Dr Michael Bassett

Dr Michael Bassett

Newspaper Columns


Parity with Australian Pay

14/08/2007
How many times have you heard professional and workers' groups bemoaning the fact that New Zealand's pay rates have fallen behind Australia's? A few months ago Ross Wilson of the CTU told the press that workers' pay needed to be brought up to Australia's to stop locally trained workers emigrating. His successor talks as though low Kiwi wages indicate moral deficiency in high places. Of course one expects propaganda when wage negotiations are in the offing. Public sector unions excel at it. In 2005 with an election coming up, the Labour government actually listened. It lifted nurses' pay rates by more than 20%, a move that has caused strikes in the health sector ever since as others try to catch up. Lab workers, junior doctors, radiation therapists, and physiotherapists are all singing the "catch up" tune. Now the Association of Salaried Medical Specialists has joined the choir. The inference they want us to draw from their chorus is that only a hard-hearted set of district health boards and mean ministers are holding out against the "logic" of their demands.

As is often the case, such arguments are not only based on falsities, but reveal deep-seated ignorance. First the exaggerations. Even in the early days of the 20th Century when New Zealand's standard of living was high by world standards, people with skills traveled, none more than the health sector. Money was sometimes a factor, but gaining more skill and experience was a greater incentive. Current Medical Council statistics suggest that the incidence of doctors crossing the Tasman scarcely increased in a decade, although as Australia lifts its pay because of a better performing economy, and its recruiting drives step up, more might have been lured in recent months. However, as a general rule, we should take care with union lobbyists' statistics before giving them credence.

Much more depressing is the ignorance on which union propaganda is based. We've known for decades that Kiwi standards of living are slipping relative to the rest of the developed world. It's because of New Zealand's relatively poor economic performance. In 1970 when the OECD produced its first per capita income rankings within the 26 member body, we stood at 9th. By 1984 after a decade of stagflation we had slipped to 21st. We stayed there despite gradually improving productivity until after Labour came to power in 1999. Over the last four years of good overseas prices, especially for dairy products, our growth rate has declined and productivity fallen because of government policies. Recently we slipped another notch on the OECD ladder to 22nd. Our remuneration is now about 37% below Australia's. All that information is available to every trade and professional union in the country.

What amazes me about union propaganda is that they assume the wage gap with Australia can be closed by an overnight stroke of the pen. Surely well-trained people like the Association of Salaried Medical Specialists realize that the flow-on consequences of this would be catastrophic? For many years New Zealand tried sealing itself off from the rest of the world, borrowing and spending on an ever grander scale, while pushing up wages. Inflation increased steadily and growth collapsed. The wage and salary earner's share of the national cake kept contracting. By 1980 a really serious brain drain was occurring as well. Is this what our union luminaries want us to return to?

I'll start listening to them when they get real and investigate what actually lies behind low Kiwi wages. Better still, when they start urging the government to take the appropriate steps to lift growth by slowing government expenditure. Remuneration levels could rise steadily if growth and productivity lifted above current levels. To achieve those goals, however, there needs to be a decrease in taxation, a cessation of the Beehive urge to meddle in business, more savings and investment, and a pruning of the bureaucracy which has been growing at an average rate of 4.1% p.a. under this government. Nothing does more to assist wage and salary earners than rapid economic growth. Jobs are created while welfare numbers should decrease and productivity lift so long as a government is vigilant - which unfortunately this one isn't. There aren't any short cuts.

Twenty years ago the union movement didn't publish a monthly economic bulletin. It now does. Progress perhaps? Yet, there is no sign in the latest issue that its author realizes what needs to be done if the CTU's members are to achieve much higher remuneration. It becomes really scary when medical specialists, too, refuse to comprehend the facts of life.