Key needs to put his money where his mouth is

20/09/2012

By Dr. David Clark

Kiwis are not earning enough. Real wages after inflation are lower than when John Key took office. People who voted for him say they feel let down. I’d go further. His failure to do anything makes me angry.

A thousand Kiwis are leaving each week for Oz. More than 158,000 have left permanently in the four years since Mr Key became Prime Minister.

When a family with one parent working full-time on the minimum wage has to spend more than 50% of their income just to put a healthy meal on the table each day, something is not right. It doesn’t leave enough for rent, clothing and heating, let alone kids’ school gear, sports, and field trips. No wonder more and more kids are missing out on the education they need to be the best they can be.

One way working poverty can be addressed is to pay people more – and the Members Bill I introduced which would see the minimum hourly rate set at $15 was debated this week in Parliament. It’s a shame the Government blocked it.

John Key says he couldn’t live on the minimum wage. If that’s the case you’d think his Government would want to support a higher wage economy, and create stronger incentives for people to get off benefits and into work. But no.

The PM is not willing to put his money where his mouth is.

The Government argues that increasing the minimum wage will cost jobs. That’s hogwash. Even the Department of Labour says modest minimum wage increases don’t impact on employment, and reports from the UK and Australia back that up.

History says so too. Labour bumped the minimum wage up by $5 an hour when it was in Government and unemployment dropped to the lowest levels in the Western world.

The best way to address poverty is to raise wages and reduce unemployment. Unfortunately, National is proving incapable of either.

A recent report says child poverty in New Zealand has doubled in the past 30 years. If you are a child of a sole parent, there is now a 53% chance you will be living in poverty. That’s abhorrent.

Note that the huge growth in numbers of Kiwi kids living in poverty is not explained by a parallel growth in bad parenting. The fact is the gap between rich and poor is growing - income inequality is at its highest level ever - and the wealthiest are benefiting from tax cuts that the average working Kiwi missed out on.

Evidence suggests the impacts of poverty on small children are worst. That’s why the last Labour Government introduced Working For Families which lifted 130,000 children out of poverty.

Unfortunately National’s 2010 tax ‘switch’ has pushed large numbers of kids back into the poverty trap. Extra GST trumped tax gains for low and middle income earners - and rising costs have only made the situation worse.

Today, 35% of children living in poverty are from families where at least one parent has full-time work or is self-employed. That is simply not good enough. We can start to address the issue by increasing the minimum wage.

Dr David Clark is MP for Dunedin North, Labour’s Revenue spokesperson and Associate Tertiary Education spokesperson

source: data archive