2025 Taskforce, Don Brash, Emissions Trading Scheme, John Key, Politics, Tasman Wage Gap

The widening Tasman Wage Gap (AKA the John Key Credibility Gap)

I left National in 2008 because I could see that John Key had no ambition for New Zealand, only for himself and his party.

Two years later, Key and National are riding high on their wave of false promises, while the Sunday Star-Times reports the all-too-predictable reality: Kiwi wages slip further behind.

For once I can’t help but agree with Phil Goff, who describes Key’s promise of catching Australia as “reckless and dishonest”:

“He was undertaking to the New Zealand electorate that he had a secret plan whereby he could catch up with Australia, and the truth is he had no such plan. And, far from catching up, New Zealand has fallen further behind.”

Key’s motto, as far as I can see, is “You can fool most of the people most of the time.” And it seems to be working a treat…

Say you’re ambitious for the country. (When you’re not.)

Say you’ve got a plan for growth. (When you haven’t.)

Join forces with a party that actually has a plan. (And ignore it.)

Say you agree with the ‘catch Australia’ goal. (When you don’t.)

Commission a plan to catch Australia. (Then reject it.) 

Chide your central banker for saying we can’t catch Australia with your policies. (When you know damn well he’s right.)

Press on with your Emissions Trading Scheme. (When the country you’re supposed to be catching has put the brakes on theirs.)

(And when the science increasingly supports your first instinct that man-made global warming is a hoax.)

So why is our prime minister doing these things?

And why did he take such a ‘principled’ stance in defying his core supporters on the anti-smacking referendum?

The answer is simple.

It’s because John Key is not running New Zealand for his core supporters. He knows he’s got their votes in the bag.

Nor does he have to worry about those righteous ACT know-it-alls, since they’re hardly likely to cuddle up to the reds or Greens.

No. He’s running our country for the benefit of a few female urban liberals of the Lucy Lawless ilk.

Women to the left of Jeanette Fitzsimons, as he calls them.

Women who took one look at his cheery smile and all-things-in-moderation patter and saw someone they could take advantage of.

A Helen Clark with a feminine side.

Women who couldn’t care less about boring male obsessions like money and Australia. But who care lots about carbon footprints and wrapping their kids in cotton wool.

That’s why, when Lucy and Keisha and co. said, “John, go to Copenhagen,” off to Denmark he dutifully trotted.

That’s why, when the lib-fems said, “John, legalise smacking and we’ll smack you,” he was happy to give 85% of Kiwis the fingers.

And that’s why, when wise heads bombard him with sound reasons to delay the ETS, he’ll be obeying Lucy and the liberals and putting planet before people.

It’s great politics. It’s also negligent leadership. 

Of course, Bill English and others would say, “There’s no point making unpopular changes then getting voted out.”

Yes, there is.

If you really cared about your country, you’d run that risk, knowing that successful reforms tend not to be wound back.

But you can reduce the risk by explaining to people why we need to change – just as a responsible parent explains to his family why they can’t keep living beyond their means.

Roger Douglas took that risk in the 80s. And guess what? The public didn’t like it.

But they understood it.

They returned Labour with an increased majority, and a mandate to finish the job. 

Key could do that too. It would hardly be a huge risk, since the Brash report only calls for cutting spending to 2005 levels.

As Don Brash said, John Key has the communication skills to pull it off.

But does he have the courage?

To find out, keep an eye on that Tasman Wage Gap. Because it’s also the John Key Credibility Gap.

If it closes, he’ll have silenced many a doubter. 

If it keeps widening – as we all said it would – the PM’s political epitaph could well be (to paraphrase Julius Caesar):

 I came, I smiled, I tinkered.

14 thoughts on “The widening Tasman Wage Gap (AKA the John Key Credibility Gap)

  1. 1. The Brash report calls for reductions to 2005 levels of spending by 2011. It then calls for ongoing and continual spending reductions

    Getting spending back to 2005 levels as %GDP is a start. But only a small and very weak start. The State (and SOEs, DHBs, Schools etc) occupy over 50% of NZ’s economy. It needs to be cut back below 15% as a matter of utmost urgency.
    That will narrow the gap. Nothing else will.

    2. There’s no point making unpopular changes then getting voted out.

    Except Hellen undid every single one of Roger’s Changes. KiwiRail. KiwiBank (aka Postbank). Floating exchange rate (can you say reserve bank currency trading). AirNZ. Minimum wage. unions. and ON and ON and ON and ON and ON. Every single significant made by Roger was undone.

    All this goes to show is that to have lasting change you must change the franchise. The problem is a simple one – no representation without taxation. 10% of Kiwis pay 95% of tax. Those 10% should get 95% of the vote.

    That will solve the problem in the long term. Or go to a “Fiji solution”.

    Or just accept that Key & English will be in government for 15 years, and that the country will be different at the end of it.

    Every single change undone, Sinner? Surely not. I’m no economist, and I know Labour implemented a lot of ‘failed policies of the present’, but surely most of the deep structural Rogernomics changes remain: the removal of subsidies, the halving of the 66c tax rate (OK so they hiked it to 39c but that’s hardly a return to 1984), GST etc.

  2. Thank you for this post- how many of these liberal females are there? Are there really enough for John Key to care about this demographic, really? I would have thought that there would have been a far larger slice of disappointed business men and company directors than that.

    But the business men and company directors are National or ACT voters. The liberal females are ex-Clarxists and Greenies who’ve temporarily loaned themselves to National as long as John behaves like a good socialist.

    Don’t forget that it has been revealed that JK really wants a spot for NZ on the UN security council, and to that end he will do anything to make sure that their liberal policies will stay in our legislation, or that we will be signatories to all appropriate UN international treaties, following Helen Clark’s example when she passed the anti-smacking law.


    I didn’t know about the Security Council, Johnnieboy. Perhaps more to the point, he may well be eying a UN spot for himself (with Helen as his sponsor). This doesn’t augur well for a commonsense position on the ETS any time soon.

  3. “A Helen Clark with a feminine side.”
    That’s the best and most accurate description of Key yet.

    It’s a bit mean to John, as at least he’s shown signs of granny-stepping in the right direction rather than take huge jumps to the left like Helen did.

    Whether he achieves anything much for his country will depend how boldly he acts in his second term. I’m just not sure he’s going to want to kick the populist habit that’s brought him so much electoral success.

    But we’ll see.

  4. @Sinner – Really, 10% of Kiwi’s pay 95% of the tax? Sounds like New Zealand has huge inequality issues that are going to drastically affect more than just the economy then.

    Morgan, I think it’s more like 30-70 than 10-95. Anyone else know?

  5. Thing is that Phil Goff can’t take the moral high ground on this issue- Labour created this widening gap between NZ and Auz in the first place, with working for families, higher taxes, ACC lolly scrambles, and the like, and he would be quite happy to do the same as Helen should he be voted back in to office.

    He above all people can’t call JK dishonest on this issue without first owning up for the sins of Labour’s past.

    Johnnieboy, how dare you use the words moral and Labour in the same sentence 🙂

    I think the wage gap was there long before Working For Families, but the Prime Moneywaster and her Wastemaster-General certainly widened it.

    Goff is no Clark, thank God – like Kevin Rudd, he’s probably further to the right than Key.

    As a mild man, he should be able to distance himself from the worst excesses of Clarxism, just as Key did with the less popular Brash views.

    But his ‘Fill-in Phil’ status means he lacks the mana and permanency to impose his own ideas on Labour, as his colleagues’ reaction to his Treaty speech showed.

  6. Winding back the clock….

    re: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10373647&pnum=0

    and: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10373670

    This message has been sent via the NZ Herald Website
    Ken Shock

    Hi Simon

    The disparity of income between NZ and AU will continue to increase because Australia is exploiting it’s natural resources. In New Zealand the Greens have lobbied against all manner of reasonable use of the nation’s resources. Several years ago Gerald Eckoff, Act party MP, released a report that the Labour government were suppressing. This report showed many billions of $$ in minerals locked away in the vast DOC lands in the high country of the Sounth Island. This report was suppressed because Labour rely on the Green vote, and because trampers like the PM want this country undisturbed. But it is not only the South Island, the chairman of Newmont mining recently visited NZ, giving the government a prodding to ‘open the treasure chest’!! He was referring to Gold resources in Coromandel and elsewhere in the North Island. Did you know it was the Goldfields that built Wellington…Gold is money, pure money!

    As long as the quasi-religious hysteria about leaving ‘nature’ untrammeled prevails, NZ will be unable to provide a first world living standard for it’s peoples. There was a report released by Act this weekend showing that PHARMAC only supplies 60% of the drugs available from government programs in Australia, so there is an aspect of the incentive to migrate that you missed. As Fran O’Sullivan recently wrote, NZ’s medical system is heading for 3rd world status !

    Ken Shock

    to sailboi@gmail.com
    cc letters@nzherald.co.nz
    date Mon, Mar 20, 2006 at 9:51 AM
    subject Re: Feedback from the nzherald.co.nz website

    Dear Mr Shock,
    Thanks for your feedback. I’ll copy this to the letters editor on the assumption that you would like to have your letter considered for publication.
    Many thanks again,
    Simon Collins

    Simon Collins
    Social Issues Reporter, New Zealand Herald

  7. John,

    Having read this thread and the commentary over at the Standard, I’m still not clear on what your proposed solution is. I suspect most people would agree on the problem, if not the cause: we are a relatively poor country in financial terms, with both low wages and low wealth as part of that. I personally agree Key isn’t the answer – although likely for different reasons to you – and am slightly amused by your “liberal female” hypothesis, although I’d support the essential principle that Key is fundamentally driven by populism rather than principle.In fact, I recall saying this loudly pre-election and being roundly derided for it. Anyway… back to my question:

    What do you propose we should do about this? A sensible answer to this has to really deal with a range of issues:
    – the boomer demographic transition
    – foreign ownership in many NZ business sectors, particularly food and banking
    – our pathetically low wages
    – our predominance of small companies
    – our low business management capability (generally true)
    – poor productivity
    – the nature of our export product set
    – our geographical location, distant from world markets
    – the likely decline in oil supplies and consequent economic disruption
    – our historical dependence on property investment
    – leaky buildings
    – immigration
    – the rising comprehension that Washington consensus, market fundamentalist capitalism has failed
    – and yes, our historical political context, both from the Nats and Labs, neither of whom has been perfect
    -… and probably a bunch more besides.

    Needless to say, the standard answer of “cut taxes” ain’t gonna do it. And if it’s “raise taxes or cut services”, the pollies who take that view should prepare to be voted out, whether or not it’s the best of all possible worlds.

    First, rainman, we need a government that actually wants to solve the problem.

    Second, that government needs to convince most of the people that the problem is real and needs to be solved.

    The best way to do that (given the standard lefty ‘who cares if we’re poor?’ response) is to point out the most critical things we can’t afford and Australia can.

    And the most critical of all those things is probably medicines. In this morning’s paper was the stat that either 40% or 60% of the medicines available to sick Aussies are not available to sick Kiwis.

    This makes the point nicely that wealth is not just having better schools or cars or trains or whatnot, but can be a matter of life and death.

    OK, once that selling job is done and there’s broad agreement that we need to grow our economy, we need a goal and a plan to achieve it.

    I suggested that idea to National and they ran a mile, fearing that they’d have to live up to it.

    I suggested the same idea to ACT and Roger Douglas immediately recognised it as the right way forward.

    His first question was: “OK, what’s NZ’s biggest problem?

    Answer: “We’re haemorrhaging people to Australia.”

    And his obvious solution (though not obvious to many, if any, others): “Catch Australia.”

    In other words, create an economy where the average Kiwi can earn $500 a week more than they do now.

    Then he started devising what ended up as ACT’s 20 Point Plan. Roger consulted the best economists in the country to get estimates of how much each policy would add to our economic growth.

    My contribution, apart from simplifying the language and laying it out, was to insert a column listing examples of other countries where the same or similar policies had helped grow their economies.

    The point of that was to show that these were not radical right-wing ideas, but international best practice. Policies that worked in countries that worked.

    I hope you’ll look at the ACT plan here: http://www.act.org.nz/plan
    and tell me what you think of it.

    No doubt you can pick at a point here and a point there, but I hope you’ll consider the plan as a whole. It remains the only plan for dealing with our economic malaise that I’ve ever seen from any political party.

    (In fact, Roger Douglas remains the only politician I’ve ever met with the helicopter vision to have seen the need for such a plan and the knowledge and experience to put it together. If none of our other politicians has ever worked to a plan, you’d have to ask what that says about their managerial ability.)

    I think it’s just common sense. Or rather, uncommon sense.

    Don Brash came up with something similar with his 2025 Taskforce report. The PM and his deputy criticised it, but when asked why it wouldn’t achieve the goal, of course they couldn’t.

    They know damn well it would work, but lack the guts to admit it to the public.

    Rainman, you say it’s obvious that cutting taxes won’t work. Why not?

    It stands to reason that if you want to unleash a whirlwind of private sector initiative, a good way is to let the innovators keep more of their own money.

    Especially when there’s so much fat that can be cut out of the public sector.

    Also, when Roger Douglas halved the top tax rate in the 80s, he actually raised more tax because the avoiders stopped avoiding.

    You say market capitalism has failed. Really?

    What failed in the credit crunch, it seems to me, was the necessary component in any competitive activity: proper regulation and enforcement.

    It’s like rugby. If the ref allows cheating, there’ll be some players who’ll cheat.

    But if the ref makes it clear he wants a flowing game and won’t put up with any funny business, the game can be a great spectacle.

    Capitalism attracts cheats in the same way that communism attracts bullies. At least in capitalism the cheats can be reined in with good laws.

    Market failures such as leaky homes were caused by dopey inspectors or dopey regulations not catching the shonky builders. If the Nats caused that by loosening the regulations too much, that was dumb.

    As for the credit crunch, for every lefty who says it was the fault of greedy moneylenders, there’s a righty who says it was caused by dumb lefty governments threatening those banks with court action if they didn’t lend to their poor voters who had no show of paying back the loans.

    Either way, clearly the regulations weren’t tight enough.

    I don’t know if I’ve answered your questions to your satisfaction, as I lack the expertise to do so. I just try to keep up as best I can.

    But what I do know is that before we can fix our problems, we need a major shift in ATTITUDE in this country. Some examples:

    My wife has just come back from a weekend in Melbourne and is raving about the high quality of service wherever she went.

    Last week, I had breakfast with a well-known Melbourne-based Kiwi. He was late because Wellington’s top hotel forgot to give him his wake-up call.

    Shortly after waking himself up, he asked for a package to be sent to a company in Kent Terrace. The girl didn’t know where that was. Nor could she spell the relatively common name of the company.

    This caused him to remark on the noticeably higher standard of education his children are getting in Australia than they got here.

    I was recently in Australia’s biggest hotel in Sydney and can testify that the service was remarkable. The staff were jumping like a well-trained army.

    My wife’s brother works as a technician in Taiwan’s top hospital. He wants to come here, but is too scared to work in Wellington Hospital because he considers their equipment dangerously out of date.

    Standards are low in New Zealand all round. Until we resolve to lift our collective sights and stop making excuses that near enough is good enough, we’ll continue to drift off the pace until there’s no one here but the aged and the terminally mediocre.

    I hope you’ll read that plan and tell me what you think.

  8. Ah, I’ve seen the plan. As I recall I asked someone in ACT for the detailed calculations and assumptions behind it and they weren’t too forthcoming, oddly enough. In it’s defence, it *is* a plan and a vision, which is indeed rare in NZ – but that’s about all I’d say in favour. It’s just the same old small government, privatise everything, ideological hand-waving, I think, and overall rather immature and idealistic. There’s a reason only 3% or so vote ACT, and it’s not that the rest are stupid. This is a vision we DO NOT WANT – and say so every election. If the Nats veer closer to this, they’re gone, and ACT along with them.

    Some issues:
    – Government waste cuts will save the average kiwi $50 a week? First show me what you call waste. $50/wk is real coin, and hard to find, as we have seen from the aborted Nat tax cuts.
    – Privatise everything? Sure, that’s worked really well so far, don’t you think? A real contributor to our wealth.
    – Nutty regulations? Which ones are those?
    – Reform the RMA will make the average kiwi $25? How? And at what (quantifiable) environmental cost?
    – Improve democracy? Not seeing a lot of that from ACT at the moment, to be honest I don’t think it’s in their DNA, so pardon my skepticism.
    – Strengthen US ties to be more exposed to US entrepreneurial skills? Pfft. More of their innovation of late has been plain ole’ fraud, and they’re rather broke at the moment. They are in a real mess on several fronts, in fact. Do you really want us to go there? I don’t.
    – Cut remaining import tariffs? Irrespective of the existence of tariffs on our exports? That’s right, we can just “switch to other fields”. All hail Ricardo. C’mon, dude, it’s 2010. We’re smarter than that.

    Some of what’s missing:
    – The environment
    – A recognition of resource depletion, notably oil
    – Any sense of national identity
    – Any recognition there’s more to life than money
    – Any recognition of power imbalances in employment relationships
    – Any recognition that not everyone has the same education or capability
    – Honesty about the real world experience of private prisons and police

    There may be one or two minor issues that might be debatable (carbon tax vs carbon trading, number of MPs), but overall I’d have to score it 1/5 Must Try Much Harder.

    If you really believe it is valid, though, how about this: post the full workings and assumptions that underpin this model on the Internet, for all to see and critique. If you believe in the product, then SELL it.

    Based on the experience of the supercity process, I don’t think ACT believes in selling their ideas, and are more happy to force them on the little people. Otherwise we would have had a referendum, no need for legislation under urgency, and none of this CCO malarkey. Not much evidence of selling there.

  9. You say market capitalism has failed. Really?

    What failed in the credit crunch, it seems to me, was the necessary component in any competitive activity: proper regulation and enforcement.

    It’s like rugby. If the ref allows cheating, there’ll be some players who’ll cheat.

    But if the ref makes it clear he wants a flowing game and won’t put up with any funny business, the game can be a great spectacle.

    Capitalism attracts cheats in the same way that communism attracts bullies. At least in capitalism the cheats can be reined in with good laws.

    Market failures such as leaky homes were caused by dopey inspectors or dopey regulations not catching the shonky builders. If the Nats caused that by loosening the regulations too much, that was dumb.

    As for the credit crunch, for every lefty who says it was the fault of greedy moneylenders, there’s a righty who says it was caused by dumb lefty governments threatening those banks with court action if they didn’t lend to their poor voters who had no show of paying back the loans.

    Either way, clearly the regulations weren’t tight enough.

    That’s not correct that we need tighter regulation. We need free markets combined with objective laws.
    Pure unadulterated laissez-faire capitalism.

    Abolish the Reserve Bank. That way the correct price signals can function and end the boom bust of fiat money and futile central planning.

    Shrink government down to its proper function of police, defence and law courts.

    Privatise education so we aren’t indoctrinating with environmentalism that is sending us to hell in a handcart.

    Then you’re the wealthiest country EVER.

  10. Does the entire world view of you and your ilk consist of only NZ, Australia, the USA and occasionally the UK, Ireland, France and whoever else we might play in sports or something?

    Yes Australia has better wages than NZ. That’s why I’ve dumped NZ and moved here to Aus. And do you know why? because after 1971 (when the UK decided it was in their interests to pay Europe instead of us generous prices for commodities) Australia stepped up mining its considerable mineral resources. NZ doesn’t have anywhere near Australia’s mineral wealth, and we failed to find another economic activity to replace what we once sold to the UK. And dopey, backward policies such as the employment contracts act and other principle-before-pragmatic neo-liberal catastrophies 1984-99 have made it worse.
    We are never going to “catch up with Australia” in the forseable future. Forget it. Instead we should work with what we have and try and get some crumbs off them. Wages and productivity aren’t the only ingredient to building a desirable and successful country.

    But why are you so concerned in the first place? despite what we’re brainwashed to believe, we AREN’T all that much like the Australians. Really we’re more like South Africans and as much like the Brits and Canadians. Australia is physically a totally different to NZ, with a completely different climate and different attributes. It might be a hangover from the situation 100 years ago where we were both colonies of the British empire but really things have changed since and we’re two countries with vastly different environments and increasingly different demographics with consequently noticeably different cultures and attitudes.

    Really, they’re just another country in the world, and they’re not really that successful either. They have also slipped in their status compared to Europe and the orient’s ‘tiger’ economies, just not as much as NZ. There’s a world beyond that which speaks English, and really if there’s anyone we can learn and be inspired form it’s them (especially Europe). Ignore Australia.

  11. And another thing; there seems to be some clueless people with regards to “the gap”, i.e NZ’s status slipping more than Australia’s.

    I find it amusing to see the ignorance of people who really believe that this gap is solely due to the 5th Labour government. Really it only became obvious then.

    I’m apolitical myself, and I was aware of this in 1995. NZ has been slipping behind Australia initially in growth then in actual GDP since 1975. If you look at the situation between changes of NZ governments the gap grew its biggest during the term of the 4th National government of 1990-9. That was when NZ really slipped behind Australia (and the rest of the 1st world). In fact during the period 1999-2008 the gap closed slightly.

    Look it up if you don’t believe me. The facts are there of you want to see them.

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