Scoop Election 08: edited by Gordon Campbell

On Phil Goff’s debacle in Christchurch

November 3rd, 2011

Any points Phil Goff may have won in the television debate a few days ago went west during last night’s public debate in Christchurch – which, as Vernon Small says, had turned into something close to a rout by night’s end.

The centre-left can feel justifiably furious at Goff and his minders for going into this debate without a narrative (much less a credible defence) for Labour’s election costings. Sorry, but “We’ll have them for you by the end of the week” doesn’t really cut it. Somehow, Goff managed to make Key look like a hard-headed and credible manager of the economy.

One can only feel sorry for David Cunliffe going into the Radio Live debate tonight with Bill English, Russel Norman, Pita Sharples and Stephen Whittington of Act, subbing for Don Brash. If Cunliffe fluffs and stalls in the way his leader did last night he’ll lock Labour into being the punching bag of this election. If Cunliffe does better – and it would be hard for him to do worse – it will be taken as a leadership challenge. This “live” exchange bodes well.

Normally, political journalism shouldn’t try to tell politicians how they should have played this or that gambit, or how it did or didn’t go down with the punters. That’s not the job. In this case though, incredulity is the only response to Goff’s line of defence on Labour’s intention to raise the minimum wage.

The issue is important because it is enabling National to deflect criticism from its own failure in government to have a credible plan to create jobs for young people. Instead, the public debate in this area is being focussed on the alleged impact of Labour’s minimum wage hike on youth employment.

Last night, Goff’s line of defence was (a) to decry the low wage economy and (b) to play the politics of envy by painting Key as a rich prick who begrudges paying a bit more for his muffin so that café staff can earn a living wage. This was astonishingly feeble. Shouldn’t Goff and Labour know by now that personal attacks on Key only rebound?

In the circumstances of this debate, an economic argument was required, and it exists. Here and here and in the Department of Labour’s own 2010 report on the minimum wage available here.

What the DoL found last year (page 17) was that relatively few employers hiring young people treated the minimum wage as a barrier. Only one in ten employers had hired 16 and 17 year olds during the previous three months, and only a third of them had paid the minimum wage:

The most common reason for not paying the new entrant’s minimum wage was that the rate was too low, or was not fair, or that the job was skilled… The Mayors Task Force for Jobs submitted that continued minimum wage protection was necessary for young people to encourage employers and others to invest in skills development, particularly in the trades… When young people are working alongside others doing the same work, there seems no justification for lower wages on the grounds of age. Information from Mayors around the country suggests that the level of wages and any increases have not resulted in constraints on job creation for young people, or fewer opportunities for young people. There is no evidence that raising wages has resulted in young people leaving school early.

While confessing (para 60 page 16) that there is little in the way of reliable data on the impact on unemployment of raising the minimum wage, the DoL goes on to say that boosting the minimum wage to $15 an hour last January would add one percentage point to the unemployment rate by the March 2012 quarter, to 5.7%.

The evidence of the last 20 years is that wider issues – commodity prices, export performance, exchange rate and interest rate movements etc – determine the decisions about job creation, much more so than increases in the minimum wage. (In the boom conditions of the 2000s the more the minimum wage went up, the faster the unemployment rate went down.) During a recession, the argument for raising the minimum wage turns on whether it will (a) simply raise costs on small business and cost jobs or (b) provide a boost to the economy (especially at retail level) that will create jobs far more effectively than the recent round of tax cuts. Goff could have chosen to make the second argument.

At the very least, surely Goff and Cunliffe can mount a more robust defence of the $15 an hour minimum wage than John Key being a meanie over the cost of muffins. According to press reports, Richie McCaw has a lot of his money invested in rest homes and aged care:

McCaw’s All Blacks salary was about $750,000 – plus a $100,000 World Cup bonus – with much more reaped through third-party contracts. The skipper signed to stay on with the NZRU until the 2015 World Cup.

His property portfolio consisted of houses in the Christchurch suburbs of St Albans and Shirley, three in Omarama, plus a new holiday home in Wanaka.

He also had directorships or shareholdings in 16 companies, mainly in the retirement home and aged care industries.

While aged care/rest home enterprises like Ryman are making stellar profits, the workers in such homes are notoriously poorly paid – as the Greens and Labour revealed a year ago in this comprehensive report on the dire conditions that are rife within the sector.

Much of the caring work for our elderly people is being done by Pasifika women. Metaphorically speaking, these are the mothers and the sisters of the Tongan and Samoan players who made such a signal contribution to the Rugby World Cup. Given his investments in the sector, would Richie McCaw be likely to oppose aged care workers getting a fair deal, and having their wages lifted to $15 an hour? Does John Key begrudge a decent wage to the people who wash and feed and care for our old people, and who sit with them while they are dying – at a time when their employers (such as Ryman) are reaping such handsome profits?


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