Rising to challenges, now

The world has always been changing, but in the last couple hundred years it has changed enormously, and the rate of change is increasing. Somehow we have to adapt to these changes without stuffing up the economy or the planet.

Rod Oram (Newsroom):  Be bold to thrive in a changing world

As it happened, 1980 was also the year we Kiwis began to realise our tried and true economic orthodoxies were failing us. So, we made radical changes in that decade, which helped us prosper in the following two.

This year we must make even bigger decisions about our economy, society, environment and international relations. But the orthodoxies we learnt in the 1980s and 90s continue to largely define our debates today. Thus, we believe some tweaks to business as usual will keep us going.

Yet evidence from around the world shows us the present, let alone the future, is no approximate continuation of the past. Economies are stagnating, politics are polarising, societies are shattering and environments are degrading. Only fundamental changes will turn those around. Any nation failing to respond constructively will be far worse off.

Social change has been pronounced too. We’re less conservative and more ambitious; we’re more ethnically diverse, yet more confident in our ethnicities and our Treaty relationships; and MMP has made our politics more representative and our governments and policies broader-based, and in some ways more effective.

We’ve considerably degraded our ecosystems, as Environment Aotearoa 2015, the Government’s first comprehensive report across land, fresh water, air and marine domains showed us. Many measures continue to deteriorate, subsequent updates confirm.

The world keeps changing. We have little influence on those changes, so New Zealand has to try to adapt to those changes.

Resolving the big debates

Setting us on the right course will take innumerable initiatives by individuals and myriad strategies by organisations, with the help of many key policies by Government. In turn, effective policies are best shaped by rigorous, broad and informed debate involving all the people affected by them.

We need urgent resolution of many of those debates. Here are snapshots of six of them:

Capital gains tax:

Any economy is distorted if one source of wealth generation is favoured over others. In our case, the lack of tax on most capital gains feeds the housing market, starves business investment and disadvantages wage earners.

Fair pay agreements:

Our businesses and their employees need to become far more sophisticated and flexible so they can keep up with, or better, exploit warp-speed changes of business skills, technology and markets. A fair pay agreement is a bottom line in a sector which encourages employers and employees to be ambitious.Good companies and their people will far excel the low bottom line of a fair pay agreement.

Wellbeing budget:

In May our government will announce its first cut at a Wellbeing Budget, based on the Living Standards Framework Treasury has been developing since 2011. There’s a fair measure of support for this from some business leaders.

No doubt, though, this partial and rather simplistic first version will be criticised as being far too complicated, a distraction from pure economic measures, and an unrealistic attempt to measure the unmeasurable.

All good progress is hard.

Zero Carbon Act:

To tackle our monumental challenges of climate change and related aspects of unsustainability we need a very long-term goal for drastically cutting greenhouse gasses, a system for setting interim targets and a way to measure our progress towards them.

My column last week described the unassailable logic of this and the great benefits other countries are reaping from it.

Resource management reforms:

When we passed our Resource Management Act in 1991 it was world-leading for its twin goals of promoting economic development while protecting the environment. Many amendments since have improved it in some respects and hindered it in others. Overall, though, it has failed to adequately deliver on either ambition.

Given our vastly increased economic activity and the resulting escalation of demands we’ve put on our environment in the past almost 30 years, further attempts to modify the RMA simply won’t work.

…we need a fundamental redesign.

Relations with China:

China has changed hugely over the past decade. Its economic scale and technological prowess, and its global influence and sense of power have grown dramatically. Yet, it has become more authoritarian in political and social terms, while reasserting the clout of state-owned or influenced corporates over private enterprises.

Consequently, economic and political tensions between China and the US, EU and many other countries are escalating fast.

Now and for evermore we need to be very clear what our values are and who we share them with; if that causes some slowdown in our growing ties with China that will help us from becoming too dependent on China; that in turn will make us less vulnerable to adverse pressures from it and will help preserve our options and resilience.

The first five sound like a pro-Government manifesto. China is a problem the Government has in part created and has to find a way of dealing with.

Housing is barely touched on under CGT and not even mentioned under the RMA.

Rising to all of the challenges above, and many more, is utterly daunting. If we are so timid as to believe tweaking business as usual will get us there, we’ll fail. But if we boldly embrace the wonderful opportunities for us in this fast-changing world, we’ll succeed.

So if we do what Oram and the Government says they want to do we should be good.

Small minority to make crucual decisions on ‘fair pay’ agreements

Fair Pay Agreements “would set minimum standards to lift wages and conditions across an industry or occupation”, but could be initiated by a small minority of workers – just 10%, or less (1,000 workers). Is that fair? A minority in, say Auckland, could effectively end up imposing ‘fair pay’ across an industry across the country.

This is what the Fair Pay Agreement Working Group has recommended. The Government will now consider what they do – this may not be straight forward, with Labour and Greens requiring the support of another minority, NZ First.

Heather du Plessis Allan: Time to fast-forward to the past

Business is collectively losing its mind over the working group’s recommendations. It’s calling it a return to the national awards of the 1970s.

Business hates that the negotiations can be triggered by as little 10 per cent of the industry’s workforce. Business hates that the contract agreements would be compulsory for all employers in that industry. Business hates paying employees more than it has to.

Business has a few fair points. We can’t expect the cafe owner in Balclutha to pay staff exactly the same wage as the Auckland cafe owner making a killing thanks to the money and foot traffic a city delivers. There should be concessions to regional variance.

These recommendations probably won’t all be accepted by the Government. Labour’s coalition partner New Zealand First might challenge many of them, if not all. Winston Peters’ party has already temporarily pulled its support on Labour’s employment law once before.

So it is far from a done deal at this stage.

But, the motivation behind these recommendations is on the money. Kiwis are underpaid.

That’s debatable. In the private sector we are generally paid what companies can afford to pay and stay in business.

Audrey Young:  Coalition Government lining up smorgasbord of targets for National

The same goes for the fair pay agreements outlined in the Jim Bolger report delivered to the Government this week.

But given New Zealand First’s track record in diluting union-backed legislation, it is hard to imagine the party agreeing to a trigger as low as 10 per cent for workers to force employers to the table for compulsory sector-wide bargaining.

The trouble is that the higher the trigger goes, the less happy the unions will be. A true compromise may result in deeply unhappy unions and employers.

Dominion Post editorial: Why back to the future on pay might not work

Many of this country’s lowest paid and most vulnerable workers have every right to look back in anger at the steady, inexorable fall in the value of their wages, the undermining of working conditions and the perceived out-of-proportion rewards for their employers and many others in the business community.

Bolger’s group was assembled to address such inequities, and its report released this week suggests we go back to the future.

It recommends the creation of fair-pay agreements, a new version of the old collective bargaining that critics have labelled as “compulsory unionism by stealth”.

There is some sympathy for that argument because the proposal, if adopted, would mean that an entire industry would have to negotiate new minimum pay and working conditions if just 10 per cent or 1000 workers in that industry, whichever is fewer, asked for it.

That creates the potential for major upheaval in businesses that have long moved on from the days of compulsory unionism and the environment that went with it.

The reforms are targeted at the country’s low-paid and most exploited workers.

But there is still the potential for major uncertainty, confusion and disruption for everyone within the complicated ecosystem that is our national economy.

For many, the amount they are paid remains the main measure of their perceived value, from the employer and within society. Work conditions are important, but pay is so often the principal point of anger and agitation.

If employers followed a number of local bodies and now Westpac bank in taking on a living wage for their employees, it would go a long way towards quelling that anger, and possibly even lift productivity.

But local bodies can just put up rates to pay for bigger wage bills. Ratepayers have to pay. If companies put up prices customers can choose not to pay.

This too, of course, is a blunt tool, and would not come without cost. But in conjunction with sensible legislation to protect workers’ rights and conditions, as happened when zero-hour contracts were deemed illegal, it could address many concerns without creating widespread disruption and a threat to the economy.

This working group is right to address inequities on behalf of the country’s workers, but it should be careful not to throw out the businesses with the bathwater.

A minority in Government, NZ First, look to be the deciding factor in whether a minority of workers could enable (or force) ‘fair pay’ on a whole industry, which could put a larger number of workers and their jobs at risk.

Another point  – Labour may think it was a master stroke recruiting ex-National MP Jim Bolger to head the Working Group, but why an ageing retired politician? One who is a long way from knowing what ordinary workers feel and experience. Surely there are younger people around who may have a better appreciation of work in the modern world.

Government blurb on the Working Group report: