11. R DOUG WOOLERTON (NZ First) Link to this
to the Minister of Finance
What initiatives, if any, is the Government planning to undertake to improve real wages for New Zealand workers?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Real wages have increased about 10 or 11 percent so far, but the Government is seeking to increase them further by raising labour productivity. There is a whole range of initiatives, including such matters as the business tax package in the 2005 Budget, substantially increased funding for workplace training, the development of an overall strategy in terms of foundation skills in the workplace, the refocusing of tertiary education on quality and relevance, and, of course, the review of corporate taxation that Mr Dunne and I are beginning at this time.
Will the average New Zealand worker benefit more in real terms by cutting the highest personal tax rate from 39c to 33c in the dollar, or from increasing the minimum wage to $12 an hour, as outlined in the Government’s confidence and supply agreement with New Zealand First?
Hon Dr MICHAEL CULLEN Link to this
To be honest, I do not think that I can actually do that sum in my head as quickly as this. I can say that the increase to the minimum wage obviously helps those at the bottom end of the labour force in terms of incomes. A reduction in the top marginal rate helps those at the top end, by definition.
Craig FossWhat economic conditions, as referenced in the Labour - New Zealand First confidence and supply agreement, need to be in place in order to permit the minimum wage to be increased to $12 an hour; and when does he expect those conditions to be in place?
Hon Dr MICHAEL CULLEN Link to this
Those will be conditions particularly around the ability of employers to withstand a reasonably strong growth in the minimum wage. Of course, the Government has a role to play in that, because quite a significant proportion of people on low wages are indirectly paid by the Government—for example, those in the aged care area. I think the member will find that by the time Mr Barker beats him next time around, we will be pretty close to that $12-an-hour level.
Does the Minister believe that initiatives to grow our exports, such as the dedicated export year and a more competitive company tax rate, will in the long term produce higher wages and greater productivity than simply cutting personal tax rates?
Hon Dr MICHAEL CULLEN Link to this
Yes, I do think that that is true. But, of course, the Government has also signalled that it is looking to think in terms of a major structural review of the corporate taxation area, not a mere tinkering around its edges.
Is it an objective of this Government to narrow the difference between the real after-tax wages of New Zealanders and Australians?
Hon Dr MICHAEL CULLEN Link to this
That certainly is a long-term ambition. I note that the largest growth in the difference between those incomes occurred between approximately1983 and 1993.
Hon Brian Donnelly Link to this
Which would be better for workers such as those in the elder-care sector, who are currently earning as little as $9.50 an hour, and those working in the lowly paid fast-food industry: cutting tax rates from 39c to 33c in the dollar, or raising the minimum wage to $12 per hour?
Hon Dr MICHAEL CULLEN Link to this
Clearly, for those people it is raising the minimum wage, since the top tax rate, which cuts in at $60,000 a year, has absolutely no impact upon them, at all. Even for those who believe in the trickledown theory, an awful lot of drips would have to go an awfully long way before they got down to those people.