Information released today by Statistics New Zealand showed that the cost of living increased by 4.7% last year, said CTU Economist Craig Renney. “This new data should reinforce the need for Government to support middle and low income families who have struggled with cost of living over the past few years,” said Craig Renney.
“Inflation was being driven by some costs that are hard to avoid for many. This includes rent (up 4.5%), household energy (up 5.9%) Local Authority rates (up 9.6%). Insurance prices were up 11.9% annually, driven by 23% increases in dwelling and contents insurance, and 16.5% increases in vehicle insurance. Food prices fell quarterly, but are still 5.7% higher than a year ago – with bread, fruit, and groceries price increases all outpacing general inflation.
“We have not yet seen an anouncement on the Minimum Wage from the government, despite that normally happening in December. The Minimum Wage needs to increase by at least the cost of living to make sure that those on that wage don’t fall further behind.“Inflation is at its lowest rate for two years, and quarterly inflation is at 0.5%. This means that inflation over the past three months has been within the Reserve Bank target rate, reducing pressure on the Reserve Bank. New Zealand now has inflation below the OECD average of 5.4%, and around the same at that found in Australia at 4.7%.
“Inflation has also fallen from 7.2% to 4.7% without significant cuts to government spending, and on a quarterly basis is now within the the target range. Inflation doesn’t appear to have been driven by government spending in any significant way. Promises to reduce current inflation by cutting public spending should be treated with a high degree of caution. Instead those cuts will simply hurt those who use those services, with little or negative economic benefit overall,” said Renney.
The sixth annual CTU Mood of the Workforce survey shows working people are very worried about their incomes and rights under the new Government and fear the country becoming more economically and racially divided.
Figures from the survey, which gathered 2000 responses in less than a week, show that more than two-thirds of working people feel that new Government’s policies will make it harder to meet cost of living pressures. More than three quarters of respondents believe that the new Government’s policies will make it harder to secure a fair pay rise.
Many respondents voiced concerns that the current government does not represent their interests with some respondents raising fears that economic and racial division will increase as a consequence.
CTU President Richard Wagstaff says the results show working people are feeling insecure at work. “The feedback from this year’s survey is that many people are worried about the future of their jobs and well-being of their families.
“It’s clear the rushed and backwards looking repeal of employment legislation passed without consultation has signalled to working people that the Government does not care about their interests or the interests of most New Zealanders.
“These concerns are held across all age and gender cohorts in the results and are consistent across union members and non-union members.
“Both the survey responses and the comments indicate that many people feel they have fallen behind in the past year and that they expect this to get worse.
“Reading through the hundreds of comments it’s clear that people want real change in New Zealand’s political and economic direction toward increased fairness and investment in people and their futures. That’s something all parties, in government and opposition, need to listen to.”
The following is a selection of representative comments from the survey
Q: Do you have any further comments about the last 12 months of your work life?
work don’t even come out with enough money to relax always stress about work money cost of living is just ridiculous
Working harder and still struggling to meet every day basic costs.
We were lucky to have a significant pay rise a few months ago. If we hadn’t we’d have fallen well behind cost of living
The sheer amount of extra work with no possibility of paid overtime means I, and many colleagues, do free overtime because we care about our customers so much and don’t want to fail them-meanwhile no extra staff are hired in the areas that need the help. More recently, management ‘bullying’ and veiled threats to job security.
The repeal of Fair Pay Agreement legislation by the new government is a major blow to worker rights and fair pay. The living wage should be extended to all workers in the cleaning industry.
The last 12 months doesn’t cover the lasting effects of covid on my workplace. It has been 4 years. I am a cleaner in a hospital and when covid happened, the workload increased, the support decreased (our managers discovered they could give extra work to us over email), and despite our company earning billion dollar profits from their sites all over the world, we are still under-resourced.
The failure of getting pay equity resolved has meant no security with wage increases in my employment
The change in gvt has made the most difference . Felt like good faith bargaining and respect has gone no impartial gvt. Now its going through the motions. Don’t speak up to landlords ,bosses because unsure of outcome.
So much uncertainty, especially working for government. It has been super stressful
Our standard of living has definitely declined over time. We are now all working longer hours at the minimum pay rate as a flat rate. Every employer stresses a desire to improve health and safety and work conditions, but generally it is only a token nod and profit margins are paramount in employers consideration. As a result more and more employers are using backpackers and R.S.E. workers to the disadvantage of local people. Shops are closing their doors because local people have to cut back on spending thus on a wider scale our national economy is on a downward spiral.
Just a lot of uncertainty
Inflation has eaten away at any surplus income i used to have. We are a 2 income family and now we struggle. So unfair that we are left to fend for ourselves with the government taking more and more away rather than supporting / assisting us.
Job insecurity is always undermining satisfaction
Job insecurity has significantly increased and with it has come reduced opportunities to undertake certain work-related activities that strengthen my work, e.g. able to attend professional development opportunities. This is due to rising costs and increased debt for my organisation.
I work in mental health. I am concerned at the level of burnout I see in those around me, the growing number of vacancies that cannot be filled, the negative impacts this is having on those of us who are left and what all of this means for New Zealanders generally, given our country’s mental health crisis is steadily increasing
I am past retirement age and finding keeping up with work expectations is becoming harder. I would like to retire but cannot afford to do so, and I am not sure whether I will ever be in a position to retire.
Only pay rise is when minimum wage goes up
A recently negotiated collective agreement has led to a slowing of the erosion of our pay and conditions however our pay is still going backwards in real terms
I work in Australia under a collective agreement It’s not perfect and has been degraded over the last 5 years But still miles ahead of what we see in NZ
I think I’m doing better than a lot of people, even though things aren’t great for me. I’m really frightened about the changes that are happening, they are actively disempowering me and driving us back into low wage economy status, undoing all the steps that were being taken towards trying to encourage employers to invest to improve our productivity. It’s so discouraging.
Q: Do you have any further comments about the impact the new Government will have on work issues?
While it is still early days for this government, it appears that all the power has been given to the employer. The 90 day trial period supports those employers that have weak employment processes in place. It is like if they don’t know the calibre of the prospective new employee, then why hire in the first place.
I wish they would focus less on culture wars and more on equity across the board. E.g. the research on UBI has been clear for years. Comments like “bottom-feeders” worry me hugely; there’s no compassion or empathy for anyone less fortunate.
It feels like they are old school and not Interested in future proofing Aotearoa for the future generations!
I feel that ACT and NZF are playing a race card and pandering to a racist right ring and Christopher Luxon lacks the backbone to bite back
I am horrified at the changes they’ve made under urgency for the first 100 days. Abolishing fair pay agreements indicates they don’t care about workers, they’re trying to start a race war with their te Tiriti changes and I’m appalled at their racism. Tax cuts funded with smoking law repeals, are horrifying and will cost a lot of New Zealanders a lot of life, money and health in the long run.
We were all lied to regarding tax cuts. They are only going to landlords. Also axing smoke free legislation and opening up fossil fuel drilling shows that the Govt is bereft of principles and essentially corrupt
Yet again this government is so out of touch with working people
I think they don’t really care about low to middle income earners
Repeal of fair pay agreements is a horrible step backwards. It allows the most vulnerable workers to be exploited by bad faith employers.
Still waiting for the policies being rushed through parliament which will actually put more money in people’s back pockets.
They seem to be undoing a lot of the progress made over the last few years, in regard to worker’s rights and the environment.
To be fair it is early days, but it’s hard to see how the government’s proposals will actually help with the cost of living or improve the quality of life for regular New Zealanders. The culture war type rhetoric against Māori, Te Tiriti o Waitangi, and the LGBT community seem to be a distraction from this government’s lack of helpful policies for regular New Zealanders.
This is not the government for Aotearoa. It is a government for big business and corporations.
This Government, in a very short time, has proven to be the most divisive elected in New Zealand history. I fear for our nation’s future social cohesion and economic wellbeing.
They all used smoke and mirrors to cover their true agenda during election campaigning. They all pretended to be there for Joe Average, so far nothing in their 100 day plan is there to help Joe Average. The first 100 days goes to the already wealthy, or to undo years of progress.
Overall the new government has been unable to give many concrete answers as to their plans and the motivation behind them as well seemingly only enacting changes that will lead to worse outcomes for those less privileged and better outcomes for those already more privileged
It seems the coalition has delivered the worst of all 3 parties’ policies. There does not appear to be any “moderating” influence from NZFirst. Feels like we’re heading back to the dark ages where the privileged continue to reap benefits and unique place and contribution of tangata whenua is ignored or abused. So very sad.
I am worried for people already struggling in our community and fear it will only get worst under this government
A lot of short sighted decisions which will increase current cost of living crisis, not solve anything for ordinary New Zealanders
I am extremely concerned about the changes they are making to workers’ rights, and also about their highly racist policies that are sending us so far backwards in terms of the progress we have made in recent years.
Commentary and notes on methodology
The sixth annual mood of the workforce survey was conducted between 3 January and 10 January, 2024 and had 1,990 recipients.
The survey is based on people who respond to an email to a random selection of 50,000 people from the CTU’s Together email list. This is a database of people we have had contact with over the last seven years via petitions, parliamentary submission calls, community events, and fundraising for community causes. They have given previous permission to be contacted by the CTU.
Reports from previous year’s surveys are available below:
The mini-Budget released by the Coalition Government today leaves many questions unanswered, said CTU Economist Craig Renney. “Despite the Incoming Government calling for clarity on existing spending, the mini-Budget today does not provide any analysis of the tax cut or spending programme of the incoming Government.
“The Mini-Budget doesn’t provide any new analysis of the spending cuts being required of government departments, nor how they are to be achieved. It doesn’t provide a fiscal strategy. In short, New Zealanders will have to wait until May 2024 to understand what is being changed.
“The government is claiming that it is cutting $1.5 billion of spending per year. Of that $1.5 billion, a third are savings commitments made by the previous government. A further $0.4bn are cuts which have already been committed to funding Early Childcare support. So only $0.6bn of the $1.5bn is new. $1bn of immediate cuts is money that comes from reductions to the transport budget – which is paid for by fuel taxes.
“The Government has claimed that it is delivering fiscal responsibility, but in fact it has taken money from climate change to deliver tax cuts for landlords and it’s taking $676m from welfare payments.
“How will that help deliver the legislated child poverty targets, or make the cost of living easier for low income families?
“The announcements today leave much still to be explained. There appears to still be a debate within government about when key planks of the tax cut package will be delivered.
“There is nothing in this package to help with the cost of living. New Zealanders have to wait to find out what the plan is. The Government should be making this clear today.”
All new workers will soon to be vulnerable to being fired at will with no reason following the Government’s reckless haste to pass under urgency an extension to 90 day trials to all businesses.
The Employment Relations (Trial Periods) Amendment Bill is poised to be passed today without the possibility of select committee scrutiny and in the face of clear evidence from officials that the trials have no economic benefit.
“Fundamental protections for workers are again being removed with indecent haste by a Government whose values are clear to all,” said Council of Trade Unions President Richard Wagstaff.
“The right to fire at will and without reason was limited to businesses employing fewer than 20 workers, but now all new workers will be vulnerable to exploitation.
“This Government promised evidence-based policy, but again this is just bluster given Treasury showed in 2017 the 90-day trial policy did not work,”
Treasury commissioned Motu which found ‘no evidence that the ability to use trial periods significantly increases firms’ overall hiring’. It also said there was ‘no evidence that the policy increased the probability that a new hire by a firm was a disadvantaged jobseeker for a range of definitions of disadvantaged jobseeker: beneficiaries, jobseeker beneficiaries, non-workers, recent migrants, youths under 25 years old, Māori or Pasifika under 25 years old, or education leavers. This result holds both over the economy as a whole, and in the high-use industries’.
Richard Wagstaff said; “What we do know is that the policy leads to job insecurity for new workers, who for their first three months of work know they can be fired for any reason (or none at all) and with no explanation.
“This flies in the face of basic natural justice and leaves new workers especially vulnerable and in a very weak position to challenge their employers every whim, without risking their job.
“This Government is making a habit of this. Just last week it ignored advice from officials that axing Fair Pay Agreements deprived women, Māori, Pasifika and the disabled hundreds of millions of dollars in potential pay rises. It is again letting flawed free market ideology dictate policy.
“There’s simply no gain – only pain in trial periods. It is just a political payoff to the business lobby that is allergic to workers’ rights and collective bargaining and now has the ear of the Government.
“Removing basic legal rights should be an anathema in a modern democratic society and can’t be justified by serving business interests by making it cheaper and easier to fire workers.
“Together with the rollback of Fair Pay Agreements, and risks to reforms to contracting, there is a compelling case that this reform is simply designed to create a more insecure, compliant, and less well-organised workforce,” said Richard Wagstaff.
The Government is due to decide how much it will increase the minimum wage at Cabinet today.
“Today’s decision by Cabinet on how much it will increase the minimum wage will be another early test for this Government, providing another telling insight into the importance it places on supporting working kiwis,” said Richard Wagstaff, NZCTU President.
“Ahead of the election, the coalition parties were all over the place on this issue – ACT was against any increases and National was muted.
“We know that the numbers of Māori, women, Pacific Peoples, disabled and other disadvantaged groups are over-represented among minimum wage earners. An increase to the rate makes a real difference to people on the poverty line.
“These are also the very people doing it tough in a cost of living crisis and this Government has made it a priority to support people through these challenging times.
“In the absence of FPAs, large scale collective bargaining, the minimum wage is assuming greater and greater importance over time, as more and more Kiwis are employed on it.”
The previous government consistently increased the minimum wage, bringing it up from $15.75 in 2017 to $22.70 in 2023, a 44% increase overall.
In 2023, a full-time minimum wage earner is getting $278 more before tax than they were in 2017.
Treasury and the Reserve Bank are projecting that inflation will be 4.3% for the year ending 31 March 2024. This means the minimum wage needs to increase to at least $23.67 to ensure that minimum wage earners do not take a pay cut in real terms.
“We urge the Government to have a heart and do the right thing by those earning the least and maintain the momentum of the last few years – now more than ever that should be a priority,” said Richard Wagstaff.
New analysis from the CTU shows the cost of the Government’s tax cuts for landlords will be many times more than the investment required for the much-needed Cook Strait ferry upgrade.
This shows the Government making a clear choice to back unproductive investment in property over investment in critical infrastructure that would help grow our economy and support business, says CTU Economist Craig Renney.
“National says the Inter-island Resilient Connection project is too expensive, but our analysis shows that, over the lifetime of the assets, the cost is only around $11 per New Zealander a year in today’s dollars. Contrast that to the landlord tax cuts, which would cost $139 per Kiwi each year. Landlord tax cuts are more than 12 times the cost of the Interislander project.
“This Government was elected with the slogan ‘get our country back on track’ – yet one of its first acts is to derail a vital transport link between the North and South islands, which carries $14bn of freight and 850,000 people each year.
MUNZ National Secretary Craig Harrison says “The upgrade of the Cook Strait ferries is not an option for New Zealand, it has to be done. The regular technical problems experienced by the ferries are a result of using end-of-life vessels in a challenging maritime environment.
“The failure to modernise this essential infrastructure leaves New Zealand exposed to further delays, service outages, expense for industry, and serious safety issues for crew and passengers. The Government’s decision sets back New Zealand’s transport resilience and will set New Zealand back.”
RMTU General Secretary Todd Valster says “The Government has stated they want KiwiRail to provide a safe and resilient service but that conflicts with aging ferries due for replacement. KiwiRail has had rail-enabled ferries since 1962. Ferries that are rail enabled allow rail freight to be moved without freight having to come off rail wagons to travel the Cook Strait. Rail-enabled ferries are safer and more efficient to load and unload. The proposed new ferries would have produced 40% fewer emissions, and the hull is designed to have a lower impact on the marine environment”.
Craig Renney says “This is a government that claims it is economically responsible while it guts New Zealand’s freight capacity and spends billions on unproductive tax cuts for property speculators. For the future prosperity of our nation, New Zealanders need to be able to move themselves and their goods around the country in ways that get easier over time, not harder. The Government should urgently reverse this mistaken decision at the mini-Budget this week.
CTU analysis
We have modelled the costs associated with the $3bn programme over a 50-year average life of the assets, using a 4% interest rate which is above the long-run average for long-term New Zealand Government bonds. This conservative analysis makes no assessment of the likely economic benefits of more regular, safe, and reliable crossings, which is likely to be in the range of many billions in the period. Nor does it make any assessment of the cost of leasing the replacement smaller ferries over the same period, which again is likely to be in the low billions.
This assessment also makes no analysis of the environmental costs of taking freight off rail, the extra roading costs associated with more trucking, nor the continuing use of less efficient ferries that produce higher emissions. All of which are likely to be very significant.
We have also examined the cost of restoring interest deductions for landlords over the same period. We have not assumed any new landlords or any new growth in the rental market, simply that the cost of the policy rises with inflation. This is very likely to be an underestimate of the real cost of the tax cuts.
We used the base case population forecasts from Statistics New Zealand.
Nominally, the Inter-island Resilient Connection would cost on average $19.55 per person, per year over its lifetime. Adjusting for inflation over the fifty-year period, this would fall to an average $11.12 per person, per year in 2025 dollars. The landlord tax cut costs an average of $232 per person, per year before inflation adjustment. After adjustment, each New Zealander would be paying $139 per person, per year in 2025 dollars.
GDP numbers provided by Stats NZ today demonstrated that the size of the economy fell by 0.3% in September 2023.
NZCTU Economist Craig Renney said “this data is much weaker than had been expected by commentators, and should give decision-makers food for thought. If growth is weakening, additional interest rate increases should be even further from consideration. The coalition Government should also be making sure that it has support for workers and communities ready should unemployment rise quickly as well.
“This data shows worrying signs that important parts of the economy have stalled. Manufacturing (-3.4%), mining (-1.8%), food production (-2.4%), construction (-1.7%), and transportation (-4.5%) all saw significant falls in output this quarter. Goods-producing industries saw their output fall 2.6%.” GDP per capita fell 0.9% in September, demonstrating that GDP figures may have been worse were it not for the impact of population growth.
“Now is not the time for tax cuts that will simply stoke house prices in the housing market and add little value to the real economy. Instead, government can act to counterbalance the impact of this downturn through investment in tackling our chronic infrastructure gap. That would not only have the benefit of making New Zealand a better place to live, it would also support future economic growth.
“GDP data shows weakness in both the consumer pockets, with household spending being down 0.6%. In particular, spending on durable goods (like household appliances) fell by 3.2%.
“This is indicative of households feeling worried about the future, particularly about their employment security. The government should be showing how it is going to support economic demand over the next few months, rather than taking it away through cuts and removing employment protections.”
The New Zealand Council of Trade Unions says a dark cloud has descended on New Zealand as the Fair Pay Agreement legislation begun to be repealed under urgency.
NZCTU President Richard Wagstaff said the move is going to hurt hundreds of thousands of New Zealand’s most vulnerable workers.
“Not only will repealing FPAs hurt workers, but it could also violate our obligations under our trade agreements with other countries.”
Yesterday, the NZCTU hosted a day of action against the move, presenting the ‘Keep Fair Pay Agreements’ petition that has gathered nearly 15,000 signatures to MPs from the Labour and Green Parties.
The NZCTU also hosted a ‘Stand Up for Fair Pay’ event at Parliament, with working people and union leaders from across the country.
Wagstaff said Fair Pay Agreements represented the biggest step forward for workers in a generation.
“We are not going to sit on our hands while the Government takes this away. It is very disappointing that they continued to ignore advice from its own officials around Fair Pay Agreements.
“The most vulnerable parts of our workforce – women, Māori, Pasifika, and disabled workers are going to be disproportionately impacted by this move.
Wagstaff said the NZCTU action was followed by the ‘Our Future – Up In Smoke’ rally organised by the Association of Salaried Medical Specialists.
“This Government is off to a horrific start. Every policy they have up for repeal will do untold damage to marginalised Kiwis. We deserve better.”
Private control of the electricity industry will significantly raise the cost of NZ’s recent commitment to triple renewable power generation by 2050, according to a new report co-authored by FIRST Union, the NZCTU and 350 Aotearoa.
The report, which updates last year’s Generating Scarcity report, argues that for every dollar the four gentailers invest in new renewable capacity, $2.41 is paid out to shareholders in dividends.
“We now have a decade of data to show us the impact of privatisation on the electricity industry.
“Despite earning $7.6 billion in net profit after tax, the industry has paid out $10.8 billion to shareholders – including excess dividends of $4.2 billion – over the decade. During this time, national generating capacity has increased by only one percent”, said FIRST Union Researcher and Policy Analyst Edward Miller.
“The Key Government’s decision to partially privatise Genesis, Mercury and Meridian has put shareholders ahead of people and planet. In 2023 alone, gentailers distributed dividends of $1.1 billion off only $521 million in net profit after tax, an excess dividend of $638 million,” said Miller.
CTU Economist and Policy Director Craig Renney said it is notable that this report follows the release of a government-commissioned report on energy hardship that suggested that 110,000 households could not afford to keep their homes adequately warm.”
“Our report suggests that consumers, including low-income households – are providing a windfall to energy company shareholders. We support the commitment to triple renewable energy production, but we need a policy framework to ensure these costs aren’t pushed onto working people while shareholders continue to make record profits”, said Renney.
Executive Director of 350 Aotearoa Alva Feldmeier says “By choosing to prioritise dividends, the gentailers have largely delayed action to lower carbon emissions, lower bills for households and support greater energy freedom. Government coffers have been filling up from gentailer dividends, earned by keeping power prices high and fossil fuels on life support. It’s climate hypocrisy, plain and simple.”
“We’ve been trapped in a toxic cycle whereby gentailers have a perverse incentive to keep fossil fuels in the grid which hikes power prices, enables them to make record profits, and distribute excess dividends which slows the development of new renewables. We will not see an end to this unless the incoming Government sets the right levers and uses its power as a majority shareholder in the electricity generation market,” said Feldmeier.
“There is large interest among communities in Aotearoa to contribute in meaningful ways to climate change mitigation. 350 Aotearoa calls for expanding public participation in the renewable energy transition and the broader functioning of the energy sector,” expands Feldmeier.
The announced disestablishment of Te Pūkenga shows the Government has no plan for vocational education, says the New Zealand Council of Trade Unions.
NZCTU President Richard Wagstaff said he was deeply concerned about the impact that another change process will have on the provision of vocational education to the workforce.
“The government’s approach to change is to terminate existing arrangements without producing a plan for what will replace it, leaving everyone in the lurch and without any certainty. The consequences of taking this approach at Te Pūkenga are enormous.”
The disestablishment of Te Pūkenga is going to mean several more years of uncertainty in this sector, threatening continuity of vocational training and adding enormous stress for an already exhausted Te Pūkenga staff.
“This is another example of the new government’s absence of vision and its disregard for workforce development and workers’ wellbeing.”
Wagstaff said the Government is underestimating how costly this change process will be, in terms of losing momentum to service delivery, impact on learners, impact on current staff, and financially.
“The new Government has talked repeatedly about being careful with taxpayer money, and about doing evidence-based policy. Yet it is embarking on an uncosted and unplanned restructure of the vocational education sector without providing any evidence as to how this will improve outcomes for learners. This is the very opposite of responsible government.”
Wagstaff said that the Minister for Tertiary Education and Skills Penny Simmonds needs to front up with a plan.
“The NZCTU invites Minister Simmonds to articulate her vision for vocational education, and to explain how the disestablishment of Te Pūkenga will deliver this vision. We also invite the Minister to do some homework and figure out how much this is all going to cost.”
