“The NZCTU was categorically not consulted on repealing Fair Pay Agreements by the new Minister.
“It is very concerning that the Minister of Workplace Relations doesn’t understand what consultation is in practice, considering the importance of this concept for the portfolio.”
Wagstaff said that the public announcement of FPAs being repealed before Christmas was made at the same time that the NZCTU first met with the Minister.
“We are unsure if the timing of the meeting was deliberate, and whether it was done so she could pretend that consultation did happen.
“Genuine consultation cannot occur if a decision has already been reached by the Minister.
“At no point did the Minister say she wanted to consult on FPAs. She asked us ‘to explain what an FPA was’ and ‘to give her an update on our thinking on where they are up to’.
“She did suggest she was weighing things up, but we were not invited to brief her properly on FPAs as part of a consultation Cabinet paper process.
“At no point were alternate options canvassed, nor was the government’s position, timetable, or the possible consequences of the end of FPAs discussed.”
Wagstaff said Minister van Velden invited him to a meeting after receiving the NZCTU’s written Briefing to the Incoming Government, and that during the half hour meeting, Fair Pay Agreements were discussed for ten minutes.
Wagstaff said, “We want to have a constructive relationship with this Government, in the way we have been able to do with all previous Governments. This is not the start we would’ve hoped for.”
Unions are heartened by the response to a petition to keep Fair Pay Agreements, which has now reached well over 10,000 signatures.
NZCTU President Richard Wagstaff said it was a sign of how popular the new legislation was amongst workers.
“We are seeing working people standing together to protect FPAs. Workers have been doing it tough during the cost-of-living crisis, and the single most effective protection we have is Fair Pay Agreements.
“FPAs could revolutionise entire industries, lifting pay, conditions, and access to training. We also believe the new laws will stop the brain drain to places like Australia, which have similar systems to FPAs in place.
“This is a game-changer for hundreds of thousands of Kiwi workers.”
The petition milestone was reached after Newshub yesterday revealed that the Government was ignoring the negative impacts of repealing Fair Pay Agreements, and the advice of its own officials. That advice showed the repeal would disproportionately affect already marginalised workers, such women, disabled workers, Māori, and Pasifika.
FPAs have already been initiated in multiple low-paying industries, including bus driving, cleaning, security, hospitality, supermarkets, early childhood education, and port work.
Wagstaff said, “Any Government whose first move is to strip the promise of a better working life away from hundreds of thousands of people is profoundly out of touch.
“They should be listening to the people who would benefit from an FPA, and to the thousands who want to see FPAs protected.”
A cabinet consultation paper provided to the New Zealand Council of Trade Unions by Newshub today, shows the incoming Government is disregarding the negative impact of repealing Fair Pay Agreements, and the advice of their own officials.
NZCTU President Richard Wagstaff said the paper shows the Government ignoring the impact on workers in a cost-of-living crisis and reflected poorly on Christopher Luxon’s management of the policy.
“This demonstrates the profoundly out of touch priorities Christopher Luxon has for New Zealand. Alnd already, it seems like he’s lost control of his cabinet.
“This Government has made a choice to prioritise cutting pay and conditions for hundreds of thousands of vulnerable Kiwi workers, by repealing the FPA Act.”
The paper outlines the process by which Fair Pay Agreements would be repealed. In one section, it outlined who would benefit from improvements to working conditions.
“Given [women, Māori, Pacific people, and young people] are disproportionately represented in workforces where there are lower employment terms, they could have disproportionately benefited from any improved terms obtained by an FPA.”
Wagstaff said Luxon was ignoring the evidence provided by officials about how damaging this move will be.
“By pushing forward with this, Luxon is taking money directly from the pockets of hundreds of thousands of hardworking Kiwis. This comes after last week, where the NZCTU discovered that the Government was prioritising paying out $3 billion for landlords.”
The paper also states that the NZCTU has been consulted on this process. Wagstaff said no proper consultation had taken place with the NZCTU.
“After campaigning to tackle the cost-of-living crisis, one of the first actions of this Government is to make it harder for many workers to get ahead, and to get the protections they deserve. It just proves what we said all along during the campaign that Christopher Luxon is out of touch.”
New analysis has shown the cost of interest deductibility changes will put a further $1 billion in the pockets of landlords, said NZCTU Economist and Director of Policy Craig Renney.
“We have looked at the details of the National Party & ACT coalition agreement, and our investigation demonstrates that the cost of returning interest deductibility will rise from $2.1 billion to $3 billion. Once behavioural impacts are added, this figure would likely exceed $1bn across the forecast period. This is a direct effect of the changes to the policy which bring in interest deductibility earlier and faster than previously suggested”.
This is set out in table 1 below:
Table 1: Mortgage Interest Deductibility
Programme
2023/24
2024/25
2025/26
2026/27
2027/28
Current law
50%
25%
0%
0%
0%
National Party Proposal
50%
50%
75%
100%
100%
Coalition Agreement
60%
80%
100%
100%
100%
Craig Renney said, “Crucially, this change would be retrospective – meaning that landlords would be able to claim 60% interest deductibility from 1 April 2023. That means that they will be receiving a rebate on payments already made. Landlords will be cut a cheque from government, but tenants will not benefit from the rental payments they have already made. That’s hugely unfair and simply rewards landlords for nothing.
“This $1 billion additional cost will pile further pressure on a budget that already is having to cope with the $3 billion loss of the foreign buyer tax. This is money that will need to be found from further deep cuts to public services, more debt, or higher taxes – such as those on the new smokers National is hoping pick up the habit. It’s an enormous and unnecessary expense. This is money that could be used to support free prescriptions or half-price public transport, both of which are being scrapped.”
These numbers have been independently assessed by Terry Baucher, Tax Specialist at Baucher Consulting.
Baucher said “It is a highly unusual move to make retrospective tax changes like this. I can’t recall a tax measure like this being brought in after an election with retrospective effect.”
Renney said, “Nobody voted for this change. ACT’s manifesto had Interest rate deductibility changes starting in 2024, as did the National Party Manifesto. There is no mandate for this change. These changes are likely to put further pressure on the housing market and will advantage landlords against first home buyers. There is no economic reason why you would make this change in the way they have.
“Budgets are about choices, and we are going to have a mini-budget in December 2024. The incoming government could have used this money to pay the pay parity bill for Early Childhood teachers, which would cost just a quarter of this cost-blow out. Instead, landlords are getting an early Christmas present while tenants and the users of public services get austerity and cuts.
“National and ACT should abandon this bad plan and instead use the $3 billion to invest in communities and public services across New Zealand. The value of National’s tax package to middle and low-income households has already been weakened with the loss of working-for-families tax credits. This change simply skews the tax advantages further to those with higher incomes.”
CTU analysis shows that over the forecast period to 2027/28 (the same period used by National in their Back Pocket Boost document) mortgage interest deductibility was due to bring in $3.516 billion in revenue.
With the changes National had proposed, this fell to $1.094 billion – a fall of $2.42 billion. This fall is different from the $2.1 billion set out in the Back Packet Boost report because it uses updated data from IRD (produced in November 2022) which revised the estimates of income.
When the additional changes factored in from the changes set out in the coalition agreement are provided, then the income generated falls to $512 million – a fall of $3 billion. This means that the deal has added a further $600 million to the cost of the changes.
Example
John owns one rental property with a fixed mortgage rate, earning the median rental payment of $580 a week. He earns $80,000 a year in income from his other employment. This gives him a combined income of $110,160.
Over the five-year period from April 2023, the coalition agreement proposals would mean that John had $411,617 in taxable income, against $524,709 on current law. This would mean that they pay $40,385 less in tax over 5 years, before any additional impact of changing the threshold rates for income tax.
The difference between the coalition deal and the National Party proposal adds a further $35 a week in benefit for John.
John’s tenant sees no benefit from these proposals.
The New Zealand Council of Trade Unions has today provided its briefing for the incoming government.
NZCTU President Richard Wagstaff said since 2017, the country has made significant progress on a range of economic and social issues.
“Under the last Government, many measures improved. Child poverty has fallen. Unemployment reached record lows. The minimum wage increased by 44 percent. Benefits were increased and linked to wages rather than inflation. Paid parental leave was extended to 26 weeks, and sick leave was doubled. All of these changes helped to deliver a more equitable Aotearoa and helped to ensure that some of the poorest New Zealanders had a real boost in their quality of life. We hope that the progress made to date continues under this new government.
“New Zealand needs to become the best country in the world to be a worker, by creating good work, and building a more productive, sustainable, and inclusive economy.”
To continue making progress the incoming government should prioritise action in areas such as:
Work to eliminate the barriers that disadvantage kaimahi Māori
Increasing the minimum wage to the living wage
Continue working to improve pay equity
Reform the Holidays Act
Criminalising wage theft
Introduce corporate manslaughter legislation
Eliminate migrant labour exploitation
Ratify all International Labour Organization fundamental conventions
Increase the capacity of New Zealand’s labour and health and safety regulators
Support vocational education and workforce development
Continue to plan for just transitions
Rebalancing the tax system
Increase the supply of affordable housing
Establish a Ministry of Green Works to close our infrastructure gap
Improve competition in key sectors
“There are also a range of areas where the CTU believes that the incoming governments agenda could do with fresh ideas. Reversing progress on honouring Te Tiriti o Waitangi; repealing the Fair Pay Agreements Act; reinstating 90-day trials for all businesses; continuing to misclassify employees as contractors; stopping further work on social income insurance; cutting public sector funding; and repealing the Reserve Bank’s employment mandate are not going to help.
“If implemented, these policies will take New Zealand backwards. They represent outdated ideas that have been proven not to work.
“This briefing is just the start of the work that the incoming government will need to complete. There is much to do, and every day that action is delayed in these areas real workers and families suffer across New Zealand. The NZCTU wants to engage with government urgently on these issues and more.
“We passionately believe in making New Zealand the best country in the world to be a worker through the creation of good work. Regardless of the differences between the trade union movement and the political parties that comprise the new government, we stand ready to work constructively with government, delivering positive policies that will make this aspiration a reality.”
November 26 marks the day women effectively begin working for free, say the New Zealand Council of Trade Unions.
NZCTU National Secretary Melissa Ansell-Bridges said that despite continued wage growth and low unemployment, the pay gap for women remains unacceptable.
“The labour market data released by Statistics NZ shows that we still have a lot of progress to make. The statistics are even worse when ethnicity is factored in. The incoming government must prioritise settling pay equity settlements to close these gaps.”
NZEI National Secretary Stephanie Mills said fair pay for early childhood teachers must be recognised and funded with urgency.
“Women in education have fought over decades to have their mahi and contribution to the learning and growth of our youngest citizens recognised and properly valued. We’ve seen significant pay equity settlements for school support staff, but there is still work to do. The settlement of more than 70 percent pay increases for kaiārahi i te reo shows the even more significant under-valuation of Māori and Pasifika women. “
Melissa Woolley, Assistant Secretary for the Public Service Association Te Pūkenga Here Tikanga Mahi said it was essential that progress continued to be made.
“We must keep up the momentum – thousands of care and support workers are already seeing their pay being eroded because of the failure to progress a fresh pay equity deal. They do a critical job of supporting people every day so they can live with dignity.
“Thousands of community social workers are also facing long delays just getting paid their pay equity payments that have already been agreed. So, our message to the incoming government is that in a cost-of-living crisis it is even more important that there is no backsliding. Let’s keep making progress.”
New Zealand Nurses Organisation President Anne Daniels said the health workforce were trying to reverse decades of historic sexism.
“It has been 130 years since women received the vote in New Zealand, but in terms of pay we are still treated like second class citizens. It is time for this inequity to stop; an inequity especially felt by Māori and Pasifika women.”
The coalition agreements set out by the incoming government are nothing less than an attack on working Kiwis, their rights, and their needs said the New Zealand Council of Trade Unions.
NZCTU President Richard Wagstaff said, “The programme provided today shows that incoming Government is out of touch with the priorities of New Zealanders, and the challenges that they face.”
“It is telling that one of the first areas of work they have highlighted for action is the repeal of Fair Pay Agreements, and the reintroduction of 90-day trials. Both measures are designed to reduce security for workers, and to make it easier to fire employees.
“At a time of economic hardship for many in a cost-of-living crisis, this is simply appalling and insensitive.
“We are alarmed to hear that they wish to revise already weak health and safety regulations, especially in light of the high fatalities and serious injuries experienced in the workplace today. Removing the ability to challenge your employment status as a contractor will also mean that more workers face discrimination and exploitation.
“National’s tax plan now makes even less fiscal sense given that significant parts of it have been withdrawn due to the loss of the foreign buyers’ tax. This puts a $3 billion gap in their plans which is not addressed in the agreements. We are highly concerned that they will fill the gap with even deeper cuts to essential public services like schools and hospitals. The government should provide transparency urgently as to how that gap will be filled.
“The incoming Government makes clear in its documents that public services will be stripped further and faster than previously thought. At the same time new commitments are made for health and education without any new funding. This will mean deeper cuts to services all Kiwis rely upon. The commitment to part privatising elements of health and education should particularly concern New Zealanders.
“All New Zealanders should be deeply concerned at the attacks on Māori, highlighted by the proposals by to remove co-governance and bodies such as the Māori Health Authority. The proposal to Introduce a Treaty Principles Bill risks damaging community relations in New Zealand, and does nothing to support Māori. The government is a Treaty partner and should recognise and honour its agreements to the Treaty, rather than abdicate its responsibilities.
“These proposals confirm the worst fears of the New Zealand public about the incoming government. This programme will damage the lives of many middle- and low-income Kiwis and will set back progress on essential issues. Now is the time for all organisations around Aotearoa to unite to challenge this dangerous and damaging direction for the country.”
The NZCTU strongly supports unions, including the Public Service Association Te Pūkenga Here Tikanga Mahi, E tū, National Union of Public Employees, and New Zealand Nurses Organisation Tōpūtanga Tapuhi Kaitiaki o Aotearoa, in filing a second pay equity claim for 65,000 care and support workers.
“This claim addresses ongoing underpayment fuelled by gender-based discrimination in a sector where a pay equity settlement is long overdue.
“It is now urgent that employers and government support this claim process to a speedy conclusion, with the Care and Support Settlement Act set to expire on December 31,” said Melissa Ansell-Bridges, NZCTU Secretary.
“This highly skilled and essential workforce needs proper recognition for the work they do.
“The claim covers workers in home-based support services, aged residential care, mental health, addictions, and disability support services. It follows unacceptable delays in the original claim.
“Workers have been left waiting for far too long for that injustice to be rectified, going to work every day knowing they’re paid less than what they’re worth.”
As the Care and Support Workers (Pay Equity) Settlement Act 2017 approaches its expiration, the NZCTU urges the incoming Government to intervention to ensure fair wages for this dedicated workforce.
2pm on Friday, November 3 will go down as one of the moments in New Zealand’s political history reminiscent of Sliding Doors. Up until that point, National and Act were on track to form a government with very similar ideological and fiscal aims. Upfront tax cuts would be financed by reduced investment in public services. There would be a greater role for the market in the public sphere and a more relaxed set of labour regulations. After 2pm, New Zealand First became a required partner. That makes life much harder for National and Act, as it brings a very different political perspective and a different set of financial requirements.
The centrepiece of National’s election campaign was $14.6 billion of income and landlord tax cuts. Some $3b of that was financed by a new tax on overseas property buyers. That’s now all but certainly gone, as it is unthinkable that NZ First would tolerate the sale of Kiwi houses to overseas buyers. Filling the gap left by the loss of that new tax would require a doubling of the indicated cuts to the public service – to 17 per cent.
That’s not feasible either, politically or practically. So, the promise to return a range of tax benefits for landlords will probably have to go. In a cost of living crisis, providing these made little economic sense to begin with. They put money in the pockets of those who have already done really well over the past two decades, yet the cuts deliver small (if any) value to the taxpayer or the economy.
Then there are other issues that need to be considered. National’s tax cut package also relies on the delivery of $2.1b of savings from ending building depreciation for commercial properties. Labour campaigned on this too. But NZ First has campaigned repeatedly on the need to provide additional depreciation support – particularly for small businesses. There’s a big cost to that. That $2.1b in savings starts to look like a tempting target for a policy that would be welcomed by the business community and would improve our chronic business investment problem.
The loss of both foreign buyers and commercial building depreciation would put a cumulative $5.1b hole in the tax plan. However, the coalition negotiations are likely to throw up other areas where the parties differ. Both National and Act have campaigned on removing what remains of regional growth funding within the Ministry of Business, Innovation and Employment. But that is likely to be an anathema to NZ First, who have championed the creation of a new Regional Productivity Growth Fund. If it were even half the size of the previous Provincial Growth Fund, that would require funding of $2b across the forecast period.
Funding this could come from the closure of the Climate Emergency Response Fund – which generates $2.3b according to National, and is to be used for tax cuts. Instead, it could be used to deliver energy security programmes across New Zealand. Fuel security is a key policy for NZ First, and it would also have the benefit of supporting job security and greater economic security in regions. But the gap in the plan is now $7.4b.
Taking that out of the tax plan would leave $7.2b remaining. That’s not enough to deliver even Simon Bridges’ policy of moving tax brackets to reflect inflation – it’s $1.8b short. And that’s before Treasury has adjusted the figures to account for faster-than-anticipated wage growth. This could be found from the remaining allowances, but in the first Budget, that would likely leave only $600 million for all new spending. Just keeping the lights on in education will consume all of that, something that National has promised repeatedly on the campaign trail. After that, there’s nothing left.
That also means the benefits of National’s tax cuts are now seriously diminished. A fulltime minimum wage worker would get $2.15 a week – not $12 a week. The support for families with early childhood education costs would be gone. The number of families getting $250 a fortnight in support from the Government wouldn’t be 3000. It would be zero.
All of this shows the challenges facing the three parties in pulling together a package that allows them to work together. What it also suggests is that rather than rushing headlong into tax and other changes at a December mini-Budget, some caution and restraint would be appropriate. The parties could spend a little more time working out what is actually needed, and how they will deliver that, without borrowing extra for tax cuts.
If you want an example of the headlong approach in action, look no further than the UK and the problems the Liz Truss government faced. It famously lasted less time than it took for an iceberg lettuce to wilt. Rushing to deliver tax cuts now for ideological purposes is likely to haunt all involved and will likely require painful changes in the future. The title track of the movie Sliding Doors is called Turn Back Time. The incoming Finance Minister might well be whistling that tune if they can’t get it right over the next few weeks.
News of WorkSafe’s confirmed organisational changes should be seen as a stark warning about the impact of cuts to public services says the New Zealand Council of Trade Unions.
“It beggars belief that WorkSafe will do a better job with such a significant decrease to staffing resource,” said NZCTU Secretary Melissa Ansell-Bridges.
“This will have direct consequences for businesses and communities – a slimmed down WorkSafe means it will not be able to do the same job of keeping working people safe at work”.
“Our track record of workplace deaths and injuries is not something to be proud of. Axing 113 jobs at the health and safety regulator isn’t the right decision for the health and safety system in New Zealand.”
71 workers didn’t return home from work between June 2022 and June 2023. That represents 71 parents, children, friends and whānau members that were killed on the job in New Zealand workplaces. 71 families and communities devastated by these deaths. A further 750 – 900 workers died during this period from the impact of work-related occupational diseases such as asbestosis and cancers.
“This means that on average, one worker is being killed every week at work, and each week between 15-18 workers on average will die from health-related impacts of their work.
“It is difficult to comprehend how further slashing WorkSafe will improve this alarming picture. The data speaks for itself, more resource is needed, not less.
“Maintaining the level of inspectors is important but that is only one of WorkSafe’s core functions and their ability to be an effective inspectorate is supported by other important functions in the organisation which are now being lost.
“The NZCTU will continue to advocate for WorkSafe to be properly resourced and calls on the incoming Government to provide WorkSafe with sufficient resources to meet all its legislative functions. Failure to do this, puts working peoples’ lives at risk.
“These cuts to WorkSafe provide a bleak picture of the reality of the incoming Government’s proposed deep and savage cuts to the wider public service for working New Zealanders. It means poorer services that they, and their whānau, rely on every day.”