Archive for May, 2010

Multi-millionaire Prime Minister John Key has decided to give us all a lecture about how grateful we should all be for the existence of rich people and that we should not be envious when the Government tomorrow decides to give them a tax cut worth thousands of dollars while the rest of us get very little or nothing.

John Key must be very worried about the reaction of lower to middle income earners, those between $48,000 and $70,000 per year, who could gain as little as $1.20 a week from the Government move to hike up GST and slightly lower their personal tax.

To head off the general reaction to high income New Zealanders buying wheelbarrows to take away their tax cut money, he has decided to go on to the offensive and accuse those who argue for a more equitable tax system as being consumed with envy.

The attitude of John Key and the National Party reminds me of the “trickle-down theory” that was popular with the neo-liberal Labour and National regimes of the late ‘80s and early ‘90s. According to these politicians if we gave the rich more, they would invest it and the benefits would trickle down to us all.

Unfortunately, this has not happened and New Zealand is one of the worst performers in the OECD for income inequality.

Rather than feeling embarrassed about how unequal our society has become, John Key is trying to give confidence to the rich to publicly defend their incomes (many of which are largely untaxed) and their right to spend it on whatever they like.

It was embarrassing for John Key that Amanda Hotchin, wife of Hanover Finance executive Mark Hotchin, decided to take his advice and defend their high living lifestyle, telling the Sunday Star-Times from their $43,000 a month Hawaii hideaway that “we don’t have to justify where we get our money or what it’s spent on, to anyone.”

Given that Mark Hotchins was one of two Hanover co-founders who were paid around $91 million in dividends in the years before Hanover Finance defaulted on thousands of investors they do have to justify where they got their money from and what they are spending it on.

It’s a long way from the world of John Key and the Hotchins and the world of the parliamentary cleaners, who have to work over 60 hours a week before they top $40,000 a year.

Little do that these cleaners know that they probably would not even have a job without the generosity of the super-rich to generously pay some tax to keep the cleaners in the style of living they are accustomed to.


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Good on Winnie Laban and Sue Kedgley for organising the joint Labour/Greens series of meetings around the country to give older people a chance to express their concerns about the reduction in funding for health services.

The reduction in home support for thousands of older people has been progressing silently in many parts of the country as the Government has leaned on District Health Boards to cut expenditure. The District Health Boards have compliantly leaned on assessment agencies to do a bit of local expenditure “trimming”.

Unfortunately, the ”trimming” is often a 50% reduction in home support entitlement.

While District Health Boards will argue that it is only a cut from one hour a week to one hour a fortnight for the older people concerned it can be the difference between them living independently in their own homes or having to move into residential care.

I was recently involved in advocating for an older couple who were living securely in their Housing NZ home. He had developed dementia and she had a serious heart condition.

They were receiving one hour of home support a week to covered cleaning, laundry and some other jobs that neither of them was any longer able to do.

A phone call from the assessment agency told them that due to financial constraints from the District Health Board this was being reduced to one hour per fortnight.

Within three weeks of this re-assignment of hours the wife was admitted to hospital for a couple of days with heart problems and was told she was no longer able to drive their car for an important part of her weekly routine – picking up the groceries. I believe that this was due to the pressure put on her by the loss of one hour of home support, worth about $20.00 a fortnight or $520.00 a year to that DHB.

My investigations showed that for the cost of $520.00 per annum the DHB could have ended up tipping this couple both over the edge into residential care for the cost to the DHB of about $80,000 per annum. At the same time the DHB was showing a massive surplus of $1 million on its home support budget from the number of cuts it had made.

While the Union normally focuses on the dreadful wages paid to the workers who carry out the home support, our elderly population is currently being treated even worse than those who are paid to support them.

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Who’s Responsible?

The US Senate has been trying to find out who is responsible for the massive oil spill off the Texan coast that has wiped out an enormous fishery and is going to cost billions to clean up.

While it was a BP oil well that caused the problem, it turns out that BP employed a contractor, who employed another sub-contractor, who then employed other subcontractors.

When it came to finding out who was to blame they have all been pointing the finger at each other, including at Halliburton, who you will remember were also involved in sub-contracting to run parts of the Iraq war.

If you think it is bad from a public policy point of view, this form of sub-contracting is disastrous for workers, who can never work out who is the person or company that controls their work.

The SFWU ever day deals with funders hiding behind layers of contractors to get out of taking responsibility for minimum wage rates, hours of work and other conditions.

The Health and Safety in Employment Act makes client companies responsible for the performance of contractors and Part 6A of the Employment Relations Act brings client companies into the framework for preserving workers employment conditions during changes of contractor.

Progressive governments need to keep developing this area of the law to keep up with the new ways large powerful corporations use to get out of their responsibilities and increase their profits.

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In recent weeks SFWU members in disability support, public hospitals, school and commercial cleaning celebrated the winning of wage increases.

While some of these increases have only come about through long negotiation processes and weeks of industrial action, they are small increases of one to two percent that are not changing a 20-year New Zealand trend of increasing inequality.

Over the last 20 years incomes have risen at all levels of New Zealand society, but they have risen much more at the top.

Between 1994 and 2008 those in the bottom 10% of income earners earned an extra $3600 in real terms (largely through big minimum wage increases during the Labour Government), while those at the top gained an extra $15,800. Beneficiaries have actually gone backwards, with benefits lower in real terms than they were in 1991.

Salaries for those at the top have rocketed with some New Zealand CEOs earning casino sums, including 16 heads of state sector organisations earning more than $400,000 per annum.

In a recent NZ Listener article it was noted that since the 1991 Employment Contracts Act and the attempt by the then National Government to decimate unions, inequality has rapidly increased.

The 1999-2008 Labour Government halted the upward trend in inequality through its restoration of greater rights for unions, increases in the minimum wage and working for families legislation, but it has been reversed by the economic recession and the National Government’s policies, which are about to include the biggest attack on the incomes of low-paid workers – an increase in GST.

This situation requires some radical solutions.

We need to abandon the once-over-lightly attempt by the previous Labour Government to promote collective bargaining and introduce a system that allows ordinary workers a genuine and constructive part to play a part in the re-distribution of wealth through the right to collectively engage in negotiating minimum pay and employment conditions at the industry level rather than just in their own workplace.

Parties of the centre-left need to commit to rolling back the National/ACT GST increase and adopting their own agenda around taxation that includes capital gains and financial transactions taxes.

But most importantly we need to keep articulating why inequality is a blight on our society and why it needs to be attacked as a matter of urgency.

Without voices being raised about this issue we will never be heard above the incessant din of the individualist philosophy that is at the root of the problem.

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