By David Hargreaves and Alex Tarrant
Regional Development gets the expected strong focus in Labour's just-signed coalition deal with NZ First, with the headline feature being creation of a $1 billion a-year Regional Development (Provincial Growth) Fund.
There's also room for some old NZ First favourites, including a new supercharged 'Gold Card' for superannuitants and a suggested boosted up role for Kiwibank.
Labour leader Jacinda Ardern and NZ First's Winston Peters put pen to paper on Tuesday afternoon to commit to a new coalition Government. The full agreement is available here.
Separately, the Greens signed up on Tuesday for the confidence and supply deal.
The release of what looked like some fairly substantial state-funded initiatives saw the New Zealand dollar quickly lose around half a cent against the American currency before recovering somewhat to about US69.6c.
On more general economic matters, the agreement, as expected makes for a review and reform of the Reserve Bank Act - though no specifics are outlined in the document.
Ardern indicated in a press conference later that the plan would be to include employment alongside price stability, and broaden the monetary policy decision-making board - in line with Labour's policy. She also hinted that the Governor and that board might be mandated to consult a wider range of people before coming to a decisoin.
Also there's plans for a Housing Commission, though again without specifics.
There is the stated intention to progressively increase the Minimum Wage to $20 per hour by 2020, with the final increase to take effect in April 2021.
There is a plan to investigate growing Kiwibank’s capital base and capabilities "so that it is positioned to become the Government’s Banker when that contract is next renewed".
Also there are plans to strengthen the Overseas Investment Act and undertake a comprehensive register of foreign-owned land and housing. See more on that below, including comments from Peters on stamp duty not being a favoured option.
Regional development, many portfolios
Ardern said the deal with NZF prioritised regional economic development and jobs for kiwis. More on that below, as well.
She said the policies fall within Labour's budget responsibility rules and that she would lead a fiscally responsible government.
As previously announced, NZ First will get four Cabinet Ministers and an under secretary. Those ministers will be busy, with a substantial number of portfolios given over to the NZ First representatives.
This will include the following portfolios: Foreign Affairs, Infrastructure, Regional Economic Development, Internal Affairs, Seniors, Defence, Veterans’ Affairs, Children, Forestry, State Owned Enterprises, Racing, Associate Finance, Associate Education and an Under-Secretary for Foreign Affairs and Regional Economic Development. A Minister from New Zealand First will be represented on the Cabinet Appointments and Honours Committee (APH) and the Cabinet Legislation Committee. Ministers from New Zealand First will also be represented on other Cabinet Committees as agreed between the Party Leaders.
The agreement indicates that priorities for the $1 billion a-year Regional Development Fund will include:
• Significant investment in regional rail.
• Planting 100 million trees per year in a Billion Trees Planting Programme.
• Commissioning a feasibility study on the options for moving the Ports of Auckland, including giving Northport serious consideration.
• Other large-scale capital projects.
Other regional aspirations in the agreement include:
• A commitment to relocate government functions into the regions.
• Re-establish the New Zealand Forestry Service, to be located in regional New Zealand.
• An increase to MPI BiosecurityNZ’s resourcing and a Select Committee Inquiry into Biosecurity.
• Honour existing Crown Irrigation investment commitments.
• Recognise the potential for aquaculture in promoting regional economic growth.
• Examination of agricultural debt mediation as well as receivership fees and charges.
Infrastructure projects
Ardern said the $1bn Regional Development Fund would come out of the near-$10bn of unallocated capital spending in Labour’s fiscal plan over the next four years.
Projects would include regional rail, “heavy investment” in forestry, and opportunities to help fund projects that might also be fundable by infrastructure bonds. “Essentially what we’re saying as a government is, we are committed to making sure we rebuild our regions, that there is strong growth, and that there are job opportunities. They’ve been neglected for too long. That is why this fund is being created.”
Asked in what ways the regions had been neglected, Ardern rattled off: “Infrastructure, rail, roading, job opportunities, health, education. You name it, and we’ll find an example if there’s been neglect.”
Ardern said there had been real advocacy on the subject from Peters particularly around Northland, saying there were obvious reasons for that being the case. “But you’d be hard pressed to find a region that hasn’t experienced neglect.”
Peters was asked if rail to Northport in Whangarei would be one of the first projects to get off the ground. He said the two parties understood that “when the head of Mainfreight says that it’s a no brainer, that it may just be a no brainer.”
Minimum wage
Another policy is to raise the minimum wage to $20 an hour by 2020. Ardern said that in the government’s first 100 days, there would be legislation to raise the wage to $16.50 from 1 April 2018.
From then, government would use discretion to ensure that the step changes were done at appropriate times and in the appropriate way, she said – the full track to $20 would not be legislated for now.
“But we’ve been very clear on the goal, and where we see ourselves finishing in 2020, with an introduction by 2021. Peters had made the point continually during the talks – which Labour agreed with – that, “we are a low wage economy,” Ardern said. New Zealanders deserved to have a wage they could live and survive on and “have a quality of life with.”
Foreign buyers - stamp duty not favoured by Peters
Ardern said the parties had agreed on banning the purchase of existing homes by foreign buyers – she later clarified this was non-resident foreign buyers. There were also plans around foreign ownership of farmland and other critical infrastructure. The parties also shared a view on cutting rights in the forestry industry.
On farmland and other infrastructure, Ardern said the Overseas Investment Office would be used to properly investigate sales of farmland five hectares or greater.
Asked why he settled for this after arguing to ban foreign buyers across the board, Peters replied: “Well, I got pretty close – is that near enough? The reality is, there’s going to be a change and a clear signal sent internationally that New Zealand is no longer for sale in the way it has been. And we’re happy with that.”
Ardern said the goal was for New Zealanders to have the ability to buy a “decent, dry, affordable home in New Zealand.” One of the steps towards that was making sure demand side pressures were dealt with. “We will find the mechanism in order to deliver that goal.”
On whether any mechanism could include a stamp duty, she would only say: “We will stop foreign buyers from buying homes in our existing housing market.” Peters jumped in – there was flexibility to work their way through to means to the end.
“I might add, that the structure and strategy that you advocate [the question was on stamp duty] did not work in Vancover, and has not worked in other parts of the world. And we would like to put some intelligent science into it before, I think, we discuss that together.”
He continued: “We’re not against getting more income, for goodness sake. But when you realise that, that won’t stop what’s going on, and didn’t stop them in Vancouver, and other parts of the world, then maybe that strategy would be a failed one.”
Shared views and objectives
The preamble to the agreement says that Labour and New Zealand First have a range of shared values, and policy objectives.
"The commitment of Labour and New Zealand First is to provide stable and effective coalition government.
"Labour wishes to progress action in accordance with the Labour Party’s Policy Platform. New Zealand First wishes to progress action in accordance with its policy platform.
"Together, we will work to provide New Zealand with a transformational government, committed to resolving the greatest long-term challenges for the country, including sustainable economic development increased exports and decent jobs paying higher wages, a healthy environment, a fair society and good government.
"We will reduce inequality and poverty and improve the well-being of all New Zealanders and the environment we live in. Labour and New Zealand First are committed to building public confidence in, and engagement with Parliament, and Government and the electoral system as a whole.
"We are committed to an independent and robust public service. We will do this while maintaining our independent political identities and working in the best interests of New Zealand and New Zealanders.
These are the official 'Coalition commitments':
• The Parties agree to support and promote the matters and issues which have been subject to agreement between them.
• The Parties will work collaboratively and in good faith to reach agreement on particular policy and legislative initiatives. The key directions for the first term will be set out in the speech from the throne.
• The Parties endorse and will operate in accordance with the Cabinet Manual.
• As provided for in the Cabinet Manual, the Parties will “agree to disagree” where negotiated between party leaders, and in such circumstances the Parties will be free to express alternative views publicly, and in Parliament. The Labour and New Zealand First Parties agree to identify policies and roles in a way that maintains and promotes the distinct identity of each party. This will include public attribution and acknowledgement of the Party responsible for policy.
168 Comments
A lesson to us all is how much an astute dealer can achieve vs a passive person. NZF & the Green had about the same amount of support from NZ voters, yet Peters achieved for his party to have seats in cabinet, be the deputy PM, form the coalition government with plenty of say re policies and Shaw got... well pretty much nothing
Winston wouldn't negotiate with the greens or let them into cabinet. Not rocket science that NZ First held the balance of power so greens had to settle for brides maid. 1 billion trees and a referendum on weed will see them get 5% or more in the next election.
Enough with the sourgrapes.
Not sour grapes at all. The Greens didn't have to settle for bridesmaid, they could have played National vs Labour just like NZF did. They could have done this even if they knew they would eventually go with Labour. I actually think it's their duty to do their best to have the most say possible in government
And then what, look like hypocrites, and loose many future votes.
The Greens campaigned for a change of government, this somewhat forced they hand. Thankfully there is plenty of policy alignment and a desire to collaborate with this government, that they aren't selling themselves out.
Your point is a poor one. You're still in the denial phase. The Greens get a bunch of their policies across the line and enable Labour to get a bunch of theirs across the line. They were instrumental in forming this government. If they'd behaved more manipulative or childlike like you're suggesting, they would have pushed Peters away. If you're arguing that semantically they're not in government because they are in a confidence and supply agreement. I don't see how it's any different, aside from making it easier to manage day to day for Ardern. If you're still trying to bargain the Greens out of their support for Labour you're crazy, and Bargaining is the third stage of the grieving process. Only 2 to go to get to Acceptance.
You are potentially correct and there in lies the rub, if the greens had not bowed out it may well be a National government and that is annoying for National voters and also a little dishonest in a slimier fashion to the Epsom electorate seat going (usually) largely uncontested to ACT.
If you are part of the support forming government then it stands to reason you should get cabinet posting based on the percent of government that you represent and that would probably have seen National rule not Labor.
Its not going to be easy for people to come to terms with that because its inherently unfair just like coat tail rules and such.
Higher wages should come from more productivity or better quality jobs not more regulation. Existing cost pressures and falling agricultural commodity prices might kill the crux of the NZ export industry.
The Labour-First coalition wants to create a high income economy without bringing high-value industries into the picture and expect low value industries such as hospitality and dairy to pick up the tab, not to mention the low-productive workforce of this country.
Always lost in the admirable outcome of higher minimum wages is the fact that higher incomes will abate the accommodation supplement - net effect will be close to zero.
Those on the minimum wage are most likely to be using the accommodation supplement.
Accommodation supplements will have to be modified - but we are now starting to talk serious as in many billions of incremental costs to the crown who employ indirectly vast numbers of minimum wage workers such as hospital cleaners / cooks etc.
Typical unintended consequences of these types of structural changes.
Yeah, I voted for National in earlier elections based on their aspiration to lift NZ's productivity and close the gap with Australia, but they ended up simply pursuing nominal growth via house price rises and immigration propping things up, contrary to what they campaigned on. Most disappointing, it was.
Dairy low value... tell that to Fonterra's CEO before complaining about paying the workers $20/hr.
https://www.stuff.co.nz/business/97253184/fonterra-bosss-83m-salary-thr…
Yes, more productive jobs would be beneficial.
But raising the minimum wage will help drive inflation, something National has struggled to achieve (and happily blamed someone else), even with billions of dollars pouring into the country.
I'm happy to see a greater focus on trickle up economics, than trickle down. Trickle up has the benefit of the money cycling through the economy many more times (helping make everyone richer), rather than being locked up in non-productive investments, or simply spent overseas.
Dairy is high value.
As to productivity your totally incorrect, the change in minimum wage will cause three key factors to change, 1) a general increases in prices, 2) the elimination of some marginally competitive jobs (not really a loss in a tight labor market) 3) a reduction in non-mandatory pay rises.
This means that minimum wages are paid out of your middle class, not out of your productivity and New Zealand's middle class households are actually paid rather well.
It's been a season from hell so far, for a significant number of dairy farmers in the north island due to wet weather. Northland and Southland/Otago were the only two regions in Fonterra at the end of last month that were ahead on production. Early days yet - the season may yet turn out ok for those north island farmers not doing so well.
I'm a bit confused, Labour + NZF do not form a majority, they actually had less votes together than National. They don't have enough seats to pass new bills. The Greens have provided them with "supply agreement". There is not 1 word about the Greens in this article. It seems to me they have been completely shafted
I don't support National (ive protested National on a few occasions and am on the record in the herald about it) it was just sad to see a poster who was able to use those terms correctly get called out for not understanding those terms, absurd.
The greens have much less influence than NZ First, its not comparable and its totally unreasonable. The greens deserve their seat at the table and it was slime-ball politics for Winston to shut them out.
In 1999, the Greens supported the Clark Government with C&S in the 46th Parliament - one in which they had 7 seats (but no ministerial responsibility).
In 2002, they increased their vote share to having 9 seats. C&S is good for them electorally... best choice and great ministerial portfolios.
Couldn't be better.
I suppose there could be one scenario where the Greens are better off outside of the coalition which is if they are ready to jump ship to go with National on issues that suit them like the Kermadec Sanctuary for example. That would mean the purest form of MMP yet, it would also mean the Labour/NZF coalition becomes much weaker. Would the Greens stick to their convictions and do this or will they yield to what Lab/NZF want ?
One has to ask why do you need the drama of the TTP to stop foreign buying.
Surely(and I stand to be corrected)just slap on a stamp duty of 15% or more on foreign buyers to achieve the same goal..As they have in UK, Hong Kong and Singapore.
Is this being done for the theatre?
And the award for attacking democracy goes to "Introduce and pass a ‘Waka Jumping’ Bill." Peters had to go with the party that gave him the most ministerial posts to stop his own caucus jumping ship. Now he wants to handcuff the ones that didn't get a post. He knows he's vulnerable.
that will be an interesting bill as he already has people in his party from a different party.
i am guessing the bill will be something about list seats and if you resign a party you lose your list place with that party, which i agree with,
as for standing seats maybe they need to have a by election to so it is the person not the party that was voted in
Yes, if a member enters Parliament on a party list, and subsequently falls out with his/her party and chooses to resign from the party, or if the parties rules stipulate in the circumstances the members membership can be cancelled - it is only right that the party brings the next person on their list in to replace the one leaving the party. It should have been a rule under MMP from the beginning.
However, if the member enters Parliament via an electorate seat, then the rule would/should not apply - and they should be able to maintain their seat as an independent.
but how many people vote for the person and not the party they represent,
NZ still has a FPP mentality. it would be an interesting test to have say BE or JA stand as a independent in their electrorate seats and see if people still vote for them or whoever the party puts up to replace them
i would suggest the new party person would get in.
take Epsom, if national tomorrow send out a message not to support act DS is gone
so on that basis i can see it is just to run a byelection for an electorate if you step down from your party, if you get back in fine then you are truly an independent member if not then it was the party people were voting for not the member
What's all this invest in the regions about? Isn't Auckland the place with the most growth? Am I missing something?
Auckland is barely coping requiring massive transport and other infrastructure spending, but instead lets spend our money in places that don't need it?
have you been to any small towns in the country, they are shocking, shops boarded up, empty houses, very few jobs.
it seems a no brainer to move head offices to cheaper locations for rent and staff in todays world of connectivity , think of the cost savings not to mention the jobs it would grow in the smaller centers
i still scratch my head in wonder at Fonterra head quarters being in one of the most expensive buildings in Auckland and farmers not jumping up and down at the costs
Companies base themselves in Auckland because there is a larger pool of quality, qualified younger employees. Auckland attracts the quality, qualified younger employees because there are more opportunities there, and their similar qualified friends are there. Kids from country towns who have tertiary qualifications sadly don`t want to live in their home towns. This is happening all around the world - west and east. Towns and cities are getting bigger at the expense of rural conurbations and this is only going to gather momentum in the digital age. Regional development - you can lead a horse to water, but you cant make it drink
This is exactly why we need to invest in the regions. I can't understand why we continue to keep all our eggs in a couple of baskets - if another major earthquake occurs in Wellington or Christchurch or a volcano erupts in Auckland, we're royally rooted. It makes much more sense to share that risk around multiple regions. Also, one way to reduce housing costs is to provide opportunities for technology workers to work in other regions (or even remotely). I'm only in Auckland because that's where the work is. I'd be happier living a smaller town and connecting to the office remotely.
Spot on Jimbo Jones. The World all over there is an exodus from the regions to the big cities for many reasons. It's often a left wing ideal to fight natural changes. I own businesses in the regions so I should be happy about it but I tell you it won't work. Even 10 billion pa won't work, it's an ideological waste of money. The economic forces drive people from the regions to the cities. If all considered, the regions were better to make a great life for most, people would leave the cities, but clearly, that's not the case.
Ironically just the other day you were complaining about satirical comments needing to be moderated.
Here you make one about Russia, but supposedly have no issue with us trading with China. That makes me wonder if you have an issue with the (ex) soviet bloc nations. If so, then what?
I only ask because the Chinese are not too different from the Russians in the way they do business, except you don't have an issue with that.
Yes, a very interesting commitment to "examine" that. No doubt initiated by Winston Peters based on discussion within the sector. I suspect there is discomfort about the management of agricultural debt by the Aussie banks (one in particular) in light of what happened over the ditch;
http://www.abc.net.au/news/2014-12-29/warnings-of-rural-financial-crisi…
http://www.abc.net.au/news/2014-02-14/farmers-take-class-action-against…
I support higher wages in NZ however what this min wage increases ignore is whole sectors can not pass on the cost or facing falling revenue, example the entire non profit sector. many such as mental health support with DHB contracts which have been reduced do not have the margins for these or relativity increases for their staff on current funding contracts...
So you fix it.
1. We either ensure we pay our people enough to live.
2. Or we pay them less than the required amount to live, and then pay again to deal with the social fallout. More jails, more police, more private security, more homelessness, more health issues.
Either way, as a society we pay for it. I prefer the first option, where those that are working are self sufficient. While simultaneously work towards getting as many people who are able to wrok into employment.
There is an assumption that all low paid people are employees. Earlier this year a report was released on self-employed people's income and there was a growing number who were below minimum wage.
Given you say low incomes cause social fallout then I would think the statistics for social fallout issues would show an increase in self-employed among them which they appear not too.
Are you suggesting that only people who are employees would get enough to live on or would you see this enough to live on being spread with equality?
I support higher wages in New Zealand but we should not have to do it through rules and the minimum wage etc. Best we put a little competition into the labour market and stopped basic level workers being undercut by the flood of low skilled immigrants. (dairy, driving, carers)
What a good thing if folk in those industries got $25 per hour. Good for business when they spend it too.
Clearly some regulation is required. Take bus contracts as a prime example, companies have secured contracts clearly by cutting their wage bill. This is where award wages were better than just a minimum wage. What has happened is clearly that people whose skills would normally put them well above minimum wage have had their earnings ground down to little better than that due to there being no other protection.
A serious question and I'm happy if someone can explain this to me (no sarcasm).
Labour & NZF coalition do not have a majority of seats in parliament. The Greens are not in the coalition but they have signed a "confidence & supply" agreement with Labour (but I don't think with NZF).
What happens if Labour/NZF coalition wants to pass a bill which the Greens don't agree with. (there are several issues that the Greens don't agree with NZF). David ? Anyone ?
The Greens will play with a straight bat. There could well be something that crops up that in all conscience they cannot support. It did happen occasionally with National and most particularly the Maori Party and on the odd occasion United Future, so it is not something that is new. I think you will find the 3 parties are more in accord than not, even NZF and the Greens.
Yes, same type of minority coalition + C&S that constituted the 46th NZ Parliament;
they dont have to vote for it, but if national try to run a no confidence motion in the labour NZF government they will support labour every day.
for them its the best of both worlds, they can get what they want done (if labour can get NZF to agree) but can voice against and vote down things they totally oppose.
it is a more consensus type of government
i.e kermadec islands greens want it, but labour and NZF first will not do it until maori and the fishing industry are happy with a deal. so all three need to find the solution to make it happen
unlike the last nine years where most laws were passed even if the support parties were opposed,
I suppose there could be one scenario where the Greens are better off outside of the coalition which is if they are ready to jump ship to go with National on issues that suit them like the Kermadec Sanctuary for example. That would mean the purest form of MMP yet, it would also mean the Labour/NZF coalition becomes much weaker. Would the Greens stick to their convictions and do this or will they yield to what Lab/NZF want ?
Evil. You claim that the Greens got shafted yet by asking this question you very obviously have NO IDEA why they have not. Indeed, they probably have exactly the power to influence matters of most importance to them. However, we now must wait and see how such issues are managed but without throwing our toys out of the pram.
"Ardern said the parties had agreed on banning the purchase of existing homes by foreign buyers – she later clarified this was non-resident foreign buyers"
This is flawed from the get go. In our area the 'foreigners' appear to target existing houses that can be moved or bowled and new ones developed using their own labour, not necessarily adding to the housing stock and almost certainly shifting the houses up the value curve, thereby excluding more local buyers.
10 plus, most in St Heliers. You can tell which ones are Asian developed as they work through the weekends, especially with no noise activities like gib. 98 Melanesia Road St heliers is a good example. Sold for $1.6, house removed and two large houses built, selling for $3m each.
NZ citizens cannot be prevented from buying land/houses in NZ. It is a fundamental right of citizenship. So is the right of permanent residents, one would think ?
Though I am not able to see a clear indication in the agreements that buying of houses by non residents and foreign citizens would be stopped. There is mention about land, but not houses. Am I right ?
Correct re para. 1.
Re para. 2 I got the clear indication that the intent is to ban foreign nationals (i.e., non NZ residents and citizens) from purchasing existing residential properties. I think they are leaving themselves wiggle room when the detail is provided to allow foreign nationals (i.e., non NZ residents and citizens) to purchase private sector new builds (Kiwibuilds will be restricted to NZ citizens and PRs I assume), much the same as the current Aussie policy (as I understand it).
Minimum wage to be $20 by 2020.
By that time living costs will have skyrocketed and 20bucks an hour will not be enough to live on.
Reality is that if the low paid jobs get $20 per hour everyone else will want more obviously which puts up costs so you are no better off, but that is probably not understood by the lefties!!
Are they going to be putting up the benefits for the unemployed and the solo parents as well.
There are going to be strikes from many unions and ununionised workers going forward.
This coalition is going to get an absolute hiding as there is not enough ability to run the country combined from the 3parties.
They all should be called the Green Party as that is exactly what they are!
so what is your answer to people not earning enough working to survive nowadays?
its an interesting discussion, if wages go up to much will firms automate?, if wages are too low how will the government support the people to survive?
and in the end who pays private enterprise or government?
https://www.economist.com/news/finance-and-economics/21724802-two-studi…
"so what is your answer to people not earning enough working to survive nowadays?"
Start hitting the companies that are clearly benefiting from NZ's lax consumer law, and drop prices.
There is an endless list of companies/industries that seem to make far higher profit margins here compared to anywhere else on earth. Why?
1. Fuel companies
2. Banks
3. Supermarkets
4. Power companies
5. Telcos
Why is it milk costs more here than anywhere else, yet we supposedly have a massive surplus?
Look at Local RRP price gouging. Anyone remember the ABs jersey debacle a few years ago. It is absolutely clear that prices are set at a different rate when dealing with NZ. The amount of companies that now have "higher" prices or "unable to deliver" to our region seems to go up by the day. Yet no issues in the rest of the world.
Stop allowing competitors to lodge RMA objections on spurious grounds.
Stop giving our stuff away for free to foreigners.
- water
- fish
- land
There are many answers, all we need to do, is to vote for a real change next time.
Bill English's slogan 'Delivering for New Zealand(ers)' seems to have been hijacked by Winston ?
Also, am I right in thinking that this is the first time that Government formation under MMP has been so detailed with signed deals, etc ?
Winston's grin was precious to see today...Happy as.
Don't panic Capt Mainwaring -
https://uk.answers.yahoo.com/question/index?qid=20080613112634AAWYByf
You are not alone Boatman ... many people share your view and fears .... I guess we all have to take things and policies as they unfold .... and measure.
Someone here was laughed at when mentioned $6 coffee soon, and all do gooder came out of woodwork claiming that it will save some homeless people etc ...... so talking to some hospitality operators today about the effect of min wage rise on their businesses, they all asserted that Margins are tight as they are and business has been slow for some time this year so min wage will mean that 1 in 4 workers has to go because there isn't much room for price increases in such a tight market place .... all had very pessimistic outlook for next year.
funny enough all said they wont raise the price of coffee to $6.00 - they would shoot themselves in the foot if they did !!
Interesting, every industry has its own particular secrets, problems, and issues , totally invisible to the naked eye...
Every heard of the factors of production, in particular labour vs capital. At the moment capital (think lease or rent) has supremacy in terms of costs, thanks to your beloved National permitting an asset price bubble. But then you are just a troll, and trolls don't have to know anything.
Rasputin Peters has Czarina Ardern right where he wants her .............. under his thumb on the pretext of being her guiding spirit and mentor .
I can assure you , the way this has unfolded will not end well for New Zealand
And I can assure you that it doesn't matter how many times "comrade," communist", or "cossack" is uttered in the suburbs of NZ, your economic fate will not determined by the your favorite color, preferred rhetoric or social conditioning.
A thought experiment (the safest kind) re minimum wage impact on hospo....
Imagine a 1/3 each split of expenses which total 80% of revenue: as between materials, plant/property/equipment, wages.
Imagine all wages are now at the minimum wage - $15.75 at present. All other costs remain as is (at 1/3 of 80% of sales).
Wages go up to $ 16.50 in 2018, and $20 in 2020
A little arithmetic gives the following:
The baseline is that total current expenses (80%) leave 20% of sales for tax, depreciation, and drawings.
In 2018, at 16.50/15.75 wages increase, the surplus reduces to 18.73% of sales. This is a 6.3% reduction on the former 20%.
In 2020, at 20.00/15.75 wages increase, the surplus reduces to 12.80% of sales.This is a 35.98% reduction on the former 20%.
In 2020, kindly place yer bets on the fate of this leetle enterprise, being that the bottom line is in effect the owners' remuneration......
Oh (for the Interest team) fer cryin' in the sink, can we not have table tags in comments?
waymad, that is the micro version. Of course the macro deal is that their competition has that same changes in cost structure. Prices rise to meet the targets. Some may be slower or reluctant. The employees with a little more in pocket ( if not hijacked by greedy rentiers) can afford to get out a bit more.
No he didn't.
He showed that demand for luxury goods increased with disposable income.
Given that he was the cheapest gig in town offering said luxury goods, he effectively had a captured market for any of the demand he created for automobiles among his workforce.
Most importantly, it was only Ford that did it and not every competing industry in Michigan.
It wasn't 'trickle up', paying a living wage, or any of that left wing mumbo-jumbo.
It was the ultimate show of capitalistic altruism to both increase demand for his products and increase the supply of highly productive labor to produce them.
"On January 5, 1914, Henry Ford announced a new minimum wage of five dollars per eight-hour day, in addition to a profit-sharing plan. It was the talk of towns across the country; Ford was hailed as the friend of the worker, as an outright socialist, or as a madman bent on bankrupting his company. Many businessmen -- including most of the remaining stockholders in the Ford Motor Company -- regarded his solution as reckless. But he shrugged off all the criticism: "Well, you know when you pay men well you can talk to them," he said. Recognizing the human element in mass production, Ford knew that retaining more employees would lower costs, and that a happier work force would inevitably lead to greater productivity. The numbers bore him out. Between 1914 and 1916, the company's profits doubled from $30 million to $60 million. "The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made," he later said. "
http://www.wiley.com/legacy/products/subject/business/forbes/ford.html.
Thanks for proving my point, Didge.
"Ford knew that retaining more employees would lower costs, and that a happier work force would inevitably lead to greater productivity. The numbers bore him out. Between 1914 and 1916, the company's profits doubled from $30 million to $60 million."
"The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made," he later said. "
Jeez, that sounds like a pretty good return on investment to me - exactly what I said previously.
Again, it wasn't socialism that achieved this; it was capitalism. In an environment with some pretty specific dynamics.
Don't confuse this at all with a market wide 'minimum wage'. The outcomes of the two are starkly different.
Ford's was born of capitalistic ideology, the other is socialist ideology.
I don't think it's as simple as that. My pick is that employers will become smarter with their employment hours to match actual needs e.g. if a café has a rush hour it will employ enough to do just that and risk getting it wrong occasionally rather than put some fat in the system and having under-employed staff. The result is that staff work more fragmented hours and get more for the hours worked, but the pay packet is no bigger.
Of course, XX, there're always Robots - no minimum wage, no unions, no sick/annual/bereavement leave - see here for a working example... https://www.wired.com/2017/01/cafe-x-robot-barista/
They have at least some flexibility in the work place, other sectors do not with revenue, pricing or staff environment. i.e Non profit sector and large parts of mental health social services which had their contracts cut 5% p.a over the past year by the DHBs as an example.
NZD/USD @ 0.6928 cents. Looking sick on the charts. Wouldn't be surprised if we see 0.6000 before Christmas and if it can't find support there, we're back into the 50s. Farmers will be rolling in it. Not great for inflation and the consumer with petrol prices though. Maybe interest rates start to tick up to support the dollar. Mortgage stress up, consumer confidence down. job losses start at the fringes. Party like it's 1991 or 2008 depending on your generation.
Yes, $60bn of debt out there, but reports say 20% of the most indebted farms have 45 to 50% of the total debt so it isn't spread around. It sounds like Winston will protect them from the Banks. If this downturn is unique to NZ it will be better than 2008 when the price went down with the dollar. This time it could be good prices and a low $. The 80% of farmers with lesser debt loads will be making lots of money.
Yes Ex Expat, I suspect the only thing that seems certain from what has been announced as coming (lower currency - their indirect doing, 26% increase in the minimum wage, immigration cuts, reversion to industry award setting etc) is rising inflation, and earlier than expected and steeper interest rate hikes - all at a time of falling growth rates and employment
INCREDIBLE RESULT
After years of posting on this forum and emailing the leaders of all parties we finally got the Ban on Foreign Buyers I was after.
WOW !!!!
Great day for all New Zealanders. Finally we can start treating our houses as our homes again and not something to be sold to the highest bidder offshore.
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