Since being elected to parliament in November last year I have been spending as much time out and about in my local electorate as possible talking to people about why they think we lost the election and asking what they think we need to do to earn another stint in government. This is the first in a series of posts highlighting some of the common themes that have come out of those discussions.
My visits to businesses around the electorate have highlighted for me just how markedly the labour force has changed over the past two or three decades. I’m not sure that as a party we’ve kept up. 30 years ago huge numbers of people were employed in factories, freezing works, by the railways, or by some other large employer. Many of those big employers are gone or have been dramatically scaled back.
Here in my own electorate, General Motors closed some time ago while South Pacific Tyres shut up shop a few years back. So what happened to all the people who used to work there? They’re still around, but today they are more likely to be small business people. Many are either independent contractors or they have setup a small business with two or three employees. Some still contract to the larger businesses, while others have a wider customer base.
This significant change in the way people work has implications for us in the Labour Party. These new small business people are more interested in GST returns, ACC levies, and provisional tax than they are in statutory meal breaks and personal grievance procedures. I’m not saying the latter aren’t still significant issues for a large number of workers, I’m just saying that for increasing numbers, they’re no longer top of the list.
I think Michael Cullen recognised this change when he prioritised improvements to depreciation rates ahead of cuts to company tax. The former was much more likely to help small business people, the latter a lot less so. Similarly my colleague Darien Fenton recently sponsored a Bill in parliament to extend the minimum wage to contractors. Unfortunately it was voted down by the new National government, but it’s the type of thing we need to see a lot more of.
There is also a wider issue of companies attempting to force current employees to become contractors. My colleague Darien Fenton blogged about the Telecom case earlier this week. Should large firms be allowed to force their workforce to become contractors in order to reduce their liabilities and shift their responsibilities onto individuals? I say no. These are all issues we’ll need to work through over the next few years if the Labour Party is to remain the party of workers.
“I think Michael Cullen recognised this change when he prioritised improvements to depreciation rates ahead of cuts to company tax. The former was much more likely to help small business people, the latter a lot less so”
Do you actually have a clue what you are talking about Hipkins? It sure doesn’t look like it.
However you may be right saying: “These new small business people are more interested in GST returns, ACC levies, and provisional tax than they are in statutory meal breaks and personal grievance procedures.”
And indeed, you should think about that, because it’s likely to make you and your union mates pretty obsolete, particularly once these small BUSINESS OWNERS realise that GST return and ACC levies are the sort of thing that you and your cronies hoist upon them. Think about it.
At last, a Labour MP perpared to visit with small business operators and not behave like a cloth cap shop steward, but actually ask them what needs to be done to make their business easier to run and grow. Well done. Keep it up. It might just catch on.
Dimmocrazy – I’m the first to admit I don’t have an accountant’s understanding of the business tax regime, I’m simply reflecting what the businesses I have spoken to have been telling me. For many small businesses, particularly those who have a lot of money tied up in equipment (eg. trades people’s tools) they have found the ability to depreciate their equipment faster really helpful and that has helped to reduce their annual tax bill more than a change in the company tax rate would have done.
Re GST returns, ACC and provisional tax, I have been thinking about that! I’m not suggesting we do away with them, but we can engage with small business about how we can make the process more user-friendly.
It doesn’t make them obsolete at all. If anything, it makes them even more necessary. They would just be changing the way they did business from being associations that support individual workers as part of some conglomerate to being associations that help individual self-employed workers with their contracts and interpreting the laws. Just like the Telecomms workers are doing ATM with their fight for a decent income and contract with Visionstream or Telecom. We could call them the ancient name – guilds.
The ACC levies would be there one way or another – cheaply through government ACC or more expensively through private insurers. GST could, and probably should, be dropped for a better progressive tax system – something like the Guaranteed Income system.
Eureka, great post Chris.
Darien Fentons bill for minimum wage for contractors wont fly, you can operate a trading trust and pay your kids, mother etc out of your profit. There are also lots of contarctors to SOEs who were offered no protection over the last 9 years. Maybe you should take her with you when you go out and about.
Chris at the risk of sounding like a Labour basher (when I think really I’m engaging in bureaucracy-bashing) I think I can save you some ‘engaging’. When I last ran a business I originally tried to do all the paperwork myself but eventually had to employ a part-timer to do it. Primarily it is tax returns (PAYE, GST, Provisional, annual returns). Make it simple, make the rules simple. I’m sure it’s much better now that there’s a lot of IRD calculators on-line.
Additionally I think Labour has a very precarious line to walk between supporting employees (e.g. promoting higher minimum wages, more holidays etc) and supporting small business owners.
LabRat – doesn’t sound like a Labour basher at all. I know that IRD and other agencies are constantly trying to make it easier for small businesses, but I’m also sure there is more that can be done.
Agree with your last point about the trade-offs, although a lot of small businesses I speak to already pay their staff more than the minimum wage etc. They see it as a way of retaining good staff.
Draco – very good point you raise re ACC vs private insurance. Feedback I’ve had from some small businesses, particulary those deemed to be higher risk (eg. trades) is that they are concerned about the prospect of higher ACC premiums should the Nats privatise ACC.
Labour does not understand business. I believe that you still do not know where the money comes from. This became blatantly obvious early in the 5th Labour government when Miss Clark sent the troops out to visit a business for the day to better understand what actually keeps this country going. Apart from the cockies. Marion Hobbs spent the day at a sex shop. She even scored some free toys. Classic and oh so typical.
As a small business owner who was shafted by being lied to by a Labour minister ( and lost a 6 figure part of my income as a result ) I hope you lot are never allowed the cheque book again.
As to why you lost the election. It might have something to do with increasing spending from $38b to $62b. Or the attack on democracy that was the EFA. Or the abuse of our money on things like a pledge card. Or the support of crooks like TPF and Winnie. Or the $1.5b ACC shortfall.
I could go on and on and on and on. But maybe it is best if you just think, like Miss Clark does, that we just bought the line that it was time for a change. Yeah, right.
johnbt – if I thought we didn’t need to change anything I wouldn’t be going out to small businesses and asking them what they think we should change. Yes, we were voted out. The first step to getting voted back in is listening to people about why they rejected us in the first place.
Try and keep your comments relevant to this post. I have no idea what your allegation refers to and without any evidence or details I can’t really comment.
Hipkins:
So even when your lot is so kind as to take a little bit less tax off hard-working small businesses, you still want to tell them what they are allowed to do with their own hard earned money? So you don’t just take less tax, and let these independent entrepreneurial people that actually go out there and make a living for themselves sort out by themselves where to spent what you have not stolen of them. No, you want to go and put little incentives in it, so that they must spend their own money on certain things that you deem appropriate in order to get a little bit back of your thievery, just so you control and control and control.
Why don’t you just be honest and tell that’s what you want to achieve, so people recognize you for what you are.
Draco T:
Guilds????
Individual, self-employed workers????
Start counting the days; there must come a time when people are going to be smart enough to look through your collectivist nonsense. On the other hand, you unionist may see the light one day and start to really make a difference, but I’m not going to hold my breath….
Dimmocrazy – you might want to get someone to explain depreciation to you, it’s not about govt telling people how to spend their money, it’s about recognising the cost of doing business. I’m not tax expert but even I can understand that.
Haha, really Hipkins, while you are on your school trip, stop at any accountant’s office and ask them to explain very, very slowly to you how this works, and how changing “accepted” depreciation rates (a fallacy by itself already) on certain items is NOT telling people what to do.
Dimandcrazy:
Yes, guilds. People working together in free-association to get a better deal.
Hey, I know, as you seem to on the up with all this “individualism” crap perhaps you can tell me why the acronym T.E.A.M. was on the wall of the 9th floor of 31 Airedale Street, Auckland. Why do you think probably the most capitalistic business in NZ teaches it’s employees communism?
Mr Draco,
I don’t know what’s on that address or why they had that acronym on the wall, but I have the suspicion that you will be telling me that momentarily.
Anyway, there’s a bit of difference between team-work and communism if that is what you were alluding to. In teams people co-operate to enhance their individual and common efficiency. This is typically some form of voluntary arrangement, or something that arises from the participants’ voluntary employment arrangements, you get the drift. Each participant in the team is there essentially in pursuit of his or her own interest, and will stop participating where this is no longer in that interest. The objective of the team is the greatest possible common objective of all participants, resource allocation is on the basis of maximum return on investment.
What I assume to be your ideal model is quite different, as each participant is enjoined to suit the common, collectivist cause. Once a member of the club, the objectives merge, everybody is equal, that sort of stuff, although there tends to be one or two (lets call them Chris and Draco), who are a little bit more equal than others of course, so they get to be ‘voted’ to call the shots and run the club. Voluntary participation tends to disappear rapidly, one becomes a member on the basis of some common characteristics, whether one likes it or not. The objective of the club is determined by the committee. The resource allocation is on the basis of political power.
You tell me where your ‘guild’ sits between these two models and I’ll tell you whether you’re a communist or not.
By the way, look up ‘guilds’ one day and see whether your definition is actually accurate, you may be surprised.
You assume wrong then. What you describe sounds remarkably like representative democracy what I was thinking about was participatory democracy.
Exactly the same reason you belong to a society. You make decisions as a society that benefits everyone. There’s also one other point – you can’t actually leave society although you can chose which society in the world is the one you want to belong to.
That sounds remarkably like capitalism. People have done the research and almost everything said about capitalism by the capitalists (and mainstream economists) is incorrect. We must either conclude that they know this and are lying or they’re really have NFI what they’re talking about.
http://en.wikipedia.org/wiki/Guild
Seems to be what I was thinking of. An association of craftsmen to “co-operate to enhance their individual and common efficiency” and bargaining power.
I’ll leave you with one of my favourite quotes:
Karl Marx, 1851
I’m pretty sure you don’t have a clue as to what communism is so I doubt if you’ll be telling me anything in regards to it.
Thank you Mr Draco, that says it all.
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