Alex's election diary: Annoying Annette King with a cynical view of Labour's new policies; And what the bloggers are saying

Dear diary,

Yesterday I think thought I annoyed Labour's deputy leader Annette King when Labour released its big savings policy. I couldn't help it really and had been itching to ask the question all the way through the press conference.

"Could one argue that this is just posturing for 2014 - announce all the big bad policies now, then over the next three years hock off the little ones that people don't like?" I asked.

I figured it was a pretty legitimate question, especially seeing as David Parker and David Cunliffe - probably the two leading leadership contenders after the election - were in the room. 

Listening back to the press conference on my dictaphone, which was well-placed right under Annette's nose, there was a great deal of hurumphing ("how ...") and use of the word 'cynical' from the table she shared with Cunliffe and Parker. Thinking back to it, there was also a lot of head shaking to compliment the hurumphing.

UPDATE: Annette has informed me she was not pissed off, and merely expressing the opinion that I had turned into a cynical old journo, despite being one of the youngest here in the Press Gallery. I think I might take that as a compliment, thanks Annette. Anyway, back to the story....

"This is a fundamental policy for Labour, yes," Phil Goff answered. "The policy that we're putting forward is policy that we believe in."

Even if that's not the plan for Labour, surely it should be asked whether, if the party were to have a new leader following election defeat on November 26, would they hold on to these policies and run on them in 2014? Or would a new leader take three years to see which ones were the most unpopular, then come along and say 'Look at me putting my mark on the party and listening to the voting public by removing this policy enacted by my failed predecessor'?

See all of Labour's new policies in our Party Policy section here.

But that's just me being cynical. Here's what some of the bloggers think:

David Farrar at Kiwiblog thinks Labour's KiwiSaver policy will reduce wages:

First of all it removes all flexibility and choice for employees. They may wish to pay their mortgage off rather than pay into KiwiSaver. National’s policy opts then in, but allows them to opt out. Labour will remove any choice from the employee. They may wish to save to start their own business, but Labour knows best and will force them into a default KiwiSaver fund – one which incidentally has the fund fees chew up close to 50% of the income in the first few years.

The decision to lift the employer contribution to 7% flies in the face of their campaign for higher wages, and helping struggling families. Most Labour MPs have never been in business, but let me explain how things work. Employers factor in the total cost of labour when they make hiring and pricing decisions. For example in my business I don’t just work out my labour cost as someone’s hourly rate. I add on 8% for holiday pay, 2% for ACC levy, 2% for KiwiSaver costs. So if someone is on $25 an hour the cost to the employer is really $28.10. One might factor in public holidays and sick leave also.

Now if you lift the employer contribution to 7%, it will mean that pay rises in future will be smaller, because otherwise the total cost of labour gets inflationary. Anyone who thinks this won’t happen, is not an employer I suggest. So what Labour’s policy will mean is that over the next few years employees will earn up to 4% less than otherwise would be the case. No, not every employee, but on average. So this is in fact a policy to reduce wages.

Eddie at The Standard also looks at this point, and wonders whether the ramp up in employer contributions from 3% to 7% would effectively be an increase in employee contributions:

But the employer contribution is worrying a lot of people. The employer contribution will ramp up at 0.5% a year from 3% to 7%. The Right’s moaning that will will hurt businesses but the worry is that they will rip the increased contributions out of workers’ wages.

You might remember that, when KiwiSaver came in, businesses were deducting their contributions from workers’ wages but Labour made that illegal. Then, National made it legal again. Under this new policy, Labour would leave it legal. The policy says:

“The impact of the 0.5 per cent annual increase on wage negotiations will be a matter for discussion between unions and employers.”

So, Labour is implicitly saying that employers will be able to offset their rising contributions against wage increases . So, workers would end up 4% worse off cash in hand, although with much bigger KiwiSaver nest eggs, as a result. It is going to end up being an employee contribution, not an employer contribution in many cases.

That’s no big deal if you’re getting the 4% average nominal wage growth that Treasury reckons is the norm but when was the last time you saw that kind of a rise?

Getting back to the cynical side of things, Idiot Savant at No Right Turn has a good ole conspiracy too. Gets my vote.

Labour has announced the other half of their retirement and savings policy: compulsory KiwiSaver, with gradually increasing employer contributions. That's not a terrible idea, and the latter is something they should have been doing from the beginning. The question is why they decided to tie it to a third rail increase in the retirement age. Its not as if the two parts go together, after all. You don't need to increase the retirement age to boost KiwiSaver, and neither half adds anything to the other. So why?

And again, I'm drawn to my earlier conclusion: this is simply a cynical political ploy to wedge National and boost Winston, an empty threat designed purely to be vetoed. You can admire the Machiavellian evil of it, but I prefer my political parties to be less deceitful in their promises.

Peter Cresswell at Not PC has found himself agreeing with Labour on the decision to raise the Super age. Well, kind of agreed.

What they’ve done is to look at the financial chaos around the world and realise that a large portion of it comes from government’s borrowing unsustainably to fund election bribes welfare. And they’ve made a tough call.

Government Super in its present form is unsustainable, they say. And they’re right. Yes it is.

The simplest way to remedy that is to raise the age at which Government Super is payable, they say. And they’re right. Yes it is.

So, therefore, they say we must immediately got on with raising the age incrementally … so that by 2033 the qualifying age will be 67.  Did they really say 2033? 

2033? 

Surely, Phil, you have to be kidding.

Yes, yes, I know you’re simply opening the debate, and for that I doff my hat to you.  But to kick the can down the road to 2033 is, frankly, to acknowledge the problem and then do nothing about it.

And luckily Matt Nolan at TVHE didn't have the Queen visiting:

I stood up and started swearing loudly at my work mates.  Calming myself to the point where I was only enraged, I explained to people at work what they already knew – it doesn’t matter who pays the contribution/tax in name, as over time wages will adjust so that the incidence of the tax is different.

This isn’t a complicated idea, I remember racing through it in test while I was in secondary school and thinking it was one of the easiest things we have to cover.  However, it is only taught in economics – and as a result, politicians can just blatantly lie about the impact of policy without the public realising.  And f**k, people in the party have studied enough to know this – they KNOW they are lying to the public, but they are happy to do it because they want to get elected.

Lets look at this case.  If as Labour says things are really a struggle for households, labour supply is likely to be very inelastic.  This would suggest that a significant amount of the “burden of tax” would in fact fall on them.  In essence, they are just increasing the minimum amount you have to put into the scheme to get your “sweeteners” back … which you are being taxed to provide in the first place.

This sort of rubbish makes me feel ill – it is deception, it is lying, and its straight out immoral.  This is why I dislike politicians.