Sunday, 20 May 2007

The problem with Labour- commentary by John Minto

The problem with Labour

John Minto

A friend once said to me that the problem with Labour was it never charted a true course. Instead it was “5 degrees to the left in good times and 20 degrees to the right in bad times”.

At the time I thought this was an overly cynical view but 30 years and two Labour administrations later I appreciate it’s fundamental truth.

I thought of this when I once read Minister of Finance Michael Cullen’s comments to a parliamentary select committee where he called for “wage restraint”. He was backing up Reserve Bank Governor Alan Bollard who had earlier in the week warned that he would need to put up interest rates if workers received “extravagant” wage increases.

Cullen then went further saying “You can’t expect wage and salary increases to compensate you for what are major shifts in relative prices over which we ourselves have no control. If we try to compensate ourselves for those then there is a serious risk that we move into a more strong inflationary cycle…”

However the recent facts point to where the problem lies and it’s not with workers’ wages. The official inflation rate for the year to March 2006 was 3.4% but over the same period wages increased by just 3.1%. In other words working New Zealanders are continuing to go backwards and suffer cuts in their real take-home pay. At the same time those on the biggest salaries received increases well above the inflation rate. Alan Bollard himself received a 7% rise – a $30,000 increase, while Cullen received an 8.1% increase – up $18,300.

When talking extravagant these men need to look in the mirror.

Wealthy New Zealanders continue to race ahead while the average wage has decreased in real terms by 20% in 20 years.

A good example are our cleaners. Just a few weeks back the largest contract for cleaners in the country was settled for a two-year term. These workers have received just a 35c per hour increase this year and will get a 35c increase next year. Unlike Michael Cullen, these low-paid workers are effectively getting a pay cut because again their pay increases are less than the rate of inflation.

Under Labour these cleaners had a right to expect a better deal. Not just because Labour claims to represent the interests of people on low incomes but because no less than seven current Labour MPs were once officials of the Service and Food Workers Union which represents cleaners. These MP’s (Lianne Dalziel, Mark Gosche, Sue Moroney, Taito Philip Field, Dave Hereora, Rick Barker and Darien Fenton) may have entered parliament with the most honourable intentions towards working New Zealanders but have failed to stem the slide in wages, let alone chart a new course for the economy. From a distance their union work seems to have been simply a stepping stone into parliament with their commitment to the low-paid left on parliament’s steps.

Labour can’t used economic excuses for the failing to address the plight of working New Zealanders. The party has overseen six years of strong economic growth but working New Zealanders have continued to slide further behind. Is Labour’s real role just to keep working New Zealanders quiescent and pliable? It seems so.

There has been barely a ripple from Cullen’s comments. National are hardly going to complain when their business backers are those who will benefit the most from wage restraint but similarly outside parliament. Carol Beaumont of the Labour aligned Council of Trade Unions described Cullen’s comments merely as “unfortunate”. She said it was unfair to expect workers to “magically deal with inflation by themselves”. True enough but hardly a voice ringing in support of those who can’t earn enough in a 40-hour week (or even a 60-hour week) to support their families.

Once upon a time Labour MPs would have led the charge for low-paid workers but Labour now expects, as a matter of course, that those on basic wages will continue to make sacrifices to keep high income earners like Cullen and Bollard in clover.

What about CEO salary restraint? What about politician salary restraint? What about profit restraint? Or dividend restraint? Or even price restraint? What about sharing the economic pain?

Instead Labour talks only of wage restraint. This party is a vivid blue imitation of what it once was. It’s entire purpose now appears to be to keep National out of power rather than driving forward and charting a new economic direction so desperately needed across our middle and low income communities.

It has now charted a course which is 90 degrees to the right even in good times. The problem with Labour grows by the day.

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