by Metiria Turei
The Government has announced that the minimum wage will go up by 25c an hour, to $13 an hour, on 1 April.
This is not enough. A sole parent working 40 hours a week on $13 an hour will earn just $520 per week before tax – not much to pay rent, feed kids, and pay the power and phone bills with, let alone pay for school trips and warm clothes.
As many of our colleagues in the union movement have pointed out this afternoon, increasing the minimum wage by just 2 percent when inflation is running at 4 percent is actually a backwards step that will widen the growing chasm between the rich and the rest of us.
We have been a proud partner in Unite’s campaign for a $15 an hour minimum wage, and would legislate to introduce this immediately if we were in Government. In fact, we are probably nearly at the point when $15 an hour is no longer sufficient, thanks to inflation. We’d also ensure that there was a built-in mechanism to increase the minimum wage in line with inflation automatically.
Everyone deserves decent work, a living wage, and to be treated with respect. Today’s announcement is a step away from this goal, not towards it.
Published in Economy, Work, & Welfare by Metiria Turei on Mon, February 7th, 2011
Tags: industrial relations, inequality, Minimum wage
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The problem with this Government’s policies is that they don’t even compensate for inflation, so low income workers fall even further behind.
Increasing the minimum wage to $15 an hour would have resulted, for full time workers, in an increased wage bill per week of only $100 a week per worker. That is hardly going to break the bank for any small employer with 2 or 3 workers on the minimum wage. And the big players, like the supermarkets, petrol stations, and fast food outlets, all make huge profits and could easily afford to meet such an increase.
We could also put in place a targeted employment programme to genuinely assist the few struggling, and usually new, small businesses that may be adversely affected by a $15 an hour minimum wage.
But true to form, John Key’s Government announces a minimum wage review that results in a drop in real inflation-adjusted income for low wage workers. Meanwhile, their employers, many of whom are huge international corporate business, rake in the profits.
McDonalds, for example, made a profit of over $34 million on the 30 non-franchised outlets they own (as opposed to the others they franchise) in the year ending 31 December 2009. But the starting wage there is the minimum – $12.75 an hour. Increasing that to $15.00 would hardly make any dent in their profits at all.
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The ones who do that are the ones I described in my comment above: – the supermarkets, petrol stations, and fast food outlets.
We can easily afford to subsidise the small number of small businesses who cannot afford the minimum wage, but why should we subsidise big corporates who just exploit it in the knowledge that people who are unemployed have to accept ant job at any pay rate under threat of losing their benefit..
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Why a mere 2% increase when even CPi inflation is double that and little of the tax cuts went to the low paid. The low level of the increase is only exacerbated by many necessities – such as food, power and fuel rising faster than the CPI.
The comparisons are telling – $15 in Australia (with around 20% higher buying power in their currency on average – but a high NZ$20 at the moment) and apparenlty the current UK rate via pound conversion is $12.50 New Zealand. So that their minimum wage would be a little lower in buying power at the moment (but note, the pound has fallen 33-50% post GFC and prior to this fall the buying power of their minimum wage would have been up to NZ$18).
It’s noteworthy that the PM notes the possibility of some job losses if the miminum wage was $15 an hour, but shows no willingness to factor in job impact on a range of other policy decisions and regard this as an important consideration. Funny that.
Simply put, this government is led by a party that regards workers as a cost on the profitability of capital, one to be minimised by those in service to capital in their management of corporations or government.
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True, but all the Mum and Dad operations I know of (A great many locally) actually pay more than the minimum wage.
It is large businesses, franchises and multi-nationals that pay minimum wage. Which means that most of the profits of minimum wage payers goes offshore. Those businesses are effectively subsidised by Mum and Dad businesses which pay reasonable wages.
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That gives them an effective rate of $18.22 /hr.
And it’s a little misleading of you to count the gst rise in the inflation rate – but ommit the tax decrease.
The tax decrease was effectively a 3.5% increase in take home pay for someone working 40 hrs /wk on the minimum wage (and additional $771 per year). So with the rise in minimum wage, they’ve had a 5.5% total increase in wages, minus 4% inflation.
Effectively they’ve actually slightly better off than they were.
If a 1.5% gain is a backward step, can we have lots of backward steps please.
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Photo. You forgot the rise in the costs of food and other necessities. You know the things people have to buy to live, have risen and will rise a lot more than the CPI.
I know the price of your $6000 dollar flat screen TV has gone down, but solo mums do not buy them contrary to “anecdotal evidence”.
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Kerry says “Photo. You forgot the rise in the costs of food and other necessities.”
That was factored in with inflation.
Kerry says “You know the things people have to buy to live, have risen and will rise a lot more than the CPI.”
Wrong = inflation was 4%, and food price rises for 2010 were 4.2%
Fron Statistics NZ – quote “Food prices rose 4.2 percent in the year to December 2010, which includes the 2.2 percent rise in food prices in October 2010 when the rate of goods and services tax (GST) rose from 12.5 to 15 percent.”
Kerry says “I know the price of your $6000 dollar flat screen TV has gone down, but solo mums do not buy them contrary to “anecdotal evidence”.
Actually in the houses my wife visits for at risk kids, large flat screens and sky is very common.
I was talking to a solo mum I know yesterday. She was complaining about two things – our kids soccer fees going up this year, and her hangover as she’d only got in from clubbing at 7am. She missed the irony.
I’m sure there are heaps of people doing a good job, but everyone (taxpayers and beneficiaries) would be better off if we could educate people to live on $100 less a week rather than spend billions to fork out an extra $20 each.
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Zedd; what you have described is exactly what the Business Round Table want and in past years they have been more upfront about that very agenda.
That’s what I find a bit scary, so congradulations to Metiria for bringing this to the fore.
Also the local labour market has been undermined by the Pacific Regional Employment scheme (RSE); where one farmer is packing 12 workers to a two bedroom flat with no cieling (a shed) no oven in kitchen no TV. and each guest has to pay $100 pw for the privilege. See Red Alert (labour.org.nz).
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Toad, and who works in those sort of places?
Interesting to note the silence on this Blog about the steep rentals paid by people now – must not be all that convenient given that it was predicted when the tax laws were changed in last year that rents were going to increase significantly as a result.
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Auckland Central – $600.00
Auckland North – $450.00
Auckland South – $360.00
Auckland West – $375.00
Wellington Hutt Valley – $375.00
Wellington Central – $500.00
Wellington Porirua City – $340.00
Nelson Central – $360.00
West Coast Westport – $250.00
Christchurch Riccarton – $340.00
Christchurch Central – $440.00
Christchurch Papanui – $330.00
Dunedin Mosgiel – $250.00
Dunedin St Clair – $260.00
Queenstown – $470.00
Invercargill – $225.00
The family tax credit is meant to help with day-to-day living costs, not substitute wages. Here is the correct calculation for $520 before tax:
Family tax credit = $149.00
In-work tax credit = $60.00
Minimum family tax credit = $31.00
Total = $240.00
Income to $14000 taxed at 12.5% Income = $14000.00 Tax = $1750.00
Income over $14000 – $48000 taxed at 21% Income = $13040.00 Tax = $2738.40
Totals Income = $27040.00 Tax = $4488.40 Profit after tax = $22,551.60
Average South Auckland rent $18,720 pa. @ $520 per week before tax, wages left after rental payment = $133.67 (including $60 in work tax credit).
So after working a forty hour week, and looking after two young kids, you’re expected to:
Feed a family of three, clothe everyone, pay your exorbitant bills, service a vehicle (if you can afford one) and pay for travel costs to and from work on $373.67 a week. My frugal calculations put expenses at $844 per week, and that’s without any saving, mobile phone, holidays, alcohol, tobacco, new appliances or Christmas for that matter.
http://www.emigratenz.org/cost-of-living-in-new-zealand.HTML
Deduct another $100 from money that doesn’t exist… WTF!
The reason New Zealander’s don’t save is because we don’t have any money to save.
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Todd – some points
- Your tax rates are wrong. The 12.5% rate dropped to 10.5% and the 20% rate is 17.5%. That’s an extra $5-600 per year.
- I only counted $209 in the WFF benefit. Under your figures that’s up to $240. If you’re correct that’s an additional $1612 per year I missed out on.
- You have benefits for two kids, and expenses for three.
- You are using average rental prices, for people with little money. If I had a below average income, I would live a below average house which would be cheaper.
- many people are solo parents not of their own choice, however part of a compulsory financial education course in schools should be drumming in the difference in how your life will turn out if you have a family with two average incomes compared to just one.
We can live comfortably (family of four for week to week expenses) on your figures for your subsistence family.
Most people could save quite a lot – it’s just that we all blow money on unneccesary things. I’ll be back soon with a list of close on $1 million dollars of savings on a working life.
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Toad says “The ones who do that are the ones I described in my comment above: – the supermarkets, petrol stations, and fast food outlets.”
For the last year I’ve bought my petrol automatically, with no person at the station.
I now buy my groceries at the automatic checkout.
What do you think will happen to the jobs at petrol stations and supermarkets if the minimum wages goes up significantly?
Fast food outlets can’t be far from being more automated. Little more than reheating is needed – it certainly wouldn’t make much difference to the quality.
Put the money in, push buttons for big mac and fries, and out it pops, down the shute.
They’ll soon have machines everywhere.
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sprout – I agree. But we’re becoming more and more automated, meaning there are less and less unskilled jobs.
So the situation of low pay for unskilled jobs is likely to get worse – not better.
The best solution is learning to live on less.
Take Phil Goffs idea to make wages tax free up to $5000. It’s going to put the top tax rate up to 45-50% – and scare off a lot of our most highly skilled people (many go now).
Tax up to $14000 is only 10%, so that means a major change in how competitive we are to skilled workers, to give everyone a bit under $10 a week.
There are so many ways to save huge amounts of money. I’ll put how to save a million next post
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Save about a million over a 40 year working life (many working lives will be closer to 50 years). $1,700,000 for a couple.
$60,000 – petrol – Driving a Falcon instead of a Corolla – $1500/yr
$60,000 – Extra deprciation – having a 5 yr old car instead of 10 yr old – $1500/yr
$104,000 ($208,000 couple) $50 at the pub each week
$28,800 – sky tv $60 / mth
$156,000 ($312,000 couple)- smoking pack a day approx $75 week
$78,000 ($156,000 – couple)- buying lunch instead of making it on weekdays $7.50 day
$41,600 ($83,200 couple) buying coffee on weekdays (no cake) $4 /weekday
$41,600 ($83,200 two dogs) dog food, vet fees, registration $20 per week
$80,000 ($160,000 couple) clothes $3000/year instead of $1000/yr
$41,600 ($83,200 couple) $20 / week pokies or tab.
$104,000 ($208,000 couple) restaurant $100 every fortnight
$9600 ($19,200 couple) movies and popcorn once a month
$104,000 – cutting out junk food and unneccessaries in weekly supermarket shop $50 / week
$52,000 ($104,000 couple) takaways twice a week at $12 ea/meal/person
$41,600 ($83,200 couple) beer or wine $20 per week
+ jewellery, nightclubs, drugs, tvs, appliances, furniture, credit card interest, hairdresser, etc.
Obviously not all apply to everyone. But I know people on pretty low wages and benefits (and better paid) for whom several of the above are applicable.
It’s a nationwide disease. Year after year we spend 16% more than we earn.
And now it’s caught up on us.
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photonz1, you
http://www.ird.govt.nz/how-to/taxrates-codes/itaxsalaryandwage-incometaxrates.html
The difference is minimal considering:
Total percentage change = 4.0%
2009 – 2010 Number of years difference = 1.00
Compound average annual rate = 4.0%
Decline in purchasing power 2009 to 2010 = 3.9%
http://www.rbnz.govt.nz/statistics/0135615.html
“Inflation can be very damaging for a number of reasons. First, people may be left worse off if prices rise faster than their incomes”
http://www.rbnz.govt.nz/monpol/about/0053316.html
Another minimal difference, the amount is calculated on net.
No! I have benefits and expenses for one adult and two children.
A working mother with two children is an average family. Yes! Most people live within their means, they therefore live in undesirable housing and have to travel longer distances to get to work and schools etc.
This is not helpful to the current situation. Please don’t let this debate turn into a vent for your bigotry.
A single example is not indicative of a failing system. Do you pay rent and if so, how much is it?
Even with consideration to a lower rental expense, on average there is still no excess and therefore no savings available.
http://www.guide2.co.nz/money/news/prices-and-spending/consumer-confidence-at-18-month-low/11/20287
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Todd – you’re getting confused. The decline in purchasing power is for the SAME $1. But there has been a rise in minimum wage and a reduction in tax totalling 5.5%.
So a 5.5% increase more than makes up for 4% inflation.
I have no doubt that it’s very hard for some people. Minore changes of a few dollars a week will not make a long term difference. So we need to educate people at school level about life financial skills, and so they realise what life will be like in varuious situations like if they are a solo parent.
Unfortnately there are too many people choosing this as a lifestyle. Our local high school has a creche with a couple of dozen kids while the teenage mums go to school.
If we can get more people making choices so they can support themselves and their families properly, then there might be more money for those who find themselves in that situation when it’s not their fault.
There are vast numbers of people who make awful life decisions. Most businesses are not making a lot of money so higher wages, or more taxation, will only tip more over the edge.
Higher wages come when businesses are making good money. Effectively, they are the engine. And if the engine isn’t running very well, taking away more of it’s power and adding more weight to the vehicle doesn’t make things better – it makes it worse.
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Photonz1
I’m not confused at all:
http://www.rbnz.govt.nz/statistics/0135595.html
I very much doubt that there will be much difference from a decline in purchasing power 2009 – 2010 of 3.9% to 2011 – 2012 other than this percentage going up again.
About the Inflation Calculator
The Inflation Calculator uses price data, mostly from Statistics New Zealand, to calculate the change in purchasing power of an amount of money between two dates, specified by the user. The difference between the input value and the Calculator’s output value represents the effect of the inflation or deflation that has occurred over that time, as measured by the selected index.
The available price deflators are:
* General – uses the “all groups” Consumers Price Index (“CPI”), published by Statistics New Zealand. Estimates for the years between 1862 and 1914 have been included but should not be regarded as being official, or of the same quality as the published CPI.
* Food – Food Price Group from the CPI, Statistics New Zealand.
* Clothing – Clothing and Footwear Group from the CPI, Statistics New Zealand.
* Housing – House Price Index, Quotable Value Limited.
* Wages – Hourly wage in dollars (private sector, ordinary time) from Quarterly Employment Survey, Statistics New Zealand.
* Transport – Transport Group from the CPI, Statistics New Zealand.
@ 12:25 AM:
Somebody would have to be earning a considerable amount to be spending anywhere near that $25,070 + a year you think people can save because they spend this on non essentials. Why have you estimated this?
Stop making up ludicrous arguments to try and justify the unfairness of working a 40 hour week + with nothing but debt to show for it. The rest of your argument is not worth responding to.
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It’s a vicious cycle really. Automation is awesome but losing jobs sucks!
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Raising the minimum wage will only cause the price of goods and services to go up. The real issue that needs to be addressed is the cost of living.
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Are you seeing the hammer THIS topic takes to the argument about welfare?
Here you are arguing essentially – “Raise the minimum and watch automation take over the low end jobs” and there is an element of truth to that one. …but even if the government perfectly matched increases to inflation the automation will cause unemployment. The government does not do that however, as it has incentives to minimize any statements about inflation and has been doing so for decades, just as has been done in the USA (well maybe not THAT badly but the the same principle applies).
http://www.shadowstats.com/alternate_data/inflation-charts
However, that’s a bit of drift….
The question is, given the two arguments, do we not have to work out how to cope with a society that contains people who, with the best will in the world, cannot be gainfully employed the same way as someone who is more fortunate in their genetic and societal endowment?
I don’t know what that society looks like. I just know that the model supporting ours is broken.
respectfully
BJ
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The real killer is the rise in GST to 15%. As the poor and average earner spends all of their income plus some on essentials.
BJ is correct! We’re debating whether a working person can function financially within the current system. My calculations show that they cannot. So such financial dysfunction can only be worse for the unemployed. The fact that they have to chose what essentials to purchase each week is a reality for most.
To argue that there is not a decrease in purchasing power is to argue against the Reserve Bank of New Zealand’s calculations. Any tax break is of little significance when put up against inflation and GST. It is almost not worth even mentioning.
Let’s update those figures then:
Using tax rates from October 2010, on gross annual income of $27,040.00:
10.50% 14,000.00 Tax Component = 1,470.00 Residual = 12,530.00
17.50% 13,040.00 Tax Component = 2,282.00 Residual = 10,758.00
Total 27,040.00 Tax Component = 3,752.00 Residual = 23,288.00
ACC premium: $540.80
After paying tax and ACC, the amount of income from a $27,040.00 annual salary is:
* $22,747.20 per annum
* $1,895.60 per month
* $874.89 per fortnight
* $437.45 per week
Giving an effective tax rate of 15.88%
(i.e. 13.88% + 2.00% ACC)
Student loan deductions:
* $795.60 per annum
* $66.30 per month
* $30.60 per fortnight
* $15.30 per week
Cash in hand:
* $21,951.60 per annum
* $1,829.30 per month
* $844.29 per fortnight
* $422.15 per week
Total deductions as a percentage of income: 18.82%
(Income Tax + ACC + Student Loan)
Frugal cost of living for one adult and two healthy children = $780 per week. I have changed the rental component, they now live in a two bedroom apartment in an undesirable area. There are no non essential expenses.
Based on $22,747.20 per annum:
Family tax credit = $149.00
In-work tax credit = $60.00
Minimum family tax credit = $28.00
Total = $237.00
$422.15 wages + $237 = $659.15 – Shortfall = $120.85 per week
Even without a student loan of $15.30 per week, this is a disgrace!
Your weekly spend: $760 = Required gross annual income: $48,603
Almost twice as much as a solo parent earning minimal wage with two children under the eligible age is receiving.
I’m still wondering why the taxpayer has to meet the shortfall for low wages?
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Very much at the root of this issue is the use of a percentage adjustment to compensate for cost of living increases. This inevitably results in an increasing gap between rich and poor. First we should be looking at what should be the minimum healthy income for the kind of society we would all like to live in. We then compare this to the current minimum wage – the difference being the “Flat Rate” adjustment everybody gets. We could then turn this into percentage adjustments which naturally decrease as salary increases. Is this not fair? Would this not help create a better society? Of course the gap between the have and the have not would remain at current levels, which I think are too large, but thats an issue for a later date.
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http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10704802&ref=newsl_morningnewsdirect_J20080513_133717_5781_6889_875540616
Shonkey Honkey takes credit for Green’s policies:
“Many houses in McGehan Close had benefited from the Government’s home-insulation programme”.
“The Government had a broad approach to help those on low incomes”.
Doesn’t look very broad to me. “Had” being the operative word.
http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10704776&ref=newsl_morningnewsdirect_J20080513_133717_5781_6889_875540616
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To date it’s worked really well, and perhaps is the single most idiotic thing done by any Government anywhere.
No Financial Experts in Dipton aye!
If the Rugby World Cup doesn’t bail out our collective behinds – we can kiss the Great Nation’s ‘free market’ economy goodbye
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Metiria,
Are you saying that the minimum wage should be set to enable a single parent to bring up children? I’m not sure that’s a reasonable argument.
Also, a $15 minimum might have an impact on jobs. My son recently received a raise from $13 (slightly above the minimum wage) to $14 per hour. That’s more than a 7.5% increase. If his employer was forced to increase that raise to 15%, I’m not sure my son would still be in employment.
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Todd – still confused says “To argue that there is not a decrease in purchasing power is to argue against the Reserve Bank of New Zealand’s calculations. Any tax break is of little significance when put up against inflation and GST. It is almost not worth even mentioning.”
The reserve bank says there has been a decrease in spending power for $1.
There has been a decrease in spending power for $1 since we brought in decimal currency.
Luckily the average wage has gone up from $25 per week to compensate.
So the rise in costs of 4% inflation (or a 4% decrease in spending power if you prefer that) has to be countered with the increase in income (2% increase in minimum wage and 3.5% increase in take home pay after the tax cuts.)
So Todd thinks it’s worth mentioning 4% inflation (or reduction in spending power) but says it’s not worth mentioning the greater 5.5% increase in take home pay.
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BJ asks “do we not have to work out how to cope with a society that contains people who, with the best will in the world, cannot be gainfully employed the same way as someone who is more fortunate in their genetic and societal endowment?”
Hence my idea for better financial education. Goffs idea of massive tax hikes to really high top rate of 45%+ will make the first $5000 tax free. It’s only 10% now so that’s $500/yr on $5000 income – a little under $10 extra per week.
Labour has just called the increase in minimum wage absolutely pathetic, yet if gives the same small increase of around $10 per week, just like their grand and highly expensive plan.
Wiser spending at the supermarket will give several times more benefit than that.
We’re never going to have the money to make great changes to benefits or to make a big difference in low pay.
The minimum wage could go up to $15/hr. Prices will go up and people on $15.50 and higher all end up worse off as well. Take home pay on minimum wage will still be under $500/week and prices will be much higher (for everyone), which take away much of the benefit of the increase.
If we can give financial education to everyone, they will
a/ gain many times the weekly benefit than adding $10 or $20 to their income, and
b/ be far less likely in the first place to get into situation where they are on the bottom of the heap.
Like the old proverb, teach a man to fish….
More subsidies, benefits etc, is only an expensive, patch up, and it lasts a week, and you have to do it again.
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Said before, will start firestorm again….
The subsidy for Children needs to be in kind rather than in cash, to the maximum extent possible. Food, clothing, shelter, education, libraries, computers, sports, scouts….
Same subsidy for every child.
No WFF adjustment per-child (as far as possible/reasonable)
No welfare payout per child. (as far as possible/reasonable)
This support has to be a level that makes it possible for even a child of someone who never copped a break in their life, to have the same chance as the child with the proverbial silver spoon. Same support level for every child INCLUDING the silver-spoon kid.
The unemployment benefit has to be based on the individual who is unemployed.
It should not be a penalty exacted of the child, that their parent(s) cannot support them as well as some other parent might.
This is of course, germane to the topic of minimum wage as it greatly extracts the issue of child poverty from the debate about minimum wages and how much is enough.
These topics need in my opinion, to be disentangled .
respectfully
BJ
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People who aren’t able to get into gainful employment in an economy which has even recent university graduates waiting tables, are not going to have anything much to manage. You cannot run this or any society as a pure meritocracy without suffering rebellion from those who have little.
BJ
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Photonz, the fact is that those on the minimum wage are continually learning to live on less as food prices, GST, petrol and the costs of education and health steadily rise faster than their incomes. It is not a choice between a Falcon and a Corolla as you glibly state, for many it is the decision whether to own a car at all!
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Tony says:
So people are meant to stop having kids because they’re poor?
~
What part of a shortfall of $120 per week didn’t you understand photonz1?
I tried to use average financial amounts… We’re talking about minimum wage, just in case you hadn’t noticed. Applying that calculation to the unemployed is rather a moot point.
Do you mean starving your kids so you can “save” for the Government?
I believe the Inflation Calculator is correct. A GST rise of 2.5% leaves you with 3% in tax breaks (is 3% correct?) with inflation at 4% + for 2011. Add in all those other factors… and it appears you’re talking rubbish again photonz1.
It doesn’t matter how smart a person is, if they don’t have enough income to meet expenses, they will never save.
Give a man the ability to buy a fishing rod and travel to the coast to catch fish.
BJ
We have already posed many issues to this that you have not answered satisfacturally. You need to explore how “care in kind instead of cash” will work before it’s a realistic option.
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bjchip says “Doesn’t matter how much education I offer someone about money.
People who aren’t able to get into gainful employment in an economy which has even recent university graduates waiting tables, are not going to have anything much to manage.”
Your attitude is exactly the problem I’m talking about.
People think if they can’t change their income, they can’t change their life.
But EVERYONE has far more control of their spending side of things than they do of their income.
I see people I know at the supermarket, and they’d have three large bottles of coke in their trolly. That’s $10.50 of inneccesary spending.
Even if they bought budget brand, that would be $7 cheaper per week, $364 per yr, $14,560+ per working life.
That’s a $14,560+ saving by doing nothing more than changing to a budget brand on a single low priced product.
Do the same with every product and you save a fortune.
If you don’t have much money, don’t buy unneccesary products.
The junk people buy is astonishing – nearly 90% of the average weekly grocery shop is NOT on fruit and veg.
And you claim it’s not possible to make any difference with financial education if you can’t change the income side of things – with due respect bj, that’s complete nonsense.
The expenditure side of things is where we desperately need more education.
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To prove a point, if 9 people earned $15 an hour and one earned $50 an hour the average income over the ten people would be $18.50. With many working in privileged positions earning well over $100 an hour you can see how statistics can be skewed.
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Where did you get that figure from?
Cheaper food is not good for you. We have a huge health crisis in New Zealand because of our bad diets. Good food costs more and education to buy it is only part of the solution. An unfair tax on good food, which substitutes cheaper food and alcohol, is part of the problem. Giving people the means to afford good food is essential in lessening the cost of health care. In my calculation, I’ve frugally put one parent and two children’s weekly Supermarket purchases at $200. This does not account for any special diets. And still we have a shortfall of $120 in their budget. With rising food costs over and above inflation, this dynamic is only set to get worse.
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You are still missing the point I am trying to make. It is not affected by how much one manages to squeeze if one is in such condition of poverty.
The point is that people who are in that condition are not in that condition because of their somehow “deserving” to be in it.
Given that there is an inequality of abilities, and it makes itself evident in the employability and unemployment of people in an environment where the minimum ability required to work is high and continually increasing.
How does the society manage having people who are producing nothing…
Who through automation have no reasonable form of gainful employment that produces better or cheaper than their robotic competition?
In the extreme picture a completely automated society, needs only one guy on any given day to run it. He/she has to have skills and abilities that only the top 1% of the society possess, to properly supervise the AI that is controlling the production of goods, but even so there would be thousands of candidates for that role.
What do you pay that person?
What does everyone else do?
The assumptions we have of how society values work and the individuals in the society, are increasingly invalid.
That should be a bit clearer… no?
respectfully
BJ
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What planet are you on? MP’s earn an effective salary of $170,000 p.a.
This is 5 1/2 TIMES NZ’s average GDP of $30,000. YOU ARE THE RICH!!!
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Sprout – I agree – median hourly rate is a better way to assess income.
However so few people earn a large wage that it doesn’t skew the average wage a great deal. For instance if you earn just $33/hr you’d be in the top 10% of earners. There’s just not that many people in the top brackets – 97% of people earn less than your example of $50 per hour.
And your claim of “many” people earning over $100/hr is plain wrong. Once your at $72/hr, you’re in the top 1%.
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sprout asks “Photonz, I am sure that wise money management is a useful skill but why should most of our workers have to carefully budget for and worry over every single purchase?”
I thought that would be self explainatory. If you do budget carefully, even on the same income, you can get to a position where you DON’T HAVE TO worry about every single purchase.
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One other issue.. putting a tax free thresh-hold on $5k (as Labour are talking about) Many other countries do this. It gives the lowest paid workers a break.
.. and, If the fat-cats weren’t so fat & greedy.. then the rest could be a bit fatter ? Viva the Revolution !! Kia-ora
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@photonz1 12:17 PM
No, you don’t appear to have any understanding of what life is like for people on low incomes, photonz1. However well you budget, you can’t anticipate a child getting sick and having to go to the doctor, the car breaking down, Uncle Joe dying and having to travel to the funeral or the many other unexpected things that happen in peoples lives. For people on low incomes, no matter how well they budget, just one of these events puts them back to having to worry over every single purchase.
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Todd says “In my calculation, I’ve frugally put one parent and two children’s weekly Supermarket purchases at $200.”
You call it frugal – I call that extravagant. We do that including several bottles of wine, and with TWO adults and two children.
And more fruit and veg than we can eat comes to $20-$25 per week.
Labour is budgeting $250m per year to take ALL tax off fruit and veg – that’s a saving of – wait for it – a little over ONE DOLLAR per person per week – giving a total spend of about $8 per week per person on fruit and veg.
We hear the repeated myth that it’s expensive to eat healthy food – total rubbish. The whole country could increase the amount of fruit and veg we eat by a massive 50%, and it would still only be $12 each per week each.
It’s the other 90% of the shopping bill where the money is wasted.
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It is interesting to note that in our largest and most profitable industries, like fast food and dairy, the wages of most workers are extremely low. Somehow Fonterra’s CEO can get a 40% salary increase (to $5.6 million) while placing a wage freeze on those below him. You say we just need to live on less, why not just share profits with those who do the work.
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toad says “No, you don’t appear to have any understanding of what life is like for people on low incomes, photonz1.”
Actually, when building up my busines I spent five years on NO income. Then several more years on a wage that considering the hours I put in, probably hovered around the minimum wage (but was a good weekly income).
So I’m well aware of what it’s like to struggle on no money for years on end.
And accutely aware of how much money people waste.
When there’s far more to be gained from wiser spending than there ever will be from increased benefits/ minimum wage – it’s sad to see so many people argue against the very thing that would make the biggest improvement to peoples lives.
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“I’ll never forget Norm Kirk’s Election – everyone had a spare $20 in their pocket – made me a millionaire!”
That is the Way to a Vibrant Economy – our current government seems intent on shutting the economy down….
I check in with a friend in Marketing periodically to take the Economic Pulse.
He had this to say about the last Budget;
“The foot brakes were applied, the front wheels locked up, and the Nat’s have just applied the handbrake for good measure”.
Reminds me of an old Ozzie joke;
“How do you start a Kiwi out in small business?
Give ‘em a big one and let them take it from there!”
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“..One other issue.. putting a tax free thresh-hold on $5k (as Labour are talking about) Many other countries do this. It gives the lowest paid workers a break…”
but it is nowhere near enough..zedd…
it is only ten dollars a week…
phil(whoar.co.nz)
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labour still has a long way to go….
phil(whoar.co.nz)
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@zedd 12:23 PM
The Greens’ policy is for a $10K tax free threshold.
@phil u 1:12 PM
It’s $100 a week actually, but agreed still not enough.
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toad says “The Greens’ policy is for a $10K tax free threshold.”
and “It’s $100 a week actually, but agreed still not enough.”
Nonsense.
Current tax rate up to $10,000 is 10% or $1000 per year.
So over 50 weeks that’s a meagre $20 per week.
You could gain many times that in smarter shopping.
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Oops, photonz, I think you and I are talking about different things. In which case philu was right.
But the $20 a week is still a hell of a lot more than those on low and middle incomes got from John Key’s tax cuts.
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Toad says “But the $20 a week is still a hell of a lot more than those on low and middle incomes got from John Key’s tax cuts.”
More nonsense.
I pay some average wages every week, and the tax cut in October added $30 onto a $600/week take home wage. (plus of course there were two previous tax cuts).
And real wages (real spending power taken after tax and inflation) went up nearly 9% in the first two years of National (during a recesion) compared to 3% total for the previous NINE years.
That’s 4.5% increase per year compared to 0.3% increase per year. (15x faster increase per year) See
http://www.scoop.co.nz/stories/PA1008/S00294/after-tax-earnings-up-9-per-cent-since-2008.htm
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Um, photonz1, aren’t you forgetting to offset the GST increase? People on low incomes spend most if not all of what they earn.
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Todd,
“So people are meant to stop having kids because they’re poor?”
You’d make a great politician. How did my question prompt this unrelated question? This is about the minimum wage and I asked Metiria whether she felt that the minimum wage should be high enough to allow a single parent to bring up kids. If you’re answering that it should then please explain why, instead of asking another question unrelated to the minimum wage.
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photonz1,
“And more fruit and veg than we can eat comes to $20-$25 per week.”
Wow! Can I shop at your fruit and veg shop? We grow most/all of our veg during the summer, buying mainly fruit (sometimes a few potatoes), which we eat every week. We’re lucky to spend under $35. When we were also buying a fair bit of veg, we rarely got away with less than $50 per week. And that is for 4 adults.
Of course, it’s possible, if one has a car, to scout around for home fruit and veg sales, but let’s not pretend that such produce is plentiful enough for everyone. $20 for a week’s fruit and veg is definitely not “all you can eat” for most families of four.
I agree, though, that a supermarket shop could cost far less if one is prepared to forego the brand names (and be careful on those larger packs; they are often costlier per unit than the smaller packs – go figure). However, the cheaper items have usually been shipped from half way around the world, so that wrecks the planet. So it can be a tough ask to spend within one’s budget and be green.
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I saw an interesting factoid about US wealth, today. 50% of the population owns just 2.5% of the wealth. 10% owns about 70% and the top 1% owns 30%. If New Zealand is only half as bad, that would skew things considerably. Beware of averages.
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I like tax free thresholds but it does mean that any tax decreases (admittedly, probably not likely for a very long time, now) doesn’t benefit you much if a substantial part of your income is in this tax free bracket.
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“And real wages (real spending power taken after tax and inflation) went up nearly 9% in the first two years of National (during a recesion)”
As I said, beware of averages, photonz1. I very much doubt that most people saw wages rise that quickly.
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toad says “Um, photonz1, aren’t you forgetting to offset the GST increase? People on low incomes spend most if not all of what they earn.”
Gst only went up once – there were three tax cuts, and for many people the cut for gst was far bigger than the gst increase.
People on $600 a week in the hand, got $30 more in the hand.
Even if you spent twice your wage – $1200 per week all on gst items, it would only cost $30 more on the extra 2.5% of gst.
Yet we keep hearing that gst ate up all the tax cuts.
The typical person on $600 / week spends a couple of hundred on non gst items – i.e. mortgage, rent, interest, trademe, privately bought car etc.
So their gst increase is $400 x 2.5% or $10, leaving them $20 better off.
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Photonz1
So you buy more fruit and vegetables than you can eat for $5 per person per week… really? Well you must be shopping in an area that the rest of us don’t know about. We spend $50 to $60 on fruit and vegetables per week and we’re not extravagant. Our total food bill comes to $250. This does not include household cleaning items etc. We eat well but spend frugally. I supplement with what I can grow and catch. Unless I want to save large amounts of energy by doing nothing (how is that good for the economy), there is no way to limit my consumption and thus expenditure further.
So now it’s not $5 per week, it’s $12? Make up your mind if you can.
Yes! People could eat more fruit and vegetables and less McDonalds and KFC. But they don’t. This is because the current system brainwashes people into believing that crap food is good and good food is taxed in various ways making it less financially desirable. Processed food damages your taste buds so real food does not taste very good. Many people have also forgotten how to cook.
Now you think a family of three wastes 90% of their shopping money? Lets add that up then; 90% of $200 is $180. Can three people really survive on $20 per week? I’m starting to think there is no point in debating your ludicrous reasoning photonz1.
Back when you were building up your business photonz1, you could survive on a minimum wage. This appears to no longer be the case.
So where are the massive savings to be made in our test case when the frugal expenditure is already $120 above income. Making such cuts as you suggest, to food purchases would effectively mean they starve on $80 per week. They could not afford to buy toilet paper, so blame your own ethos concerning fundamental shortages for that mess.
They have very limited to no control of other factors of expenditure. Moving into a cheaper house and buying cheap food that has been shown to be unhealthy are not solutions; they just create an underclass that is disaffected and more likely to undertake all those social ills you like to tell us about all the time to try and stigmatize the victims within this dynamic.
Only 20 hours ECE is funded so where does the expense of a further 20 hours come from if those two kids are under 5 and there’s nobody else to look after them? Factor that into the calculation and we have a serious shortfall indeed.
The mother can only work 20 hours a week… Shall we recalculate?
You might consider $20 per week to not be very much, but for people who are struggling, it can be the difference between keeping a roof over their head and being homeless. In fact you seem to have contradicted yourself there again. It seems that the best we can achieve with tax breaks that do not keep up with inflation is a slight delay to our crumbling society going into free fall.
What a load of crap. Here is the Inflation calculator again… The decline in purchasing power is 3.9% for 2010. I would prefer to trust the actual website than an article full of propaganda. There was a decline in purchasing power for the first quarter of 2008 of 1.6%. The Reserve Bank of New Zealand has accurately factored in all variables.
http://www.rbnz.govt.nz/statistics/0135595.html
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Photo. Wages for skilled tradespeople have dropped 40% against the CPI since 1980 while wages for politicians and administrative clerks (Managers) have risen many times. That is why all the skilled people in my trade below 50 are now working in Australia, Bahrain, Singapore and third world countries where the pay is better.
You can see for yourself, if you dare to do the sums, why average wages have gone up. Pushed by large increases in administrative positions in Wellington.
Your inflation figures are garbage because the CPI is fiddled to be biased towards luxury items. It has been gerrymandered for years to hide real price inflation for the ordinary wage earner.
Living on no or low income for several years, as we did to, is a lot easier if you have capital and credibility with the bank to fall back on and the prospect of a good income either as the business builds up or a return to your former job if it fails. Try it from a base of no house, no possessions and no family with money to help.
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Tony
I’m not sure if I should take that as an insult or compliment.
The question is in relation to yours because disabling the poor from having children is a mechanism available under the current financial construct. The humanitarian answer is that financial restrictions should not disallow people from procreation, being that it is our inbuilt requirement. Whether equilibrium is achieved through raising the minimum wage, capping rises in food prices, reducing tax for the poor and ensuring that mechanisms are in place to safeguard against impoverished deprivation is a question not related to the fundamental problem you pose. Therefore the answer must be that restrictions on raising children (within limits*) should not be imposed through increases in taxation and inflation.
* In light of overpopulation, perhaps limits to New Zealands population should be set in the future. I’m unsure how this would work. They should not be set through an unfair financial mechanism that is unhealthy for societies development and structure. I believe this is a consequence and not a development reason for the current restrictive regime as it currently adversely affects our infrastructure.
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Tony says “$20 for a week’s fruit and veg is definitely not “all you can eat” for most families of four.”
Our kids are still at primary school, so eat much less than adults, and we don’t buy expensive stuff out of season.
Cambell Live did a story on the price of fruit and veg a month or two ago. I get the inkling it started out as a story on removing gst on expensive fruit and veg.
They did five fruit and veg a day, in the required amounts, for a family of four, and bought it at an expensive inner city supermarket. It cost from memory about $38 – less than $10 per person.
At a cheaper supermarket it cost just over $30, or about $8 per person.
They were really surprised about what a small cost fresh fruit and veg is compared to what people spend on their weekly groceries.
Tony – even your expensive scenario of $50 for four adults – is a measly $12.50 per person per week – that’s peanuts.
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Decline in purchasing power for 2009 = 1.9%
Decline in purchasing power for 2010 = 3.9%
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Todd – you still don’t understand the concept of purchasing power.
It is NOT measured against what people earn.
It is measured against the dollar – i.e. against what they USED to earn.
Simply put, decline in purchasing power is inflation (notice that the numbers are the same as the inflation figures).
So you keep repeating ONE SIDE of the ledger only. To work out if we are better off or not you have to factor in that tax has been cut, and wages have risen.
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About the Inflation Calculator – The available price deflators are:
* Uses the “all groups” Consumers Price Index (“CPI”), published by Statistics New Zealand.
* Food – Food Price Group from the CPI, Statistics New Zealand.
* Clothing – Clothing and Footwear Group from the CPI, Statistics New Zealand.
* Housing – House Price Index, Quotable Value Limited.
* Wages (including tax) – Hourly wage in dollars (private sector, ordinary time) from Quarterly Employment Survey, Statistics New Zealand.
* Transport – Transport Group from the CPI, Statistics New Zealand.
Are you retarded photonz1?
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Kerry says “Wages for skilled tradespeople have dropped 40% against the CPI since 1980″
Do you have any links to back these claims up?
Kerry says ” the CPI is fiddled to be biased towards luxury items..”
Rubbish. Have you actually bothered to have a look at what they measure?
And if it was so skewed, how do you explain how the food price index is virtually identical the the CPI? (at 4% for last year)
Kerry says “Try it from a base of no house, no possessions and no family with money to help.”
We did. Which is why it took us a long time to get the business up and running as we had no outside help, no assets and no finance available from the bank etc.
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Try doing that today. Go on, if you believe so much in the system, give it all away and start again photonz1.
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Over a trillion dollars has been printed which through the fractional reserve system magically converts into 40 trillion in credit (debt). We should simply print some money to pay back the money they printed to lend to us.
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Todd – the inflation calculator is pretty simple.
It works on a set dollar figure (not on adjusted wages), and works out inflation (decrease in purchasing power) for the SAME DOLLAR FIGURE over whatever period you want.
In case you missed that, tt works out inflation for the SAME DOLLAR FIGURE.
So there has been a massive drop in purchasing power for $1 over the last century. It would now cost $153 to buy a basket of goods that cost just $1 a hundred years ago.
It’s obvious that this drop in purchasing power makes NO adjustment for annual increase in wages, or for tax cuts.
So repeating one side of the equation over and over is completely pointless, unless you also factor in the huge change in wage rises (and tax cuts) over the same period.
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Todd says “Try doing that today. Go on, if you believe so much in the system, give it all away and start again photonz1″
Why would I want to do that after I’ve worked hard for so long.
That’s nuts.
There are actually LESS families with low incomes now in NZ than at any time in the past 20 years – see
http://www.socialreport.msd.govt.nz/economic-standard-living/population-low-incomes.html
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Todd says “Therefore the answer must be that restrictions on raising children (within limits*) should not be imposed through increases in taxation and inflation.”
Stunning – in the real working world almost everyone restrict their number of children to the amount they can afford.
But Todd thinks those financial limitations that apply to everyone else shouldn’t apply to the poor.
With this attitude it’s no wonder we have regions where the poorest 20% have half of all the newborn babies.
We’re breeding our way to greater poverty and disfunction.
And the Greens want to to move more children out of poverty – how?
By making it easier for poor poeple to have more children?
That’s going to work – yeah right.
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But there are still families on low incomes that fall through the cracks in the system. Wage increases not keeping up with inflation is a huge crevice, a divide that creates social disharmony and untold misery.
The question remains; if you believe that the system is so capable and all blame is on people who are effected, as a social experiment, quit your job, give all your things away to the Salvation army and start again. I want to see some conviction to your belief… not just empty words.
Who was that politician who thought she could survive on a benefit again?
If you cannot answer my question about your misunderstanding concerning available price deflators on the inflation calculator, I must conclude that you are in fact a retard, with a few straws.
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“Given that there is an inequality of abilities, and it makes itself evident in the employability and unemployment of people in an environment where the minimum ability required to work is high and continually increasing.”
Sadly, as I have found out in the last 3 years, ability doesn’t have much to do with employability…
In my recent experience, age has a lot more to do with it.
Vicky
Oh and PhotoNZ, it’s “fewer New Zealanders” etc, not less…
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Todd says “The question remains; if you believe that the system is so capable and all blame is on people who are effected, as a social experiment, quit your job, give all your things away to the Salvation army and start again”
Why do you keep making incredible stupid suggestions?
Todd says “I must conclude that you are in fact a retard”
Clearly you don’t understand that the inflation calculator works on a set dollar value and does not work on how much people earn.
Just because someone earned a dollar a week in 1910 doesan’t mean they still earn a dollar a week in 2010
If you look at the drop down list, you’ll see that wage inflation is available as a separate calculator. It is not part of the CPI calculation, as that is based on the dollar – not wages (the very SAME dollar – no matter what years you choose)
Vicky says “Oh and PhotoNZ, it’s “fewer New Zealanders” etc, not less…
”
whatever….
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“By making it easier for poor people to have more children?”.
Greens should be restricting the ability of the richest people to have children as they are going to use many more times the resources and cause many times more environmental degradation than poor people.
As for your eugenics idea that children of the well of are the most intelligent. The European aristocracy put that myth to rest. Needing a frequent injection of housemaids or newly rich American blood to save them from buffoonery. The scions of many of the richest in NZ prove my point. My Grandmother was a solo mum on a widows benefit.
I am qualified in three trades. All 3 have had at least a 40% drop against the CPI since the 80′s. Other trades have had similar drops. Immigration is used deliberately to prevent pay from going to where it should be, and so employers do not have to pay for training..
These are the people who can actually do and make things that NZ will need in the future.
Our grocery bill has gone up 40% in two years, and many times the increases in wages since the 80′s.. We buy a lot of fruit and veges and almost everything on special in bulk. Something not available to beneficiaries as the do not have enough spare cash to buy in advance.
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photonz1
Here is one of the price deflators: Wages – Hourly wage in dollars (private sector, ordinary time) from Quarterly Employment Survey, Statistics New Zealand. Do you understand that?
Inflation calculator – Pull down menu 2010:
Food
Total percentage change 4.6%
Number of years difference 1.00
Compound average annual rate 4.6%
Decline in purchasing power 4.4%
Clothing
Total percentage change -1.3%
Number of years difference 1.00
Compound average annual rate -1.3%
Increase in purchasing power 1.3%
Housing
Total percentage change -1.6%
Number of years difference 0.75
Compound average annual rate -2.1%
Increase in purchasing power 1.6%
Wages
Total percentage change 1.2%
Number of years difference 0.75
Compound average annual rate 1.5%
Decline in purchasing power 1.1%
Transport
Total percentage change 2.2%
Number of years difference 0.75
Compound average annual rate 3.0%
Decline in purchasing power 2.2%
General – uses the “all groups” Consumers Price Index (“CPI”)…
Decline in purchasing power includes wages and is 3.9% for 2010. Get used to the facts!
Wow photonz1, is that your smoking gun? At least the poor can look good as they starve huh!
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“It’s difficult to soar with the eagles, when you’re scratching with the turkeys!”
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Phil Toms
Perhaps we should just tell the bean counters where to get off like Fidel Castro did.
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Kerry says “I am qualified in three trades. All 3 have had at least a 40% drop against the CPI since the 80’s.”
Are you sure that’s not 140%?
Because I asked you to back that up with some facts, and all yuu’ve done is repeated hollow words that mean nothing at all if you can’t prove it.
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photonz1,
“even your expensive scenario of $50 for four adults – is a measly $12.50 per person per week – that’s peanuts”
Maybe, maybe not but why did you attempt to underestimate the true costs, to $5 per person? That kind of thing weakens your argument because it’s clear to everyone who shops for fresh food what the real prices are.
By the way, we also don’t buy fruit and veg out of season. Nor do we buy fruit and veg from abroad (with only one or two reasoned exceptions, occasionally).
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Todd clearly you still haven’t got your head around it.
The CPI figures are against dollars – not wages.
The wages figures are if you are PAYING wages – you purchse less hours than you used to.
You don’t even comperehend the basic indexes.
I’ve been patient, I’ve explained it several times, but you’re no closer to understanding how the indexes work. Your arguements are pointless.
Just like when you tried to claim early childlhood education had plummeted by comparing 3 and 4 year olds in ECE in 1990 with 3 and 4 year olds AND newborn babies in ECE now.
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Do you want the pay slips, Photo?
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Tony asks “Maybe, maybe not but why did you attempt to underestimate the true costs, to $5 per person?”
Because 5-6$ ARE our true cost for two adults and two small children.
I made it perfectly clear the NZ average is $8 per person per week.
That’s easy to work out
a/ because it matches Campbell Lives five portions a day costs, and
b/ it matches than huge savings on GST if Labour removes GST on fruit and veg ($1.20 per person per week, x52 weeks,x4m people = $250m that Labour says this policy will cost. (and $1.20 is the GST on $8 of veg and fruit).
So….we spend $5-$6 per person, average for all of NZ is just $8 per person, and extravagant old Tony spends a whopping $12 on fruit and veg each week.
You’d better take out a mortgage to pay for that.
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photonz1,
“in the real working world almost everyone restrict their number of children to the amount they can afford.”
That’s not this real world, which is a problem. People appear to have children regardless of whether they can bring them up healthily without outside assistance, or not. In some societies, they just expect others to pick up the bill.
So, Todd,
“They should not be set through an unfair financial mechanism that is unhealthy for societies development and structure.”
How should it be set?
Should the minimum wage be calculated based on what a single parent requires, financially, to raise one child, two children? If so, that would mean it is too high for a single youngster living at home. So how can that discrepancy be resolved?
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Photo. What about your claim you started a business with nothing. Where is your evidence? No tax payer funded support at all. No education for you or your employees. No roads to get your product to customers, No minimum wage so customers can buy your products. I could go on…
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Kerry says “Our grocery bill has gone up 40% in two years,”
We’ve (easily) reduced ours by a bit more than that percentage.
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Kerry rant “Photo. What about your claim you started a business with nothing. Where is your evidence? No tax payer funded support at all. No education for you or your employees. No roads to get your product to customers, No minimum wage so customers can buy your products. I could go on”
What is the point of this rant?
I had no taxpayer benefits, didn’t employ anyone.
Are you deperately trying to infer that because roads exist in this country, then that was a subsidy to my business?
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phil toms,
“After once being 4th in the OECD we are now bankrupt because of globalisation”
Don’t worry, most OECD countries are bankrupt; they just won’t admit it yet.
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Bollocks. Not if you are still buying the same things.
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Kerry asks “Do you want the pay slips, Photo?”
No – I want some proper independent evidence that wages for trades have gone down 40%.
-or are you talking about a niche market which depends completely on discretionary spending in the middle of the worst recession since 1930 – (i.e. building boats for people who used to have lots of money but don’t now).
If so, that bears little reseblance to what’s happening with trades – I’ve never ever had to pay more per hour for tradesmen than I do now.
My family (who employ a couple of different types of trade in their businesses) have never had to pay more, or charge more, than they do now.
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Kerry – if you food bill has gone up 40% in two years then you are really screwing up badly.
You badly need some of the financial education I was talking about.
According to the food inflation index – see http://www.rbnz.govt.nz/statistics/0135595.html
Food went up 6% in two years from the end of 2008 to the end of 2010. (3%/yr)
You just spout rubbish and pie-in-the-sky figures off the top of your head, and you can never back it up with facts.
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photonz1,
“average for all of NZ is just $8 per person, and extravagant old Tony spends a whopping $12 on fruit and veg each week”
No, not extravagant, though I am old, compared to you young entrepreneurial whippersnapper. We buy as much as we eat each week and none of us could remotely be described as fat or even overweight. We buy local whenever we can, which may increase our immediate costs to help reduce our footprint. Cambell Live may well have it right at about $30 for a family like yours buying cheap imported food but it is still not $20.
I’ve noticed prices increase, even if you haven’t. But this is getting away from the point. I can see that a family of four, like yours, could eat reasonably healthily for around $200 per week, if they are careful and don’t mind cheap imports. I was just making the point that your fresh fruit and veg costs are atypical.
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Where is your evidence Photo. Tradesman’s rates have just gone down from a blip a couple of years ago so I don’t know where you get highest now from. As I was employing tradesmen and contracting I have a good idea of pay rates.
No. I am not qualified in boat building. I ran a boat building firm.
My pay slips are very good evidence of what has happened in the trades.
They are in the preferred category for immigrant’s so are still very much in demand.
I expect your trade as a spin doctor (if you are a real person) for NACT is extremely profitable, but not one which will be in much demand when the economy collapses.
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Photo. You asked for stats a few days ago and I gave you a whole lot, but because they did not agree with your mythology you ignored them.
Now giving you more facts, but you continue with the BS. Everyone can tell you their grocery bills have gone up by much more than the CPI. Except for yours it seems.
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Tony
Read my post again, I’ve already stated that I don’t know.
Photonz1
What is there to get? Decline in purchasing power for 2010 = 3.9% end of story.
You claimed that the average was 94% for ECE attendence. You did not define the ages you were talking about photonz1. Stop being childish!
I’m not going to rely on your unfounded information again.
http://www.stats.govt.nz/browse_for_stats/economic_indicators/CPI_inflation/ConsumersPriceIndex_HOTPDec10qtr.aspx
In the December 2010 quarter compared with the September 2010 quarter:
* The consumers price index (CPI) rose 2.3 percent, influenced by a rise in goods and services tax (GST) from 12.5 percent to 15 percent on 1 October 2010.
* This is the largest quarterly increase since a 3.5 percent rise in the September 1989 quarter, when GST rose from 10 percent to 12.5 percent on 1 July 1989.
* Transport prices rose 4.3 percent, reflecting higher prices for petrol and international air transport.
* Food prices rose 2.1 percent, with higher grocery food prices the key contributor.
* Housing and household utility prices rose 1.6 percent, with higher prices for the purchase of new housing and property maintenance services.
* Recreation and culture prices rose 2.9 percent, influenced by higher prices for package holidays.
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I must concur with Kerry in that you dismiss without proper reasoning any valid information you do not like. Perhaps your intent is to render any debate pointless through your misinformation?
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Todd,
I’m afraid I have to agree with photonz1, with regard to the inflation calculator. In the first link you gave, it says, “These provide an estimate of the inflationary effect of a price change applicable to a particular type of good, service or business cost.” That is, it is only looking at the impact of inflation on some business cost (e.g. wages) or living cost (e.g. food prices). So the calculator shows how much a business has to pay now, to pay the equivalent of a dollar a year ago, or how much a dollar of food costs now, compared with a year ago.
In terms of the decline in purchasing power of the dollar, it’s referring to what a dollar could buy now compared with some earlier time. So a 3.9% decline just means that each dollar you have now will buy 3.9% less (on average) than it did a year ago, due to the 4% inflation figure. However, if (admittedly a big IF) your wages (or, more pertinently, take home pay) increased enough to compensate, then your individual purchasing power wouldn’t have decreased at all.
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Wow! Thanks for the explanation.
What kind of general CPI calculator wouldn’t factor in general wage increases/decreases?
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Tony says ” I was just making the point that your fresh fruit and veg costs are atypical.”
We spend $5-$6 per person per week for two adult and two small children. The average for all of NZ is $8. So considering we have tow small children, our spending it on fresh fruit and veg is pretty normal – far from atypical.
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kerry says “Where is your evidence Photo”
My evidence – youa re the one who makes extreme claims and can’t back them up.
40% lower pay for tradesmen – what a laugh. Every tradesman I’ve employed recently has cost a fortune – more than ever before.
And you reckon they get paid 40% less – yeah right
All I asked is to show us the evidence that trades are paid 40% less than they used to be. And obviously you can’t
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Kerry says “Everyone can tell you their grocery bills have gone up by much more than the CPI.”
But the food index and the CPI have gone up by the same amount. So everybody can tell me that (actually no one has except you), but most don’t know what the CPI is.
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I didn’t see the Campbell Live programme but doubt it was a full scientific survey. However, I thought you were saying that it was trying to show costs for a family of four with young children. Sorry for misinterpreting. In that case, good on you but it’s not what we pay in this locality, and we’re in the middle of a vegetable growing area. I would think $10 per person would be far more typical, for a good selection and helping of fresh fruit and vegetables. I guess we’ll have to agree to differ.
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Tony
I just had a look through my links, could you show me where it states:
“These provide an estimate of the inflationary effect of a price change applicable to a particular type of good, service or business cost”?
~
Ah! Everybody I know has had to spend more at the grocers. Perhaps not on planet photonz1 though huh!
I find this quibbling rather boring. The facts are that wages have not kept up with inflation. Raising Minimum wage by 25c to $13 is a joke! The capitalists are trying to screw us out of every single dollar that they can.
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For gods sake Todd you’re thick.
Todd says “What is there to get? Decline in purchasing power for 2010 = 3.9% end of story.”
No – decline in purchasing power is measured against $1 – NOT against the higher income people get due to pay rises and tax cuts.
Todd asks “What kind of general CPI calculator wouldn’t factor in general wage increases/decreases?”
The type that measures consumer prices against an index(the CP and I bit out of CPI). It is a measurement of consumer prices against DOLLARS.
Its NOT measured against how much people earn.
So prices have gone up 4%. Tax cuts and an increase in the minimum wage mean a total 5.5% rise in take home pay for 40 hrs on the minimum wage.
Hence those on the minimum wage are 1.5% BETTER off than one year ago (AFTER taking factoring price rises).
So as the CPI suggests, it measures Consumer Prices – not wages
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Is nobody going to answer my question?
What kind of general CPI calculator wouldn’t factor in general wage increases/decreases?…
Thanks photonz1 for your lovely answer.
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“What kind of general CPI calculator wouldn’t factor in general wage increases/decreases?”
My guess would be, all of them, Todd. After all, the CPI is a measure of consumer prices, so wouldn’t take into account wages, at all, at least not directly (wages, as a business cost, indirectly affects the CPI, though, as it affects the price businesses charge for goods and services). The calculator attempts to show how business and consumer costs might be affected by the CPI, over a period of time, that’s all. I don’t know what the calculation is behind each element on the calculator, since that information is not given, so I don’t know why the calculator suggests that it will cost a business $1.02 in wages that cost it $1 in 2009.
The quote I gave is in the second bullet point of the page that explains the calculator (I think you linked to it earlier).
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Todd says “The facts are that wages have not kept up with inflation. Raising Minimum wage by 25c to $13 is a joke!”
Wrong. Again.
The a 25c rise in the minimum wage is a 2% rise, added to the 3.5% rise from the tax cuts, totals a 5.5% rise in take home pay.
Inflation is just 4%.
So those on the minimum wage are BETTER off than they were.
Just because you repeat an incorrect mantra over and over doesn’t change the fact that it (and what you beliveve) is incorrect.
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Food Q4 2008 to Q4 2010
Total percentage change 6.1%
Number of years difference 2.00
Compound average annual rate 3.0%
Decline in purchasing power 5.7%
The inflation calculator is an averaging calculator, there may be areas where food prices have risen greatly and even some where it has fallen. Specific goods have also risen greatly. Calling somebody a liar when you’re not aware of the facts is not very respectful.
Food prices rose a whopping 2.7 percent in August 2008 – the largest monthly increase since a 3.8 percent rise in July 1989 when the rate of GST increased from 10.0 to 12.5 percent. Within the last 30 years, the largest monthly increase was 10.0 percent in October 1986 when GST was introduced, followed by 5.9 percent in April 1979.
The most significant increases came from higher prices for lettuce (up 33.6 percent), tomatoes (up 42.8 percent), cakes and biscuits (up 8.0 percent), fresh milk (up 4.4 percent), and lamb chops (up 18.2 percent).
http://www.menucoster.co.nz/public/news/largest-food-price-increase-since-1989
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Tony says ” I don’t know what the calculation is behind each element on the calculator, since that information is not given”
Tony – I don’t know the exact items used, but I have a link to the weightings used for the CPI. I think they go to a huge effort to track as closely as possible what the average person spends.
And far from what Kerry claims, it is not skewed to lucury items like flat screen tvs. In fact every type of household appliance totalled together make up just 1% of the index.
See
http://www2.stats.govt.nz/domino/external/omni/omni.nsf/outputs/Consumers+Price+Index
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Thanks Tony
I find it interesting that photonz1 has only just admitted his lack of knowledge concerning what calculations are undertaken in the CPI field. Calling me stupid because I ask a question to find out other peoples understanding of the process, is rather naive. I had previously searched for the information required including viewing source code.
Talking to yourself again? Where is GST in that calculation photonz1?
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Todd – do you realise you are quoting annualised figures.
So if food went up a massive 2.7% per annum for the month, it really only went up 2.7% divided by 12 months or 0.225%. (i.e. less than 1/4 of one percent)
It often goes up and down seasonally.
For example, for December 2010 fruit and vegetables went DOWN 4%
And for November they went DOWN 5.7%
- see December
http://www.stats.govt.nz/browse_for_stats/economic_indicators/prices_indexes/FoodPriceIndex_HOTPDec10.aspx
and November
http://www.stats.govt.nz/browse_for_stats/economic_indicators/prices_indexes/FoodPriceIndex_HOTPNov10.aspx
The important thing is not how much prices go up by, but if income keeps up with inflation.
And recently income has increase by MORE than inflation so we are better off. In fact wages have increase by more over 25% MORE than inflation since 1990.
Wages increased 15% more than inflation from 1990 to 1999
Wages increased 3% more than inflation from 19990 to 2008
Wages increased 9% more than inflation from 2008 to 2010.
See http://www.scoop.co.nz/stories/PA1008/S00294/after-tax-earnings-up-9-per-cent-since-2008.htm
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Todd asks “Where is GST in that calculation photonz1?”
The gst rise is included in the CPI inflation of 4%.
So effectively last year we had base inflation of 1.5% and a gst rise of 2.5% to give a total inflation of 4%.
(the gst rise impact was actually slightly less than 2.5% because it is not added to all good and services (i,e mortgages, interest, rent, some postage and airfares etc,)
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photonz1,
“I don’t know the exact items used, but I have a link to the weightings used for the CPI. I think they go to a huge effort to track as closely as possible what the average person spends.”
Yeah, it seems to be a reasonably good job, though I worry about one aspect: “Quality assessments are done to put a monetary value on the change in value as perceived by the consumer between the old and new item. Prices are then adjusted so that no price change is shown that is related to the change in quality.”
In a linked document (which I’ve only scanned) it talks about hedonic adjustments. If this is done in a similar manner to the way the CPI is adjusted in the US, then it can skew the figures somewhat (in the US, a similar adjustment is done in the GDP calculation, thus doubling the discrepancy). Basically (assuming I understand it correctly), if an identical product is no longer offered, some assessment is made of the value of any change in specification or quality and a price adjustment is made (reducing the price if the “quality” is improved). So, even though it may be impossible to buy the original product any more, the calculation merely tries to determine what you would have paid for that original product if it had been available. I think that kind of adjustment is nonsense, since it doesn’t reflect what a consumer actually pays.
Otherwise, I think it’s a better guide to prices than many countries provide.
Does anyone know if the quality adjustments are documented anywhere?
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Tony – I think the issue is products constantly change and evolve. And it’s matter of adjusting for an equivalent basket of goods as they priced ten, twenty, and thirty years ago.
For example, how do they compare inflation on the price of an internet connection between now and 1970? Or cellphones?
It’s inevitable that they have to change products, and make adjustments.
I think with such a wide range of products (all home appliances make up just 1% of the index) then any adjustment of a single product will not make much of an impact on the overall index
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Just go here please.
http://www.rbnz.govt.nz/statistics/0135595.html
You can use this calculator (for any year/years between 1970 and 2010 – including quarterly) to determine the difference between wage movements and price movements (and in a sub-group of categories – unfortunately there is none for power).
An example – between 1990 and 2010 wage increases averaged 3% per year, but housing cost went up 5.8% a year, while food went up only 2.3% per year – though they may have measured only ready to eat and restaurant food not all food).
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Photonz, for goodness sake, how can you possibly defend the growing concentration of wealth in a few and the ongoing intrenchment of poverty. I know people who have had their hours cut and their pay frozen or reduced. Good, hard working people who have had to sell their homes just to keep their heads above water. People unable to work and support their families as they could because ACC refuses to pay for an operation that was approved earlier but a review has forced them onto a sickness benefit and a waiting list. People who work more than one low paid job to support their families and find their children misbehaving because they’re never around to guide and support them. People who have chosen not to work full time because they are supporting an ill or disabled family member and struggle on tight budgets and little support. People who are forced to rent damp, substandard houses because they can’t afford anything else and their children become sick. While there are some that squander their frugal wages, there are many more who just suffer despite their best efforts to get a head.
I’d like you to look these people in the eye and tell them :
“Effectively they’ve actually slightly better off than they were.”
“…but everyone (taxpayers and beneficiaries) would be better off if we could educate people to live on $100 less a week rather than spend billions to fork out an extra $20 each.”
“Most people could save quite a lot – it’s just that we all blow money on unneccesary things”
“The best solution is learning to live on less.”
“Hence those on the minimum wage are 1.5% BETTER off than one year ago (AFTER taking factoring price rises).”
Photonz, your empathy and compassion knows no bounds.
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Gosh that photonz1 is well informed, isn’t he!
Well researched and well rehearsed.
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I don’t think the issue of sufficient wages can be discussed without reference to the need for most couples to have two incomes (particularly to afford a home as a base to a secure retirement).
Thus it is important to promote the concept of a social wage/dole access for a non working partner. This being work tested as for others, but also without work-test as per the DPB when the children are young.
I first promoted this idea to the Minister of Womens Affairs (Laila Harre) in the first term of the last Labour government (WFF is of course a targeted form of this and includes a couple on 2 low incomes and is assessed based on the number of children etc). But the topic was first raised within the context of introducing parental leave and where to go from there (there are many more good things yet to do).
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sprout says “… how can you possibly defend the growing concentration of wealth in a few and the ongoing intrenchment of poverty..”
I looked for the figures to show this, and what I came across were statistics that said the opposite. That the difference between the richest 20% and the poorest 2o% is getting smaller. In fact the gap is the lowest it’s been in nealry 20 years since 1982 – see
http://www.socialreport.msd.govt.nz/economic-standard-living/income-inequality.html
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greenfly says “Gosh that photonz1 is well informed, isn’t he!”
I’m simply dispelling all the uninformed rubbish that’s repeated over and over here, like a mantra.
Like wages haven’t kept pace with inflation (wages are up 27% MORE than inflation since 1990).
Or food prices have gone up horrifically far more than the CPI (they’ve actually been coming down the last couple of months)
Or that the CPI index measures against income.
Or that wages for tradespeople have dropped 40% against inflation since 1980.
Effectively there are a whole group of regulars on this site who parrot utter nonsense as long as it fits their ideology – they never bother to actually find out what the truth is.
They’d rather spout bullsh!t than know the truth if it doesn’t fit their argument.
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photonz – Of course the gap has been getting smaller. We had 9 years of a Labour government. However the gap did peak half way through in 2004, before the rise in the minimum wage and WFF which reduced it, as the 2007-2009 figures showed.
The 2009 figures showed the lowest gap since 1992 (not 1982). However most of the increase in the gap occurred before 1992 (with the rise in unemployment and the cut in benefit rates etc). We rated very well pre 1984.
From your link.
“Comparisons with other OECD countries are available using a different measure, the Gini coefficient.66 Gini coefficients measure income inequality, with a score of 100 indicating perfect inequality and a score of 0 indicating perfect equality.
The most recent OECD comparison (from 2004) gives New Zealand a score of 34, indicating higher inequality than the OECD median of 31 and a ranking of 23rd equal out of 30 countries. New Zealand’s Gini score was below that of the United States (38), very close to those of the United Kingdom (34) and Ireland (33), a little above those of Canada and Japan (32), and a little further above that of Australia (30). Denmark and Sweden had the lowest income inequality with Gini scores of 23.67 In 2007 and 2009, the Gini score for New Zealand was slightly lower, at 33.”
Unfotunately the 2010 tax cuts will reverse the gains made and increase the gap between rich and poor (more so if costs such as child care were factored in).
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Photonz, SPC only if you use the broken measurement that is being touted there.
Should be using Gini, not playing games with quintiles. SPC has the right of it to look at Gini.
The top 20% pulls in too many people and distorts the picture. It would be more informative to look at the top 5% and the bottom 95%, Casting the net on the quintile brings in a large segment of population who haven’t done all that well (in the middle/upper-middle class here), to dilute the wealth effects. One could call it purposely disingenuous given that it pulls in people all the way down to about 50K/year… I would expect to find that the use of the 80-20 measure was first promoted by someone in a right-wing think tank, paid by the wealthy to obfuscate, as the more sensitive methods or focus on the top 5% or 1%, give a much different answer.
The GINI remains at 34 or so, still rising, and that is quite high compared with the sweet spot in the mid-upper 20′s.
http://norightturn.blogspot.com/2010/02/some-facts-on-income-distribution-in.html
http://www.nzchildren.co.nz/income_inequality.php
respectfully
BJ
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There’s certainly some disinformation going on that is not helpful to the debate.
From my personal experience, things are getting more expensive and my income has not increased. My production cost are + 10% over the last year. This comes directly off my profit margin which was small to begin with. If such increases continue over 2011, there will be little reason to continue apart from lost investment capital.
It’s not just on a personal level that the cost of living takes a toll. Many businesses across New Zealand are struggling because there is less money in the economy. Those of us who are on the ground see this happening on a daily basis. People are spending on necessities, but not much else. Meanwhile our savings figures have not improved.
In a way less consumerism because of a lack of funds is a good thing. Being that production and packaging causes so much waste. However when that lack of funds inhibits people from purchasing the basic necessities of life as shown in our test case, we have a serious issues that has far reaching consequences for all of society.
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A basket of goods and services that cost $150.00 in quarter 1 of 2000 would have cost $202.37 in quarter 4 of 2010.
Total percentage change 34.9%
Number of years difference 10.75
Compound average annual rate 2.8%
Decline in purchasing power 25.9%
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http://ndu.org.nz/economy_and_workers_lose_out_under_low_minimum_wage_increase
“In addition some major NZ firms add shift and attendance bonuses to hourly rates below the minimum wage. They say that the Department of Labour has condoned this practice. The NDU believes the practice could be unlawful.”
http://www.scoop.co.nz/stories/PO1102/S00007/wage-increases-do-not-match-price-rises.htm
The CTU says that the increase of 1.7 per cent in wages for last year falls far short of price increases of 4 percent.
Peter Conway said that even the median increase for those workers with an actual pay rise was only 2.9 percent and the overall increase of 1.7 percent is well down from the 4 percent level in the September 2008 year.
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Very informative BJ.
Remember that next time the government or the media talk about “middle-income” tax cuts – they’re not talking about you, or most of New Zealand. Instead, they’re only talking about themselves.
Such associations suggest that it is not absolute material deprivation which shapes health at the population level, but rather the effects such inequalities have on psychosocial outcomes such as the degree of control over work, anxiety, depression and social affiliations.
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Todd says “Meanwhile our savings figures have not improved”
Just as I complained earlier, people here are making up completely false stuff up off the top of their head if it fits their arguement.
It’s just more nonsense.
Our savings in Kiwisaver have not only not improved – they’ve skyrocketed.
Late 2008 there was less than $1 billion in Kwiwisaver. By the end of 2010, it was over $7 billion.
And fron interest.co.nz “From December 2007 to September 2010, household deposits grew from NZ$76.048 billion to just over NZ$91 billion, according to Reserve Bank records.”
No doubt a portion of the increase may not be new money but rather funds being shifted from elsewhere, however numbers in Kiwisaver continue to grow and are now more than 1.6m people.
And total private mortgage debt in NZ went down in December.
This has never happened before.
There is something I asgree with you Todd – your first statement (as it applies to your later one, quoted above)
“There’s certainly some disinformation going on that is not helpful to the debate.”
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Tood says “A basket of goods and services that cost $150.00 in quarter 1 of 2000 would have cost $202.37 in quarter 4 of 2010.
Total percentage change 34.9%”
So inflation went up 35% for the decade, but wages went up more.
Using the same calculator but selecting wage rises, for exactly the same period, shows that wages went up 44% for the decade – 9% more than price increases.
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My opinion is founded on evidence:
http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup
New Zealanders – the people and the government – are not saving enough. Unless we make some rapid changes, we are risking a major economic disruption likely to leave practically all New Zealanders worse off. It’s as if we are standing on top of a cliff that may collapse dramatically or crumble slowly. Either way, it would be a bad fall. We need to move back from the brink – and fast.
Unfortunately, low national saving is not New Zealand’s only problem. Growth in productivity, exports, incomes and living standards has been poor – the productivity growth rate actually halved over the last decade. The vital tradables sector – producing exports and import substitutes, plateaued in the mid-2000s and then declined in both output and employment, while non-tradables – such as property, retail and government services – continued to grow strongly. The whole position was and still is unsatisfactory and unsustainable.
SWG recommends an urgent increase in national saving of 2% – 3% of GDP, amounting to some $3 billion to $5 billion annually. The focus should be first on the government sector and shifting it from deficit to fiscal surplus earlier than the projected date of 2016.
The reality is that New Zealand’s economy has been performing poorly for some decades, with no effective policy response.
Kiwisaver is not indicative of New Zealanders saving more. Stop using one dynamic and applying it across the board to back up your assumptions photonz1.
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Housing that cost $250.00 in quarter 3 of 2000 would have cost $519.62 in quarter 3 of 2010
Total percentage change 107.8%
Number of years difference 10.00
Compound average annual rate 7.6%
Decline in purchasing power 51.9%
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Photo keeps talking about average incomes because he knows that the few on very high incomes drags the average up and gives a false picture which suits his argument.
Photo’s figures are the ones that are doctored to give his desired result. Note he has not been able to counter my stats except with BS.
He/it should be looking at his/its conscience as an apologist for those who are burgling NZ from its rightful owners.
Anyone who thinks most off us are not worse of since the great Neo-liberal experiment started are living in a demented dream world.
Douglas and Brash can be forgiven as they were victims of religious mania, but the current mob are guilty of deliberate criminal behavior.
If Photo is an intelligent person? then he/it should be headed for jail along with his fellow crims and supporters of the robbery.
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And the results are:
http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/finalreport/09.htm#toc2_1_3
Can you read a graph photonz1?
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Average wages have risen because: Some wages right at the top have increased greatly, The number of people employed, often on very low wages, has decreased. Ordinary time wages for most people have not.
Not to mention benefits that have never risen to the level they were before Ruthenasia.
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photonz1,
“It’s inevitable that they have to change products, and make adjustments.”
Of course, but I’m not sure hedonistic adjustments actually produce a sensible figure. If, say, a bookcase is now made with a sturdier wood and self brackets are metal instead of plastic, but I can’t buy the old bookcase any more and have to buy the new one, isn’t my expenditure higher by the full amount of the difference in price between the old one and the new one? Quality adjustments might pretend that the price is actually the same, or lower, thus impacting the CPI but not impacting my spending, which was the full amount for the bookcase. Same with a TV that has more bells and whistles than the old version but still costs so much more.
All I’m saying is that I can see that adjustment easily understating the increased costs of goods and services.
Of course, new products and services have to be brought into the basket somehow but that is not what the quality adjustment is about.
“Using the same calculator but selecting wage rises, for exactly the same period, shows that wages went up 44% for the decade – 9% more than price increases.”
Hold on, didn’t you write earlier, and I agreed based on the information about the calculator, that wages is simply shown as a business cost? i.e., the cost of providing some unit of wage was $1 in 2000 but $1.44 in 2010. The calculator, as far as I can tell (though the exact formula for each selectable item isn’t shown), doesn’t show that for each $1 earned in 2000, $1.44 is earned now.
[In fact, you wrote, "The wages figures are if you are PAYING wages"]
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2008Q4 2010Q4
Median Weekly Household Earnings $1,257.00 $1,236.00
Net income on tax rates in force at the time $1,001.79 $1,057.29
Consumer Price Index 1061 1099
Inflation-adjusted average weekly wage $1,037.67 $1,057.29
Change after inflation and tax cuts 1.9%
Minus 2.5% extra GST on net income -0.4%
That is before extra rises in commodities, power and services charges with the latest oil and commodity price rises are factored in.
Someone has done this calculation in the standard also and has the same numbers.
Apologies for the tabling.
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New Zealanders in general are not saving enough. We rate very poorly in the OECD. Saving can literally be translated to the difference between income and expenditure. We are not saving because there is usually no difference, in many cases there is a deficit as outlined above with the average mother of two who works 40 hours a week.
Some might argue that those who are saving and paying off debt are doing so because there’s nothing to invest in. Like the Mum’s and Dad’s National keep going on about to justify privatisation. However this is a complete lie, National could allow further investment without privatisation. People with (expendable) funds to invest are very thin on the ground.
I believe there’s more worth to New Zealand if people save and pay off debt than invest. We will only be able to do that if wages keep up with inflation and other measures are implemented. Without that there is no worth in the Government encouraging people to save when they are unable to do so. A lack of saving because there is not enough money to save is the defining problem.
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http://frank-ritchie.com/post/3167802474/why-i-support-social-welfare
This guy says it so much better than I can.
The society of meanness and mean spiritedness that people like Photo advocates is not one I would want to live in. I suspect Photo will not like it very much either.
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http://www.oecd.org/country/0,3731,en_33873108_33873658_1_1_1_1_1,00.html
New Zealand’s living standards remain well below the OECD average. This is entirely attributable to persistently low labour productivity, which in turn is related to economic geography as well as structural policy factors.
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http://www.youtube.com/watch?v=whVf5tuVbus&feature=player_detailpage
For any one who is not aware of Ha-Joon. An economist debunking conventional economics.
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Go on photonz1, take one for the team… If you believe that the capitalist
nightmaredream is working so well, run the gauntlet. Prove to us all that hard work brings success, after all it’s minimum wage earners own fault they’re poor because they’re uneducated. Somebody should tell the dole bludgers that “Work will set you free”. Wasn’t that Nationals campaign slogan?So why don’t you give all your things away and start again if things are so rosy? I dare you… As a social experiment to see how well the system really works. You apparently built up your business from absolutely nothing, not even government assistance, now you have the added bonus of experience to prove to us all that a rags to riches story-tale is real and achievable in 2011 and beyond.
Your right wing ideals would have given you a few rich friends who will surely help you out financially, wouldn’t they? I mean, there’s no dog eat dog/every man for himself mentality going on is there? You will have the added bonus of being a philanthropist, giving your belongings away to somebody who is
more deservingunable to acquire them because they did not have the opportunity to earn money to buy them. It might even stop people pirating all your things huh!In fact I double dog dare you. If all those stats you have thrown around here are true, it should be easy peasy for you and your family to get back on your feet in no time. Being that the system according to photonz1 is working so well. Or are you too afraid that success is no longer tied to hard work alone?
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NZ living standards are afflicted by the “build it anywhere else” issue of comparative advantage… “economic geography” being ignored in the application of Ricardian principles and global trade by people who have an ideological opposition to any interference in “free trade” by anyone (except a corporation).
The problem of course is that the price of moving money around is zero in the current implementation. That this is a violation of the laws of physics, and is actually untrue despite the attempts by the financial world to ignore the real costs (ultimately dumping them on the rest of society), means that the application of “Comparative Advantage” here is flawed twice.
http://www.huffingtonpost.com/ralph-gomory/manufacturing-and-the-lim_b_227870.html
The first flaw is of course, the notion that we shouldn’t build anything here that we can buy cheaper from someone else somewhere else.
The second is the flaw arising from the lack of impedance in the money flows.
Such a situation leads to us being able to make money overall, only by exploiting hobbits and shipping our fresh water and energy overseas as farm produce… to a world that is still underpaying food production costs because it obtains energy and fertilizer at prices that do not reflect the depletion of resources or the destruction of the environment.
Not building things here, we also export our best educated high-earning youth… the temptation to leave has to be overwhelming for a young man or woman, and there is no likelihood of that investment in education returning either.
Gradually NZ will deplete itself if this continues, having been eaten up by the top 5% and fundamentally destroyed in the process. There is no alternative to change. We HAVE to change… and again, this change starts with the banks. It starts in the financial sector and it includes a real and comprehensive change to the way we think about money crossing our borders.
We are not fooled, National voters are… deluded about who benefits from their leadership’s policy initiatives. Our messages are not so radical.
No foreign bank can control our money supply.
Fractional-Reserve Banking is fraud and will not continue here.
Our money shall be a real, redeemable hard currency.
Conversion and transport of money into and out of this country has a cost.
The effect on the environment of doing those things is indirect and yet more potent than any direct action we could ever enforce.
Our living standards are low because we are being robbed.
respectfully
BJ
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Todd says “So why don’t you give all your things away and start again if things are so rosy? I dare you”
Just because you repeat it over and over, doesn’t make yopur idea any less stupid.
Todd says “In fact I double dog dare you. ”
Todd – youa re starting to rant.
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Kerry – you made wild claims that tradesmen get paid 40% less than they used to after inflation.
And you couldn’t back your claim up.
You made claims that things like flat screen tvs have a big effect on the CPI – which was plain wrong – all appliances put together have only a 1% weighting on the CPI.
And you continue to add the gst rise onto inflation, when it is already INCLUDED in the inflation rate. So you double count it.
And you also try to double count rises in petrol, power, services commodities etc – on top of inflation, when they are already included in it.
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Photonz1
You ignore what the Savings Working Group, OECD, Treasury, The Reserve Bank and Statistics New Zealand are saying and go on about everyone else being wrong. The best you can provide as evidence is a few propaganda articles of little relevance and your own incorrect calculations.
It’s unfortunate that photonz1 has resorted to personal insults because his argument has categorically failed. Photonz1 plays out of tune despite the score being squarely placed in front of him. Does he comprehend what he is reading at all? If such expressed incomprehension as that from photonz1 is not annoying ranting, I don’t know what is. In fact I would clinically say it is bordering on the insane. I’m beginning to think that photonz1 is just a National disinformation antagonist that has no intention of adding any worthwhile information to the debate.
A double dog dare means you have to do it photonz1. I’ve repeated my request once. There are consequences if you don’t, but then again there are consequences if you do. Your fear of those consequences has obviously got the better of you. A coward with empty words. If you decide to undertake the social experiment, let us know how you get on huh? I will add you as a blip to the stats.
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Todd – You made the incorrect claim that our savings figures have not improved.
Yet in the last two years Kiwis bank savings have gone up by $15 billion, and Kiwisaver has gone from under $1 billion to over $7 billion. And this in the middle of a recession.
You are completely wrong about the figures not improving – they’ve improved massively.
Do we need to improve even further? Of course we do.
But that doesn’t change the fact that your claim that the figures are getting worse in plain wrong.
Todd – what’s the definition of hypocracy ? (your quote from the same paragraph are)
“It’s unfortunate that photonz1 has resorted to personal insults..”
“In fact I would clinically say it is bordering on the insane.”
You have said you dare me to give away everything I’ve worked for, and bacause you say it’s a double dog dare, that means I have to do it.
I haven’t heard anything so pathetically stupid and immature since my 8 year old was at kindergarten.
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Photonz1
Please link to evidence that shows our savings have improved? All the information I’ve seen and therefore based my statement on, shows a lack of savings. I would be happy if our savings have improved, but until there is more than just you saying so, I will rely on the evidence at hand.
Furthermore… My rhetorical question concerning the Inflation Calculator was: What kind of general CPI calculator wouldn’t factor in general wage increases/decreases?
Photonz1 response:
The next day photonz1 says:
Tony says:
Photonz1 ignores this going onto say:
Ranting! The burden of proof remains. An argument buy dismissal is childish!
Your Ad Hominem argument is pathetic.
Photonz1!
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Todd – I think you long post proved my point.
You don’t seem to understand the basic difference between a CPI calculator that measures (surprise surprise surprise) consumer prices, and the wage calculator that measures….wait for it….can you guess…it measures wages.
If you want to get an indication buying power of take home pay there are three factors.
Increase in inflation.
Increase in wages.
Change in tax.
You repeatedly calculated buying power only taking the first factor into account.
Unless you take all three factors into account, your figures are irrelevant.
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Photonz1
How does a long post give any credence to your argument? That is illogical!
Is that the best rejoinder you’ve got? Took long enough for you to say I’m wrong again.
Point out one of my calculations that I’ve only incorporated increases in inflation?
So now my figures using the Inflation Calculator are irrelevant because you say so. Let’s all bow down to the superior intellect of the great photonz1 and ignore common sense huh!
You can’t play a straw if you’re tone deaf photonz1.
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Todd chanllenges – “Point out one of my calculations that I’ve only incorporated increases in inflation?”
I can do better than one.
Todd says “I very much doubt that there will be much difference from a decline in purchasing power 2009 – 2010 of 3.9% to 2011 – 2012 other than this percentage going up again.”
FAILS to take into account both wage increases AND tax cuts as it is measured against the dollar – not wages.
Todd says “To argue that there is not a decrease in purchasing power is to argue against the Reserve Bank of New Zealand’s calculations.”
FAILS to include both wage rises AND tax cuts. Is measured against dollars – not wages.
Todd quotes the misleading CTU statement “The CTU says that the increase of 1.7 per cent in wages for last year falls far short of price increases of 4 percent.”
Misleading, because it FAILS to include tax cuts.
You continually try to claim that we are worse off because of inflation, while totally ignoring the positive (and larger) effect from tax cuts and wage increases.
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Photonz1
That’s not a calculation; it’s an assumption I made that tax cuts will make no real difference to the cost of living in the future.
Statement of fact, not a calculation.
The inflation calculator for general CPI says: Decline in purchasing power 21.4%
Tony says ”I don’t know what the calculation is behind each element on the calculator, since that information is not given”.
Photonz1 @ 10:23 PM says: “I don’t know the exact items used, but I have a link to the weightings used for the CPI. I think they go to a huge effort to track as closely as possible what the average person spends”.
Could somebody fix the stuck record please?
What tax cuts for beneficiaries?
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Todd – yet again quotes the drop in purchasing power against the dollar – with is completely irrelevant unless you haven’t had a pay rise or tax cut in ten years.
Todd asks “What tax cuts for beneficiaries?”
The increase in benefits that came in the same day as the new gst rate.
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Do you mean an increase of $1 to $3 in benefits?
Unanswered question:
2, A single example is not indicative of a failing system. Do you pay rent and if so, how much is it?
3, I’m still wondering why the taxpayer has to meet the shortfall for low wages?
4, Do you mean starving your kids so you can “save” for the Government?
5, What part of a shortfall of $120 per week didn’t you understand photonz1?
Where did you get that figure from?
7, So now it’s not $5 per week, it’s $12? Make up your mind if you can.
8, Are you retarded photonz1?
9, Can you read a graph photonz1?
10, Hold on, didn’t you write earlier, and I agreed based on the information about the calculator, that wages is simply shown as a business cost?
11, Please link to evidence that shows our savings have improved?
12, How does a long post give any credence to your argument?
Slightly lop sided there. Perhaps I should rest my case.
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You’re ranting again Todd.
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Evidence of improved savings.
1/ Household deposits up by $15 billion over 3 years
“From December 2007 to September 2010, household deposits grew from NZ$76.048 billion to just over NZ$91 billion, according to Reserve Bank records.”
2/ Kiwisaver funds increased 800% in two years from under $1 billion to over $7 billion. It’s possible that about half the increase came from other funds, as overall managed funds rose from $20 to $24 billion over the same period.
3/ Kiwisaver numbers have grown to 1.6 million savers.
4/ Total mortgage debt in NZ went down in December 2010. This has never happened since records started.
see
http://www.interest.co.nz/kiwisaver/kiwisaver-records-eight-fold-increase-two-years-while-other-managed-funds-are-cannibalised
and
http://www.nzherald.co.nz/brian-fallow-on-the-economy/news/article.cfm?c_id=1502863&objectid=10703737
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How much of the bank deposit money came from sold rental property?
How much of the increase was in former times placed into finance companies?
How much of the money in Kiwi Saver came from wage contributions ts and how much came from government – the $1000 start-up and the $1000pa tax incentive and how much came from employer contributions?
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Rant: To speak in a very loud, aggressive or bombastic way, usually at length and repetitively.
Not the best answer to my argument that you ignore the facts and relevant questions posed.
From photonz1′s link:
The combination of that unaffordability and a weak labour market seems to be having an effect on borrowers’ behaviour.
The Reserve Bank’s December credit growth numbers recorded an actual drop in the total amount of households’ mortgage debt compared with November. Unheard of.
It was only a decline of $50 million in a mortgage loan book of $171 billion and one month does not make a trend.
But is a sign of how much times have changed. How enduring the change will prove is the question with which policymakers have to grapple and they have little more than intuition to guide them.
The working group sees further gains from harnessing inertia to broaden uptake of KiwiSaver, by automatically enrolling all employees, not just new ones, and requiring them to make the effort of opting out if they want to, and perhaps increasing the default contribution rate to 4 per cent.
That would help, but it would not deliver the increase in national savings of $4 billion to $5 billion a year the working group considers necessary if we are, in the words of its chairman Kerry McDonald, to step back from the edge of a crumbling cliff. Like it or not, that will require tough Budgets.
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Photonz1, do you have your blinkers on?
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Todd says “you ignore the facts and relevant questions posed”
Actually I ignored most of your post specifically because your questions were IRrelevant.
i.e.
2, How does a long post give any credence to your argument?
4 Do you mean starving your kids so you can “save” for the Government?
5, What part of a shortfall of $120 per week didn’t you understand photonz1?
7, So now it’s not $5 per week, it’s $12? Make up your mind if you can.
8, Are you retarded photonz1?
9, Can you read a graph photonz1?
Instead of a long list of questions filled with nonsense, throw me a couple of relevant rational intelligent questions and I’ll do my best to answer them.
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Speaking of irrational; how do you propose to tax the test case another $100 when there is already a shortfall of $120 per week?
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Todd says “Speaking of irrational; how do you propose to tax the test case another $100 when there is already a shortfall of $120 per week?”
Sorry I’ve got no idea of what you’re talking about. Who suggested increasing tax by $100?
And right at the start when your “test case” people started making stupid decisions like renting a house that was way above what they could afford, I stopped following them.
(because that proved my point that some financial education would be far more beneficial than a few extra crumbs per week)
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Photonz1-Sorry I haven’t been following this strand for a bit. You said:
“I looked for the figures to show this, and what I came across were statistics that said the opposite. That the difference between the richest 20% and the poorest 2o% is getting smaller. In fact the gap is the lowest it’s been in nealry 20 years since 1982 – see”
SPC provided a good response, National has been doing everything possible to reverse the improvement shown under Labour. The next graph will show a sudden rise!
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Photonz
I noticed that you never did answer me about the actual problem of actual employment for people and what we as a society actually do when only a very few of us can be gainfully employed and the rest of us have nothing.
I pointed out how the system is broken. Giving most people the least they can possibly live on as a very few prosper is where this system leads. Giving them more than we can possibly afford isn’t going to work either.
So our social fabric needs to be cut from a much different cloth.
Nothing.
Sprout, there would not be anything that happens suddenly there as that particular stat gets in people all the way down to about $50K/yr.
respectfully
BJ
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photonz1
Admittedly you meant educating people to not spend money they don’t have (which obviously wont work) and not a tax (which will work depending on your point of view) to achieve that $100 less per week. Do you now not stand by your statement?
Let’s recalculate: Existing shortfall for average family with one parent and two children under the age of five: $120 per week. Required hours in ECE per week: 80. Funded hours per week: 40. Projected shortfall of $366 to $823 (Average $594.50) per week for each child (Informed estimate only, I had difficulty finding relevant information). $120 + $1189 ECE + $100 = a shortfall of $1409 per week. This would inhibit our parent from being able to work 40 hours in the first place.
I have already recalculated so that the family now lives in a cheap two-bedroom apartment in an undesirable area. Happy now? I factored in the cheapest possible accommodation available. Do you have problems remembering things?
Admittedly question 8 could have been worded better; Are you afflicted with a mental ailment that precludes you from understanding factual information when it is presented to you in an easily understandable format?
You’ve attempted to answer one of those eleven questions photonz1, and then failed again when SPC questioned your answer and reasoning. I think it is safe to conclude that your argument has lost. The minimum wage rise of 25c is not enough. New Zealand is creating a greater divide between rich and poor and is in the process of creating an underclass of the average “middle-income” earner as well.
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bj says “I noticed that you never did answer me about the actual problem of actual employment for people and what we as a society actually do when only a very few of us can be gainfully employed and the rest of us have nothing.”
Sorry – I never saw that question.
Effectively, we need to grow businesses. Business is the engine. And if businesses are not doing well, then you will NEVER have much increase in either employment or wages.
You can shout and campaign for higher wages and more employment for your whole liife, and it won’t make a shred of difference. What makes a difference is if business is prospering.
So we need to do lots of things.
Primarily more money needs to be invested into business. This can be done in a number of ways
- a/ change Kiwis investment habit of putting everything into non-productive property.
- b/ increase our savings, so more goes into business including via the stockmarket, kiwisaver, and other funds.
- c/ lower out debt. For several years (on average), every New Zealander has spent 12-16% MORE than they earned.
Unfortunately lowering our debt and saving more is going to have a negative effect in the short term (a few years), because people are not spending.
However if we continue as we have, it will be disaster – as the savings group says – we are on the edge of a crumbling cliff.
There has been less and less investment in business, and more and more debt with interest heading offshore.
d/ lowering taxes on business, so they have more for expanding, wages, and new jobs.
e/ lowering top tax rates, as this is a disincentive for anyone to save and invest.
Or, rather than a big drop in the top rate we could look at split rates for investments, so that there is a lower tax on bank interest, dividends etc – so that people are encouraged rather than discouraged from saving and investing.
f/ Shift taxation from earning to spending. I hate gst, but it’s the right thing to do for the country to increase tax on spending and lower it on earning. So we’ve had a one step improvement in that recently – perhaps another step in the future.
g/ put in place financial education so we can all learn to live a little BETTER on LESS money.
As with many things, there are two sides tio the coin. If we have a big lift in general wages, ALL our exports, and tourism, become much more expensive, and less competitive internationally. So higher wages mean we ar at risk of becoming less competitive and having our top industires contract. It’s a fine line to get it right.
So in summary, wages and employment rely on one primary factor – businesses doing well. If that isn’t happening, then you can forget any improvement.
Unfortuantely a lot of people pushing for better wages and employment come across as very anti-business.
In the meantime, while not everyone can contol employment conditions, everybody does have control over their own spending.
Everybody I know spends money on completely unneccessry things – from the wealthiest to the poorest.
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“Effectively, we need to grow businesses. Business is the engine. And if businesses are not doing well, then you will NEVER have much increase in either employment or wages”.
Agreed, But why do you still insist it must be private business. Private business sucks on running monopolies and infrastructure as we all know.
When wages paid by overseas companies are too low, which they are, the money is lost from NZ. Wages stay here. Underpaying employers, insufficient infrastructure and private monopolies are a drag on the efficiency of well run businesses.
We need investment in sustainable energy efficient technology or we will not have a future, but we will not get that when banks will only lend for speculation and all the spare money is taken offshore to be put into gambles in finance derivatives.
“You can shout and campaign for higher wages and more employment for your whole liife, and it won’t make a shred of difference. What makes a difference is if business is prospering”.
Business will not prosper when money is extracted from the NZ economy by multi-national corporates and banking leaving little to be spent on local business products.
“So we need to do lots of things.
Primarily more money needs to be invested into business. This can be done in a number of ways
“- a/ change Kiwis investment habit of putting everything into non-productive property.”
Property is productive in that everyone needs shelter or they cannot work. Agree that easy debt has pushed it too high. See the fractional reserve banking thread.
- b/ increase our savings, so more goes into business including via the stockmarket, kiwisaver, and other funds.”
Regulate the stock market and finance companies so NZ can see it is a reasonably safe place to put their money. That they will not be screwed by major shareholders like 1987.
Invest in renewable energy, infrastructure and technology as well as education. If the basics are not in place then no matter what your le4vel of savings it will be swallowed up by inflation in an insufficiently productive economy.
Stop the hemorrhage to offshore banks. If any one is printing fiat currency it should be us, not private banks. Note; even conservative US states are talking about re-introducing State banks.
“- c/ lower out debt. For several years (on average), every New Zealander has spent 12-16% MORE than they earned.”.
See Fractional reserve banking again.
“Unfortunately lowering our debt and saving more is going to have a negative effect in the short term (a few years), because people are not spending.
“However if we continue as we have, it will be disaster – as the savings group says – we are on the edge of a crumbling cliff”.
Yes. If we continue to borrow for extra tax cuts for Nationals election bribes.
“There has been less and less investment in business, and more and more debt with interest heading offshore.”
As wages have gone down in NZ since 1980′s business (myself included)have stopped investing in NZ because no one can buy their products.
“d/ lowering taxes on business, so they have more for expanding, wages, and new jobs”
Been tried for 30 years. Has not worked..Better to have more income than a lower tax rate. Why we are all moving to Australasia despite much higher effective tax rates.
“e/ lowering top tax rates, as this is a disincentive for anyone to save and invest”
Absolute bull. Investment in NZ has decreased to a third of what it was when wages were higher and taxes were much higher.Lowering taxes just means we pay more to an inefficient private sector provider for the services we were getting cheap from the State..
“Or, rather than a big drop in the top rate we could look at split rates for investments, so that there is a lower tax on bank interest, dividends etc – so that people are encouraged rather than discouraged from saving and investing.
f/ Shift taxation from earning to spending. I hate gst, but it’s the right thing to do for the country to increase tax on spending and lower it on earning. So we’ve had a one step improvement in that recently – perhaps another step in the future”.
All income should be taxed the same, but there should be incentives to business that invest in renewable s and local employment.
I don’t have any philosophical objection to consumption taxes. But those who are given the most from our resources should pay the most. Progressive taxes.
“g/ put in place financial education so we can all learn to live a little BETTER on LESS money”
Good idea. Unions advocated this in the 70′s. Opposed by banks and employers because they did not want people to know too much. Interfered with them ripping workers off..
“As with many things, there are two sides too the coin. If we have a big lift in general wages, ALL our exports, and tourism, become much more expensive, and less competitive internationally. So higher wages mean we are at risk of becoming less competitive and having our top industries contract. It’s a fine line to get it right”.
In my experience if an industry cannot pay decent wages they are usually heading out the back door anyway. Do we want to be a nation of tour guides who cannot afford their own waterfront like Greece and Spain (worked well for them didn’t it) or a nation of first to the mark and innovation in clean tech. We already have the brand. If Federated Farmers and National don’t destroy it.
If our only competitive advantage is being the cheapest then we are doomed to be third world.
“So in summary, wages and employment rely on one primary factor – businesses doing well. If that isn’t happening, then you can forget any improvement.
“Unfortunately a lot of people pushing for better wages and employment come across as very anti-business”. No they don’t. Business needs customers with decent wages and more employment so they have customers.
“In the meantime, while not everyone can control employment conditions, everybody does have control over their own spending”.
“Everybody I know spends money on completely unnecessary things – from the wealthiest to the poorest”.
Maybe. But I like my coffee. The effects of us all stopping spending will not help business much either.
I am definitely not anti-business.
Many small business owners know their prosperity depends on that of their customers. I am against gifting publicly owned business to a section of the private sector who have proved they are incapable of building their own business so they want to get their sticky fingers on ours.
In summary. We are not going to catch up with countries like Finland and Australia by doing the opposite of what they are doing.
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Todd asks “Do you now not stand by your statement?”
What??? I said we need to learn to spend $100 per week less, and you made some bizarre link and said that meant I wanted tax to got up $100 per week.
As I said, come up with some intelligent questions and I’ll do my best to answer them.
The rest of your nonsense I just ignore.
Todd says “I think it is safe to conclude that your argument has lost”
You can conlcude we have two moons if you want….
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Kerry on with the myth “As wages have gone down in NZ since 1980’s business (myself included)have stopped investing in NZ because no one can buy their products.”
Using the inflation calculator,
-inflation has gone up 362% since 1980.
-wages have gone up 409% since 1980.
Plus we have had several tax cuts
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On tax reduction for businesses, Kerry says “Been tried for 30 years. Has not worked.”
And “We are not going to catch up with countries like Finland and Australia by doing the opposite of what they are doing.”
But Finland reduced it’s corporate tax rates from 29% down to 26% about five years ago.
Which make both of your statments above wrong.
see
http://www.internationaltaxreview.com/Article/2615488/Finland-reduces-rates-in-corporate-tax-shake-up.html
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I don’t regard kiwisaver as a savings scheme. It’s more of a bet that by the time you would have been able to access those funds, society is still ticking over more or less as it is today and the prospect of a long and comfortable retirement is still real. I don’t regard either of those as likely. I suppose it’s also a bet that the government won’t raid those funds, in some way, to try to balance the books.
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Photo. You insist on using average wages.
The only real overall increase in wages (As you well know) has been in the over 300K bracket. 10 to 20% recently for those brackets. 0 to 2% for everyone else in the last two years against CPI changes of 4 to 6%. That, and increasing unemployment is pushing the average wage up.
The price of necessities has also been increasing at a faster rate than the CPI. If you read the news you know that successive Neo-liberal Governments play with the mix of prices in the CPI to make price inflation seem lower.
There was leveling out when Labour was in. Since the thieves are back the slide has continued.
Real income for most people has gone down. I gave the figures for median wages yesterday.
Big business were given all they asked for in the 80′s. Since then New Zealand, the USA and UK has slide downhill by nearly all indicators compared to all the countries that did not follow the myths of the Neo-Liberal religion.
You can play with numbers all you like.
The experiment is a proven failure. Anyone who advocates continuing on the same path is either prepared to rob NZ for their own individual gain or is seriously deluded. Which are you?
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“Finland reduced it’s corporate tax rates from 29% down to 26% about five years ago”.
You forgot their payroll taxes and employer super contributions as well as regulations which stop transferring personal income and calling it business income.
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http://www.nationmaster.com/graph/tax_tot_tax_wed_sin_wor-total-tax-wedge-single-worker.
Still much higher taxes than us. http://www.gfmag.com/tools/global-database/economic-data/10445-household-tax-rates.html#axzz1DVzBHQiG
42% as against 18%.
Unfortunately for them they are being influenced by the same dickheads who stuffed us.
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Phot
Do you not understand what I’m getting at? I thought I spent it out in plain English! How do you expect low and average wage earners to save when they have a shortfall in their budget each week?
Yet another Fallacious Argument from phot! Bad Analogy:
Claiming that two situations are highly similar, when they aren’t. For example, “The solar system reminds me of an atom, with planets orbiting the sun like electrons orbiting the nucleus. We know that electrons can jump from orbit to orbit; so we must look to ancient records for sightings of planets jumping from orbit to orbit also”.
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It’s not just the increasing disparity in wage income between top and bottom (and the many no longer employed at all). We should also note the extent to which GDP and productivity has increased compared to wage movements.
Another thing to note is that the move from a mixed economy with employment for all to a more privately owned economy and global free trade has not increased GDP at a rate comparable to other nations. This shows that what we have done is not the main determinant as to productivity gain or success in developing new products and markets.
And what gains we have made has not been matched in wage increases.
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photonz1,
Well, your continued use of the inflation calculator differently to how you at first tried to explain it to Todd, led me to examine it again and it seems that you are now right. Although the page which describes the calculator describes it as a way to see how the CPI has affected the price of goods/services and costs to businesses, another description (which Todd mentioned but I glossed over) of the wages deflator mentions the Statistics New Zealand Quarterly Employment Survey. After looking at that, it seems that the hourly wage deflator does refer to the actual average hourly rate changes over time. However, as Kerry and others have pointed out, averages don’t tell the full story, even though they suit your argument. Unfortunately, I couldn’t find more detailed data or data stretching back to 1980 to get more of a handle on this stuff.
Your answer to BJ about what to do appears to boil down to, “we need more growth”. That, of course, is ultimately doomed to failure (on a finite planet) and so, as a strategy, is worthless.
Increasing GST and decreasing taxes just widens the wealth gap since GST doesn’t change depending on wealth/income/affordability. I would say that, ideally, there should be no GST though there should be duties that reflex the true costs of goods and services, including environmental damage. Income taxes, of course, would have to rise, especially for higher income “earners”.
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Kerry says “If you read the news you know that successive Neo-liberal Governments play with the mix of prices in the CPI to make price inflation seem lower.”
That sounds like something you’ve just made up off the top of you head, like the false claim that flat screens skew the index (ALL appliances put together – fridges, ovens, washing machines, tvs etc ) have a total weighting of just over 1%.
And I do read the news. I’ve never yiour claim reported..
You probably just made that up.
If not, show me the link.
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No Photo. I leave making up things and dodgy use of statistics to the NACT party and their propagandists.
Bludger Bennet claiming in Parliament today that she introduced the home insulation scheme.
Now they are talking about removing GST from the CPI series.
Key claiming wages have risen when for the majority the have dropped at least 4% against inflation. See MED figures for median wages vs prices inflation I gave a couple of days ago for the last two years.
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“http://www.rbnz.govt.nz/monpol/pta/0055243.html”.
Interest rates are already excluded from the CPI as a political ploy to hide the absurdity of fighting inflation with interest inflation. It also has the advantage of hiding the real rise in peoples costs of living.
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Incomprehensible! You’ve completely lost me there phot! Could you please explain what your Earth shattering argument is now to make us all ignore the facts and believe that the Natz are just a bunch of misunderstood humanitarians?
Background note for journalists and analysts on the new Policy Targets Agreement, and the consequential decision to discontinue the calculation and publication of `underlying inflation’.
http://www.rbnz.govt.nz/monpol/pta/0055243.html
Is it just me or are they trying to hide something?
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Kerry, that was because we stopped. In the late 1980s, we had among the lowest corporate tax rates in the OECD, and we kept a rate of 33% whilst the rest of the world reacted, and by 2007, we had among the highest corporate tax rates in the OECD.
The United States also has among the highest corporate tax rates in the world, with rates increasing from 35% (the final figure depends on which state you are in).
The countries that have lowered their corporate tax rates have either kept their companies or attracted them, enabling them to enjoy the rewards brought as a result. So called “socialist” Sweden has a lower corporate tax rate than we in so called “neo-liberal” New Zealand have.
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I have no problem with industry incentives to get NZ start ups for employment and exports. As I have said before.
It has to be for net benefit to New Zealander’s though, not just the banks or Keys cronies.
But you have to do a lot more than just being the cheapest.
I do have a problem with giving asset strippers and pirates more of assets we already own to play with.
Sweden, like Finland has strict regulation to stop personal tax avoidance. EG transferring personal income to undertaxed companies is very difficult. Company owners still pay the taxes, just not directly. Not to mention capital controls and gains taxes.
Also they have payroll and super added to the headline taxes as well as much higher a progressive income taxes.
It did not help Ireland trying to have the lowest corporate tax rates. The locals will be paying the price, of corporates not paying their real costs, for decades.
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Kerry says “Interest rates are already excluded from the CPI as a political ploy to hide the absurdity of fighting inflation with interest inflation. It also has the advantage of hiding the real rise in peoples costs of living.”
Except with interest rates very low right now – it does the exact opposite of what you claim.
That was one of the reasons interest was excluded from the CPI (from over a decade ago). Prices could be going up, but a quick drop in interst rates skewed the inflation rate to show prices going down.
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Kerry says ” Key claiming wages have risen when for the majority the have dropped at least 4% against inflation. See MED figures for median wages vs prices inflation I gave a couple of days ago for the last two years.”
Stats NZ figures show the MEDIAN hourly rate (not average) went up 7% from $18.70/hr to $20/hr (average went also went up by 7%)
So that’s MORE that inflation fo 6% opver the two years.
Similarly the MEDIAN weekly wage went up 45% in the decade 1999-2009. ( $519 – $750) That’s a 15% increase of real wages MORE than the inflation rate of 30%.
Even more when you count tax cuts.
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What’s the percentage of sweet F all photonz1?
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However, it is somewhat telling that the GDP per Capita is around half that of Ireland, even after all that they have been through. Also, while Ireland might have had issues with relation to the Global Financial Crisis, there are other nations with low corporate taxes that have done well. Singapore for instance has a 17% corporate tax rate.
If we want to compete, then we are going to at the very least need a corporate tax rate in the low 20s, with my own preference being somewhere between 15% and 20%.
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“Except with interest rates very low right now – it does the exact opposite of what you clai”.
That was done in 1999.
“So that’s MORE that inflation fo 6% opver the two years”.
You did not show the end of my calculation. real median income down 1.4% in two years.
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photonz1,
Do you have a link to that median hourly rate data? I couldn’t find it anywhere on the statistics NZ site (only average hourly rate and median weekly earnings – which went up 5.2% in two years, average went up 5.4%).
By the way, remember that the median figure means that half of workers received less than that increase.
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Median wages are falling against costs.
http://www.odt.co.nz/news/business/130363/real-income-falls-4-ctu
“# Median weekly income from all sources fell slightly, down 1.7 percent to $529 (non-significant).
# Median weekly income for those receiving wage and salary income increased slightly by 1.2 percent.”.
Take off tax cuts and add GST and price rises. Median wages fell 1.4%.
Not forgetting that many people get well below the median income. Obviously benefits fell even more against costs with a decrease offsetting tax cuts.
And for those that think NACT is the party for small business.
“Median weekly income for those receiving income from self-employment was down by 6.3 percent”.
http://www.stats.govt.nz/browse_for_stats/work_income_and_spending/income/nzincomesurvey_hotpjun10qtr.aspx
Don’t know which NACT research unit feeds Photo his data, but they are a bit off.
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Tony asks “Do you have a link to that median hourly rate data?”
I know – not easy to find. Here a link to rates from 1999-2009 with average hourly and average weeky income, as well as median houly and median weekly income.
see
http://wdmzpub01.stats.govt.nz/wds/TableViewer/tableView.aspx?ReportName=Incomes/Earnings from wage and salary jobs by occupation, sex and broad age group
Tony says “By the way, remember that the median figure means that half of workers received less than that increase.”
No it doens’t. You can’t extract that info from it.
For example, 3 people could earn hourly rates of $15, $25 and $90, and the median would be $25.
The bottom rate could increase dramatically to $24, the middle stay the same, and the top rate could plummet to $26, and the median would STILL be $25.
It’s a measurment of someone in the middle – and tells us little of the changes above or below that.
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Kerry – is that the best you can do?
To prove real wages have dropped over the last 30 years, all you manage to come up with is some stats that show ther was a RISE in median wages for a period of just a quarter of one year (in the middle of a recession).
If you want to see actual figures for the last ten years, click on my link above (you may have to copy and paste it as it looks like it’s too long and has broken)
Work it out – there’s been a 45% increase in median wages over the decade, but only 30% inflation.
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Here bungi and Marty G dismiss Jonn Key’s claims about New Zealanders being better off
bunji
http://thestandard.org.nz/national-fiddles-as-nz-burns/
Marty G
http://thestandard.org.nz/key-tries-bad-stats-to-mask-pathetic-record/
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SPC – the standard article you link to is nonsense from the start.
The add the gst rise into inflation, but completely ignore the tax cuts that came with it.
Clearly from the beinging it attempts to deceive.
Then it says median wage has gone down, when statistics NZ show the median wage 09/10 has gone up – see
http://wdmzpub01.stats.govt.nz/wds/TableViewer/tableView.aspx?ReportName=Incomes/Earnings from wage and salary jobs by occupation(ANZSCO2006), sex and broad age group
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SPC – the author of you second link is just as useless.
They count the GST increase in inflation, then immediately count it a SECOND time against wages.
And they count minus 2.5% off a whole wage (twice) when most people don’t spend their whole wage on gst items – particualrly people on low incomes who often spend a large part of their income on NON-gst items like rent or mortgage payments.
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You are free to challenge them there photonz.
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Thanks for the link photonz1; it didn’t come out right but I figured it out.
Actually the median income DOES mean that half of the data points are below that median figure. That’s what median means, unless I’m very much mistaken. Your example also shows this to be true. Of course, with an odd number of data points, there will be ever so slightly less than half the data points below the median but, for all intents and purposes, it’s half. I think this is what you miss. If the person on the median is doing OK that doesn’t mean that the whole workforce is doing OK. This is true for the average figure also.
From that statistics data, the median hourly rate went up 46% between 1999 and 2009, whilst the average rate went up 50% – so, a widening of the income gap. The actual income, however went up less than 45% for the median, in that period, meaning, I suppose, that hours worked went down. The average income, however, increased by nearly 48% – again pointing to a growing income gap.
However, inflation was only 30.5% between 4Q1999 and 4Q2009, so that would appear to support photonz1′s position although there is no way to know how different groups have been affected by income changes and price changes. Also, I haven’t seen a critique of the New Zealand CPI but know that the measure in other countries (like the US and the UK) significantly understates the impact of increased costs for households. The only potential problem I’ve seen with the NZ measure is the quality adjustment, which is almost certain to understate the increased expenditure experienced by people, but I don’t know by how much.
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“Kerry – is that the best you can do?”
Photo. Is that the best you can do. I’ve already said incomes went up some 15% in the period against an increase in Labour productivity of 83% which has been wasted, invested overseas or burgled.
You as usual are making up the questions as well as the answers. And ignoring the substance of the argument to nitpick at the odd detail.
Spending power of those on the lowest incomes has dropped. Benefits and minimum wages have never been restored to pre Ruthanasia levels.
Many people who took drops in incomes to help their companies survive the share market failure back then are still waiting for there pay to go back to pre 1987 level also.
My argument is that Neo-Liberal policies are leaving New Zealanders much worse off than the countries which did not follow the religion to the same extent. Nothing you have said debunks my position.
The more statistics people bring up, especially international comparisons, show the disaster that Neo-Liberal more market, less regulation, free trade dogma has been for NZ. And UK. And Ireland. And the USA. And the third world countries where the IMF made opening their legs to be fucked, a condition of aid and lending.
Now you nitwits are supporting more “free trade” protection for financial thieves, more transfer of our earnings to overseas owned corporates and the theft of any thing we have left.
All you have is an own goal there that most of the increase in median wages was during the period of a Labour Government who relaxed some of the Noe-Liberal crap.
Unlike Richardson and Key who managed to have recessions when the rest of the world was in recovery.
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Somewhere in the thread above someone asked for independent evidence of falling real incomes since 1980. See Brian Easton who did quite a bit of reeaerch into the subject in the 1980s-90s, and then Mary Mowbray as a researcher based at MSD in the 1990s until about 2005 (I think).
As for CPI being useful as a measurement tool for purchasing parity for people on low incomes – at very least it is questionable. Yes it is the official measure but that is because no one will fund Statistics NZ to undertalke sufficient research in order to measure how price movements affect people in particular income brackets. They have produced price movement data based on “net” spending by types of h/holds (renters v. non-renters, and yes – even by income brackets but they advise their data pools are too small for the answers to be relied on and the spending patterns are “net” thus for the lowest group you get negative spending particularly for accommodation/housing becauuse the income groups are based on taxable income and some millionaires qualify for the lowest taxable income group…
The issue is that real incomes for many are falling and generally this is for those on lower incomes… evidenc exists in the rising GINI of income inequality as much as the Easton/Mowbray research… and the CPI data which is hugely impacted by cost of accommodation (referencd above)
people on low incomes “survive” by necessity through loans from the sharks (as evidenced when credit is broken down by SNZ mesh-blocks….)
By all means debate theory and ideology, but search out and understand some of the research that has/is being done.
Low income folk are getting poorer.
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Firstly, less new hiring – businesses just get by on less staff if at all possible. Second, and much more important, is a reduction of hours for current staff. As a poor student, I cannot get more than one 6 hour shift a week at my job, because the business is struggling. I also know they won’t be hiring anybody new for a very long time. Furthermore, I can live on $200 a week frugally, tightly, but with enough to eat well and pay all essential expenses. A part time job, knocking that up by $60 pw is all saved for the proverbial ‘rainy day’. If I, and thousands of other students around the country can do that, I don’t see how anyone can complain about living on minimum wage while working full time (ESPECIALLY not when receiving WFF). If rent costs are too high, people always have the option of moving further out of town, or simply to a different town where that particular cost is lower.
My second biggest issue with raising minimum wage is that it essentially devalues the work of skilled people. Graduates start on less than 40k per year in New Zealand, and raising the minimum wage to the early-mid thirties will NOT see a corresponding leap in the pay of skilled workers. This will disincentivise upskilling, and continue to perpetuate your myth that we’re all entitled to have kids we can’t afford, work our lives out in mindless jobs without a thought to improving our situation, and have the net taxpayers (read: those not receiving handouts for being irresponsible) pick up our pieces.
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Mmm. So, Kim, you basically want to perpetuate inequalities. You actually want lower paid, less skilled jobs, so that you can aspire to higher paid higher skilled (in your opinion) jobs. Not everyone can have those high skilled high paid jobs, otherwise you wouldn’t have any sort of society. So are those lower paid jobs really of lesser value?
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Sorry… I was sort of with you on the “disincentivise upskilling” argument which makes sense, and is of a part with the way the taxes and benefits shape income for the young professional… more on that later.
The problem I have with THIS however, is that we have no such mythology anywhere within the party. If you read through some of what we have written above your blast here, you’d notice that we are well aware of the issues of “meaningful work” and the population of people who aren’t able to perform any such thing.
You may note that some of those questions aren’t posted as questions that have answers either. The fact is that the society as a whole is based on a model that is, as we are more and more automated and productive, more and more broken and unsupportable. We know that much. You are still arguing from within that model, as one who is willing to labor as a slave, because that is the only means offered for survival by the model.
A minimum of $15/hr might reduce the number of meaningless jobs.
…but that’s not actually much of an argument. It might leave more people completely on the dole… but that is a realistic result if we are increasingly automated (productive).
The tax and benefits structure leaves a massive “hump” in the income taxes and benefits clawbacks as one passes through the 60-90k income range. One notes that this is where someone winds up fairly quickly as a technically competent and relatively competent worker in this society. The hammer used to be heavier, with effective marginal taxes approaching 90%. This has been somewhat reduced with WFF, but it is still over 60% while the effective marginal tax on the person over 120K is likely to be 33% or less.
This sort of thing leads any competent worker to consider alternatives to working harder for less… and a lot of them head for Oz as a result. The work isn’t here in any case, as most technically challenging industry is also exported as it is too hard to export product and not enough internal market to support production at the prices that competing imported product can reach. Our money is however, transferred freely at the speed of light. Ricardo’s principle of comparative advantage has been used to justify the gutting of NZ industry for decades… the results suck. People with money got more, the rest got less.. and there is no effort to modify this. Greens are AFAIK, the only ones who even recognize it as a problem.
Point is, you’ve projected a stereotype on us. The truth about the Green party is a lot more complicated than the simplistic rantings of the right-wing would leave you thinking. You did come up with something interesting, which is that disincentive to upskill, and I really appreciate it being brought to my attention as I have only looked at the similar issue at the POV of the higher end tax and benefit distortions. It exists throughout, as you show us, and the solution to it is higher wages across a wide range of workers. This is of course, not going to happen until/unless we are actually producing things here again. Which is very much against current government policy. They have imbibed too deeply, the kool-aid of Ricardo.
The bottom line here is the measure of inequality. Our GINI has increased year after year, the spread between wealth and poverty in NZ has widened. This is not accidental, and it is necessary to counter it by raising up the poorest and taxing the wealthiest… not the folks on 60-90K, but the folks over 180K, and the folks getting their tax-free capital gains.
The real world isn’t the place you think it is. It has the features you see, but it has behind them some seriously distorted structures you are apparently, not in a position to see.
If they are on a wage, they have to show up for work. That is the transport cost, and then there is the cost of moving, which for a family is not (trust me on this) negligible. There are other individuals (the non-working part of the family, often in school) involved. As a single person, you’d not consider the issue of moving to be serious, but it becomes more and more serious the longer one’s family has been in a place.
Greens are a place where we think about stuff, we don’t just sloganize.
respectfully
BJ
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Kim
There are additional costs involved in moving to cheaper less desirable areas. Sometimes these costs can in the long run far outweigh any savings to be made. Many services or learning institutions are simply not available where accommodation is cheap.
Let’s propose our test case is lucky enough to be eligible for a student loan at all, a single 19 year old student with a part time job earning $65 per week before tax, with independent circumstances after tax entitlement amounts to $161.76 per week.
Let’s say that the student is able to find cheap accommodation in a reasonably close location to their school. Rent = $95, travel expenses each week to school and work = $40 + food $55 + bills $25 = $215. Provided they can find a place to live this cheap which is becoming harder and harder these days. There are of course more expenses. These amounts listed are the absolute lowest somebody could survive on in New Zealand, considering our over-inflatedness. Being that any earnings from a part time job are taxed as secondary income, I fail to see where any savings can be made, even with being “frugal.”
If the parents earn the average wage of around 40 K per year the entitlement is $78.91 per week, even if they will not support their young adult who lives away from home. So if the young adult is poor without support, they cannot study. This seems rather unfair to me. The whole argument that people need to have money to be allowed to have children is rather juvenile as well. Consideration must be given to the fact that we need more New Zealanders to keep the economy growing and financial-disincentives to procreation will stagnate the gene pool. Wealth is no longer related to intelligence, physical strength or moral qualities, if it was at all to begin with. That elitist mumbo jumbo that is destroying our country needs to be put to rest.
As a student, for everything you earn over $195.78 the same amount is deducted from your allowance… So the only myth is that students are able to save any considerable amount while studying and working.
Back when I was studying, working 25 hrs per week and living with my partner in rental accommodation, I do not recall being able to save despite living on potatoes and water for long periods of time. I hate to think how hard it is now.
http://www.studylink.govt.nz/financing-study/student-allowance/student-allowance-rate-calculator2010.html
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Kim, the minimum wage was increased from $9 to 12 and there was no increase in unemployment because of wage price inelasticitiy in that labour market (essential to provide the service jobs and the cost was either absorbed or passed on). In the real world Australians get paid $A15 an hour as minimum wage (nearly NZ$20)
The situation in the existing economy is not caused by the wage rate but recession. Hiring is not impacted by the minimum wage rate – but demand for labour and services and this falls in a recession.
There is a reason why the student allowance is linked to the dole level rather than the minimum wage, it is supplemented by part-time work and students may be living at home or in flats with others. However a working wage is supposed to enable people to live in their own housing.
Expecting people to live away from where they work is to forget the cost of transport.
As to the need to be seen getting ahead of others as a reward for becoming skilled, if that requires you to support low wages for the unskilled, you like them only need to go to Oz to get a huge pay increase. You certainly won’t be part of the solution to the problem of low wages here by staying.
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An example that you forgot about Todd was the very high likelihood that your house would be burgled.
It is probably a lot easier now. Student loan living costs ($160 something per week) plus fifteen hours per week at minimum wage (~$170 per week after tax) gives a student a decent sum of money to work with.
Of course the student loan is interest free, which basically means that while you might be “borrowing to live”, the amount that would need to be repayed is decreasing in real terms every year. The student that gets supported by their parents (such as myself and many hundreds of students that I know of) can have a very decent living with what is on offer at the moment.
Todd, the problem with more people is that there is only so much food that can be produced. The more people we have, the higher the likelihood of us getting a Malthusian catastrophe.
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Todd,
“Consideration must be given to the fact that we need more New Zealanders to keep the economy growing”
But economic growth is unsustainable. Why would you want an unsustainable economy? Of course, we have a monetary system that requires growth but that’s not a reason to perpetuate something that must end; instead we need to transition to something else, preferably before that transition is forced on us by limits (if they are not already doing so).
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john-stone
You’re welcome to include that if you like, however I was mainly referring to there being a lack of employment opportunities in areas where housing is cheap.
I would not consider $65 income before tax and $79 after tax allowance per week much to “work” with.
Well that makes it all OK that the thousands of people who do not have financial support from their parents and cannot find enough employment simply cannot study because of financial restrictions then huh!
So lets impose an unfair restrictive financial measure that is unhealthy for poor families who do have kids, creates more crime, causes disparity and many other societal dysfunctions to restrict population growth… Surely there are better ways to achieve sustainability?
Tony
It’s not something that I want; it’s the current dynamic. I agree with you that it’s unsustainable.
What I want is for people to have the opportunity to procreate,
bring up their intelligent children so that they become contributing members of society. Education is a clear key to such a future in both population growth and developing a society that we all want to live in. Limiting peoples ability to be educated, have families and own their own homes are all detrimental measures that are inhumane; population growth being the least reason the powers that be have for imposing such negative impacting policies.
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Consideration must be given to the fact that we need more New Zealanders to keep the economy growing and financial-disincentives to procreation will stagnate the gene pool.
Todd – did you really say this? You know I can’t agree with it. Not on any account whatsoever. Any notion that we aren’t already a motley crowd would be dispelled by a walk through any of our main centers.
There are enough unemployed as well. Not enough for Nact supporters, but their rationale is that we’re all paid too damned much as it is, and they have no intention of giving up their right to keep all the money. Puts them out no end that the most promising young talent keeps slipping away to Oz unless they pay more.
We have a lot of problems. Not enough people isn’t one of them. In the neo-capitalist fantasy finance world we don’t have enough “consumers” but we never really bought into the notion of lending all the poor folks the money to enslave themselves with. So more people alone doesn’t do it, they have to be paid.
ciao
BJ
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Perhaps not enough people willing to work for minimum wage (essentially nothing) to do all those grunt jobs. In hindsight the wealth/procreation debate isn’t very productive.
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there was a comment that dairy farmers pay low wages by sprout
here in canterbury a starting wage is 32k + houseing and a proper house not a shed
my two Dairy assistants both 20 have 2 years exp earn 35k + each leave in a 3year old 2 bed flat
get your facts right
and a manager of a 1000 cow farm will be earning 100000 a year
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Todd,
“It’s not something that I want; it’s the current dynamic. I agree with you that it’s unsustainable.”
Good. Your prior comment appeared to support unsustainable economic growth.
“Education is a clear key to such a future in both population growth and developing a society that we all want to live in.”
Maybe, though I don’t think that’s a given. It is simply assumed that, given enough education, population will level out. The US and NZ, for example, continue to increase their populations at about 1% per year (and it’s not just through migration; far more people are being born each year than are dying).
But I get the impression that you think education is good, regardless of what is being learned. I certainly don’t agree with that; I don’t think our education system (nor that of any other country) is preparing our children for a world where limits will become very evident and drastically affect how they need to live their lives.
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Tony
That’s not what I was meaning to imply… There are obviously limits to how much education can achieve in the face of increasing unsustainability. But the right type of education is important (recycling, political, health, budgeting, history, current events, sex education etc) to alleviate a completely unsustainable future. Sustainability within financial, social and environmental conditions must be achieved. I agree that much of our system is conditioning young people for the opposite, pushing a corporate greed and consumerism ethos… Not that I would call such things education, propaganda or brainwashing are far more appropriate terms. For these, you don’t need an education within the context I was meaning. You don’t need funding for ECE or tertiary education. You don’t need personal, moral or social responsibility at all. The consequences of which should not be underestimated.
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SPC says “In the real world Australians get paid $A15 an hour as minimum wage (nearly NZ$20)”
Which is misleading (the conversion that is), because OECD say that NZ$1 has the same spending power in NZ as $0.98c has in Australia.
So effectively if you are earning NZ$40,000 in NZ and A$40,000 in Aus, you will have the same buying power in your own country.
Last year an Aussie tv programme flew to NZ, bought two weeks groceries, and flew them back to Australia. The price for the NZ groceries AND a cheap plane tiocket were LESS than just the groceries in Aus (they did convert their Aussies dollars which helped).
So being on $15 an hour in Aussie would be like $15 an hour here, except you’d have less take home pay because of higher tax.
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Kerry says “My argument is that Neo-Liberal policies are leaving New Zealanders much worse off than the countries which did not follow the religion to the same extent. Nothing you have said debunks my position.”
And nothing you have said about wages dropping massively against inflation since 1980 has been backed up by any facts.
And as for trade – we are the most isolated country in the world – without trade we will be like other countries who don’t trade much – Zimbabwe, Cuba, North Korea, Burma, etc.
We’d be just like a small remote rural town that didn’t let it’s good’s be sold to the big population bases.
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photonz – perhaps you would like to explain when the OECD determined the relative spending power between our dollar and the Oz dollar and on what basis this was done?
I know for sure that a car sold on the global market for $US20,000 – costs so much in Oz dollars and so much in our dollars (clue ours is worth around 76 cents Oz and around 76 cents American). And that applies for all other imported goods and clothes etc.
And don’t they have an exemption from tax threshold …
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Photonz
You accept the OECD report at face, about how much our dollar is worth here, but you go on about trade because YOU know that we import a massive amount of finished goods. Which apparently don’t count much with the OECD because our exchange rate with other currencies doesn’t affect the buying power they ascribe to our currency. Clearly whatever the OECD based its numbers on, it was NOT the cost of living here in NZ.
Which calls into question the other numbers on which you base your notion that we are somehow no worse off than we were when the GINI was under 30. Sorry, but that is simple bullshit, because the GINI is the measurement we need to look at.
Wages have become unequally distributed Photonz, we know that has been happening and we know the meanness of the right wing tax cuts at any cost brigade. We understand how your borrowing rather than taxing puts off the cost on the poor and middle classes. We understand how you want to believe that the poor have somehow deserved to fail and so you have no obligation to help them… and how you want to believe that somehow giving the wealthy thousands of dollars in breaks equates to fairness because the percentage of the pittance that the poor get back is the same.
We understand it all and we despise it.
Really? We aren’t against trade altogether Photonz, so that bit of straw stuffing needs to be knocked out… but lets get on with the question of how much trade is good for us. Whether it is right that the priniciple of comparative advantage has been so abused by the right wing to ship our best paying work, our technical expertise and any incentive to actually stay in this country – overseas.
I don’t think so. I think too, that the ease with which the money moves into and OUT OF this country has a lot to do with the impoverishment of its citizens. You are looking at a slow motion catastrophe and blaming it on the wrong people. Get a mirror.
BJ
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Some observations – I have no computer at home, hence my slience after hours –
Firstly, the Australians at $15/hr minimum wage are $2/hr ($80/wk) better off than NZers on the min wage, and if the wage profiles of both nations are looked at carefully you will find a much larger percentage of NZers at or near, the min wage than our Australian counterparts.
Secondly, while I have not sourced Mary Mowbray’s work – the most recent in-depth analysis of real disposable incomes based equivalised for family size I know it is available on the MSD’s website – or at least was a until few motnths ago… Clear evidence shows that for the 1980-2005 period the average real disposable incomes equivalised for family size rose significantly for the top 10% and for the 2nd and 3rd next top 10% it began to rise, but prior to about 2000 had remained static, the middle 50% (that is from about the 25th percentile to 75th it fell to about 1995 then remained static, while the bottom 25% fell in real terms thrpugh-out. The Gini as a measure of income rose for most of this period. I have not searched out any research on real disposable incomes equivalised for family size since Mary’s so perhaps there has been some improvement but the Gini is still high among the OECD member states (or those regarded as “rich states” by the likes of the World Bank/IMF). Interestingly, the last I looked NZ barely qualifed as a rich state.
Strange how these factors have materialised since the Douglas era?
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“without trade we will be like other countries who don’t trade much – Zimbabwe, Cuba, North Korea, Burma, etc.”
You castigate others for making unfounded claims and then you come up with this doozy. Of course, Zimbabwe, Cuba, North Korea and Myanmar are not identical countries by any means, so which country would we be like and why?
We’ve also seen what global trade has done to many other countries; rendered them bankrupt. That doesn’t seem like a good option either. Stop tossing these ideas out without foundation and try to look for the real story, not the one fed to you by government and media.
As energy and resources decline, we’ll have to get used to declining world trade, anyway. Let’s make sure we’re less dependent than other countries, eh?
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spc asks “photonz – perhaps you would like to explain when the OECD determined the relative spending power between our dollar and the Oz dollar and on what basis this was done?”
I don’t know how they did it. There was a weekend article on Aus vs NZ in the ODT and they refered to the OECD cost of living report as saying effectivelty NZ$1 buys the same in NZ as A$1 buys in Aus.
I’ve done a work trip to Aus every year since 2003, and most things at the supermarket are significantly more expensive in Aus than NZ if you are spending NZ$.
I’m currently planning my next trip, and budgeting to spend at least 30% more on most things than I do here.
As for your example of a car – you are wrong about that. A standard 2009 or 2010 Suzuki Swift sells in NZ for around NZ$18,000 and in Aus for around $18,000. When you convert it, they pay NZ$5000 more.
A ten year old Subaru with 100,000 km sells for around NZ$8000 here, and more like $11,000+ in Aus – that’s nearly NZ$15,000 – almost double.
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bj says “You accept the OECD report at face, about how much our dollar is worth here…”
I accept it because I work in Australia for a few weeks every year, and I know how much more expensive most things are there.
You must hate it here so much. You exude anger and hate. If it’s so bad, and it’s so much better in Australia, why don’t you move there?
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Graham Howell says that the incomes (equivalised for family size) have dropped for the botton quarter.
Surprise suprise surprise. When the majority of very large families come from those who can least afford to have a big family, then of course incomes equivalised for family size will plummet for this group.
So what is the Green policy for getting people to not have more children than they can actually afford? (punish those who do stay within their financial means, and reward those who don’t?).
And then we get claims that the Greens want to reduce child poverty.
The birth ratre of those living in poverty (bottom 20%) is so much higher than ALL other groups, than in some regions they are responsible for half of all births.
Simply throwing vast amounts of money at sympoms of this problem, doesn’t actually stop the problem happening in the first place – it can make it worse.
We have increasing numbers dropping over the cliff. Piles of cash at the bottom might make for a softer landing, but what’s being done about a fence at the top?
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Tony says “We’ve also seen what global trade has done to many other countries; rendered them bankrupt.”
Well, as long as we don’t need any products that have any metal or plastic in them, we’ll be just fine not trading.
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You must hate it here so much. You exude anger and hate.
Now you’re projecting Photonz, think carefully about what I said I despise – is it something that will be better across the ditch? No… I judge there to be no difference in this.
Not really in my opinion, and the inertia and resistance to change is going to be greater.
Sorry, you won’t be rid of me so easily as that
BJ
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As a general rule Photonz we favor education as the best means of persuading them not to make more bambinos. This of course, is a thing that is bitterly attacked from the right, though most on the right do not realize that the cuts in education are in fact a long term strategy to reduce the bulk of the population to blind ignorant obedience, much as it is in the USA at this point.
On the other hand, I do take your point. The party might do well to pay more attention to this aspect of the poverty problem.
BJ
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bj says “As a general rule Photonz we favor education as the best means of persuading them not to make more bambinos. This of course, is a thing that is bitterly attacked from the right…. ”
That’s funny – I thought it was the left who were fighting the govt tooth and nail to stop all their efforts to address the problem of 1 in 5 leaving school unable to read or write properly (or do maths).
I tried to get a discussion going about extra fiancial educatuion for all, and continually got shot down.
No one was interested – all they wanted to do was tax those who work hard and give it to those who don’t.
Even if you doubled the tax of those earning over $100,000 and became the highest taxed country on earth, and spent all that on those who earn below average and on benefits, it wouldn’t come to much more than the rise they got in October.
Hence if you can spend just a few million to set up a financial education programme, you could help people to save MORE that what they would get from a big tax change.
And they could save that money NOW – today – not in one year, three years, nine years or thirty years time when (and if) we get a far left govt.
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photonz1,
“Well, as long as we don’t need any products that have any metal or plastic in them, we’ll be just fine not trading.”
Do you think we don’t and can’t make any metals or, even, plastics in this country, without importing the necessary raw materials?
But you missed my other question; which of the countries that you listed do you think New Zealand would become like, if we had no global trade, and why?
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Tony asks “But you missed my other question; which of the countries that you listed do you think New Zealand would become like, if we had no global trade, and why?”
Actually, we’d probably be more like Rhodesia, as we’d start from a relatively affluent position and we have quite a bit of know how and ingenuiity.
We may have some fuel plastics etc, but there would be horrendous shortages of most things, as we simply wouldn’t have the quantities of raw materials that we needed.
Milk and meat would become very cheap, but you won’t be able to get tires, and least not for anything less than a fortune. But on the positive side we wouldn’t need so many as few people could afford cars, and bus transport would be very expensive.
Anything that there was a shortage of (i.e. most things) would have prices so high that only the wealthiest could afford them.
You can kiss goodbye to the welfare system – we just wouldn’t have the productivity or the size of economy that could support it.
Can please you give me a small list of the most successful and wealthy nations who don’t trade.
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I don’t think that there are any such nations but your whole scenario is flawed because it assumes that trade simply ends, without any plan (and implementation) for moving to a society that doesn’t need to trade.
However, this is all getting a bit off topic though, as I think I’ve said, global trade will decrease, anyway, as energy and other resources decline, and especially if people wise up about the environmental costs. So we’ll actually get to see which countries end up like Zimbabwe, which end up like Cuba, and so on. Exciting times, eh?
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Tony – why will global trade decrease?
It’s not as if nuclear powered ships haven’t beeb invented.
Or electric rail.
Almost everyone else in the world is connected by land to each other.
I think many people forget we are pretty much the most isolated country on the planet, and without trade, we’ll just slip further and further behind the rest of the world, into a poverty stricken backwater.
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We have all the resources we need to build pretty much anything we can imagine. It’s for the very reason you give that we are so isolated that we should rely on our own abilities and resources. We don’t need the rest of the world, it needs us. Utilizing nuclear power to facilitate trade is not an option.
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Todd says “We have all the resources we need to build pretty much anything we can imagine.”
Yeah right – we’ve got plenty of wood, but we need rubber metals, resins and plastics if we want to build airliners, trains, cars, computers, wind farms, solar panels, tv screens, etc.
We could always have wooden planes, and wooden tvs, and wooden computers, and wooden wheels. We could build wooden Hillman Hunters (they wouldn’t be much worse)
And we might struggle a bit with our own medicines. But that’s ok, cause we’d be so poor only the rich could afford medicines anyway.
Todd says “We don’t need the rest of the world, it needs us”
Very funny – most of the world doesn’t know we exist.
NZ could fall off the map, and no one would notice (actually there have been world maps where NZ was dropped off, and….you guessed it….no one realised).
Todd says “Utilizing nuclear power to facilitate trade is not an option.”
Of course it is. Nuclear powered ships have roamed all over the world for decades. We may decide not to let them in here, but that doean’t mean the rest of the world won’t.
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Photonz
We made tires in this country until last year… not that expensive. We made whiteware here up to about 3-4 years ago. We smelt aluminium and steel. Your alarm at the prospect of us doing things for ourselves as opposed to letting foreign workers do them is somewhat misplaced. We CAN build the things we need, or could if we weren’t exporting our brightest and best (and our money) to Oz… because they want jobs that don’t involve harvesting nuts and berries.
The actual delta $ would mean that we all live with a bit less, fewer luxuries and less of the consumer oriented glitz that the rest of the world thinks is necessary. We may reach for sustainability and manage to retain our civilization, they WILL run out and fail to retain much of anything at all… and we might well be happy if they can’t find us on a map in that event.
Not quite right there anyway. The world’s hungry would notice almost immediately. Folks with money would not. Of course we know who counts.
Todd may not like nuclear power but I am quite happy enough with it if and this is a big iff… we set up the additional reactors that allow us to reprocess and burn the waste… that would be thorium reactors. With waste products that have reasonable half-lives and appropriate places to sequester it until it becomes safe. NZ has no place to sequester waste that has even a 30 year half-life… we’d have to ship it to Oz.
respectfully
BJ
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I tried to get a discussion going about extra fiancial educatuion for all, and continually got shot down.
You tried again to place blame on victims Photonz, that is how it was perceived here. Nobody here has any problem with educating people about economics (we can start with teaching Parliament about what money actually is, and why our fractional-reserve system is wrong). Economics is indeed neglected in most curricula, and this is I suspect, the way the bankers like it.
Your point about financial education is not misplaced. We welcome it. Your emphasis on the poor being to blame for their poverty however, is, and we do not.
respectfully
BJ
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Thanks BJ.
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bj says “We made tires in this country until last year… not that expensive”
Tonys question was what would NZ be like with no trade at all. So you have the ability to make tires BJ, but where will you get the raw product – our local rubber plantations?
And we make aluminium, from what? Our own bauxite? (actually, it’s not really ours – just someone bringing it here to use our cheap electricity).
Under a no trade scenario most goods would become very expensive (that’s what has happened in every other country where trade has been severely restricted).
But you’re right – everyone would have to do with a lot less….at least almost right. Most people would have to do with a significantly less. Only the rich would be able to afford allthe things we now take for granted.
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photonz1 said “I tried to get a discussion going about extra fiancial educatuion for all, and continually got shot down.”
Then BJ proved the point “You tried again to place blame on victims Photonz,”
We don’t have financial education in schools, and that’s “the way the bankers like it”. sounds like a weak excuse.
BJ says “Your point about financial education is not misplaced. We welcome it”
Yeah right – barely a positive comment or a constructive idea put forward in a week of going on fiancial education in schools.
BJ says “Your emphasis on the poor being to blame for their poverty however, is, and we do not.”
That’s totally simplistic. It’s blatantly obvious that many poor people are totally to blame for their position, and many are not.
It’s not just poor people who are in need of financial education – there’s plentry of middle income and even higher who are financially illiterate.
Just look at programmes like the money doctor – should be renamed “Stupid People and Their Money”. Though if we don’t have financial education, then it’s not completely their fault.
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photonz1,
Oh boy. So we’re just going to build nuclear powered ships and planes to carry on global trade as we know it? Get real.
If, by “almost everyone else”, you mean that Europe, Africa and Asia could trade with each other happily via electric trains, you’re sadly deluded. Do you know what finite resources means? Do you know that our biosphere supports us? The rest of the world are subject to limits, just like we are. When I talk of declining resources or damaged ecosystems, that applies worldwide, not just New Zealand. So we would not slip behind other countries, whatever that means.
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Rational trade arrangements that take into account the cost of transport and the natural impedance that occurs when money is correctly defined, are going to happen. It will be less… it will not go to zero.
I see above that Tony asked that hypothetical about what you thought WOULD happen in a zero trade environment, which you were responding to, and that’s a fair enough reason for what you were saying. It is wrong, dead wrong, to ascribe a zero-trade policy or even prediction, to the Greens.
Bauxite can be hauled in sail driven ships if needed. From Oz to here is mostly downwind.
BJ
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Before Photoz is surprised about family size, equivalising for family size attempts to balance for differences in family size. The maths can be complicated but it esentially assumes it costs less for a two person househ\old to live than two single person ones. That logic is applied across all household incomes. Income data is meassured and adjusted by both the household methodology and for movements in prices …. to arrive at movements in real dollar terms. While there is some debate in academic/research circles about the maths involved in h/hold equivalising it is at the margins – not the concept.
And in anycase, families exist, they are the size they are for all sorts of ethno-cultural reasons …… Public policy needs to be based on reality not some notion of what life ought to be like.
We have had data presented above about wage/income movement in the last two years, even the last decade, and some comment on the movements over the last 30 years – I recognise I have not provided a web reference but unsure if it exists other than MSD’s website…..
As for median incomes going up 7% and other other may incomes rise or fall. Much of the problem in the last 30 yrs is that most fell.
Granted the medialn increased by 7% recently. And rather than rely on the crude CPI measure, another crude measure is the net spending movement data for the middle income bands that SNZ produces…. That should show the actual price movement for the avrerage person on the median income.
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“Only the rich would be able to afford allthe things we now take for granted.”
But only for so long as they can get those poor bastards to make those things for them, and only whilst the resources remain accessible enough and plentiful enough to make those things. Frankly, they are welcome to them, but they should be made to make them for themselves.
The “taking for granted” is an illusion. We live in a very temporary phase of the human experiment, enabled only by cheap plentiful energy that made other resources seem cheap and plentiful and able to be extracted without consequence. That period is now waning.
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Photonz –
I repeat, the bankers do NOT want you to know what money is. They do not want you to know how money works. They want you to owe money to them.
This isn’t about the poor, it is about everyone. You were very much missing in the Fractional-Reserve thread. I was surprised.
So tell me… What is money?
This is critical thinking 101, and I remember that this wasn’t discussed when I was going to school either. It has never been discussed. When I got to University, the Economics professor and I had blistering arguments about the difference between his assumptions and the real world. I never thought to ask that question at the time.
Economics is not a science. It is based on a faulty measurement standard. In the current environment the smartest thing to do (if you can manage it) is to borrow a lot of money and default on the debt. THAT is a winning strategy… it is not good economics. It sucks as a way to run any productive enterprise. It does not help the nation.
It is what it is.
If we start to educate people about economics I will be absolutely delighted… but it does not give me any pleasure to note that
…this sentence parses to mean that you placed the blame and then realized that you had to qualify it… or to mean nothing whatsoever.
I suggest that we’re not actually going to see eye-to-eye here. The problem of the poor as I’ve described several times above this, is largely one of productivity improvements and redundancies. It is the social model falling to pieces as the underlying assumption “anyone can get ahead by working hard” falls apart.
You’ve not suggested any answers except that the minimum wage should be held so low as to promote unproductive work practices and you are blaming people for not being in the top half of human abilities. The Lake Wobegon population… does not exist.
BJ
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A friend brought some veges and fruit to church last sunday, and said he wanted to trade…… We are setting a trade option next week. Granted it won’t pay the rent or power but its a start and he and the fellow traders are all satisified. I think the sun and rain helped somewhere along the way…..
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“It’s not as if nuclear powered ships haven’t beeb invented.”
Off the top of my head, I think there have been four non-military nuclear powered ships. All the cargo ships were experiments that were complete financial failures and were either broken up or had their reactors replaced with conventional engines. The Soviets did build a nuclear icebreaker for the far north, but I can’t remember what happened to that.
Given the commercial failure of nuclear shipping, I never understand why a few right-wingers are so starry-eyed about it.
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BJ says “You were very much missing in the Fractional-Reserve thread. I was surprised.”
No – not missing it. More like ignoring it.
I think it’s fantastic that I can borrow money easily, and use it to buy income generating assets that pay considerably more than the interest I have to pay.
If you really want to get one up on the banks, you can even borrow money from them, then buy their shares with it. If they make a fortune, you’ll come out on top. However in reality, your current dividend will be around the 6% mark (before tax) – similar to your interest rate.
The problem is Kiwis went nuts on housing speculation, and spent several years buying houses for much more than they were worth (every week there were articles telling us houses were over priced but people kept paying too much for them).
Effectively we have the same houses we had ten or 15 years ago (with a small number of new houses) but we owe the banks thre or four times what we used to – FOR EXACTLY THE SAME HOUSE.
That’s really stupid. At last we’ve had some restructuring from the govt to put a lid on house prices, without colapsing the market.
Coincidentally there was an article in the paper this moring by an economics professor that pretty much sumed up everything I’ve been saying all along.
And the first few sentences are similar to something you said about what is good for the individual isn’t necessarily good for the nation
See
http://www.odt.co.nz/opinion/opinion/147778/property-speculation-has-led-edge-precipice
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Sam says “Given the commercial failure of nuclear shipping, I never understand why a few right-wingers are .”
Who is “so starry-eyed about it”?
It’s merely one option if there is no oil. And if there is no oil, the commercial viability of all other options changes completely.
The idea was simply bought up to counter the arguement that if oil stocks dwindle there will be no trade (there will still be nuclear, electric trains, bio fuels, fuel cells, and probably a number of new technologies yet to be invented)
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I reckoned you were ignoring it.
I don’t care if money is borrowed. Only that it must not be created in the process of borrowing it.
…and as you said, what may be good for you may not be good for everyone.
Keynes is simply restating the tragedy of the commons in economic terms. Whether his formulation comes first, I don’t know. It is no news to us.
Neither were the reforms (given that we’ve been calling for them for most of a decade now).
I’ve always given credit to National for forcing some reform through, but not full credit, as they’ve socked us with GST increases and reductions for the wealthy and refusal to put on a CGT at the same time. Personally I think that they had NO choice. The absurd speculation was so far out of hand that not even they could get away with ignoring it. Cullen, had Labour won, would have been in the same position.. and National followed his suggested prescription.
No, not full credit at all… but a barely passing grade is better than Labour did in 3 terms, so I am not entirely unhappy on that specific issue… but my feeling about it is that “Even a stopped clock is right twice a day”.
BJ
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photonz, In your first post here you mentioned that after tax many low income parents had a higher level of pay per hour because of WFF tax credits. You did this to defend the low rate of minimum wage. Then later you have attacked low income parents for having children. As if this should be discouraged.
Do you support the WFF providing for low income parents or not. And if not – would you in the absence of any WFF then support a higher minimum wage?
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“And if there is no oil, the commercial viability of all other options changes completely.”
Yes, but the point is that nuclear shipping is outrageously expensive, so traded goods will be too. It’s not a matter of no trade – just massively reduced trade. And probably other power sources (wind, solar) will be more competitive.
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… as for ‘starry eyed” I was thinking of that ACT MP who was raving about nuclear cargo ships a while back, as if she’d discovered the Holy Grail.
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Interest thread…. If I could find the relevant old Vic essays I would reference a summary of the debate between economists of the philosphical kind and the econometric type. The former dominated the academic world prior to the 1920s, but sadly not since…..
Very few of the former exist, even those on the left or of the Keynesian type are not phlospohers even though Marx was…
As a result economists have tried to prove utility theory via mathmaticval formulae… and as not all elements of utility can be measured money/wealth/income has been used as a proxy…. from which has come the mess we call ecoonomic policy emanating from governments. (And I admit I use numbers to try and prove/disprove matters that are more properly of a philospohical nature….)
As noted, the measurement system is to put it bluntly, a load of crap and we all chose which bit of smelly stuff we want to prove/disprove because we rely on a deformed meaure of worth/utility…. that is money/income/wealth…
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One should note Gareth Morgan says he asks the Infometrics economists to explain why there mathematical model indicators will be proven accurate in practice in the economy, by showing how people would rationally act to deliever an outcome in accord with the forecast.
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BJ says “I’ve always given credit to National for forcing some reform through, but not full credit, as they’ve socked us with GST increases and reductions for the wealthy and refusal to put on a CGT at the same time”
Pretty much everyone had benefit increases or tax cuts that equalled or were greater than the GST increase.
On a $600 a week wage in the hand there was a $30 a week increase in the hand. Even if you sepent the whole $600 on gst items (i.e. nothing on rent, credit card or mortgage interest), that’s only a $15/week increase because of the gst. The tax cut was twice that.
A capital gains tax would be a disaster at this point in time. Current policies and economic conditions have put a lid on house prices, without plummeting them and sending people under. So what’s happening, is exactly what needs to happen.
(and beside, bringing in a capital gains tax when houses are still 15% over valued, means that capital gains for teh enxt few years will likely be negative – the govt will be paying OUT instead of collecting)
We actually already have capital gains tax – it’s just not called CGT. If you trade houses or speculate on them to make a profit, you are taxed on the money you make, just like a car dealer is taxed on the capital gain they make on buying and selling cars. It applies to traders and speculators who only own properties on a short term basis.
The govt needs to be very careful in the way they deflate the housing market. If they suddenly make it much less profitable to own a rental property, it’s likely landlords will simply hike rents up to compensate.
A very large rebalancing has to be done, and needs to be done very slowly to avoid creating a large number of losers (who would inevitable be mainly those with lower incomes – renters and those struggling to pay their mortgage).
Currently the housing bubble is continuing to deflate at a good rate that’s not causing much damage. Elsewhere it popped, leading to financial meltdowna.
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SPC asks “Do you support the WFF providing for low income parents or not. And if not – would you in the absence of any WFF then support a higher minimum wage?”
There are several problems here. First and foremost something need to be done (fianncial education, social advertising campaigns – whatever) to try to convince people to live within their means.
So that means if you have a low income or no income, not to have a large family.
Secondly, it’s not kids faults if theya re in a poor family so some support need to go there. Possibly a mix of services and financial help would be better, especially for the extreme end of things where the money never gets to the children anyway.
Thirdly, why does someone over $100,000 (i.e. in the very top 3% of earners) need working for families help?
Fourthly, back to fiancial education in schools so that ALL people can better live within their incomes.
Fifthly – also through fiancial and social education, we need to try to get people to have, or stay in, two parent families. There are so many advantages with two parents – fiancial and social – to both the families and the country.
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Won’t say?
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photonz1,
“Pretty much everyone had benefit increases or tax cuts that equalled or were greater than the GST increase.”
Yes, but the better off had better returns and so the wealth gap increased, essentially growing the poor, as measured by some percentage of average wealth or income.
“The idea was simply bought up to counter the arguement that if oil stocks dwindle there will be no trade (there will still be nuclear, electric trains, bio fuels, fuel cells, and probably a number of new technologies yet to be invented)”
Maybe not no trade but certainly decreasing trade. Electric trains require electricity (generated from some source) and can’t travel across water (heck, even within New Zealand, we have a water barrier), biofuels are net energy losers, fuel cells are not energy sources (and with huge problems). Technologies yet to be invented may never be invented, of course, especially with declining resources. You have a starry eyed view of what limits mean.
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Photonz – Creating GREATER inequality eventually bites the poorest, it ALWAYS does. The strategies of National increased taxes on the poor, gave them a tax cut that barely covered it when it covered it, and handed mucho dinero to the owners of the party, the have’s and have more’s.
You can cite a planet full of statistics from right-wing governments and think tanks that show that the poor aren’t being hurt, the CPI isn’t increasing and it is perfectly OK to substitute hamburger for steak in computing the CPI because it’s the same thing… but the folks who are getting reamed WILL know. It isn’t just numbers to them. It isn’t OK to lie about it and it isn’t reasonable to expect them to like you when you do it.
For some of the rest of us who ALSO know what is being done here, the choice is to go to the Greens, or farther left… and for the people it is being done TO, there is really no option but to take whatever is on offer, as much as can be had and say “fuck you very much” for the bullshit you put them through.
You want people to think. You want them to pay attention to trying to save money. Some will because the habits of generations have been passed down but most will see their hands slapped with a break-even tax adjustment while they see the big spenders getting another wheelbarrow of dosh. While their kids have been turfed out of early childhood and they can’t afford to live near enough to work to make working a worthwhile option (if indeed there IS any work) and there’s stuff all assistance helping them to move anywhere there is work. You don’t want to pay them a living wage, you make the drugs illegal so the gangs have both a guaranteed income and a welcome mat laid to the front door of the school and you wonder why they take the drugs and give-up?
I can’t imagine anything as stupid as this being policy in this country but it seems that fantasyland isn’t just the domain of Mickey and Minnie. John-boy seems to inhabit the place as well.
BJ
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Thirdly, why does someone over $100,000 (i.e. in the very top 3% of earners) need working for families help?
Off the top of my head it would be because the effective marginal tax on that person would slip over the 70% mark if the benefits claw back were not ramped more gradually. The real crime here is that there isn’t a higher tax bracket for people over $150K and another for people over $500k.
Before there was WFF the effective marginal rate hit 90 cents on the dollar, a 90% tax/benefit hit. You know it was there. It had to be fixed, and Cullen’s answer was WFF and nothing else. I remember giving him hell about it too.
This is not because so much money is going to come from the folks in those brackets, they’ll structure things to pay very little of that in ordinary taxable income… the reason is that for those of us who actually work and produce for a living, 100K is about as much as we’re ever going to see coming in… some lawyers and bankers and property speculators got more, but didn’t IMHO, produce a damned thing.
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Tony says “You have a starry eyed view of what limits mean.”
If the choice is being optimistic or fatalistic…..hmmmm.
As for electic trains – no good for NZ trade, but unlike NZ, almost every other country in the world has a land border (or a very short boat trip to a mainland – or a chunnel).
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BJ – again, if you hate it that much here, why don’t you go to a country that is far more left wing.
If it’s bad enough for a large enough number of people, we’ll have a left wing govt in 9 months.
I don’t have a big issue with higher tax in the upper brakets you talk about, but it won’t actually achieve a lot.
The main benefit will be making people like yourself feel better. It won’t actually bring in much extra in tax, because 99% of people earn less than $150.
And it’s well known that if you have too big a difference between the company tax rate and individuals top rate, people in top positions merely arrange their affairs to avoid the top rate (i.e. become a contractor, ltd company etc.
When the gap is smaller, it’s not so worthwhile with a more complicated set up – so less people do it and MORE people pay their full tax.
One of the problems we have is 40% of working age people contribute ZERO tax to NZ.
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photonz1,
It’s not a matter of being optimistic or fatalistic; it’s a matter of being realistic. So long as we tell ourselves false stories, we have no chance of avoiding dire consequences of those limits.
But we’re all right because “almost every other country in the world has a land border”? Sheesh, do you actually think about what you write?
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Tony completely twists what I said into “But we’re all right because “almost every other country in the world has a land border”? Sheesh, do you actually think about what you write?”
All I suggested was that electic trains are one option for trade as most of the rest of the world has land borders.
And if the oil situation is so bad and will run out soon, then why are we so concerned about climate change? Running out of oil will totally solve that insolvable problem.
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Sorry, photonz1, but that’s the impression I got from your posts. You kept saying that most countries can trade with attached countries by land. Whilst that may be true, to a degree, it doesn’t help (if that’s the right word) those countries that don’t have a land border with other countries, or those countries that consist of multiple islands. So a dwindling of resources will not be made up for by the alternatives you seem to think are waiting in the wings, for the country that matters most to us.
The oil situation is bad but you clearly haven’t even made a cursory investigation of the situation, with that sort of comment (“will run out soon … will totally solve that … problem”). Depending on how fast countries collapse, oil could continue to be produced, though at a declining rate (which is bad for economies), for decades, or even a century. But the kinds of oil (and gas and coal) that are now being targeted for extraction are even more polluting than the sweet stuff that was easy to get and high quality. So, no, it won’t solve the problem of climate change or habitat desctruction; we actually need to stop using the stuff well before it runs out.
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Photonz
“the rich are the scum of the earth in every country” – don’t remember who said it, but it has a certain cynical core which resonates with me. …as in, it doesn’t matter where you go, there they are. The conditions somewhere else MIGHT be better, or not, and there are considerations beyond social context. This country does comparatively better than the one I came from, but the other reasons were more compelling than the social and political environment.
You keep right on trying to paint me as unhappy with the country. What I really am is pissed off at the government in power.
BJ
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I am still waiting for a reply to my question.
Do you, photonz support the WFF providing for low income parents or not? And if not – would you in the absence of any WFF then support a higher minimum wage?
After all you did cite the WFF tax credit component of WFF as a reason why the minimum wage did not need to be increased (ignoring the fact that singles without children (empty nesters working as carers and cleaners and supermarket staff) and couples yet to have children are saving for retirement or to buy a home in which to have children.
And also note, the real world evidence that as families realise middle class aspiration they have smaller families (why birth rates fall in developing countries as proposerity increases). Having low minimum wages is counter-productive – so teaching people in certain “decile” schools to not have children they cannot afford is silly – and it does not even deal with the existence of WFF (which they know makes it affordable if they can get a job).
I suppose you mean telling those people unlikely to get a job to not have children while on welfare coz the children will be raised in poverty. See my point about third world family size. Family in a rental is a poor persons substiture for a career and the ability to have a (some sovereignty/plan in and over their) life in the wider community and owning a home etc.
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Tony says “Whilst that may be true, to a degree, it doesn’t help (if that’s the right word) those countries that don’t have a land border with other countries, or those countries that consist of multiple islands.”
True – but that is only a very small number of countries. I suppose one of the things I was trying to emphasize (which always gets forgotten) is that we are probably the most isolated country in the world from the major markets and population bases.
As for oil depleting – I think we have the technology now to get by with much less oil than we do. For the firt time ever, every major US car manufaturer is putting out an electric car.
Currently many alternative technologies are slightly dearer than oil – so as oil prices keep going up other technologies become feasable from a financial point of view.
And when that happens, the changeover will pick up speed. Hell – even I have been looking at a very efficient car for my wife recently re-insulated the house, and the old heat pump will get replaced with a more efficient one on Thursday (and I’ve been told I’m on the extreme right).
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BJ – I just think we’re far more likely to make a significant improvement to peoples lives by teaching better houserhold fianncial management.
You could campaign for your whole life for higher wages and benefits and never change anything.
And if you did, it would likely be reltively insignificant compared to what you can do by teaching people to live better on less.
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SPC says “And also note, the real world evidence that as families realise middle class aspiration they have smaller families”
Or could it be the other way around – that if people have smaller families they are more likely to realise their middle class aspirations.
Because if they have realised their middle class aspirations WITH a big family, they’re unlikely to give a way some kids to then make it smaller.
And having lived in the third world for a few years, there were three main reasons for large families.
1/ Source of child labour to work the family plot.
2/ Source of a pension as there is no welfare system
3/ Because of a high death rate among young children.
To answer your question, I beleive people should work themselves into a position where they can afford to have a family BEFORE they have it. This gives most people about fifteen years to get themselves trained/educated/promoted above a minimum wage.
I don’t agree with WFF for most people. However there are always circumstances where people will need help (i.e. those with disabled children who need extra care).
However if people are in a minimum wage job, and want to have a family, they need to spend the first fifteen years of their working life to improve their fianancial situation to the point where they can afford to support one.
If they sit in a minimum wage job and put in no effort at all to improve their situation, they shouldn’t expect other hard working Kiwis to support their family for them.
And if they do, instead of WFF, support should be non-financial i.e. food tickets, electricity tickets, rent subsidies, clothing tickets, child care etc.
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I see you are opposed to WFF for those on the minimum wage – yet you first posted here opposing a minimum wage increase by citing what a person on WFF would get per hour including their tax credits.
I sort of guessed that there was something you needed to declare about your position. You presume that anyone on a minimum wage who has children is not to be trusted with tax credits and that would include anyone moving from DPB to a minimum wage job as well. You don’t want to educate you want to the poor to live under judgment by their welathier betters.
You want those needing to receive tax credits to keep their children out of poverty to be morally supervised by the state.
Your profiling is based on the crude assumption that the size of the wage is a sign of the level of dependency when they become parents and dependency you see as a sign of their unfitness to be parents.
On the other matter – but the evidence to support my analysis also occurs in developed nations – it’s not just in developing nations. The evidence in Europe is that affluence has resulted in families with an average size smaller than 2 children – despite larger families being affordable and being the norm in earlier generations.
Two reasons – contraception and careers for educated women and their two income couple lifestyle being aspired to by others in society (also singles living alone after divorce and surviving via their career and childcare).
But in any case it’s a simple social fact, separate from economic rationalism – people without a career and place in modern society will more likely develop instead their own family life whether on welfare or WFF support or in gangs or another sub-culture (sectarian etc). It’s the way of the western world underclass (even if in the developing world their underclass is associated with that part of society still in the old economy). I’m ignoring the Maori and Polynesian attachment to group/family/collective as the Pakeha underclass is similar in makeup.
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Better financial management – could be fun.
Cook on the stonesunder the sun – particularly in the summer – reduce the power bill.
No need for fridge in winter – reduce the power bill.
Sleep five to a bed – reduce the power bill (but no sex please!)- this will also reduce accommodation costs.
Walk, walk, walk – but remember to leave earlier than when going by car unless you are in Akld on the motorway…..
Another way to save is simply not pay the bills…. (I’m unsure if once the powers disconnected the daily charges continue to mount up… )
You can also grow your own …. and if possible, trade it…. break the duopolies….. but be careful…
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SPC, says “You presume that anyone on a minimum wage who has children is not to be trusted with tax credits”
That’s not what I said.
I said if people sit on a minuimum wage, AND year after year have made no attempt to improve their situation for their family, AND expect everyone else to support them, THEN they should be supported with things that WILL improve their situation – food, electricity, rent, clothes and childcare.
Your system does nothing to address child negelect. Even the lefty health nurses at my wifes work are saying we HAVE to move to food coupons for dysfunctional families.
We have 50,000 children going to school with no breakfast. Yet $1.50 on a loaf of bread would give two children two pieces of toast each on weekdays – 75c each for five breakfasts, or 0.15c per breakfast – (or $78 for toast for two kids for a whole year) – or it buys one stubby of beer.
And in the tens of thousands of families who can’t afford to give their children breakfast, are there no smokers, drinkers, drug takers, flat screen tv watchers, sky subscribers, V8 drivers, dog owners, nike shoes wearers, hair dyers, make-up wearers, chocolate eaters, coffee drinkers, pokie gambers, tab gamblers, etc?
Because there shouldn’t be a SINGLE one of those things above – not one – that takes priority over the breakfast of ANY ONE of those 50,000 children.
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Graham Howell says “Better financial management – could be fun”
So you don’t think there is a single family of the 50,000 children who go to school without breakfast, who could change a priority to buy a $1.50 loaf of bread?
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photonz1,
“True – but that is only a very small number of countries.”
Maybe, but it includes THIS country! So, even if you’re right that there will still be lots of global trade, it will be very different trade and exclude some, even many, trade links (e.g. the Americas and Europe), with some countries, including New Zealand, hardly participating at all.
“I think we have the technology now to get by with much less oil than we do. For the firt time ever, every major US car manufaturer is putting out an electric car.”
You think we do, eh? Do you know how much oil goes into making an electric car? And just because a company markets an electric car (not that many/any are actually available to buy yet), doesn’t mean that it is a viable option or that it will maintain current lifestyles.
“so as oil prices keep going up other technologies become feasable from a financial point of view”
So, as everything becomes more expensive, a few people will be able to take up alternatives? That’s not a good strategy, if you want society to hang together. The changeover will never pick up speed because the changeover will be too expensive for most people.
We can’t solve our problems by becoming less unsustainable, because it’s still unsustainable. We, including you, need to tell ourselves more accurate stories about our predicament and not rely on wishful thinking for our futures.
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Since when has a loaf of bread cost $1.50?
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photonz1,
“Because there shouldn’t be a SINGLE one of those things above – not one – that takes priority over the breakfast of ANY ONE of those 50,000 children.
“
We can certainly agree on that!
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Todd asks “Since when has a loaf of bread cost $1.50″
Last week.
Sometimes I have to pay full price at my supermarket – and that’s $1.65. Ocassionally it’s on special at $1.
Or if you are silly, you can get exactly the same bread, but from an advertised “brand” and pay $3 – even though it is the same bread, made at the same time, at the same bakery.
our kids do lots of sport and we go though a lot of bread – usually 4 loaves a week, so we save 4x $150 which saves us $6 per week, $312 per year, and over our 40yr working life will save up to $12,480 (probably a bit less as we won’t always be feeding 4).
I talked to a cheesmaker for one of the main brands recently. Their premium and budget brands had a 30% difference in price but the only difference is the packet – the cheese is identical.
But are there really families of 50,000 children in NZ who have higher priorities for every single dollar of income that is higher than $0.75c a week for five breakfasts for their child?
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That muck gives me indigestion:
http://hubpages.com/hub/why-white-bread-is-bad-for-you
Other negative health aspects come in the form of raised levels of bad LDL cholesterol in your bloodstream. This can lead to problems such as heart disease related to the narrowing of the arteries. When levels of LDL cholesterol become too high artery walls thicken and blockages can occur, leading to thrombosis (blood clots) as well as high blood pressure.
I know it might be tedious photonz1, but could you get your shopping receipt and let us know your budget spend? We need that font frog.
Did you happen to notice that this thread is 277 posts long?
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Photonz1, asks if I can identify a SINGLE family who has purchased a loaf of bread priced at more than $1.50 whose children have occassionaly gone without breakfast.
Steth, what quality of debate one becomes involved in….
I am however aware of bene h/hoilds with children being unable to afford repairs to their fridge in May being declined assistance by administrators of the public purse (aka case managers at Wk&I) with the aforementioned case amanger saying come back in the Spring when its needed. Hopefully an isolated incident…. but there are many other “isolated” bits of shit out there…
Shit happens to a lot to people in poverty (including the parents of the 50,000) and my inability to find a single family I guess proves some point phutunz is making, but Gruhum fails to see it.
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Todd – I don’t eat white bread.
And I don’t have my last shopping receipt, but I did have a good look at after I did the shopping last weekend -
Weekly grocery shop last week for family of four was $189. It included approx $30 of fruit and veg (a bit more than normal as I got a extra fruit that I wouldn’t normally buy), and four loaves of bread for $6.
It included meat for the week (all on special, and relatively small quantities for each meal). Breakfast cereal for the week, toiletries for the week, frozen goods etc.
There was a large block of cheese and about 6 x 2 litre milks. So dairy cost as much as fruit and veg, though if money was really tight we could probably halve our dairy spend (and still have recommended daily requirements) and save about $15 / week.
It also included items that are not neccesities – i.e. wine x2, chips, biscuits, shapes, drinking chocolate, ice cream and fizzy drink.
They came to around $40 so we could have got away with $150 for the week if we stuck to neccessities.
However we do spend more if there are bargains. I only buy coffee when it is half price or less (then I buy 20 pkts). And watties tomotoe sauce normally costs $3.50 a bottle, but we pay around $1 a bottle by refilling with a four litre bulk pack (bought on special of course).
Ditto with cooking oil. You end up paying 1/3 to 1/2 normal price.
And if meat is cheap, I’ll buy several weeks worth, in which case I might spend $230-$250. But $200 is average.
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So photonz you “don’t support WFF for most people” and where someone is on a minimum wage job for some time – you say they should no longer receive tax credits in cash. You are still presuming that simply by having a low wage job and being dependent on support – they are not parents who can be trusted.
That’s prejudice against people stuck in low wage jobs – and it’s not based on their performance as parents, so its not based on valid concern for the children.
And you imply that not supporting that is somehow “Your system does nothing to address child negelect”. It’s not my system photonz, dismissing your alternaticve does not mean I cannot do better than the current system.
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SPC – YET AGAIN, you change what I actually said, and ignored the conditions I clearly spelt out.
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Oh yes it is what you said.
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SPC – clearly our education system is not working. Get some reading glasses, or reading lessons.
I limited my group to people who had made no attempt to improve things for their families, over years and years, and expected everyone else to support them.
You removed those conditions and applied my statement to everyone.
Now wonder we have 50,000 children go to school without breakfast when there’s a bunch of people continually making excuses for bad parenting – essentially making excuses for neglect.
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Graham Howell says ” and my inability to find a single family I guess proves some point phutunz is making, but Gruhum fails to see it.”
Pretty simple really.
There are 50,000 children who go to school without breakfast.
I beleive spending $1.50 a week on a loaf of bread to give their kids breakfast should take priority over some of their other spending.
Do you beleive there isn’t one single family who could change their priorities to put feeding their kids first?
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OK Phutz, I’ll bit.
What evidence do you have the supposedly 50,000 children going without breakfast an unspeified number of times are in that position because their parents/guardians did not by sufficient quanties of $1.50 loaves of bread.
My understanding of reach into breakfastless children is that many have parents working at the time the children rise (or the parents have returned from working the night shift and are asleep) and that the children have simply not bothered.
And while slices of bread can feature in a breakfast it need not do so, so why does the absence of a $1.50 loaf of bread (or one per child per week) or one fewer than needed (for example the parents buy six when seven are needed…)
The vast majority of parents on low wages and no benefit but denied supplementary assistance when entitled by those who made decisions similar to the fridge example I gave above, or those with wages and abated benefits, or simply on benefit entirely would dearly love to be provide more – including the seventh loaf of bread. And yes some parents have wrong priorities… and sometimes paying to get the fridge fixed/replaced takes priority…
I also know some base opinion on the dysfunctional mother of their children too…
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Graham – that’s pretty standard – a never ending list of excuses for child neglect.
The figure of 50,000 was on tv this week from a poverty advocate.
The problem public health nurses find is that if people have much higher priorities than their childs welfare, handing out more money doesn’t fix the problem, and in many cases makes it worse (i.e more alcohol, more drugs, more going out and leaving the kids by themselves at home).
They even have what the call the “flat screen index” where the size of a flat screen in dysfunctional families is a good indication to the level of child negelect.
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Oh dear Phutz, I was responding to your request to find a single family who among a population group satisified or not some criteria you set.
I was trying to find out exactly what you wanted to ask me…. like was it the missing seventh loaf of bread, or any bread at all.
Child neglect by whoever is not excused, but unless we seek to understand the myriad of reasons for such neglect and where possible seek to address them then all that happens is a degree of what purports to be denate across the ether. Sadly, child neglect occurs in all types of the families including those where the parental income is over 100K. It is equally wrong there. The set of policies differs depending on thre causatlity.
Ascertaining how many of the breakfastless children are a result of poor spending priorities by beneficiaries and low income or simply a lack of income is difficult. From my contact with the people on such incomes -and this would be close to the thousands over the last 20 years -improving the income would reduce the poverty of them and therefore the chances of no breakfast on occassion. (AND just so we have some shared understanding, by “poor priorities” lets identify alcohal and illicit drugs as poor priority setting as opposed to fixing the fridge.) There has been research by reputed social policy researchers interviewing middle and low income people about the what is needed for an adequate budget. For the most part, a benefit plus supplemetary assistance does not allow these budgets to be meet. Catering for repairs and maintenance, school uniforms, occassional decent new clothes are not possible – yet second fridges break-down to say nothing of the second-hand washing machine. There is also research into the cost of basic diets for adults, children (babes, primary and adolescents) and ensuring this is available per week sometimes hits barriers. I think the eftpos machine says “transactrion declined”. Instead of seven loaves, only six are purchased.
Not excuses Phutzs, but when throwing shit at the small number of parents with poor spending prioties lets not lose sight of 50,000. Increasing incomes is likely to mean the number of breakfastless days for the vast majority would reduce, maybe even to zero. Stange, the demand on food banks (perhaps a proxy for breakfast needs of children) was very low prior to 1 April 1991 when beneficiary parents had significasnt cuts to there incomes. I have also refered you to cuts in real incomes for those on low incomes (Mowbray and Easton). Guess what – when real incomes drop the seventh loaf of bread is not bought in thousands and thousands of households. Maybe in few hundred the beer is still bought and thats sad. I guess denying the thousands for the sake of the few hundred will bring some satisfaction to some, because they will say “poor spending priorities’
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