Wednesday, February 22, 2017

The Living Wage and corporate welfare dependency

Michael Barnett, CEO of the Auckland Chamber of Commerce revealed a lot when he was quoted in a recent Stuff article on the Living Wage. Barnett claimed that the living wage was "subjective and artificial" and would make businesses go under. He believed that rather than councils paying their staff liveable incomes, they should just ensure low waged employees get "their full government welfare entitlements". His thoughts are widely held by the business sector, especially large corporates who benefit most from low wages, and such thinking deserves to be challenged.

The belief that market forces should determine the value of a job and what it is paid is flawed. Market forces should have some bearing on wages and salaries but to use this as the main determiner is open to manipulation and abuse. In fact the evidence and economics behind the living wage is far more objective and rational than the excuses used to pay CEOs their exorbitant salaries.

We currently have the case of the CEO of the NZ Super Fund receiving a 36% pay increase and this has come after a 22% increase two years earlier. The usual argument to support skyrocketing CEO salaries is that the huge increases are needed to meet the market and to attract the best. This assumes that high salaries do attract the best and that financial considerations, rather than the job itself, is a key factor in recruitment and retention. A Dominion editorial exposes the flaws in this thinking and it is my belief that anyone who will only do a job for a highly inflated salary may not be driven by the sort of philosophies and ethics we would want in the role. What difference does it really make to quality of life if one earned $1.2 million a year rather than $900,000 and what different skills and attributes would be expected from a CEO paid more than $400,000 per annum? Who is to say that within any business or government department that there aren't other managers working at a slightly lower level who couldn't step up and do the same job just as well, if given the opportunity.  There is little evidence that I have found that supports the view that paying high salaries secures good performance and the opposite appears to be the case.

The current trend is for CEOs and senior management to receive increases well above the rate of inflation and to keep a firm cap on the wages of those at the bottom. In New Zealand our largest corporation would have to be Fonterra and despite 100 of the company's managerial staff earning more than our Prime Minister (17 staff earn more than $1 million a year) the company has struggled recently. Interestingly the dairy industry as a whole is also known for many workers earning below the minimum wage and enduring possibly the worst working conditions in the country.

Michael Barnett would promote the idea that if someone was prepared to work in a rest home or clean toilets for $15.25 an hour (or $12.20 as a training wage) then that is the value of the work. This is a subjective view that does not account for the real effort and skill involved in any low waged job and is also shaped by an historical bias that undervalues work predominantly done by woman. Some recent legal judgments have challenged this workforce discrimination.

Since the National Government introduced the Employment Contracts Act in 1991 we have seen a gradual change in how employees are regarded and represented. Only 20% of the workforce is now unionised and there has been a huge growth in casualisation of work and zero hour contracts became common. This is reflective of the thinking that labour is just a commodity and ignores any humanitarian considerations of income security and how workers and their families should be valued.

When a farmer buys a new tractor they generally ensure it is well housed when not in use and is regularly serviced. Many dairy farmers now track the production and health of every cow to ensure optimum productivity. It is interesting that many of the same farmers do not have accurate employment records for their workers and make little effort to ensure their health and safety or that their pay meets their basic needs. Accessing the supply of willing workers from the Philippines is possibly less problematic than replacing a cow or machine and instances of slave labour in New Zealand are a growing concern. Viewing the worker as a commodity rather than a person is becoming increasingly entrenched.

It should also be noted that large corporates employ the majority of the minimum wage workforce: supermarkets, rest homes, fast food industry, cleaning... most of these businesses are very profitable and could easily afford higher wages. It is also important to recognise that New Zealand is now regarded as a low wage economy and that our productivity is well down in comparison to other OECD countries.

When Barnett claims that businesses will go under if they have to pay living wages, this is quickly disproved by the many small businesses that have found the opposite. The article I first linked to had a number of examples where small business owners found that paying their workers well brought huge benefits to their business and many other examples to support this can be found. The Warehouse is one larger corporate that discovered introducing the living wage has had a positive effect on its sustainability and profits.

New Zealand does not really have a social welfare problem, we have a corporate welfare problem. Tax cuts and grants get continually handed out to profitable companies, tax fraud costs us hundreds of millions and yet beneficiaries are chased down and imprisoned for relatively small sums. Compared to other OECD countries we have relatively low unemployment and yet at the same time we have increasing inequality as the top 10% of earners have seen their incomes steadily increase but most workers have not enjoyed the same. Wages have not increased with productivity gains and this means that the wealth our country collectively generates is not being shared fairly amongst those who contribute to it. Concerns of affordability can quickly be parried when a CEO's $200,000 bonus payment could provide 40 workers with a $5,000 pay increase instead.

The living wage is based on what is needed to pay for "the necessities of life and participate as an active citizen in the community." When housing, electricity, transport, food and education costs increase then so should wages. The living wage is not based on a random figure plucked from the air, but reflective of the real costs of living and thriving in New Zealand.

We now have the bizarre situation where Barnett and his mates actually believe that the Government should subsidise wages to support their profits. While the salaries of his mates spiral upwards, the cost to the Government of the Working for Families tax credit and the accommodation supplement is probably around $5 billion per annum. Denying workers discretionary spending power also deprives the domestic economy. The growing number of families needing food parcels and income support means they are spending less in their local shops. Our current level of corporate welfare is unaffordable and (for the good of our country, our economy and our future) we should begin a weaning process immediately!

Monday, February 20, 2017

Making New Zealand great again...

Bill English has made much about the importance of stability since becoming Prime Minister and his own financial management, when Minister of Finance, did not involve major shifts in priorities. No Government sector can claim that they had a sudden influx of capital since 2008 and the mantra under both Key and English has been to deliver "more for less". Any extra spending generally meant changing priorities and shifting money from one area to another.

The consequence of this approach has been an under-investment in important infrastructure and a slow deterioration of government services over the past nine years. Gradual change is a cautious approach to governance that has been used defensively by both Labour and National over the last twenty years. The Douglas and Richardson eras had both involved substantial shifts in government investment that resulted in sudden changes of circumstances for large sections of society.  Both Clark and Key sought to avoid this to capture and retain the political middle ground. The approach doesn't frighten the voters and provides the impression of responsible governance. However, it has also meant that there has been no large re-investment back into the areas that had suffered huge cuts in the 80s and 90s.

Our rail network still suffers from under-investment, which has not helped Auckland's traffic problems and has seen a proposal to dump electric trains on the North Island Main Trunk Line. Lack of investment has also seen our social housing stock reduced while demand is steadily increasing and our health, education and welfare systems are becoming increasingly stretched to deliver quality services. After Richardson's Mother of all Budgets child poverty trebled from 5% to fifteen and it is now close to 30%.

I talked about the "new normal" in my last post, and this is what incremental decline causes. People quickly forget what used to be expected and slowly adjust to living in a country where poverty is common place, housing is largely unaffordable and a clean environment is an unaffordable luxury. Under this National Government we have learned to believe that substantial change is no longer possible; poverty is self-inflicted; addressing climate change is not our responsibility and clean rivers are not economically viable. Gerry Brownlee represents his Government's philosophy well when he castigates those who demand more and attacks reports questioning lacklustre performance.

It is important that the Labour/Green campaigns shift thinking and expectations with accessible and aspirational messages similar to those that rallied voters behind Trudeau and Sanders (in a New Zealand context). Obviously the messaging has to have substance behind it, so that there is a practical blueprint to follow once elected. It is clear to all that Trump was elected because he could describe a United States' utopia that resonated with many, but his planning hadn't progressed beyond the simple, Fox News informed, scribbles on his branded serviettes. We do not want to be caught by "show us the money" moments that are more likely to occur here than the US (evidence isn't needed there apparently).

We need to see strong Labour/Green campaigns this election that will convince voters that a change to a fairer and cleaner New Zealand is actually achievable and that both parties contain people who can make the vision happen. While the messages are important, those delivering the messages around the country need to come across as energetic, fresh and capable. The Mt Albert by election has provided a taster of what is possible. Roll on September 23!

Monday, February 13, 2017

"New Normal" Dangerous

It is amazing how quickly expectations of what is 'normal' can change.

Southland has experienced one of the windiest and miserable Summers I can remember. Our farmers market has only had one day outside all Summer and even then the canopies were blown around by the wind and some stall holders were forced to seek shelter. Every day I wake up resigned to another day of wind and cloudy skies. I have almost forgotten our usual habit of dining outdoors most evenings over the summer months and enjoying our long twilight hours. Northland has experienced the opposite situation. The region is experiencing its fifth drought in eight years. Despite the fact that all of this has been predicted by NIWA as a consequence of climate change the current Government is determined to continue with business as usual and a soft approach in dealing with our emissions. The RMA still does not address climate change and the Emissions Treading Scheme still excludes major emitters. Extreme weather is the new normal both here and overseas.

Ten years ago homelessness was not too visible in our major cities and certainly not at the levels visible today. It is now estimated that around 40,000 New Zealanders are homeless (one in very 100) and that we have a shortage of 60,000 houses. The Government is refusing to call this a crisis even though the shortage is currently increasing by around 40 houses a day. Much of our existing housing stock is also substandard with many rental properties lacking in insulation and basic maintenance. Rheumatic Fever is a third world disease that is related to poor housing and overcrowding and this is a growing problem because the causes are not being addressed. Homeless street people are common overseas and Bill English is treating homelessness as unavoidable and normal here too.

I can remember teaching at a small rural school that regularly took its children down to the local river for a swim during the Summer months. There was no concern about water quality and children never suffered from swallowing the odd mouthful. The water was clear, Didymo was absent and the rapid dairy expansion hadn't begun in Southland. Safe wading, rather than swimming, is now the new bottom line for quality and few would think it is safe for their children to swim in their local river. Dirty rivers are the new normal for this country.

The United States has recently elected its 45th president. While the previous 44 have had different levels of success and support, most have treated the office with dignity and have been measured and polite in their public engagement. The United States Constitution was adopted 230 years ago and for the first time the elected President, Donald Trump, is openly challenging the authority of the judiciary. Trump's ill-considered tweets, obvious lies and clear conflicts of interest have dramatically changed the previous expectations of what presidential behaviour constitutes. Petulance and ignorance define the new normal emanating from the Oval Office.

Normalising anything that is unacceptable is dangerous, it lowers expectations and severely reduces any sense of urgency to put things right. It worries the hell out of me that my children will suffer the climatic consequences of ignoring major polluters; are unlikely to afford a home of their own; will never enjoy swimming in a pristine local river; and will have to endure the global consequences of a tyrant leading the world's most powerful nation. We must not accept the unacceptable as normal!

Wednesday, February 1, 2017

Trump's Muslim ban exposes stupidity

Donald Trump won the Presidency because of his hardline approach to issues and simplistic messaging. In the business world, where he had operated previously, his success (largely exaggerated) was not achieved through diplomacy and managing complex and nuanced issues. It also appears that we have a man who is the emotional and intellectual equivalent of a bolshie, narcissistic, teenage boy leading the world's largest power.

President Trump exists because of the Post-Truth age. Not only was he elected because of the dominance of commercially and idealistically driven, popular media, his own knowledge and understanding of the world comes from the same sources. Research has revealed that watching Fox News is likely to make someone less informed about the world than watching no news at all. Lincoln's famous quote, "Government of the people, by the people, for the people, shall not perish from the Earth" could be rewritten to reflect the reality: "Government of the ignorant, by the ignorant, for ignorant, shall destroy the earth."  Given that the US is one of the world's largest emitters of greenhouse gases, and Trump is a climate denier, the world's environmental clock sped up when he took office.

The Executive Orders being signed with great enthusiasm are simplistic idealistic statements of intent that are not evidence based and will have far reaching consequences. His immigration and refugee ban is a classic example and the damage was instant.

The ignorance that lead to the immigration order is easy to understand. The fear of Islamic Terrorists came out of the horrific 9/11 (or 7/11 according to Trump) when United States citizens suddenly felt vulnerable to attack from outside. Bush's War on Terror was an attempt to allay those fears in a decisive way. An enemy had to be established and a show of strength in dealing to them was required. Al-Qaeda and Osama bin Laden were identified as the enemy, but this was problematic as bin Laden was a Saudi and he led loose groups that existed in a number of countries. Iraq became a convenient excuse for concentrating military operations in a single state while a parallel, clandestine operation to capture and torture potential terrorists occurred across many states.

Despite ending the war in Iraq and killing bin Laden (a trial would have brought too much attention to the actual realities and illegalities of the US operations), the situation in the Middle East has actually got worse. The War on Terror is an impossible one to win because the US is largely attempting to aggressively manage the discontent of millions of Muslim people suffering from poor foreign policy and military decisions. The fundamentalism and extreme views that have developed in the Middle East have been mainly created by the volatile environments that many Muslims are being forced to endure. This is not a religious conflict but, as in many wars, religion is used to provide justification.

Under President Obama there had been a continuation of operations that flout international law as US drones operate and kill suspected terrorists, without trial, across multiple borders. Thousands of deaths have been officially recognised but many more are disputed, including the combatant/civilian status of many who have been killed. The countries where US drones have operated are: Afghanistan, Algeria, Iraq, Iran, LibyaPakistan, Philippines, Somalia, Yemen and possibly Mali.

There is no logic to Trumps executive order to protect US citizens from terrorism. None of the terrorists who have killed people on US soil come from the seven Muslim countries singled out by the ban (15 of the 9/11 hijackers came from Saudi Arabia). Indonesia, the largest Muslim majority nation, is a notable omission and it appears that no Muslim countries where Trump has business interests have been included either. Yemen, one of the named states, is one of the poorest and most disadvantaged countries in the world. Its citizens are suffering hugely from a civil war where the US supported Saudi forces have an active involvement and are linked to possible war crimes. These Muslim nations have more to fear from the US than visa versa.

The threat posed by Islamic terrorists is extremely overstated. Around 16,000 people are murdered in the US every year (over 40 a day) and that compares with the average of 6 deaths a year as a result of a terrorist act since 9/11. Having tighter gun controls would make a far bigger difference to reducing violent deaths than tighter border controls. All Trump has done is increase the suffering of innocent Muslim families, caused chaos at airports and border controls and provided further proof that he is totally unfit for the role of President.

Tuesday, December 6, 2016

John Key's Real Legacy

The defining element of John Key's reign as New Zealand's 38th Prime Minister will be his ability to maintain a high level of popularity while dogged by scandal and having few lasting achievements. He should be recognised for his political instincts and ability to steadily push through National's agenda while avoiding blame for numerous failures. The title "Telfon John" was one of the few things that stuck. Key's major effort to achieve a legacy for himself was to push for a new national flag and it failed dismally. His resignation may indeed be for genuine reasons, like spending time with his family, but the timing is also clever because the underfunding of Government sectors is going to be seriously exposed and the housing bubble is close to bursting. Key's money trader instincts are highly tuned and I'm sure he smells disaster ahead.

Under Key's watch our public debt has increased from $10 billion in 2008 under Labour to almost %70 billion now. Cutting income taxes for the already wealthy, not implementing a capital gains tax and refusing to effectively deal with corporate tax avoidance limited spending across Government sectors to achieve a surplus. Conservation has suffered badly after successive cuts and both health and education have experienced funding shortfalls over the past 8 years and many social services have been cut altogether.

John Key has been a prominent international leader because of his easy manner and willingness to pander to big business and big Governments. One of the most popular speeches online regarding the Prime Minister was one by Green MP Gareth Hughes where he listed Key's many failings.

Under Key we have seen...
  • inequality grow
  • a housing shortage reach epic proportions.
  • almost 30% of children living in poverty. 
  • a steady increase in GHG emissions and a weakening of the ETS
  • NZ plummet in global education rankings and a growing tail of achievement and education inequity.
  • the collapse off Solid Energy and a failure of Key's push to grow our coal and oil industries as an early flawed goal.
  • Novopay.
  • growing pay inequity between men and woman.
  • our waterways become more polluted through the encouraged intensification of the dairy industry.
  • an increase in human rights violations
  • growing corruption including the blatant support of tax avoiding foreign trusts.
  • increasing numbers of native fauna and flora nearing extinction.
  • numerous embarrassing reports of Key's peculiar behaviour from pulling pony tails to off colour statements.
  • 100s of thousands of New Zealanders having their health seriously compromised because of a lack of resourcing.
  • the use of facilitation payments (bribes) to enable trade deals. 
  • multi-billion dollar motorway projects supported, despite many failing cost/benefit analysis.
  • an increase in crimes of violence (especially domestic) and a growth in prisoner numbers to over 10,000.
  • a number of Government Ministers involved with conflicts of interest and dodgy dealings who are allowed to continue in cabinet.
  • serious flaws in the Christchurch recovery
  • numerous lies and deliberate misinformation. 
  • a massive investment in PR over policy analysis.
Some positive things have occurred under a John Key led Government including the change in legislation to allow same sex marriage and over 300,000 houses insulated. However neither were instigated nor championed by National.

The Green party refused to congratulate Donald Trump as President Elect because of his shocking and extreme stances during his campaign and I find it difficult to thank John Key for his service when majority of New Zealanders have seen a reduction in services and diminished quality of life, while an elite few prospered hugely. Under Key it has been the very rich in NZ who have really benefited, with many seeing their wealth increase annually by over 20%. While John Key claimed, after his victory in 2014, that he would govern for all New Zealanders, the evidence has been otherwise.

Monday, November 28, 2016

Cuba vs USA, what Castro really achieved

Castro's death has revealed the power of US propaganda. Here are some embarrassing facts when comparing the United States with Cuba in key areas:


Life expectancy
Cuba: 79.16
USA: 78.88

Health system, physician density
Cuba: 6.72 physicians per 1,000 population
USA: 2.45 physicians per 1,000 population

Obesity levels
Cuba: 21.5%
USA: 33.9%


Cuba: 1.5% below poverty line
USA: 14.8 % below poverty line


Government debt
Cuba: 17.0% of debt to GDP
USA: 104.1% of debt to GDP


Literacy rate, 15-14 year olds
Cuba: 100%
USA: 99% (this has been questioned when some sources claim 86% is more accurate)

Education expenditure
Cuba: 12.8% of GDP
USA: 5.2% of GDP


Incarceration rate
Cuba: 510 prisoners per 100,000 population
USA: 693 prisoners per 100,000 population


Countries occupied or bombed since 1980
Cuba: Nil
USA: 14 (these are just the Muslim nations, there may be more)

To have achieved such high living standards while suffering severe financial constraints because of the US trade embargo (and including several assassination attempts) deserves some recognition. Castro was a dictator, but a largely benevolent one. Nelson Mandela admired Castro and credited him with doing more to end apartheid in South Africa than anything the US did. Cuba has also shamed the US for the level of aid it has provided for struggling neighbours like Haiti. I'm sure few realise that not only did Cuba lead the world with its medical aid but the Cuban National Ballet is internationally regarded.

To compare Castro with the likes of Stalin, Hitler or Bin Laden displays a high level of ignorance and blind acceptance of propaganda. For the New Zealand media to support the attacks on Trudeau for recognising Castro's real achievements is embarrassing. Castro was no saint but as a leader he probably achieved more that should be celebrated than many.

Treating news as entertainment has dangerous consequences...

The commercialisation of our news media and the ease with which unethical and egocentric politicians can cynically manipulate public opinion is now reaching extreme proportions. 

In the UK the political interests of Nigel Farage and Boris Johnson were advanced successfully because their bombastic personas and simplistic messaging were picked up so widely in media. It is a sad fact that news outlets with the largest readership maintain their dominance through sensationalism and gossip, rather than educated and informed journalism. This works well for those who have few scruples and are comfortable operating in that environment.

The circulation of printed newspapers have plummeted in the UK over the past six years and the dominant newspapers include the Sun, the Daily Mail and the Daily Telegraph. I used to read the Independent and the Guardian when I lived in the UK over twenty years ago and I was shocked to note that the Independent's circulation is now not much more than the population of Invercargill and the Guardian's has been halved since 2010 (now only 160,000). The Daily Mail dominates the online news space, with a monthly audience of 29 million, with little reporting of substance. Throughout the Brexit campaign it gave enthusiastic coverage of Johnson and UKIP's Farage with limited journalistic scrutiny.

In the US, against all predictions, Donald Trump won through a relatively modest campaign budget and the huge media exposure of his outrageous statements. Fox News is probably the US equivalent of the Daily Mail and its prominent news host, Sean Hannity, publicly endorsed Trump months before the election. The right wing conspiracy theorist, Alex Jones, is an influential voice for many working class white Americans and he was also strong in his support of Donald Trump. Jones' radio show is syndicated across 130 stations and claims to have 80 million video views a month. Facts and balanced reporting are not usually associated with Hannity or Jones and yet their opinions had a huge influence on voters. 

Neoliberal, conservative governments have increasingly served the interests of multinationals and the banking and finance industries over the majority of citizens. To ensure their political success they have had to appeal to the very people who have been exploited through their policies. The working classes in developed countries have not fared well in a free market environment. Global competition has resulted in limiting wage increases, destroyed unions and reducing working conditions. Conservative governments can only be elected if they can shift attention from the real consequences of their policies, including increasing corporate welfare at the expense of spending on the welfare of ordinary citizens. The US Federal Reserve ended up spending $7.7 trillion to bail out financial institutions that had failed because of corrupt practices and greed. Fossil fuel companies continue to enjoy annual subsidies of around 6.5% of global GDP  (even New Zealand gifts $46 million to the oil and gas industry), despite the fact oil companies dominate the top twenty of the worlds richest.  

Restricting public access to information, denigrating academic and scientific opinion and encouraging the development of personality based election campaigns has served conservative politicians well until a recently. While the working and middle classes have watched wealth distribution shift to an upward flow to a wealthy few, their growing frustration has seen the rise of two distinct politcal ideologies. In the US this saw the grassroots development of the Tea Party, supported by the less educated working class. The younger generation of the middle class supported the Occupy movement. While both movements lack leadership and sustainable organisation they represented a growing dissatisfaction with the political establishment.

The growth and freedom of commercial media was once used effectively by the conservative establishment to disperse its spin, however, the increasing sensationalism of news and erosion of journalistic ethics has seen more colourful politicians capture the limelight. To the less educated Sarah Palin, Donald Trump, Nigel Farage and Boris Johnson provide simple messages that resonate and support their prejudices. Jeremy Corbyn and Bernie Sanders encapsulated the idealism of the Occupy supporters with their principled stands and authenticity. Unfortunately the news media with the widest reach in both the US and UK have always attacked the left (note how Corbyn's Castro comments were framed) and so now we see Trump as the President Elect and Boris Johnson as Britain's Foreign Minister. 

In New Zealand our National Government has been supported by talk back radio and through commercialising public TV. John Campbell got shunted into the underfunded public radio and Mike Hosking's right-wing rants are promoted through prime time television. Apart from Winston Peters most of our populist and most bombastic politicians are found in the Government caucus. Key, Brownlee, Collins and Parata will be celebrating the latest polls

Now that news is being treated as entertainment, and populist personalities dominate politics, we must prepare for a future that will resemble a disaster movie. Nothing sells news better than disasters and we can depend on Boris, Donald and John to deliver. Human suffering and climate change will make great stories.