What could a Winston government do for the economy?

RACHEL CLAYTON
Last updated 16:22 07/10/2017
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New Zealand First leader Winston Peters will have a significant say on policy for the economy.

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Northern Employers and Manufacturers Association senior manager Kim Campbell says he'll be worried if a government isn't formed before Christmas.
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Council of Trade Unions economist Bill Rosenberg says raising minimum wage to $20 is an achievable goal.
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Winston Peters has said he wants to raise the minimum wage to $20 per hour.
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Sustainable Business Council executive director Abbie Reynolds says her members were focused on government's long term commitment to climate change.

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The special votes are in, and one thing for sure is New Zealand First will be involved.

The party's leader Winston Peters has signalled he wants to raise the minimum wage to $20 per hour, but business experts are conflicted on what that could mean for jobs.

Speaking on TV3's The Nation on Saturday morning, Northern Employers and Manufacturers Association senior manager Kim Campbell said wage growth needed to be matched to the economy.

"You've also got to think about if you put everybody up 25 per cent, what happens to the people who are already on $20 an hour, and the ratcheting effect that is going to have," he said.

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Campbell said raising the minimum wage could lead to job losses.

"Our instincts are let the market decide that. So we're not disagreeing on the what, we're disagreeing on the how."

But Council of Trade Unions economist Bill Rosenberg said it was realistic and would have minimal effects on employment.

"I think it's ambitious," he said.

Campbell objected and said New Zealand had one of the world's highest minimum wage rates.

Rosenberg said we also had some of the lowest unemployment rates.

"I think also the other way to look at rises in wages is that it actually provides an incentive to employers to raise productivity, and one of the big problems that New Zealand has is very poor productivity," Rosenberg said.

"One of the problems with the minimum wage is that it only affects the people right at the bottom. The next 50 per cent are not getting anything like those wage rises, nothing like what the top 10 per cent are getting. So we actually need to do more than simply raise the minimum wage."

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The country's sluggish productivity growth was highlighted in an OECD report into the New Zealand economy in June.

According to Wellington economic consultancy Motu, annual productivity growth would have been about 70 per cent higher, averaging 0.24 per cent, between 2001 and 2012, instead of 0.14 per cent, were it not for a decline in skills associated with higher employment.

Motu estimated last year that the skill level of the average Kiwi worker fell by 1.8 per cent over the period as more people joined the workforce.

Sustainable Business Council executive director Abbie Reynolds said her members were conflicted on the issue of wages. 

"A lot of them have taken steps to raise their minimum wage to about $18.50, because they think that's the wage that allows the people who work for them to live with dignity."

Rosenberg speculated over the forecast by ANZ chief economist Cameron Bagrie saying New Zealand had reached peak tourism, immigration, and construction.

"Treasury forecasts always say it's going to fall. It hasn't.

"I would hate to see it being peak construction, because there's so much more to do there.

The threat of automation, he said, was also "very rare".

"We may get firms buying better machines, get better processes, involving workers more in decision making, so we actually get better processes there.

"What we need to have accompanying that is much better support from the government to help people through those changes, and we need to have government that actually supports the development of new, high-value industry, taking advantage of opportunities like climate change to actually change the direction of the economy to high value."

All three panelists were happy to wait for a government to be formed because they were focused on long term change.

But there was no doubt business would be effected somewhat by New Zealand First policies.

Campbell said he liked the party's manufacturing policy and stance on supporting the regions.

"He's got some ideas there that work. We disagree with the way he wants to go at immigration," Campbell said.

"Both Winston and National have to curb their most extreme instincts or they're just not going to find a common ground. Winston tends to be rather more interventionist. He has a very conservative social agenda. And so the combination is what counts."

Rosenberg said New Zealand First had positive long-term views on changing the direction of the economy and he wanted to see the next government focus on New Zealanders who have been left behind in the last nine years.

"It also has some quite positive policies ... dealing with the problem of casual employment.

"You have an economy where a whole lot of people are missing out, where we're neglecting the environment, then ... the economy won't function well."

For Reynolds, it was all about climate change.

"It might be a bit of a fantasy, but what we would really love him to be able to do is to take that really long-term perspective and build [a] coalition around what the climate change plan is," she said.

- Stuff

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