Kate Hawkesby: Helen Clark Foundation is back at it again

Author
Kate Hawkesby,
Publish Date
Wed, 25 Nov 2020, 10:08AM
Photo / Getty Images
Photo / Getty Images

Kate Hawkesby: Helen Clark Foundation is back at it again

Author
Kate Hawkesby,
Publish Date
Wed, 25 Nov 2020, 10:08AM

Not done with wanting to discourage cars from residential streets, pushing the government to adopt drug reforms, and the former PM personally agitating for no concerts at Eden Park, the foundation is now advocating for a minimum wage rise.

Another one. Bear in mind we’ve already had three, above and beyond the inflation adjustment. But no, Helen Clark and her crew want another one.

I do wonder if Helen Clark should be a member of the Green Party these days; her ideas seem more akin to Green Party policy than anything mainstream or centrist or even slightly sensibly left of centre.

You don’t need to cast your mind back far to remember the last minimum wage increase. It happened inexplicably on the cusp of Covid and our level four lockdown in April, a time when arguably no one could afford it, but that didn’t appear to stop the government.

Thousands of Kiwi businesses being closed was not a deterrent, a pandemic sweeping the globe and forcing us all out of our workplaces was not a deterrent, so we shouldn’t be surprised that the Labour government has committed to increasing it again in 2021.

It will go up to $20 an hour. This is something Act’s David Seymour has referred to as the equivalent of economic vandalism. He said, "Basic economic theory and empirical evidence show minimum wage increases would only serve to reduce the number of jobs available.”

He pointed out in one report that, "the Treasury says a higher minimum wage won't lift productivity, overall wage levels or job creation, and will harm international competitiveness."

Economist Cameron Bagrie is reported as saying that ‘another minimum wage increase would be a case of the cart coming before the horse.’ "You want the horse in front of the cart - get the productivity up and then you pay people more," he said. He also pointed out that the real issue is not the minimum wage but rather ‘median wages across New Zealand’. He says we’re  ‘a low-wage economy because we're a low-productivity economy.’

So surely the focus should be getting productivity up?

But this government always argues that lifting the minimum wage serves as an important stimulus tool for the economy. Finance Minister Grant Roberston’s standard argument around this is that people on low incomes tend to spend more of it.

But what about job losses and layoffs by employers who simply can’t keep affording the wage rises? How productive is it if a chunk of your low paid workforce who're meant to be out spending the pennies, can't do that because they lost their job?

It makes no senses to me, but it does to Helen Clark and co, which is another reason I think this government should swerve how much sway that foundation has on its political thinking.