Kate Wilkinson would have got a report in October with options for a November Cabinet paper on lifting the minimum wage. In government Labour just about always made a decision before Christmas and there was always an increase effective from 1 April.
Each increase pushed up a relatively small but increasing group directly but a much bigger group indirectly.
I think it is time for the government to commit to $15 an hour from either 1 April this year, or 1 April next year at the latest.
There are a big stack of equity arguements in favour of the change. And it could be a good boost to the increasingly fragile recovery.
Business NZ would squeal. But most employers know that lifting wage rates encourages investement in capital equipment and training to make their labour force more productive. It is all part of the movement to a high skill, high wage economy.
Update Herald poll shows 61% of Kiwis support lifting minimum wage to $15. Women more than men. Challenge to Key who doesn’t like any policy that puts public offside.
Err Clint, there are many factors, and not just the right wing’s hysteria that the sky keeps falling when they’re in power and labour keeps trying to squander the good times when theyre in power and not give massive tax breaks. Thank goodness for anti cyclicalism is all I can say. But that’s a completely different discussion.
@Kaine
“for each year the economy grows to include higher numbers of unskilled and low wage earners, you increase the lost revenue to the Crown.”
You keep creating false choices, Kaine. You can decrease taxes and end up with a growing economy and higher wages overall.
So what if $400 million is lost. The Treasury forecasts the deficit to be $6.7 billion in 2010/2011. If you increase that by $400 million, that raises it to $7.1 billion you make no job cuts (actually, *any* cuts) at all. You have increased the deficit by 6%.
That would be pure economic stimulus, just like the payroll tax break Obama gave last year. Obama’s bet is that increased spending and tax cuts will help the economy recover, and when that happens revenues will go up and some taxes will be increased moderately to claw back revenue.
Raising the minimum wage does not increase the money supply, and therefore is no economic stimulus at all. It is just moving the same money around in the economy. It functions as a *FLAT TAX*, which burdens low income people who make more than the minimum wage and those on fixed incomes more than the rich. Raising the minimum wage is not progressive at all. I really don’t understand why National is against it.
Deficit spending is taking money from outside NZ and injecting it here.
As for motivating employers to innovate, you create another false choice. By having lower payrolls, employers have more money for training workers, hiring new workers, and upgrading equipment. If you just increase the minimum wage on them, all that money goes into existing employees’ wages, leaving none of it for those other purposes.
That said, I am not for decreasing the minimum wage. Leave it where it is and do tax credits to improve things instead.
Labour cannot be against tax credits because that is precisely what WFF is.
Post #1 Jan19
Trevor, have you ever owned/run a business or had employees working for you?
Update: Labour party puts faith in Herald poll. Trevor Mallard finds fairy stools at bottom of Helen Clark’s garden.
“Trevor Mallard finds fairy stools at bottom of Helen Clark’s garden.”
Ooooh, tourist attraction 
As to what is a liveable wage, the dole is liveable. That’s what it is for. The dole for a person over 25 is $218 per week. $5.45 per hour for a forty hour week.
Funny how all of you comment on economic matters with what one must assume is less than a 7th form education in the subject. For god’s sake some of you even think GST is regressive and that excluding some items is a good idea! Not only that but there are even some of you that think the dole is taxed in some meaningful sense and that giving a benefit to somebody is giving it back to them (they never earnt it at all that is wwhy they are on the dole)!
Andrew… Firstly, I don’t speak for Labour, so my view on Tax isn’t Labour’s view it’s mine.
Lowering tax is not the answer, your continual recitation on false choices, is itself false. Friedman’s view of the false choices made in decisions around increasing drivers or pullers is not a debate I care to enter and we’d be going for days arguing ad absurdum.
The point is, from a social economic point of view, the Minimum Wage must be raised in order to force employers to innovate. Innovation is not simply about investment, and I guess in a blog post it’s hard to cover everything but if you understand anything about economics, you know that there is either a pull philosophy or a push philosophy. Pull relies on an already stimulated economy, one that is already expanding and one diversifying. Push results from the need to drive from the base for lack of economies that create true demand which require businesses to innovate to add value.
Adding value is not about reducing compliance, it’s about increasing the value of something and that can be achieved in skill, technology or rarity or any number of other things.
Creating tax credits as you say is fine, but you have to pay for the administration and your system creates a compliance cost to business with IRD in any case. Look at the Budget papers from 2005.
If $400 million is nothing, from which services would you make the cuts? Remembering this is the first year… where do YOU find the savings? Obama’s tax breaks were not in isolation… you can’t cite just one thing as a substantiation. In any case, a constant demand for housing through a lack of available resource kept money flowing through our economy luckily, New Zealand didn’t need to be quite so aggressive nor did it need to combine anti cyclical priniples in conjunction with contractionism to see things through.
Raising the minimum wage does not increase money supply? Wasn’t my point… but since you’re on it, even though money supply isn’t actually relative to stimulus, how would tax credits be any different apart from their cost to services increasing the demand for consumer contribution negating the increase anyway? Tax relief combined with a push on the drivers creates a need to innovate for improved productivity, tax relief in isolation simply leaves less money in the economy at the cost of universal service provision.
5.45 an hour is livable? I suppose it is if you want an unhealthy person.
Tax changes are due to be announced today, dreading it. 
Sigh, I hate it when small businesses complain, Ive seen so many that are in business because of they have an idea, or take a risk and they should not be in business in the first place. Very stupid people with good accountants,they pay there staff minimum wage and claim for back on everything, and then complain that they may have to lay off staff if the minimum wage goes up (many of the staff are family members anyway). And all these business forget that there biggest potential asset is there staff in the first place. I say raise the minimum wage to $17.50 and hour and get rid of the dead wood the recession didnt.
Trevor, if lifting the minimum wage is such a good idea, why aren’t you pushing for $25 an hour, or $50 an hour, then surely everyone would be better off?
By the way, Trevor, isn’t it logical that wage rises would follow productivity rises and not the other way around? I don’t follow your reasoning that capital investment follows wage rises. Why wouldn’t an employer make the capital investment in the absence of wage rises? And if wages rise, surely there is less capital reserve for investing back into the business and the employer will have to borrow.
Waterboy, you really need to check your spelling and grammar. I bet you’ve never run a small business. I do. I therefore suppose you think I’m “very stupid”.
By the way, the directors of the company I partly own, including me, took a $10k pay cut so that we didn’t have to lay any staff off or decrease their wages. In fact we recently hired several (about fifteen) more staff after taking over a failed business. Is that “very stupid” of us?