Goff goes back to Labour roots

Yesterday's "state of the nation'' speech by Labour leader Phil Goff represents a return to the party's blue-collar roots, and an accomplished one at that.

His "For the Many, Not the Few'' speech in Hamilton hits all the right notes for a Labour leader. He criticises the fat-cat millionaires ripping off the taxpayer by evading tax, gives the PM a swipe for the measly 25c an hour increase in the minimum wage, calls for better wages and conditions for "hard-working Kiwis'' and has a crack at dole-bludgers who "rip off'' the working class.

After his ill-fated foray into race relations before Christmas, the speech represents a return to form and to type for Goff, with nothing in it likely to anger the membership or scare the horses.

Neither, however, is there anything in the speech that's likely to make voters sit up and take notice. Certainly not in the explosive style of former National Party leaders delivering state-of-the-nation addresses, anyhow.

The best news hook in Goff's address is a call for the chief executives of the public service to be paid no more than the prime minister. Labour in office would introduce a cap on the salaries of state sector CEOs, Goff says.

All well and good, except...well, for starters, his state sector spokesman, Grant Robertson, has been scathing of National's cap on state sector salaries, so why extending that to chief executives is a good idea I'm not sure.

Second, Goff doesn't say whether this should be achieved by lowering the CEOs' salaries or increasing that of the PM.

I agree that, on the face of it, it seems bizarre that the chief of police should be paid more than half a million dollars a year, or that the head of the Reserve Bank should get $450,000-plus when the CEO of the whole country - John Key - gets only around $400,000.

However, the reason this disparity exists in NZ - and indeed most countries - is that while CEOs of public departments are paid market or near-market salaries, leaders are not. Indeed, they couldn't be, because it would mean a salary in the millions.

If Key was paid market, he'd have to get more than the head of Telecom, which puts him in the $10 million-plus range.

The chairman of the US Federal Reserve earns more than the US president, too. That's just the way it goes. The privilege of office is supposed to be worth more than the salary the job attracts.

Personally, I think the country has bigger problems than the salaries of our 14 public sector CEOs, and it's hardly going to make any difference to the economy.

Goff's overall point is that the gap between the rich and poor has grown too great, and that's inarguably true. The big question, though, is whether you fix this by trying to limit the salaries of those who are successful, or try to grow the cake so everybody earns more.

I didn't see any ideas in Goff's speech about how to do this, except for calling on employers to pay a higher minimum wage. The problem with this, of course, is that wage increases have to be based on productivity gains, and forcing employers to pay workers more without that is just going to get the economy into further trouble.

Goff also needs to remember that while $10 a week extra might not sound a lot extra to him, for plenty of people, it's a whole lot better than nothing. Indeed, given most people got a zero per cent pay rise last year - including judges, MPs, and a lot of CEOs, incidentally - a 2 per cent rise is more than many got.

The other point, of course, is that Labour presided over some large increases in CEO salaries, so it's a bit rich to criticise this Government, under which so far most CEOs have had nothing extra at all.

At the other end of the income scale, Goff says Labour would "crack down'' on dole bludgers like the Christchurch Harris family, but he doesn't say how. Presumably he supports National's plans to do the same.

He talks of more programmes to help dysfunctional families, and early intervention programmes for young criminals, which is fine, although this is also a well-worn path and Key himself has made the same thing a priority of his administration. Ditto work on improving the education system.

I was interested to see Goff pledging to work with National on improving the tax system, although he has ruled out supporting a rise in GST in return for a cut in the top personal tax rate.

He's on reasonably safe ground there, since National won't be stupid enough to offer that to the electorate without corresponding cuts further down the income tax scale as well. A bipartisan approach to tax reform would be welcomed by everyone. It's important to get it right, and no one wants any major changes unpicked again by another government.

On the whole, then, I'd give Goff a pass mark for today's speech. It was solid, but not spectacular. It's unlikely to win Labour any extra votes on its own, but it might persuade voters who abandoned the party in 2008 to start listening again.

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