I also expect that the Government’s excuse for consigning workers to live on a wage that is completely inadequate to support their families will be the same as it has been over the last three years – a claim that increasing the minimum wage to a liveable level will cost jobs.  Last year, John Key claimed increasing it to $15 an hour would cost 6000 jobs. That claim appears to be an exaggeration of Department of Labour advice.  The Department  provided no methodology for its calculations, but suggested that a minimum wage increase to $15 an hour could slow job growth by between 4100 and 5890 jobs.

I find the purported Government concern about a decline in job growth completely hypocritical, given the number of jobs the Government is itself shedding in the state sector.

What’s more, John Key failed to mention that Government also had advice from Treasury that countered that from the Department of Labour – advice that suggested increasing the minimum wage would most probably not cost any jobs at all.

(It) has not been true in the past, so without new evidence the balance of probabilities is that a higher minimum wage does not generally lead to higher unemployment.

I’m with Treasury on this one.  There has been extensive research into the employment impacts of increases in the minimum wage over the past thirty years, starting with the landmark 1992 paper by US economists David Card and Alan Krueger. The NZ Council of Trade Unions’ submission to the current minimum wage review contains a literature review of that research (Appendix 1, pages 56-73).  What is clear is that things are much more complex than John Key asserts. There is no clear evidence, either internationally or in New Zealand, of a causal relationship between moderate increases in the minimum wage and employment or unemployment levels, and this has become increasingly evident over the last 30 years.

Increasing the minimum wage, first to $15 an hour and eventually to two thirds of the average wage, will help both reduce inequality and poverty and reduce the reliance of many low-income New Zealanders on taxpayer-funded financial support. It’s time for Government to listen to the Green Party on this issue, rather than submitters like Federated Farmers and the NZ Retailers’ Association who lobby for low minimum wages out of their own members’ self-interest.

They both note this chart produced by Treasury:

Check out the blue line (post-earthquake) and the grey line (pre-earthquake) for the forecast impact on GDP.   Actually not much difference there.  It was all bottoming out regardless of the earthquake, and Treasury has even forecast that by mid-2012 the post-earthquake rebuild will be having a positive impact on GDP.

So why the panic from John Key and Bill English?  Why suddenly decide, under the pretext of earthquake recovery, to wipe $800 million of previously proposed expenditure?  And if there is a short-term problem, why not a temporary levy on middle and high income earners living outside Christchurch, as Russel Norman has proposed.

I agree with Keith Ng and Idiot/Savant – the Government is using the earthquake as an excuse to impose ideologically inspired right wing measures, such as public sector cuts, privatisation of SOEs, and the the undermining of the welfare state upon us.

All undercover of the earthquake.  And my money is on the Budget agenda all being rammed through under Budget urgency, with no opportunity for public submissions, passed through all stages over 2 or 3 days with the Government requiring Parliament sit till midnight.

True to form for National. Not just undercover of the earthquake, but undercover of the night:

One of the town’s largest employers, who runs a timber retail firm, was a speaker, and his leadership was inspiring. He works closely with Workwise to employ people who have experienced mental illness and he says this has been a great experience. Sometimes the attitudes of the able-bodied so-called “normal” staff have presented a barrier to employing people with mental health impairments, especially in management, but he has persevered.

The other barrier to employment for people with mental health impairments and other disabilities is the tired old elephant in the room: John Key’s Government’s punitive policy towards people with disabilities during the economic downturn.

It’s great to support the careful and caring work that groups like Workwise and enlightened employers are doing in the field of mental health awareness but we are in a serious employment crisis. With thousands queueing up for jobs, those with impairments and disabilities face a huge challenge in successfully finding work. Enlightened employers like those at the breakfast this morning are unfortunately in the minority, and most, when faced with a choice of an applicant with an impairment or one without, will hire the one without every time.

Meanwhile, new welfare legislation will cut the benefits of people on the sickness benefit and the DPB if they don’t do enough to find part-time jobs that don’t exist. Work and Income staff were there this morning, repeating the message of empowerment within tight turn-around times. This is pretty meaningless rhetoric in the current context.

A Treasury submission to the Welfare Working Group released yesterday is a perfect example of how those in positions of power can rationalise an attack on the powerless, assisted by numerous coloured graphs and pie charts. The essence of the submission is that we should work test everyone and then move them off benefits. It doesn’t even mention the current condition of the labour market.

I applaud the work of tangata whenua, community sector groups, and businesses working to support quality jobs with real wages for people with impairments. It’s a crying shame the Government is undermining this by creating fear and issuing threats to their welfare during what could soon be a double-dip recession.

The numbers from Treasury are nonsense. Treasury can’t tell us what the deficit is going to be in December let alone what’s happening in 2030 or 2040.

Now, I’ll admit to having a go at Treasury forecasting myself from time to time, most notably about oil prices.  But the thing that is extraordinary about this statement is that it didn’t come from here at the lily pad, or from a Green or Labour MP.  It was made by none other than the Prime Minister, in response to Treasury advice on Nick Smith’s limp excuse for an Emissions Trading Scheme.

That’s right – John Key expressing a complete lack of confidence in a Government Department that he is ultimately responsible for.

Nick Smith chimed in too, unusually for him somewhat more moderately:

Figures beyond the first decade are highly speculative and dependant [sic] on assumptions about future international agreements, the carbon price and the growth of industry.

What a pity Smith didn’t apply that sort of logic to the other debacle he currently presides over – the gutting of ACC, where he is himself using highly speculative figures about the cost of claims decades in the future to justify levy increases and cover and entitlement cuts now.

Here’s what Treasury had to say about the regulatory impact statement for the ACC-gutting Bill currently before Parliament:

The Treasury Regulatory Impact Analysis (RIA) Team has reviewed this regulatory impact statement (RIS) and considers that it does not meet the RIS requirements. The RIS does not contain the required information and the analysis is incomplete in a number of key areas. For example, some of the proposals to remove ACC entitlements will shift costs onto other government agencies or onto individuals but the RIS does not quantify these costs. The proposal to introduce experience rating and risk sharing in the Work Account will increase administrative and compliance costs for business and for the ACC Scheme, but these costs have not yet been investigated. In addition, the RIS consultation requirements have not been met.

Pretty damning stuff, but Smith will no doubt blunder on with this ill-conceived Bill and Treasury can expect another serve from the PM for providing advice which is embarrassing to the Government.

If I were an overseas frog looking to buy up some prime Kiwi land I know who I’d be using as a law firm to lodge my application.  I’d be calling Russel McVeagh or Simpson Grierson or Chapman Tripp or Bell Gully or Minter Ellison Rudd Watts. 

The reason for my hypothetical hiring of these firms is that all of the above firms are represented on the advisory panel looking into how to best flog off New Zealand to overseas investors.   Though it still remains a mystery as to how the above firms got picked and dozens of other firms busily making moolah by assisting overseas investors missed out.

Five corporate lawyers from the above firms got the get go from former Minister of Land Information Dr Richard Worth on the 12^th March 2009.   Not only do these firms now have representatives looking into how to change the rules – they were thanked for agreeing to take part before journalists, opposition MPs and the general public knew there would be a review of the Overseas Investment Act – the review itself wasn’t announced till 17th March 2009.

Bill English the Minister in overall charge of this review didn’t seem to be aware of this strange and mysterious fact telling Russel in the House last week “I cannot give the member a detailed explanation of the sequence” when asked about the oddness of the group being picked before the review’s announcement!

After the official announcement Bell Gully were keen to tell the world they were involved announcing on their website that partner Andrew Petersen was to take part a day after the official announcement. 

The speed with which Richard Worth picked Mr Petersen seemed surprising to this frog.  The announcement from Finance Minister Bill English was only the day before and now we had Mr Petersen already picked by Dr Worth on 18th March. 

It wasn’t until some months a few Official Information Act requests later that it became clear all five representatives had been chosen beforehand. 

Chapmann Tripp didn’t want to seem unseemly in their haste to announce they’d be sticking their 2 trillion cents in to the review – it wasn’t until the end of March that their website trilled with the happy news that Chapmann Tripp partner Tim Williams was on board for the ride.

Simpson Grierson were even tardier announcing on 3 April that Don Holborow’s was on the Technical Reference Group.

Minter Rudd Ellison Watts release isn’t dated and Russel Mcveagh’s website is too hard for this frog to navigate though their representative on the Technical Reference Group Garth Sinclair apparently;

 …provides ongoing corporate and commercial advice to a range of clients including major New Zealand companies, multinationals with businesses in New Zealand, companies looking to invest in New Zealand.

Of course it will remain a mystery as to what sort of advice any of the firms will be giving their overseas clients – if any as Treasury has stated that Members of the group will not be asked to give formal advice in order to ‘reduce the risk of any conflicts of interest arising between the role of any group member, and their ordinary employment/obligations.

That old trick of not producing a written report to reduce conflicts of interest  should sort that then….

Oh and as a bonus here’s our latest video on this topic with Russel explaining some of these dealings

The pattern looks awfully familiar. Almost identical to what I pointed out last November. Will they ever learn? Perhaps. With oil futures in continuous contango for the first time ever, (ironically the day before the Budget), the world is waking up to the fact that oil really is a finite resource.

Joe Bennett’s hilarious jibe at the economists who live the cornucopian dream is a clear sign that the realities of peak oil are beginning to sink in. Let’s hope that our leaders pull their heads from the sand sooner rather than later.

I won’t slag Treasury off again, as I did it in my post last Wednesday. No Right Turn has done a good job of that since Budget Day.

Presumably that means in 2011, after the Greens’ peak oil conspiracy has been exposed and everybody has returned to enjoying endless supplies of cheap petrol, and when petrol is eventually introduced into the ETS, the price required to have the sort of behavioural change the Prime Minister is seeking would need to be more in the range of $1 per litre of petrol rather than the currently mooted 8 cents per litre.  I’d be interested to see her selling that to the roading lobby after they got her to back down on the current proposal.

Oil price rises are the single biggest factor in a proposed rates increase discussed today by the Greater Wellington Regional Council.

The proposed rates increase for the 2008/09 financial year is 6.8%. Rising transport costs, in particular diesel to fuel the region’s buses, account for 40% of the proposed rates rise. However, ratepayers will not pay for the entire transport cost increase, and the Regional Council will also be consulting with the public on a proposal to raise fares by about 10% on 1 September this year. This would be an average increase across the Metlink network, and would impact differently on different fare zones.

[frog: I finally found the link to my quote here.]

If our government agencies were doing an even slightly better job of forecasting the price of oil, as there is voluminous data and research that says the price will only go up, the Wellington Regional Council might be able to plan for these increases and soften the blow to ratepayers. They might even be able to adjust the public transport and urban planning to accommodate an oil constrained future! Wouldn’t that be amazing?

Last year I reported that in the House, Jeanette confronted Treasury and the RBNZ here, and the MED here about their appalling forecasting. Today’s announcement is the fruit of their unwillingness to lift their heads from the sand and confront the realities of a finite resource.

So it would seem the government’s sustainability strategy still includes ‘dig and burn’.

One can only describe Treasury’s efforts as flaccid in the face of the
firm trend in rising crude oil prices!

As you can see from the pink line, in May 2004, they said we would have a $26 per barrel oil price today. In May 2005 (Teal), they said today’s price would be $51 per barrel. In May of this year (Blue), they said we’d be at $56 right now. You get the point. (By the way, BEFU stands for Budget Economic & Fiscal Update and HYEFU stands for Half Yearly Economic & Fiscal Update, which comes out in December each year.)

Right now oil is averaging $95 per barrel.

Jeanette then turned her attention to the Reserve Bank’s forecasts. Same story. Eight consecutive Monetary Policy Statements with ridiculously persistent predictions of falling oil prices:

Isn’t it time the government forecasters actually made an effort to understand the underlying reasons why their forecasts are so wrong? This frog thinks so.