Dialogue: Investment key to a fairer future

By ROSS WILSON*

The Council of Trade Unions wants to see an investment Budget - one that recognises the need to invest in communities, in physical infrastructure, in training and education, and in health and well-being.

The CTU welcomed the previous Budget because it appeared to position New Zealand to develop a high-skill and high-wage economy.

It was fiscally responsible, but also socially responsible.

Expenditure in the last Budget concentrated on the key issues set out in the Labour pledge card before the 1999 election.

Significant sums were committed, therefore, to lowering state housing rents, reducing the burden of student loans for low-income students, increasing superannuation payments, and funding more elective surgery.

Just as welcome, from a union perspective, was the $42.2 million over four years on modern apprenticeships, the $38 million increase to $112.5 million a year for Industry New Zealand, and more for R&D.

The CTU has long advocated policies which would build a modernised, diversified economy based on our traditional strengths but with more investment in skills and infrastructure. A high-wage, high-skill economy is the aim; an economic development strategy is the means.

The Government got many aspects right in its first Budget, but it only scratched the surface. There are long lags in terms of concrete benefits from the economic development policies. Similarly for education and skills development.

This year, the CTU will be looking for more progress on economic transformation. Also, we need to see a framework to deliver quality tertiary education, more investment in vocational training and foundation skills such as literacy and numeracy, and improvements in early childhood education funding.

The CTU believes a budget must be viewed in the context of broader Government policy. The success of a Government in implementing policies which will assist workers to achieve more equitable outcomes in the labour market and a fairer workplace are therefore of vital interest. The repeal of the Employment Contracts Act, improvements to ACC, and increases in the minimum wage are examples that sit alongside specific Budget initiatives addressing key economic and social policies.

It is vitally important that the capacity of the state sector is expanded. This can be achieved well within the goal of under 20 per cent debt/GDP ratio.

The public sector needs more staff - not at the top, but for the many others in the state sector who are trying to deliver quality services. Significant pressures are emerging in the state sector, including issues around the recruiting and retention of staff.

Benefit levels have not really been touched except for a CPI adjustment. The effects of child poverty continue. We are hoping that this Budget can deliver more for those New Zealanders in poverty.

The CTU is aware that the Government cannot fix the problems of the past 10 to 15 years all at once. The Government has already indicated that it wants to slice off a huge proportion of future surpluses to prefund superannuation.

We believe that it is vital that the Government protects the revenue base and is not spooked by the business sector into reducing company taxes, which will reduce the money available for it to continue with an investment programme.

But last year, the Government front-loaded its expenditure. This year will be different. The cap of $5.9 billion has already had to be stretched. So expectations have been reduced for some considerable time.

There is no doubt that things are tight. Part of the reason for such a tight Budget is the fact that the previous Government gave significant tax cuts, unevenly distributed, which did not in any case alter public expectations of quality public services.

By 2003, there may well be additional money available to ensure an opportunity to step up the programme again. This depends not only on the performance of the New Zealand economy in the context of the global economic outlook, but on the outcome of the election next year, and any alterations to the tax system.

* Ross Wilson is president of the Council of Trade Unions.