Wage gap or tax chasm?
March 30th, 2008 at 9:04 am by David FarrarBill Ralston’s column is titled “Wage gap more a tax chasm”.
Actually, Mallard is telling the truth. Those are the wage-gap figures. Gross wages. But what he ignores are the figures that matter most to you and me: our take-home pay.
Because of tax cuts and higher tax thresholds across the Tasman, the gap in tax-paid, take-home pay has widened rapidly under Labour.
Ralston has caught on to the key point – gross wages are misleading in comparisons between countries. You will hear Labour Ministers and supporters talk endlessly about gross salaries.
What you will hear far less from them is actual cash in hand, or after tax income.
And if one is comparing over a number of years, one should adjust for inflation. If after tax income in both countries has gone up 20%, but inflation in one country was 15% and in the other 8%, then it is better to be in the latter country.
So the best measure for comparing between countries is inflation adjusted after tax income.
Tags: Australia, Bill Ralston, Wages
March 30th, 2008 at 9:27 am
Of course after tax income is the only valid comparison. To make any comparison you need to compare the cost of living vs the amount of money you have to spend. It’s not rocket science but apparently too difficult for the Labour apologists to understand.
Vote:March 30th, 2008 at 9:49 am
the one ‘telling’ fact about our wage ‘slippage’ against australia..
is that under national..(80 cent rise in minimum wage in nine years..(!)..)
..is when that gap widened to a gulf..
the gap has not narrowed under labour..
but neither has it grown in leaps and bounds..as it did under national..
so..for you..dpf..as a natty from that regime..
(and i daresay ‘raise wages’ were two words never heard coming out your mouth in that order..eh..?)
you do have somewhat of a nerve to be pointing the bone at labour..
your lot..and our piss-weak unions..
have wrought this..
labour just hasn’t ‘fixed it’..
phil(whoar.co.nz)
Vote:March 30th, 2008 at 10:21 am
labour just hasn’t ‘fixed it’…
No that’s right philu, they have only had 8-9 years and as we know nothing can be done by a Labour govt in less than 12 years – Gee – wow, we had better elect them for a forth term so they can deliver on the promises they made for their first term.
Loosers !
Vote:March 30th, 2008 at 10:24 am
Too many dope smoking dole bludgers, that’s one of the major reasons NZers are suffering.
For the sake of an effective and workable democracy, its time for changes to the electoral system. Any one in receipt of government money- wages, pensions, subsidies, grants, allocations etc should automatically forfeit their voting rights.
Vote:March 30th, 2008 at 10:24 am
Phil steps in with his usual literate genuflection.
Vote:March 30th, 2008 at 10:29 am
Hey Phil – increasing the minimum wage has:
Vote:a.) Zero effect on the median wage unless other wages go up proportionally.
b.) An inflationary effect.
March 30th, 2008 at 10:33 am
Spam
I’m starting to think Labour party policy is to make everybody (except politicians) earn the minimum wage.
Junior doctors opting out
A minimum wage worker who spent 6 years producing a family rather than studying to be a Dr would probably be earning more per hour once WFF benefits are taken into account.
Vote:March 30th, 2008 at 10:40 am
You’ll be pleased to hear that “Big Trev” Mallard is sorting out the government department cleaning pay round though.
http://kiwiexpat.blogspot.com/2008/03/duckman-cleans-up-parliament.html
Vote:March 30th, 2008 at 10:54 am
“..Gee – wow, we had better elect them for a forth term ..”
or back to national so they can create an even bigger wage-gulf.
eh..?
“.literate genuflection..”
(why..i..i’m blushing..!..)
that’s a very high-end back-handed compliment.!
passive-aggression as an art-form…)
phil(whoar.co.nz)
Vote:March 30th, 2008 at 11:02 am
Speaking of, this is hilarious!
http://www.passiveaggressivenotes.com
BTW, you missed a bracket so I guess it’s illiterate genuflection!
Vote:March 30th, 2008 at 11:12 am
Its very easy to spin figures to say whatever you want to say but market forces don’t lie you only have to see what is happening with nurses to see the pay gap in action. My partner has recently graduated as a nurse and something like two thirds of the people in her year have graduated and gone overseas, mainly to Australia. Meanwhile the hospital that she now works at (which is run by one of the less broken DHB’s) has something like sixty nursing vacancies. Now you would expect to lose some graduates each year because they come out of the system at an age where many people go on their OE, but not to the extent that it has happened here. When you consider the cost to the taxpayer of training a nurse for three years and you consider that this is just one nursing school out of a number around the country it starts to add up to quite a big subsidy to the Australian taxpayer and is basically a massive policy failure.
We live in an area where the cost of living is lower, the rate of loss would have to be worse in Auckland particularly as nurses don’t get paid any more in Auckland than they get paid here.
And just to completely threadjack, just pouring more money into health and paying nurses more won’t be enough, its been tried and other countries can always outspend us. It also won’t change the stressful working condtions that occur when people have to work in understaffed hospitals (understaffed by nurses I mean, there is no shortage of paper shufflers). What the government needs to do is bond nurses and other health professionals to a hospital for a period of time after they graduate in exchange for paying some or all of their fees. This will plug some of the gaps in the health system and people who have jobs and less student debt (and don’t get me started on the student loan system) will be more likely to put down roots and stay in New Zealand. Unfortunately I don’t expect this to happen because both main parties are extremely reluctant to interfere with the free market even when it obviously isn’t delivering the outcome that NZ needs.
Vote:March 30th, 2008 at 11:33 am
Philu, you are incorrect.
the wage gap was high under National, it was just over 30%.
It is now 40% under Labour because of the major tax cuts they have delivered along with the corresponding growth in the economy.
Bear in mind also that under National, the prices for our main commodities was the lowest in a generation. Labour have been incredibly lucky as they have enjoyed the best commodity prices in a generation along with the strong economy put in by National. This is why Cullen admited in the first two years of office that it had been a “dream ride” for him.
The best though labour can do, is see the wage gap broaden to a gulf. It’s disgraceful.
Vote:March 30th, 2008 at 12:00 pm
Although you have to compare the cost of living with the amount you have to spend, here in New Zealand even high income couples are not saving – and could be. Labour is doing nothing to encourage savings for a house in the near future that couples – espeocally high income cooples – could not do if they had a bit of discipline – but interesting that a couple who couldnt even save $300 a week can all of a sudden afford a $900 weekly mortgage.Without a student loan, too.
If they moan about paying high tax, and moan about high Government spending, perhaps they should look at their own savings and spending first, rather than their tax rates. Could it be that the after tax income gap is widening, that the savings gap is widening proportionately further?
Vote:March 30th, 2008 at 12:01 pm
The intention Was (WFF, Closing ther Gaps, Getting into the Top Harf of the OECD), to redistribute Income. Funny ol’ world, That policy has ended up redistributing People.
Incentives Always Matter….
Vote:March 30th, 2008 at 12:21 pm
To see how far we are falling behind
Here is a very useful tool
http://www.imf.org/external/datamapper/index.php?db=WEO&lang=en
Vote:March 30th, 2008 at 3:17 pm
Isnt Rudd also cutting spending by some $10 Billion? Dont hear the aussies complaining too much about that.
Vote:March 30th, 2008 at 3:28 pm
Whats the bet Ralston gets a top job in a John Key governemnt
Vote:After all he cant be pleased being a third rate sunday newspaper columnist( rewritting national press releases) and fill in drivetime radio host.
Bet he itches to be in the same position Richard Long held for Don Brash ( pulling the puppet strings) but in government instead. And Gods knows Shar Key needs a lot of string pulling
March 30th, 2008 at 3:41 pm
you are actually going for the big lie there..bogusnews..
the gulf between us and aussie opened up during the national govt of the 90′s..
(how could an 80 cent increase in the minimum wage in those nine years under national not confirm that..?..)
to their shame..labour haven’t closed it..
but it was national who created that gap/gulf..
phil(whoar.co.nz)
Vote:March 30th, 2008 at 6:09 pm
Philu I don’t mean to be an arsehole but why do you worry about the wage gap. I would have thought that one would have to earn a wage first to worry about the gap.
Dave ” Liarbore is doing nothing to encourage savings”, why save Dave when the bastards do their fucking best to take those savings from you. The whole system is a crock of shit that is only made to relieve all and sundry of their wealth.
Vote:March 30th, 2008 at 7:16 pm
No Philu I’m not going for the big lie.
the facts are plain. The reduction in real income has come about because Labour has foisted an additonal 41 taxes onto us, while not adjusting the tax thresholds as incomes increase.
For proof for our declining salaries and ability to buy things you only need to look at our OECD ratings, fallen once and about to again. (didn’t fall under National incidentally).
Australia has cut taxes constantly and enjoyed higher economic growth. They haven’t fallen down the oecd ladder as we have.
Vote:March 30th, 2008 at 8:06 pm
As a single, childless, taxpayer I am expected to pay more than is my fair share so that other people can have kids, so that those who are capable to work can have the choice not too, so that the grievance industy can be appeased, so that refugees who will never contribute more than they receive can live here, so that students can have interest free loans which I didn’t get, so that junkies can have methadone, so that … Jesus I’m worn out.
Vote:God defend NZ, the military are in no fit condition to do it.
March 31st, 2008 at 3:09 am
Innocent Bystander
We lose people to Oz and they lose people to North America etc …
The system of training nurses while they worked, as formerly, is becoming increasingly attractive as an answer. Otherwise we should allow tertiary debt to be written off in return for working here. By increasing the fees charged for doctor training the TD write-off becomes more attractive.
But ultimately there is no alternative to increasing pay as well.
This issue is the cause celebre of the right – for them under-funding government allows alternative private sector provision – and as it allows the offer of higher incomes through tax cuts it’s also populist (until the consequences become known – higher mortgage rates and charging for services).
The Australian government has been able to offer tax cuts because of rising incomes. While we had some capacity to do he same (after employment growth rather than income growth and the more recent terms of trade boost) – we had to focus on the NZSF, Kiwi Saver, debt repayment and neglected infrastructure spending and thus the focus on targeted help to students and families in more need than the rest.
Vote:March 31st, 2008 at 8:01 am
SPC: We lose people to Oz and they lose people to North America etc …
Am I following that train of thought correctly? You seem to be suggesting that losing qualified people to higher wage economies is a normal, acceptable thing. Makes a bit of sense. Until you think about what we’re replacing them with.
SPC: for them under-funding government allows alternative private sector provision – and as it allows the offer of higher incomes through tax cuts it’s also populist
Read what Bogusnews wrote:
The reduction in real income has come about because Labour has foisted an additonal 41 taxes onto us, while not adjusting the tax thresholds as incomes increase.
For proof for our declining salaries and ability to buy things you only need to look at our OECD ratings, fallen once and about to again. (didn’t fall under National incidentally).
That focus on NZSF, Kiwi Saver, debt repayment and so forth definately shows in us rocketing up the OECD ratings and in those 41 additional taxes. It shows in the spending of public funds for electoral activity by the Labour Party and so forth.
It’s all rosy, isn’t it? Move along. Nothing to see here. Labour is the pinnacle of achievement.
*cough bullshit cough*
Vote:March 31st, 2008 at 10:15 am
Waymad: “Incentives always matter”………
THAT is the missing comprehension in the intellect of Leftists all over, in a nutshell.
Vote:March 31st, 2008 at 10:18 am
What does a busted arse country like Malawi need to get it out of its mire? Let’s put the economic geniuses of the Left to work. Strong Trade Unions, Income-redistributive taxation, tough worker protection laws, tough environmental protection regulations, generous number-of-children-based welfare provisions…………etc, etc, etc…….
BWWAAAAHAHAHAHAHAHAHAHAHAHAHAHAHAHAAAAAAAAAAAA !!!!!!!!!!!!!!!!!!!!!!!
Vote:March 31st, 2008 at 10:31 am
A friend of mine said he’d be voting Labour this year becuase he’d got some sort of performing arts support allowance which he admitted he probably didn’t deserve but he liked the idea. I asked him if he thought that his vote had been bought because of this but he couldn’t fathom that concept. I guess being in business alters your perspective on how the government gives your money away. And when the minister of finance is suggesting for the opposition to fly to australia, well that shows their intentions. Dispose of any opposition and buy enough votes. Oddly, it sounds like Zimbabwe. How’s over 1000% inflation sounding? Labour could get in again if they’ve bought enough votes with WFF, the performers dole and suchlike. Then when the global credit crunch truly hits NZ I’d love to hear what Cullen has to say about the “amazing” job that Labour has been doing. Dis-incentivising hard work and encouraging borrowing on false asset increases. Truly amazing.
Vote:March 31st, 2008 at 5:28 pm
SPC: We lose people to Oz and they lose people to North America etc …
pascal “Am I following that train of thought correctly? You seem to be suggesting that losing qualified people to higher wage economies is a normal, acceptable thing. Makes a bit of sense. Until you think about what we’re replacing them with.”
You mean graduates from Europe wanting our lifestyle or graduates from Third World countries? The problem is pace of change and our ability to replace skilled staff.
SPC: for them under-funding government allows alternative private sector provision – and as it allows the offer of higher incomes through tax cuts it’s also populist
pascal “Read what Bogusnews wrote:”
The reduction in real income has come about because Labour has foisted an additonal 41 taxes onto us, while not adjusting the tax thresholds as incomes increase. For proof for our declining salaries and ability to buy things you only need to look at our OECD ratings, fallen once and about to again. (didn’t fall under National incidentally).”
Given we have grown by increasing employment (by employing the unemployed who were not working before) that is not surprising. National’s policy path was not sustainable, unless you claim the Cullen Fund, Kiwi Saver, the increased infrastructure funding and puting more resources into health and education were not required?
And nothing explains how futile income growth by tax cuts is than the 1990′s – when we lagged behind in public policy while incomes were not matching growth in Oz (it is the period when we fell behind most against them).
pascal “NZSF, Kiwi Saver, debt repayment and so forth definately shows in us rocketing up the OECD ratings. It’s all rosy, isn’t it? Move along. Nothing to see here. Labour is the pinnacle of achievement. *cough bullshit cough*”
Next you’ll be condemning people contributing to Kiwi Saver for retirement and a home for having a lower amount of income left for consumer spending. National saving, debt repayment and investment in infrastructure is essential for a sustainable economy – other nations did not get the income growth by having continued neglect in these areas.
Vote: