Govt’s Axing Of Pay Equity Cost Jobs & GDP Growth – PSA Analysis
Analysis shows pay equity settlements over four years would have:
– Created 13,000 jobs
– Grown GDP by $13.5 billion or 0.6%
– Increased tax revenue by $5 billion
Fresh analysis by the PSA of Treasury’s own modelling shows the Government’s decision to cancel pay equity claims under urgency in May 2025 was an economic own goal, one that has cost the country billions of dollars in lost growth, lost jobs and lost tax revenue.
The analysis, based on Treasury’s own MATAI macro-economic model, shows that reinstating pay equity would grow the economy by $13.5 billion over four years and create around 13,000 jobs. It would also generate an extra $5 billion in tax revenue, reducing the net fiscal cost of pay equity to $6 billion over four years, or $1.5 billion a year.
“Low paid women workers have paid the price for a decision that was all about making the Budget numbers work, without a considered assessment of the economic upside from the significant income boost that would flow from pay equity settlements,” said Fleur Fitzsimons, National Secretary for the Public Service Association Te Pūkenga Here Tikanga Mahi.
“Our analysis shows the Government had a genuine opportunity to grow the economy, create jobs and boost tax revenue by continuing with pay equity settlements, and it walked away from it.
“This was short sighted economic management, plain and simple, depriving over 150,000 women of the pay rise they need and deserved.”
Treasury’s own figures show pay equity delivers a return of $2.25 for every dollar of net government spending, a stronger return than other major Budget initiatives.
The 0.6% increase in GDP from pay equity outperforms other less effective Government growth policies. By comparison, Treasury modelling shows the Government’s Investment Boost policy generates just $6.4 billion in GDP growth (0.3%) from a $4 billion net spend; a return of just $1.6 for every dollar spent.
“Pay equity isn’t just the right thing to do for women who have been underpaid for years, it’s also better value for the taxpayer than some of the Government’s own flagship policies,” Fitzsimons said.
“The actions of the Government in cancelling pay equity claims and gutting the Equal Pay Act 1972 were an act of constitutional vandalism and wage theft which must be overcome. We will leave no stone unturned until New Zealand women receive pay equity starting with care and support workers many of whom are now back on the minimum wage.
“We need to see clear commitments from opposition parties to pay equity which means and properly accounting for it in their fiscal plans and fixing the Equal Pay Act 1972.
“Low- and middle-income workers spend the money they earn in their local communities. That spending supports local businesses and creates local jobs. This Government keeps choosing policies that don’t deliver anywhere near the same bang for buck, simply because it prioritised tax cuts for landlords over our nation’s working women.”
With unemployment rising to a decade high and the economy struggling, the analysis is a reminder of the cost of the Government’s decision.
“The Government says growing the economy is its top priority, but it turned down a $2.25 return on every dollar. That’s not economic management; it’s an own goal.”
Has this government got anything right the last couple of years? They muddle along, meddling in whatever is in the way, then knee-jerk and make unbelievably stupid decisions which turn out to be the exact opposite of what was needed! The Pay Equity issue again highlights the lack of capabilities of Finance Minister, Willis who is another totally lost cause but believes she is the ‘cat’s whiskers’! She doesn’t see that she missed the opportunity to grow the economy, create jobs and boost tax revenue, but instead chose to cancel pay equity claims and gut the Equal Pay Act 1972. Again, like Luxon, she is way out of her depth as Finance Minister but try telling her that? This CoC just goes around in circles, achieving nothing, because most of their MPs are square pegs in round holes!