Council of Trade Unions president Helen Kelly.
Opinion
Don Brash's 2025 Taskforce made a range of recommendations about how our economy could catch up with Australia.
Its ideas, which included slashing Government spending met with widespread condemnation.
Helen Kelly, the New Zealand Council of Trade Unions president is one of a range of New Zealanders approached by nzherald.co.nz to share their thoughts on how we can shorten the gap.
Helen Kelly: New Zealand Council of Trade Unions president:
Catching up with Australia is not simply about higher GDP per capita or productivity. Those things don't automatically translate into higher pay or improved quality of life -with improved health, less crime and a better environment.
Australia kept a fairer
employment relations system and maintained industry wage setting while New Zealand deregulated wage bargaining.
During the nine years of the Employment Contracts Act, New Zealand's average wage rose only 7 per cent in real terms (by another measure the real wage actually fell) - while productivity rose 26 per cent. Employers used low wages to avoid productivity-enhancing investment.
Meanwhile, child poverty rose sharply and New Zealand experienced the steepest rise in inequality in the OECD. Another round of deregulation and privatisation is not a solution.
Nor are cuts in public spending the answer. Of the 24 OECD countries with a higher GDP per capita than New Zealand's in 2008, 14 had higher spending governments.
For example fast-growing Denmark has a similar sized economy to New Zealand's, but its government expenditure was 51.3 per cent of GDP compared to our 41 per cent.
New Zealand is not highly taxed - we had the OECD's third lowest tax wedge on the average income in 2008.
A whole economic and social environment is what leads to success, not just a few ideologically favoured aspects. We need new approaches.
New Zealand's workplaces must be central to this new approach. There is a huge untapped resource of workers' knowledge that can raise productivity if matched with management that listens and union backing. We know from half a decade of working on such projects with forward-looking employers, as well as from international research.
New Zealand needs employment laws that spread the benefits of union wage levels and working conditions to all workers in the industrial sector. Then employers can focus on investing in productivity-enhancing technology rather than destructive competition to beat down wages.
Workers will then feel they will benefit from raised productivity and get involved in improving their workplaces.
Investment in lifelong learning is vital. Value added exports will rely hugely on the depth and quality of the skills base of Kiwi workers.
The exchange rate is hindering exporters. We should peg the dollar to our main trading partners' currencies, and seek international support in controlling the huge unproductive financial flows that threaten the stability of the currency and the economy.
A well funded state should ensure poverty, and high levels of inequality, no longer add to our social and economic burdens. It should also encourage productive investment (e.g. through a capital gains tax exempting the family home), and provide public services such as education and health that meet the needs of New Zealand's people.
