Economic Bulletin
Economic Bulletin | Economy | Economy | Election Campaign | Minimum Wage | Public Services
There is now widespread recognition that wages need to rise in New Zealand. The CTU has identified a number of measures that are needed to lift wages on a sustainable basis. These include: increasing the minimum wage to two-thirds of the average wage; amending employment law to strengthen collective bargaining particularly in relation to promoting industry and multi-employer base documents; greater support (including institutional forms) for union capacity to deliver improved wages for workers; the implementation of good employer and responsible contractor policies in the State sector, and an ongoing programme to deliver for women equal pay for work of equal value. We also support higher wages through more investment in skills, plant, machinery and technology alongside improved workplace practices to boost productivity. These measures will help address the structural issues that underpin embedded low wages. In the short run however the pressure on the pay packet has been made worse by high food and petrol prices.
August 2008
Comment
Economic Bulletin | Economy | Economy
Economists are never that keen on comparing previous forecasts with what has actually happened. This is understandable. Usually the defence against the accusation that economics is a dismal science is that it is not always that dismal - but we also know it is not always that scientific either. This year we have seen plenty of revisions to prior forecasts. In June 2007, the Reserve Bank was picking that annual consumer price inflation would average 2.6 percent for the second half of 2008. Now they say that inflation for the September 2008 quarter will be around 5 percent. Last year the consensus forecasts for March 2009 were for annual GDP growth of 2.4 percent and annual CPI of 2.6 percent. By June this year, the forecasts for March 2009 had changed to 1.0 percent GDP growth and 3.9 percent lift in annual CPI.
July 2008
Comment
Economic Bulletin | Economy | Economy | Election Campaign | Environment
June 2008
Comment
Times are hard. It is likely that when the June quarter economic growth figures come out on 26th September, it will confirm that the economy has been in a technical recession through the first half of 2008. We are halfway there with the news that the economy contracted by 0.3 percent in the March quarter. The Bank of New Zealand has warned that the length of the adjustment process threatens to be longer than the 1998 downturn.
Economic Bulletin | Economy | Economy | Election Campaign | Public Services
May 2008
Comment
Budget 2008 showed that relatively modest tax cuts nevertheless use up a large amount of money. The annual average cost of the tax cuts is $2.7 billion. John Key had been quoted prior to the Budget as saying that National would have bigger tax cuts. Last October I commented in this Bulletin that for the National Party it seemed that no matter what the question is - the answer is always tax cuts. That stance seemed to wilt somewhat within hours of last week's budget. But - a bidding war on tax cuts is still possible - and carries some real risks.
Economic Bulletin | Economy | Economy
April 2008
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Comment
Food prices are hitting households – and also the headlines. In the 30 years to 2005, world food prices fell by around three-quarters in inflation-adjusted terms. Since then they have risen by 75 percent, with much of the increase in the past year. The U.N. Food and Agriculture Organisation's (FAO) Food Price Index, measuring the market prices of cereals, dairy produce, meat, sugar and oils, was 57 percent higher in March 2008 than a year earlier.
Economic Bulletin | Economy | Economy
March 2008
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Comment
The free trade agreement with China is due to be signed next week. The CTU has consistently raised concerns about these negotiations over the last 3 years and has made comprehensive submissions, met with MFAT officials on many occasions, and signalled our key issues in discussions with Ministers. As the negotiations neared a conclusion we focussed mainly on three areas: the phase down of tariffs on clothing, textile, footwear and carpets as well as whiteware; the memorandum on labour issues, and; temporary migration.
Economic Bulletin | Economy | Economy
February 2008
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Comment
There is now an accumulation of economic indicators pointing to slower economic growth. Despite relatively low levels of unemployment, the prospect of higher dairy returns, improving terms of trade and the likelihood of a solid Budget in May, in general it has to be acknowledged that the key economic issue is not inflation – but ensuring that slower growth does not tip over into a recession.
Economic Bulletin | Economy | Economy
January 2008
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Comment
Predictions on the economic outlook for 2008 are tinged with more than the usual degree of hesitancy. This is a time when many economists are saying, in effect, "there is a lot of uncertainty, markets are volatile". In other words – they don’t know! There is obviously more certainty about what has already happened and why. And there can also be some predictions about knock-on effects. But there is uncertainty about quite how bad the US recession will be, how much contagion is still to come from the sub-prime mortgage crisis, what the impact will be on other countries, and how effective the US stimulus package will be and over what time frame.
Economic Bulletin | Economy | Economy
November 2007
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Comment
After 8 years of Labour-led Governments there is by now a long list of achievements that indicate a ‘worker-friendly’ approach. Such a list would include 4 weeks annual leave, 14 weeks paid parental leave, scrapping the Employment Contracts Act, lifting the minimum wage by over 60 percent, KiwiSaver, higher pay for teachers and nurses, the ACC scheme brought back into complete public ownership and so on. As a union movement, we have been prepared to acknowledge these gains while continuing to push for further improvements. But this Government has also been a ‘business-friendly’ government. Recognition of this has been hard to discern. For instance, in 2005 the business community hardly acknowledged $977 million over 4 years in the Budget to allow for higher depreciation. Companies are due to receive a tax cut of nearly 10% in April next year, the first cut in company tax since 1989. The tax credit of 15 percent for research and development expenditure is another major boost for business. There is also expanded export market development assistance. From an initial funding pool of $6.7 million in January 2005, the scheme has grown to more than $50 million annually. The annual value of support for business under just these four initiatives (depreciation, tax cuts, and export assistance) adds up to over $970 million a year.
Economic Bulletin | Economy | Economy
October 2007
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Comment
With the National Party these days it seems that no matter what the question is - the answer is always tax cuts. Take their recent comments about a person they called Joanna Average who earns $44123 annually. In order to make this a story about tax rather than income and well-being they ensured that Joanna had no children. This meant that the very significant tax cuts as part of Working for Families were left out of the calculation. That also meant any benefits from 14 weeks paid parental leave and hugely reduced costs of early childhood education could also be excluded from consideration. Part of Joanna’s income has also moved into a higher tax band, whereas most workers will be in the same bands now as they were 7 years ago. They didn’t mention that there were 16,000 more women who were unemployed in 2000. Fair enough not to mention KiwiSaver in terms of the period considered but any commentary would have surely recognised that the $1000 kickstart, the $20 a week (which is $1040 a year), and the potential of $582 extra a year due to the removal of Specified Superannuation Contributions Withholding Tax on the first 4 percent of employer contributions would add up to a significant benefit to Joanna in the long run. If this story was not just about tax, what other relevant factors to Joanna Average would be mentioned? Try – four weeks’ annual leave and cheaper doctor’s visits and prescription charges for a start. If Joanna did have children and they were in the workforce perhaps the fact that the minimum wage for an 18 year old in 1999 was $4.20 an hour compared with $11.25 an hour today might also get a mention.
