarm and limp. Helen Clark says she will check to make sure no rules are being broken (if they aren’t being broken then the rules are surely meaningless) but all the signs are the government will turn a blind eye. Rakon won the New Zealand Trade and Enterprise Supreme Award for exports last year and has received almost $600,000 in government subsidies over recent years.

Our community funds have been used to support the illegal invasion and occupation of Iraq.

We cannot can rely on moral decisions being made by businesses or their government minders. Communities can take all kinds of action to avert war and bring a rogue company such as this to account. For a first step I’m writing to Helen Clark. Why don’t you too?