GUEST BLOG: Ian Powell – An email that almost says it all

The term ‘social wage’  was once used a lot in public discourse in Aotearoa New Zealand but much less so in recent years.

Whereas ‘wage’ is what employers pay employees for their labour, ‘social wage’ usually means public expenditure on health, education, housing and social welfare.

Without expressly using the term, public interest business journalist Bernard Hickey has recently highlighted the relevance and importance of the ‘social wage’.

Hickey is an insightful and credible independent speaker and writer about economics and politics. Through Substack he publishes the online The Kākā which produces email newsletters and podcasts.

Kākā are forest birds who are restricted to a particular mode of life; obtaining all their food from trees. They are adept fliers, capable of weaving through trunks and branches, and can cover long distances.

The bird’s name resonates with the mode and quality of Hickey’s probing journalism.

The email

On 28 August his The Kākā email included the following:

Dear taxpayer getting over $57,400 after tax per year

Are you ok with this being done to lift your after-tax income by about $38 per week, and to win your vote?

Just FYI, if you are ok with it…

Treasury and IRD have advised the Government at least 64% of the NZ$15 billion of tax cuts being delivered to landlords and PAYE earners over the next four years will go to the top 40% of earners. That top 40% includes the two quintiles earning more than $57,400 per year after tax. These tax cuts are being paid for by some Government borrowing, some outright spending cuts and by slowing growth in spending in health, education, transport and infrastructure to rates less than inflation and population growth (ie real per-capita cuts). The Government says it’s finding fat in ‘back offices’ to remove so that ‘front line’ services aren’t and won’t be affected. It may sound and feel painless and like magic.

After all, it feels as if back offices can be easily separated from ‘front line services’ and that back offices aren’t really people who earn and spend money and have families and mortgages or rent due. These ‘back offices’ feel more like the stationary cupboard and a photocopier that never seems to work. You may think you need and/or deserve that cash more – especially these days when its tough to make even a decent income go far.

But here’s what’s actually happening:

• over 60% of GPs have stopped taking new patients, while people in Northland, Gisborne and the West Coast can no longer either see a doctor and/or get into a hospital after hours or on weekends;
• waiting lists for elective surgeries and to get into A&Es are blowing out, while staff who are burnt-out and chronically underpaid because of 30 years of real-per capita funding cuts in education & health are jumping on planes to Australia and elsewhere at a rate of two A320-loads per day;
• now we learn those tax cuts are also being paid for by kicking 1,000 kids out of motels, with the minister not knowing where 200 went or trying to work out where they are now;
• and by freezing funding for disabled people, including banning net new additional residential care places or spending, which means only disabled people who committed crimes, are insane or are stuck in a hospital bed can get in, and even then they’re not guaranteed a place; and,
• despite a social housing shortage estimated in the hundreds of thousands and the most expensive rents in the world, the Government has chosen to stop building new social homes itself, and has yet to say how or when or how much it will provide Community Housing Providers (CHPs) to build only half the amount being previously built per year by the state house builder…maybe.

I could detail many, many more examples, but this email is already long enough.

The other side of the ledger

Hickey describes with appropriate bluntness the inherent unfairness and inequity of these tax cuts in the context of the other side of the ledger.

This ‘other side’ includes special benefits for landlords, increasing inaccessibility of being examined by a general practitioner or being diagnosed and treated by a hospital specialist, job losses for those working in demonised and misnamed ‘back office’ positions in the public sector, vulnerable children evacuated from motels without any knowledge of where they are now, and freezing funding for disabled people.

Hickey is also right to note that there are many other examples that could be added. A case in point is Radio New Zealand’s subsequent report (2 September) that government underfunding is forcing 89% of general practices to increase their patient fees: Patients pay the price.

One could also include the Government’s paltry increases to both benefits and the minimum wage. Those on low incomes are not only big losers of this prejudicial politics but the ‘social wage’ element of their life survivability has also been.

Economic systems – for the few or for the many

The issues highlighted by Bernard Hickey in The Kākā along with what I have added above fall within the ambit of the declining social wage.

This is a natural consequence of an economic system whose prime driver is wealth accumulation. The outcome is that people (the ‘many’) exist to serve the economy whose biggest beneficiaries are the ‘few’.

The British Labour Party in the mid to late 2010s adopted the slogan ‘for the many, not the few’. But the sharp turn to the political right under its leader Keir Starmer has in effect reversed this to ‘for the few, not the many’.

What New Zealand needs instead is an economy system whose prime driver is to serve the people (the ‘many’ rather than just the ‘few’).

Ian Powell was Executive Director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years, until December 2019. He is now a health systems, labour market, and political commentator living in the small river estuary community of Otaihanga (the place by the tide). First published at Political Bytes