0 Quote of the Day - 9 June 2014

We somehow don't think Sir Robert Jones has a very high opinion of Labour leader David Cunliffe; he opines:

No Labour leader has ever been so unpopular as David Cunliffe, evidenced by the disastrous polls and also the Reader's Digest trustworthy survey bracketing him humiliatingly in bottom place with Dotcom and Harawira.
Cunliffe was installed against the strong wishes of those who knew him best, namely Labour's caucus. Now the public know him as well, resulting in a wider disdain. Two decades ago, employees voted with their feet, leaving the once powerful union movement a mere rump as a representative body. It's therefore no surprise that the rump's outlook is alien to the majority of voters. What's astonishing about this is the ignoring of Labour's history, not just here but also in Britain and Australia. National reigned here from 1949 to 1984, broken only by two single term Labour administrations. In Britain the Conservatives ruled the roost from 1979 to 1987 and in Australia, the Liberal coalition from 1949 to 1983, excepting the Whitlam government.
What changed was the advent of realistic Labour leaders, namely Lange and Douglas, Hawke and Keating, and Tony Blair. They threw off their party's debilitating union influence, acknowledged the failure of their socialist ideology and embraced the market economy, substituting the meaningless term of "social democrats" rather than socialists to henceforth describe themselves. The British and Australian labour governments then ruled for 13 years but Lange's subsequent change of heart created an irreparable schism which cut short a well deserved longer stint.
There's no popular support in all three countries for a return to a high taxes, big government socialist order, other than from the no-hoper entitlement to live off others sector, which is why it's extraordinary that Cunliffe should expound these propositions and have the gall to label them progressive. Perhaps he was influenced by the election of a nondescript individual as French President, who exploiting the politics of envy, promised punitive taxes on higher incomes. "You're welcome here," London mayor Boris Johnson told them and they came, and also went elsewhere. The President, now polling the lowest of any in French history, intends reversing the policy with a low tax regime to attract the job creators back in an endeavour to fix the moribund economy.
I know someone who, through much hard work, became wealthy in the last few years. He has a sentimental historic attachment to the Labour Party, as do many affluent individuals and he was planning a six-figure donation this year, chuffed at his new-found capability to do so. But he was outraged after hearing a Cunliffe interview following the leadership race. "Will you raise taxes on higher incomes?" Cunliffe was asked. "You betcha," the new leader exclaimed with gusto. My acquaintance was angry, for as he said, "I've worked my butt off and the tone of Cunliffe's enthusiasm to punish me for this was sickening."
"Will you now vote National?" I teased, knowing he'd never hitherto done so. "You betcha," he exclaimed.
We're now threatened with a disheartened wreckage of a Labour opposition, reflected by the head office-imposed, mostly tokenist no-names in their mediocre new candidates list.

Sir Robert makes a very interesting point here. We've heard rumours for months that the Labour Party is broke. Promising to tax businesses and high earners more is hardly the recipe to encourage those business owners and high income earners to pull out the chequebooks and donate with an attitude of gratitude. In a sense, Labour has cut off its nose to spite its face.

In the meantime, Labour's main backers will be trade unions, and we have already blogged about that particular link this week. In promising an election campaign free of "dirty tricks or dodgy deals; smear campaigns and a personality cult", Mr Cunliffe is obviously not planning to make any further cash for policy allegations against National, lest the hypocrisy of Labour's own cash for policy history catch up with it.

0 Cash for policy (part two)

We blogged yesterday about the important and growing influence of trade unions on the Labour Party. Affiliated trade unions support the Labour Party with cash, promotion and labour, and the Labour Party responds with union-friendly policies.

3News reports a development which, whilst it will be welcomed by the unions, will be less favourably received by employers:

3 News has learned Labour is planning to lift the minimum wage from $14.25 to $16 an hour in its first year.

Unions have been lobbying Labour on the issue, but the pressure is still on; they want much more.

Labour leader David Cunliffe is comfortably nestled between Labour's union affiliates.

"Colleagues, comrades – we are part of a broad labour movement," says Mr Cunliffe.

The unions are strong within that movement. They are pushing hard for a jump in the minimum wage.

Labour has already indicated two increases in its first year – one before Christmas from $14.25 to $15 an hour, and today came the details of the second.

"Even that's starting to look a bit stingy, so we're looking at a further increase within the first year," says Labour's labour spokesperson Andrew Little. "I expect it will be up around $16 an hour."

So $16 an hour by April next year – for the unions leaning on Labour, it's a pay-off, but just a start.

Increasing the minimum wage from $14.25 per hour to $16 per hour represents a 12.3% increase, by April next year. But that's just the start; read on:

"It needs to be more, above $18, but it certainly would be a big boost," says president of the Auckland Service and Food Workers Union (SFWU) Jill Ovens.

"I think the second increase needs to be more than $16; it needs to start moving to two-thirds of the average wage over the term of the Government," says CTU president Helen Kelly.

Two-thirds the average wage is $18.80. It's also the ideal minimum for Labour's man in charge of wages.

"It's a good target to have, yes," says Mr Little.

But it's a high target, even more than Australia's minimum wage of $18.10.

We've blogged in the past about rises to the minimum wage and the proposed Living Wage. Rises of the magnitude suggested by Labour and its union affiliates are quite simply unaffordable for many employers.

Let's say for example a business here employs an office junior on $15.00 per hour, administration and customer services staff at $17.50 per hour and an office manager on $20.00 per hour. The immediate decision is the pay rate of the office junior; does the employer then pay her just the new minimum wage of $16.00 per hour, or continue to pay her around 5% above the minimum wage? If the employer decides to preserve the margin, the office junior's pay is immediately going to go up to $16.80 per hour.

The employer now has a dilemma. The admin. and customer services team (let's say for argument's sake there are five in the team, working 35 hours a week) are paid $2.50 per hour more for a reason; the value they add to the business, and the greater complexity of their work. So the boss has the choice; increase their hourly rate to $19.30, or have an unhappy staff.

Then there's the admin manager; (s)he too is paid $2.50 an hour more than the staff (s)he manages because of the added responsibilities that go with the role. So the admin manager's hourly rate is increased to $21.80.

Just like that, the weekly wage bill has increased markedly. The cost of the office junior has increased by $54 per week (30 hours at $1.80 per hour), the cost of the administration and customer services team has increased by $437.50 (35 hours at $2.50 per hour times five), and the cost for the admin manager has gone up by $100 per week (40 hours @$2.50 per hour). In the office alone, the wage bill has just gone up by almost $600 per week, without a thought give to wage rises for the technical and sales staff!

The business owner has two choices. He either puts his prices up by 12% which in a competitive, price-sensitive market risks loss of market share, or he cuts his staff costs by either reducing hours, or deciding that four staff can do the work currently being done by five staff in the administration and customer services team. Who wins then?

The unions may see Labour promising them a 12% rise in the minimum wage in return for their cash and kind support as a very good return on their investment. But the unions will also be the first to complain when our hypothetical business owner decides he has to let one of his staff go because wage costs have become prohibitive and he simply does not have the cash to pay his staff.

Increasing the minimum wage by this kind of margin is a simplistic solution to a complex problem. Given that more New Zealanders are employed by small and medium businesses than by the super-rich corporates and John Key's Rich Mates the solutions proposed by Labour and its union affiliates will impose a disproportionate burden on businesses which cannot afford that burden. There will be job losses, and some businesses will fail. Again we ask; who wins then?

The unions may be demanding a higher minimum wage as quid pro quo for their cash support. But Labour needs to take a far wider view of the economy as a whole, and not make promises to its affiliates which will damage the wider economy. 

0 Cash for policy? (Part one)

3News political reporter Tova O'Brien posted this yesterday on Twitter:

The relationship between Labour and its affiliates, the collective name for a number of trade unions is long established. But the importance of the relationship was increased significantly two years ago when Labour essentially gave the unions the casting vote in party leadership elections.

Coincidentally, Rodney Hide's column in the Herald on Sunday yesterday was about union donations to Labour. His entire column is worth a read, but here's how he began:

The true donations scandal in New Zealand politics was reported this week without comment. It's the Engineering, Printing and Manufacturing Union's $60,000 donation to Labour.
The EPMU is one of the six unions affiliated to Labour. The affiliated unions pay fees and fund the Party through donations. The donations and fees total hundreds of thousands of dollars.
More significantly, union staff campaign for Labour and the unions run parallel campaigns. For example, Labour is campaigning for the "living wage". In a parallel campaign the Services and Food Workers Union spent more than half a million dollars last year promoting that exact policy.
The union funding of Labour totals in the millions. And what does Labour provide in return? In effect the entire party. The unions get to determine the party's leader. Their say counts for 20 per cent of the vote. That's the difference between winning and losing by a wide margin.
Affiliation also buys a seat at the table. The affiliated unions have a guaranteed vice-president position on Labour's all-powerful New Zealand Council.

They also get their people as MPs. The Labour Party enables the unions to parachute members into Parliament. Labour list MP Andrew Little headed the EPMU for 11 years before entering Parliament.
Being a union boss come Labour's list selection time isn't as good as being a Maori lesbian but it's a close second.
And the unions get policy, lots of policy. In 1999 the EPMU gave $100,000 to Labour. The following year the Labour Government passed the Employment Relations Act. This act gives the unions incredible power over Kiwi workplaces as well as easy access to workers' pay packets.
The Employment Relations Act nicely closes the loop. The act was provided by the Labour Party. It gave the unions access to workers' pockets, and that's the money the unions now tip into Labour's coffers.
Indeed, in the state sector it's policy for Government to give union members a bonus to cover their union fees. You and I pay their union fees.
Unions and Labour are guilty of "cash for policy", "cash to sit at the table", "cash to decide the leader" and "cash to parachute members into Parliament".

Rodney Hide is absolutely right. As much as Labour and the Greens accuse John Key's Rich Mates of trying to buy influence, they ignore the obvious going on right under their own nose. Labour and the unions are so confident of not being called out, that they don't even try to be subtle about it.

Over the course of the next few days we are going to take a closer look at Labour's relationship with its affiliates, and just what the union influence is trying to achieve. Early indications are that businesses in New Zealand are in for a rough ride if Labour leads a coalition government after the General Election on 20th September.

Stay tuned...

0 Two unions; polar opposite reactions

Regular readers will be aware that we aren't great fans of trade unions. It's not that long ago that we were card-carrying members of the EPMU, but that's another story for another day.

But we saw two union stories in the news yesterday, and they couldn't be more polar opposites. Here's the first story:

IES: consultation, collaboration, good for schools

3 June 2014

The government’s $359 million Investing in Educational Success (IES) program has been a positive example of sector collaboration, says PPTA president Angela Roberts.
Roberts welcomes today’s release of the working group report on the initiative which will see schools across the country collaborating rather than competing.
From PPTA’s point of view the consultation over IES was comprehensive, robust and genuine, Roberts said.
“We stepped up to the challenge and engaged as fully as it is possible to do.”
The sector had worked hard together to find pragmatic answers and there had been significant movement from the originally unacceptable cabinet paper, Roberts said.
“You know it’s collaboration when it’s hard work – and this was really hard work.”
“We feel cabinet has heard us,” she said.
That did not mean there would not be further work to be done or challenges in the future. Details of the new provisions would be a matter of collective bargaining, Roberts said.

“This is just the next step. We still have a long way to go to make sure that this lands well in schools and look forward to continuing to be part of the process,” she said.

Roberts was pleased cabinet had affirmed the working group’s final report.

“This is not performance pay and it is not a lolly scramble – it’s an investment that will have a positive impact on our schools and our students.”

In her engagement with teachers and principals they agree that competition is destructive and that something should change.

“This is something PPTA has been working towards for more than a decade, we are pleased a government has finally decided to resource it,” she said.

It's not every day you will see a PPTA presser on this site, so chalk it up! But we commend the PPTA for the attitude it has taken into good-faith negotiations with the Government.

As Angela Roberts has noted, there is still a long way to go before the IES is ready to be implemented, but by engaging with the Government, the PPTA is making progress on behalf of its membership. And at the end of the day, that's what unions are about; the members, not the elected or appointed officials.

Unfortunately, we cannot be as charitable towards our former union. Check this out, via Scoop:

4 June 2014

Sitel jobs coming to New Zealand isn’t all good news

There’s not much cause to celebrate in the news that 139 jobs at Sitel in Australia will be moving to New Zealand, says the union for telecommunications workers, the EPMU.
The US company announced last week that it is moving jobs to New Zealand because labour is cheaper here.
“That’s not good news for workers or the New Zealand economy,” says Anita Rosentreter, EPMU organiser. “These jobs aren’t secure and they don’t give workers a chance to build a real career or plan for their future.
“Last year we lost 100 jobs from Sitel in Auckland. They went to Australia and the Philippines.
“This is the price of the government’s low-wage economy. Even if jobs do come here in the short term, they can go just as quickly – moved to countries where workers are paid even less, or places like Australia which invest in skills and infrastructure.
“New Zealanders deserve secure, skilled jobs with a future, not short-term contracts which could be gone tomorrow.”

This is pretty low-rent stuff from New Zealand's biggest union. Jobs are jobs, and we are sure that there will be plenty of competition for the 139 positions with Sitel. 

It's really unfortunate that the EPMU is coming across all elitist. For a start, they clearly don't want the union fees of 139 new potential members.

But for the EPMU to claim that 139 people going into work is "not good news for the workers, or the New Zealand economy" is just plain bizarre. The economy benefits when people transition from welfare to work. The individuals benefit too, learning new skills, earning a wage, even if it is at the lower end of the scale, and developing the discipline of working.

The EPMU needs to forget the political rhetoric, and actually take a glass-half-full approach to these jobs instead of the Eeyore-like prophesies of doom and gloom.  

So kudos to the PPTA, but not to the EPMU. We know which union we reckon is doing more for the interests of its members, or prospective members.

0 Darien Fenton retires; is Clare Curran next?

Labour list MP Darien Fenton will leave Parliament at the General Election. Whether she has retired or whether she is being retired is a moot point. But Ms Fenton joins fellow unranked (Labour's caucus is ranked down to #25 of 34) MP Rajen Prasad in heading for greener pastures.

Interestingly, we blogged a prediction of this in September last year, courtesy of Patrick Gower from 3News; check this out:

Paddy Gower also tipped the imminent demise of Clare Curran. Neither she nor Ms Fenton were Cunliffe loyalists, as evidenced by their low rankings within Labour's caucus. Will Clare Curran be next to be pensioned off?

And as a final irony, Darien Fenton came to Parliament after many years as the general secretary of the Service and Food Workers' Union. Isn't it ironic that Labour's 2012 rule change gave the unions the determining vote in Labour leadership contests, and Ms Fenton's political career has been ended by the bloke who the unions wanted to lead the Labour Party.

0 Cash for policy?

We've heard a lot about "cash for access" in the last couple of weeks. But all we've really discovered is that pretty much all political parties fund-raise, and their MP's are a significant drawcard.

But writing in the Manawatu Standard, Liam Hehir wonders about cash for policy, and addresses the elephant in the room. Under the headline Deals keep the grassroots tilled Hehir opines:

Are you ready to hear something that will shake your faith in our democracy? Brace yourself.
I can reveal that a network of highly organised corporations have gained influence over one of our political parties. They give this party thousands of dollars - and there is no doubt they get their money's worth.
For instance, the corporations in question have privileged party connections. As hard as it is to believe, they actually have a direct hand in choosing the party leader. Less directly, a high number of party MPs and organisers used to work for them.
The party regularly proposes legislation that furthers the goals of these corporations.
One of their umbrella organisations was even awarded a government contract that one watchdog group called a "cosy deal" to do "little, if anything". 

Goodness; who could this be? Is Mr Hehir talking about the Business Roundtable? Is he talking about the Exclusive Brethren, or the Chinese branch of the Cabinet Club?

Well no, actually he isn't; he continues:

Yes, the role and influence of unions over the Labour Party is truly disturbing.  

Oh, the unions. Isn't it strange, that as the media leaps to condemn the National Party for daring to leverage the popularity of the most popular Prime Minister in living memory, the role of trade unions in funding the Labour Party continues to pass beneath the radar.

It has of course been a minor topic of discussion this week with the Public Service Association's rather quaint notion that politically neutral public servants in broadcasting should be free to be openly political. That in itself rather diminishes the outrage over National asking its supporters for donations, which are given willingly, to help it get re-elected.

Liam Hehir's piece is deserving of a read in its entirety. There are two sides to the "cash for access" argument, but one side doesn't get many column centimetres or soundbites; is that good, balanced journalism?