by Metiria Turei
At page 60 of its report (PDF) the Welfare Working Group suggests:
From the modelling reported in Chapter 10, we are of the view that the evidence from welfare reform in New Zealand and overseas indicates that a reduction of around 100,000 people [in receipt of working age benefits] is very ambitious but feasible.
Let’s put that into context. In the two years between December 2008 and December 2010 the number of people on working age benefits increased by 67,000. So the Welfare Working Group’s target for reducing the number of people on working age benefits over 10 years is only one third more than the increase in beneficiary numbers over the last two years.
And in the five years between December 2000 and December 2005 the number of people on working age benefits dropped by a whopping 90,000 (or 90% of the Welfare Working Group’s 10 year target) from 392,000 to 302,000. That was without the punitive measures the Welfare Working Group is proposing to introduce – in fact the work-for-dole schemes and work-testing of single parents that had been implemented by the last National-led Government were abolished early in that period.
So much for ambition! The Welfare Working Group doesn’t have any more ambitious target for reduction in beneficiary numbers than would seem likely, given past experience, to occur anyway given reasonably favourable economic conditions and sound economic management.
So why is the Welfare Working Group proposing its beneficiary bash-fest? One clue can be found at pages 155 and 156 of its report:
Some submissions on our Options Paper argued that Government should be more proactive about creating a vibrant labour market that generated more jobs. For example the New Zealand Chambers of Commerce argued that ‘reforms to increase flexibility of the labour market and remove barriers to employment are possibly the single biggest thing the Government can do to reduce benefit dependency’.
Mandating minimum terms and conditions – for example through minimum wages, dismissal provisions and minimum leave entitlements – involve a balance between job creation and protection of vulnerable employees. The OECD urges care in the use of such policies as they sometimes have the unintended consequence of reducing employment, often among the vulnerable workers the policies are designed to address.
We are of the view that employment growth is an important area, and Government should undertake an investigation into whether labour market barriers to employment need to be addressed as part of a strategy to reduce welfare dependency.
The agenda they are promoting is that of the far right. It’s all about forcing upwards of 100,000 more people into the labour market to compete for jobs that don’t exist. More competition for the same number (or fewer) jobs helps to drive down wages. That dovetails nicely with National’s other policies, such as its 90 day fire at will law, its restrictions on union entry to worksites, and its nil (real) increases in the minimum wage. Nicely for employers, that is.
People in employment on low and middle incomes have as much to fear from the Welfare Working Group as beneficiaries as they will all be forced to compete for the McJobs these policies will create.
Published in Economy, Work, & Welfare | Featured by Metiria Turei on Fri, March 25th, 2011
Tags: beneficiary numbers, job creation, McJobs, welfare benefits, Welfare working group, workers rights
More posts by Metiria Turei | more about Metiria Turei
on the trolls and those who are unable to keep on topic
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Make your mind up Metiria.
You complain about the WWG forcing 100,000 into work, after complaining that it’s only 100,000.
You want to make it much harder for employers to take on new staff.
And you think that will INCREASE employment…….
Time for one of the Green Party MPs – any of them – to get into the real world and run their own businesses for a while.
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Create the jobs at wage rates people can afford to live on, both directly and indirectly, and those beneficiaries who can work and who don’t consider it will be detrimental to their children’s welfare to work will flock into the workforce of their own accord without the big sticks the WWG is proposing the Government wield.
And, in anticipation of Metiria’s reference in her post to the minimum wage being your next target photonz1, most minimum wage employees are employed by big corporates rather than small employers. The big corporates can well afford to pay well more than the current minimum wage. The only reason they don’t is they don’t have to, and to do so voluntarily would make them less competitive if their competitors don’t.
Making the big corporates pay a higher minimum wage would increase tax revenue, providing the Government with money that could be used to subsidise small and new employers who would struggle to pay higher than the current minimum wage without cutting staffing levels through the transition to a higher minimum wage.
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toad says “Making the big corporates pay a higher minimum wage would increase tax revenue, ”
That depends totally where the money comes from. If it comes from profits, then you are totally wrong.
A million dollars taxed as company profits or shareholders income will be taxed at around 30% or (within 2 or 3% depending on how much is taxed as company tax, and the top rate of the shareholders – i.e. 28,30 or 33%).
Whereas if the same million is paid to workers earning under $48,000, it’s taxed at 17.5%.
So the govt collects almost double the tax from the company and shareholders, as it would from workers.
Not that I beleive tax take should be a factor when setting fair wages.
The same money as company profits or going to shareholders is taxed at a MUCH higher rate low wage workers pay.
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@photonz1 5:32 PM:
But it won’t come from profits of the big corporates, will it, photonz1?
Productivity is the issue here photonz1. If people feel they are being paid what they are worth, they will work harder. If they don’t, they will skive and take sickies.
The big fast food and retail corporates only stick with the McJobs employment practice because they fear that unilaterally changing that, and consequently having to increasing prices, will cost them market share if others don’t follow suit.
But increased prices result in an increased GST take. And we can all afford to pay more for our cheeseburger from MickyD’s (not that I ever eat there) if we have more wages in our wallets.
The supermarket duopoly is another issue – one that needs regulatory solutions because there is not effective competition there. But sort that, and the same principle applies.
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Can they though Toad? I formerly worked for one of the two supermarket chains, and while we got paid more than the minimum wage, nevertheless there were a host of issues that were related to it. For instance, there was a policy that a person who called in sick would not be replaced, so if you had one or two people call in sick on a Saturday afternoon, that meant that all hell broke loose. I moved to another job where I now earn minimum wage in order that I didn’t have to put up with those all hell braking loose conditions (and that is something that no-one really considers when they discuss about pay and conditions).
The other things to consider relates to unintended consequences. Sure, we could have all minimum wage workers being paid what the Australians get, but would you really be keen to have the supermarket shut at 6pm on a Saturday and 5pm on a Sunday? Would you really be keen for half the shops in a mall to be shut on Sunday? Bear in mind also that all those reduced trading hours means that there are fewer jobs available.
The final thing Toad is that a large number of smaller firms do hire at the minimum wage as well. It is of course smaller firms that tend to be the engine drivers of job growth, so you don’t want to encourage them to make do without that extra help around the office.
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toad says “But it won’t come from profits of the big corporates, will it, photonz1″
Wrong – as an employer, if I increase wages, there’s one place it comes from – my pocket. As you already say – I can’t put up my prices because I’d be uncompetitive.
This is no different from other local small business operators, like the one who runs the local McDonalds franchise.
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@john-ston 6:50 PM
I wouldn’t really mind, as long as the employees’ wages were adjusted upwards to compensate. Because shoppers are flexible creatures, and will adjust their shopping behaviour to changes in shopping hours. That doesn’t necessarily result in less staff hours, just in the staff hours being less widely dispersed over the week.
And more work-life balance for low income workers would be a good thing, provided it does not cost them financially.
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Toad, in the first instance, there would be less staff hours because some jobs are fixed in that way. For instance, in a supermarket, you will probably still have one deli person in a reduced hours scenario – working on the assumption that we switch from New Zealand trading hours to Australian trading hours, that would be a loss of 14 hours per work. In a smaller retailer, you would still have a couple of members of staff; so that would be a loss of a day each week.
Most of those low income workers who work on weekends are students – our work/life balance is alright and the inability to work on weekends because the shifts aren’t there will cost financially.
To be honest, for the students that generally work weekend hours and work in places such as McDonalds or Woolworths, the minimum wage is already quite generous. The problem is elsewhere.
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@photonz1 5:32 PM
I missed this when responding yesterday evening to your 5:32 comment. There is a fundamental flaw in your argument about tax revenue. It is that you omit to consider the GST take. Workers on the minimum wage spend everything they earn (or more than they earn in many cases). So, you need to add in 15% of their after tax wages (less the small amount that will be spent on GST exempt financial services) to the revenue side of the equation.
That would make it close to revenue neutral even if ALL the increased wage bill were at expense of company profits, which I’ve argued above it won’t be.
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“To be honest, for the students that generally work weekend hours and work in places such as McDonalds or Woolworths, the minimum wage is already quite generous. The problem is elsewhere.”
BS. Most of their workers are people who are trying to make a proper living. Students complain now that those sort of part time jobs are not available.
As most of these profits go offshore and the minimum wage earners spend everything they earn there is a net benefit to NZ.
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“The same money as company profits or going to shareholders is taxed at a MUCH higher rate low wage workers pay.”
Doubtful. Only half of the wealthiest people in NZ even pay taxes.
Big corporates use transfer pricing and other semi-legal dodges to avoid tax. Occasionally, like the Aussie banks, they get caught. Mostly they get away with it.
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Kerry says “Doubtful. Only half of the wealthiest people in NZ even pay taxes.”
Wrong – dividends are taxed BEFORE they are paid out.
Anybody can look at any company on the sharemarket and see that any money paid out to shareholders is taxed at a nearly double the rate of the average wage.
If it’s poosible to get dividends without paying tax on them, please tell me how – I’d love to know.
Because all mine come with a third taken off for tax.
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toad -says “Workers on the minimum wage spend everything they earn……So, you need to add in 15% of their after tax wages ”
Makes little difference – shareholders also spend money and pay gst.
And despite the myth, workers on the minimum wage often spend a higher proportion of their income on zero rated gst items like rent or mortgage than people on higher incomes.
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Plenty of options if you control the company. If you don’t know what they are change your accountant.
Not many shareholders are taxed in NZ.
Because unlike Australians, New Zealanders do not have enough disposable income to buy shares. NZ’s underregulated financial markets are not a tempting investment anyway, after being robbed by the sharks in the 80′s.
People on higher incomes spend more on imports and offshore. Like houses in Hawaii or Luxemburg.
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Kerry, when I worked in the supermarket, there were about fifteen staff who would work on a Sunday, and about twenty staff who would work on a Saturday. Two of those Sunday staff and three of those Saturday staff would be what would be considered full timers; all the others were part timers and the vast majority of them were students.
In terms of those part time jobs not being available for students, I agree – I know that in my final year before I left, the turnover dropped to virtually nothing as most of the attractive retail jobs (for instance, working at Starbucks) was not an option.
Except Kerry, things have changed since the 1980s in terms of the stock exchange. The problem is that the Baby Boomers cannot shake the memories of that old granny gasping at the balcony of the stock exchange or that Asian dude that looked like he had been kicked in the nuts, even though it happened nearly 25 freckin years ago.
There are plenty of New Zealanders with enough disposable income to purchase shares, but those New Zealanders tend to gravitate toward rental property, in part because of the access to leverage.
But not that many, if any, if you are a shareholder in a large company such as Woolworths or Restaurant Brands.
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“New Zealanders tend to gravitate toward rental property, in part because of the access to leverage”.
The regulation of the share market and finance has not improved here in 25 years. Another lot of crooks are getting away with it now. Banks remember too. They have refused lending to buy shares since then.
Rental property is the only thing that we can leverage on in NZ. There is no finance available for business startups apart from what you can get on your mortgage.
Over the last 20 years you would have to be thick or extremely optimistic to invest in any thing else.
I would be 10 times richer now if I had just bought and sold a dozen rental houses, instead of battling the banks, foreign exchange fluctuations, and all the other obstacles to start a business..
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Kerry,
Especially publically owned SOE’s. Priviatise and collect more tax!! Now you are talking!!!
I dont know where you get your information from, but the taxation around dividends is pretty robust. Especially around dividends from offshore investments when the dividends are repatriated.
Maybe you could provide a link to show HOW it is not robust?
You saying the IRD is not doings it job? Or is the IRD is not ALLOWED under law to take the full tax take from the dividend stream?
Green envy coming to the fore or can this claim be backed up by facts?
Again the claim that the IRD is not doing its job. Just your opinion by simply making claims out of thin air to fit a perceived expectation?
And did the Aussie banks not get pinged for back taxes by the IRD so proving you incorrect?
How does transfer pricing work to alliviate paying taxes?
Even the nubilious system of a holding company collecting “management fees” from a trading company sure minimises the tax take from the trading company but the profit from the “management fee” is still taxable. The addition of the extra layer of claimable expenses is lamentable and surely able to be fixed by an IRD edict.
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Kerry,
I have invested very successfully elsewhere so must be very thick and optimistic.
Fortune favours the brave and no, the meek do not inherit the earth.
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Kerry,
While others who have battled the system and “made” ten times what you have now are to be belittled?
As I said, fortune favours the brave.
And it is never too late to be brave.
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That other lot of crooks were in the finance company realm, not in the Stock Exchange. Things have changed in the Stock Exchange since 1987; it certainly does not have that Wild West culture about it anymore.
Banks generally don’t lend on shares anywhere you go. The only way you could exploit leverage with shares is through the use of options.
And that is an issue.
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“Green envy coming to the fore or can this claim be backed up by facts?”
More like rage that criminals get away with it. You do not have to look any further than the Prime Minister for evidence. Hawaii. Fay Rich. Ireland. Brierly, Hotchin etc etc.
Gerrit. I am not so sure that fortune favours the brave. If you look around it favours the dishonest.
The best way to rob a bank is to own one.
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“While others who have battled the system and “made” ten times what you have now are to be belittled?”
Gerrit. I do not have any problem at all with entrepreneurs and those who start useful productive industry earning more. I never have. Most of these do not get more than 3 to 4 times the average wage anyway.
I do have a problem with parasites, who only know how to cost cut and run down, who get 300 times the income of a worker in the company simply because of a cosy arrangement in Anglo Saxon countries between Directors and Managers.
Or those who have immense unearned inherited wealth using it to buy Governments to make sure it is increased.
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Or the finance industry which destroys more productivity than they earn. In the UK 7 pounds taken for every pound they contribute.
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Kerry,
So the PM has been engaged in criminal activity?
What law was broken? Why is he not being prosecuted?
Why is owning a property in Hawai so bad?
Therein lies your problem Kerry, No law was broken but the one in your mind.
Fay and company broke no laws, they took advantage off a very naive Labour government that allowed the valuer to purchase the rail assets.
Who broke the law? no one. Who was stupid?
Prebble and the Labour party.
Naivity in commerce should be illegal, but is not against the law at present. For if it was, it would be Prebble and the Labour party in the dock.
Much like Labour (correct me if I’m wrong) who bought in LACQ companies so that PAYE payers had a mechanism to offset company losses (not just housing rental companies but ANY type of enterprise limited liability company)against PAYE tax payments.
National has now closed that loophole (but shareholders in one company can still offset those losses against profits made by another company owned by the same shareholders).
The losers are the poor sods on PAYE. They get no breaks.
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Not everything that is wrong or dishonest is against the law Gerrit.
Especially as the crooks make the laws.
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Douglas, Prebble and Key should be in the dock.
Taking 300k a year from an employer and then working against the employers best interests is illegal, except for politicians.
Insider trading laws would have stopped Fay/Rich in most Western countries.
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Kerry,
How do you judge then what is or is not wrong or dishonest?
It comes down to the eye of the beholder. Your judgement versus another.
The peoples parliament is rightly the setter of laws, if you dont like the laws, democratically select another set of parliamantarians.
But with National and Labour of the same colour and persuation I dont think we are going too have many changes in New Zealands’ parliamant.
With the Greens aligned with Labour what options do the people have?
Two racist parties (Maori and NZ1) but no social democrats at all.
Worth a read on how moribund both the leading parties are and the chances for New Zealand, to enable the Welfare Working Group or any Green initiatives for welfare reform, are a lost cause.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10715098
For without sorting the economic issue, there will be no welfare reform. Just a slide into Chinese dependence and serfdom.
No party in New Zealand (not even the Greens) has the heart to tackle the economic problems head on.
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Kerry says “People on higher incomes spend more on imports and offshore. Like houses in Hawaii or Luxemburg.”
yeah – NZ is just chokka block with people like that.
Karry says “Not many shareholders are taxed in NZ.”
Planet earth calling Kerry – come in.
The hundreds of thousands of kiwi shareholdrs in all the NZ publically listed companies would dissagree.
Average holding of share in most NZ companies is in the $2000-$7500 range, so most are not going to have vast overseas property portfolios
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you mean like reversing keys’ cuts-for-the-rich..?
a levy to rebuild christchurch/new zealand…..instead of borrowing…?
making those half of the wealthiest who pay no tax..pay tax..?
..closing the loopholes corporates use to avoid paying their share..?
a capital gains tax on all but the family home..?
close down the trust-scams used to avoid tax/qualify for w.f.f. etc…
..and a transaction-tobin-tax..?
how about them..?..just for starters…?
phil(whoar.co.nz)
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“what options do the people have?”
With the present system of 3 yearly rotating dictatorships. Not much. Democracy would be nice.
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We will only get that if we imitate Libya.
“The largest obstacle to democracy is the believe of the poor that we have it and the abject fear of the rich least we get it.”
Jefferson.
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The losers are the poor sods on PAYE. They get no breaks.
EXACTLY right Gerrit. Same system in the USA. Wealthy get breaks, workers get shafted. Media is used to keep the clods from figuring out where the shafting is coming from and the major parties are wholly owned.
BJ
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I think we can Gerrit. I think that overall we do pretty well on the major problems. Certainly the internal feedback I have had has not led me to believe that it is all THAT impossible.
Had a discussion with someone in the Transition Town movement this afternoon, about setting up local currencies and how a National “local currency” backed by electrical work, renewables, could have the smaller scale local currencies integrated into it. I hadn’t considered that dimension before.
We want to do it Gerrit, and nobody else in Parliament has a clue. What it would take would be a larger Green vote than National can cope with. Labour isn’t leading. With Goff in charge they aren’t even trailing.
Greens with Hone might be able to form a block that can’t be ignored by either party (BJ you are SUCH an optimist!)… that could only be ignored by Labour and National going to the dance together. Goff would be jettisoned first… I reckon he’d land somewhere near Uluru.
Whatever it takes to keep NACT from power after this election. That has to be the standard now. Even if it means (gasp) dealing with Winston Peters.
respectfully
BJ
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PhilU,
To implement ALL those policies requires votes. If the Greens hook up with Labour there will be zero (no, 0.0001%) chance of ANY of those policies being enacted.
Dreamsville.
It is time the Greens stood up and stated that ALL of the mentioned policies are to be implemented BEFORE a confidence and supply agreement is reached with Labour.
BJ,
Hooking up with Hone is suicidal. Demographically NZL is turning Asain/Pacific with Maori on the outer.
Hoen brings apartheit and racism to the table and probably civil unrest as the ironsand money flows not to the state (and ALL the people) but to Maori hiding behind iwi trusts (paying how much tax again?).
A few urban and rural warfare “training” facilities using replica AK47, MP5 and M16 weapons (20 round paintball mags with limited range but oh so realistic) are active in Auckland. Mainly run by Asian/Pacific interests, so the future is no way certain for Maori apartheit policies to be enacted, least of all enforced.
But if the greens see racism and apartheit as the way forward, the voters will again decide either in the ballot or the street.
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crikey gerritt..i don’t see that as at all radical…
..there was no mention of nationalising some of the big leeches..
..nor of windfall taxes against corporates/the richest..
..the eu is moving towards a tobin tax..
undoing keys’ cuts for the richest is hardly radical…
..nor is a capital gains tax..
..and the rest is just closing loopholes..
wtf is radical about any of that…?
..and that is the direction labour have to move in…
..they have to promise a change of direction..
..and back that with believable policy…
..that is their best hope of victory..
..and yes..despite yr alarmist/racist-rhetoric…
..i am hoping a pre-negotiation bloc is able to be formed…
…(for obvious reasons..and to ensure labour follow thru..)
and the greens and the hone party…(and hopefully the maori party)..
..would be powerful enough to demand those changes…
(and of course…no gst on real-food…)
phil(whoar.co.nz)
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PhilU
And there is your problem and the problem for the Greens.
Labour wont go to any of those policies.
Greens poll tax policy will be worth seeing. What is the proposal?
And Hones racist policies will gain traction with the voting populace?
Even Labour sees that as a no go area.
But good luck with the dreams.
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well..i think they will go to those policies..
..so i guess one of us will be correct…
and as for the support for hone..?
you are seriously not understanding how much of what he says resonates..
..and not just with maori…
he is talking to those people both labour and national have ignored…
..’the underclass’…for want of a better word..
..those who have had no voice..let alone power… for so long..
and when you say ‘labour’…you mean goff…
that rightwing chokehold on the labour party…there for so long…
…is loosening/breaking…
..and there are many in labour who would be quite happy with the prescription i outlined…
anyway..as i said..
..one of us will be correct…
phil(whoar.co.nz)
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@Gerrit 8:56 PM
The Greens have no policy for a poll tax, nor are they developing one. That is the absolute worst (i.e. most regressive) form of taxation you can get.
And the Greens do not agree with Hone’s position that all foreshore and seabed should all be in Maori title. We think the Courts should decide that issue, and the test for title should be one determined by the Courts on the evidence in each particular case, not by Parliament.
But we do argue that the same criteria should apply to Maori title as to any other title. If those who are arguing for Crown ownership were consistent and non-discriminatory, they should accept that all current private title to foreshore and seabed should be nationalised too.
What chance of that?
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I wonder if Gerrit confused Poll Tax with Tobin Tax.
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john-ston,
I did.
So what is the Greens policy and framework for a Tobin Tax?
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PhilU,
Understand fully, especially the Asian/Indian/Pacific attitude here in South Auckland.
All the resonance of an empty drum.
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ok..maybe he should focus on the rest of the country…?
..and not waste too much time/energy on that sth ak ‘Asian/Indian/Pacific attitude’..?
d’yareckon…?
phil(whoar.co.nz)
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“they should accept that all current private title to foreshore and seabed should be nationalised too”
And there is the start of a mutual lasting consensus..
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