Raise wages to stop brain drain, says MP

Last updated 05:00 15/05/2011
Photo: Fairfax
Green MP Metiria Turei.

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Raising the minimum wage would boost the economy and Government's piggy bank, plus keep Kiwis from moving across the Tasman.

That's the message Green Party co-leader Metiria Turei has for Finance Minister Bill English ahead of Thursday's 2011-12 Budget.

Turei wants the minimum wage lifted by $2 an hour from the current $13.

"Raising the minimum wage to $15 an hour would not only significantly improve their lives at a time when living costs are soaring, it would also generate up to $173 million per year for the Government at a time when the fiscal deficit is ballooning," Turei told Sunday News.

The rise would immediately generate an extra $101m a year in increased PAYE taxes, she said. It would give 300,000 workers increased spending power, leading to a gain of about $72m annually from GST.

Turei said fewer people would need to get the Government accommodation supplement and Working for Families assistance.

"This is smart economics in action and makes both fiscal and social sense. It would bring us more in line with Australia, where the minimum wage is A$15, just over $20, and actually advance the Government's abandoned goal of `catching up with Australia'.

"Governments make choices when they set the Budget.

They can choose to find ways to raise revenue that also benefit those on low incomes, or they can choose to cut social spending for those who need it the most."

Earlier this week, Prime Minister John Key said Kiwis should brace themselves for significant Government spending cuts, including to the KiwiSaver scheme.

Raising the minimum wage to $15 an hour was part of the Green Party's Mind the Gap strategy, aimed at combating what Turei described as growing inequality in New Zealand.

"In future Budgets, the Green Party would commit to further staged increases in the minimum wage, until it is pegged at two-thirds of the average wage, like we do with New Zealand Super," she said.

"In the medium-to-long term, this could deliver further new revenue and savings of up to $700 million per year."

Last month the minimum wage rose 25 cents an hour to $13.

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