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Insights 24: 8 July 2022
The Australian: Oliver Hartwich on how New Zealand lost its mojo for serious economic and social reform
Podcast: John McDermott, former Assistant Governor RBNZ on winding back the overhang of monetary stimulus
Policy Point: Minister hopelessly ill-informed on labour market statistics by Dr Bryce Wilkinson

The false statistical justifications for unfair pay non-agreements
Dr Bryce Wilkinson | Senior Fellow |
When Ministers appear before a Parliamentary Select Committee we do not expect them to make false assertions about factual matters.

That is why we were shocked by what the Minister of Workplace Relations and Safety told the Employment and Workforce Select Committee last month.

He told it that he “entirely disagreed” with the main facts in our submissions on the Fair Pay Agreements Bill. He even asserted that our statistics were “at odds with virtually every credible organisation”.

Since our statistics were solely from official sources, he essentially asserted that Statistics New Zealand and the OECD are not credible.

To add insult to injury, he dismissed us as ideological.

This week we published a short Policy Note rebutting Minister Michael Wood’s claims that:
  • Labour’s income share has fallen since 1991, and
  • Productivity growth since 1991 had been poorer, and 46% below that in Australia.

As we had made clear in our submissions and in the Policy Note, the second assertion is wrong, and the first assertion is wrong in respect of employees.

What is this all about? It seems to be little more than a power grab by the CTU.

To achieve a move back towards pre-1991 centralised wage negotiations, the CTU needs to discredit the Employment Contracts Act 1991. That Act empowered the unthinkable – bosses and workers could negotiate directly with each other as adults.

To claim that labour’s income share has fallen since 1991 is to suggest that employers have benefited at the expense of employees.

Yet our official national income statistics show that employees’ share fell markedly before 1991, not on average afterwards. Did the Minister fail to acknowledge that out of ignorance, or was it something worse?

The Policy Note also clarifies a related technical issue. Labour income is employee income plus the portion of self-employed income that Statistics New Zealand (SNZ) attributes to work effort.

For the portion of national economic activity for which SNZ makes that split, labour income has trended down since 1991, but employees’ share has weakly trended up. Even that is not a case for the measures in the Bill.

In short, the Minister’s rejection of inconvenient official statistics on employee incomes and labour productivity does him no credit. It is a disservice to the select committee and the public. And it is no way to treat serious submitters.

Read the Policy Point Minister hopelessly ill-informed on labour market statistics

NIMBY In Chief
Dr Eric Crampton | Chief Economist |
As an exemplar of the purest form of Kiwi anti-growth, anti-development orientation, it is hard to beat.

If New Zealand doesn’t beat this particular habit, it is very hard to be optimistic about anything other than emigration.

It is especially hard to be optimistic when the main author of the government’s guide to resource management reform, former Court of Appeals judge Tony Randerson, is also leading efforts to block a hospital expansion in Epsom.

This week, notice of a meeting of the Eden Epsom Residential Protection Society made its way to Twitter.

The Society wanted to raise $20k to $25k to pay its barrister, Michael Savage, to continue efforts to prevent a hospital expansion and new ICU facilities in their neighbourhood.

During a pandemic. When hospitals are overwhelmed.

Come gaze into the void with me.

Southern Cross wanted to re-zone a bit of its own land to allow a hospital expansion. Some of the land falls under a Special Character Area Residential designation.

Auckland Council notified the plan change on 21 March 2019. Submissions closed 18 April, further submissions closed 13 June, and they held hearings.

The 85-page decision, notified 28 May 2020, ultimately allowed the proposed plan change, with some modifications.

The Society appealed the decision. The High Court is scheduled to hear the case mid-September.

The Council’s website on this single proposed private plan change includes the Society’s Notice of Appeal; interventions from Tūpuna Maunga o Tāmaki Makaurau Authority and Kainga Ora; a decision and a new public notice; summaries of decisions requested; one hundred and seventy six submissions; a document with further submissions; and Southern Cross’s original change request along with attachments A through L and further information on matters from a special character assessment to volcanic viewshaft controls.

Border and immigration policies stopping skilled medical staff from coming to New Zealand are bad enough. Three years of resource consenting process for a hospital expansion, mostly during a pandemic, is nonsense.

Something must change.

In a better world, resource management reform would allow the High Court to confront the members and officers of the Eden Epsom Residential Protection Society, personally, with the costs they impose on the community from delayed and forgone development.

But despair with me.

Tony Randerson, QC, is both the government’s preferred expert on Resource Management reform and President of the Eden Epsom Residential Protection Society.

Nothing will change.

Risk assessment
Dr Michael Johnston | Senior Fellow |
Question: How many electricians does it take to change a lightbulb?

Answer: Just one, as long as they’ve completed a Job Safety, Environmental Analysis and Risk Assessment, a COVID-19 Workplace Safety SmartForm and an Electrical Safety Certificate.

One of our Insights readers recently found himself the butt of this real-life joke when he hired an electrician to replace a lightbulb – one that was, admittedly, in a room with an unusually high ceiling.

The issuance fee for the certificate alone comprised nearly 10% of the invoice for the job. One might suspect that the labour involved in the electrician filling in the paperwork, charged at $84 per hour, was greater than that of actually installing the new light.

In these perilous times one can’t be too careful. The acute risk posed by electricians changing lightbulbs is just one of many things we should worry about. For example, there’s also the risk of being traumatised by maverick members of the fourth estate.

Veteran journalist and former editor of Wellington’s Dominion newspaper Karl Du Fresne recently gave a talk at Victoria University of Wellington. He spoke mostly about what he sees as a decline in journalistic standards. While Du Fresne’s talk might sound innocuous, he is, apparently, a dangerous man.

Thankfully we have the student paper Salient to warn us of the egregious risk inherent in listening to jaded journalists. Their write-up of the event commenced with a ‘trigger warning’: “This article examines some of the racist, transphobic, sexist, and otherwise harmful content discussed at the event in question. Please exercise caution when reading”.

Oddly, the article didn’t elaborate on any of the racist, transphobic or sexist things Du Fresne was alleged to have said. In fact, I was present at the talk and, having heard him say nothing of the sort, I have an uncharitable suspicion that the Salient author didn’t actually attend. But better safe than sorry when it comes to the promulgation of potentially traumatic ideas.  

A hundred and fifty years ago, all we had to worry about was petty stuff like war, famine and widespread maternal death in childbirth. Now we face wicked threats like lightbulb changing and marauding curmudgeons like Du Fresne. We should be grateful for Electrical Safety Certificates, which deal with the former problem. Now it’s time to require all published opinions and public talks to be accompanied Psychological Safety Certificates, to deal with the latter.

On The Record

Initiative Activities:   
  • Podcast: John McDermott, former Assistant Governor RBNZ on winding back the overhang of monetary stimulus
  • Policy Point: Minister hopelessly ill-informed on labour market statistics by Dr Bryce Wilkinson
All Things Considered
  • Graph of the week: Compensation of employees - Share of GDP from 1991
  • "Global warming is bad, but isn't a prudential risk for banks. Maybe RBNZ can try to remember its real job"
  • Truancy from New Zealand’s schools is worse than at any time in nearly the last half century
  • : A virtual museum of AI Art from DALL-E 
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