Michael Cullen: From nurses' pay to EVs, Government faces some hard choices

Nurses march for more pay. But would the money be better used elsewhere? Photo / Mark Mitchell

Opinion

OPINION:

The relationship between the New Zealand Labour Party and the trade union movement is a complex one. It is built around unions which operate primarily in the private sector.

Sometimes it has to operate on an agree to disagree principle as, inevitably, a Labour Government has to take a wider, national interest view of matters. Public sector unions do not affiliate to Labour. Perhaps, in part, this explains the rather different attitude that some of them take to the process of industrial negotiations.

The dispute with the Nurses Organisation is a case in point. Everybody loves nurses; they care for us when we are at our most vulnerable. This has been the case since Florence Nightingale created the modern image of the nurse during the Crimean War.

Everyone (just about) believes nurses deserve more. But how much more? The union is demanding a 17 per cent across the board increase, which would take the maximum for a charge nurse to over $150,000 a year.

This approach runs headlong into the Government's desire to lift the incomes of those at the bottom end by a higher percentage than those at the top.

The nurses are not the only public sector union to be leery about this, mainly because most of their members are at the top end of the relevant scales. Meanwhile, their leadership is adept at marching the membership to the top of the hill but much less adept at getting them down again.

The Government has to think of the flow-on effects of any settlement (which will be large) and the impact this will have on the ability to fund improvements in the health system and elsewhere.

This is inconsistent with the rather odd common view that if you can afford to spend a large sum on one thing, then you can afford to spend it as well on something else. The opposite is the case, as a moment's thought should reveal. If you have spent a large sum on one thing, you no longer have it to spend on others. The latter is what economists call the opportunity cost.

The National Party in Opposition has reverted to its standard position that we can afford to do whatever we want. We can have subsidies for electric vehicles without any need to tax heavily polluting vehicles to pay for it; we can meet the nurses' demands and still have large tax cuts; and we can fully address our climate change obligations without anybody having to face extra costs as a consequence.

Everything the Climate Change Commission suggested as the most effective and efficient pathway forward was rejected by National if it involved some cost as the price of avoiding what increasingly looks like a potential disaster for a temperate zone agricultural country.

As with every other recent reliable study, the commission has shown that the cost of doing nothing is higher than the cost of doing what is necessary. The longer we delay, the worse the equation becomes. The sooner we act decisively, the more likely it is that we can prosper, in part by creating new technologies based on the concept of truly sustainable development.

But in retrospect, the Government could not have chosen a worse time to announce a proposal for a new walking and cycling bridge across Auckland's harbour than while the nurses were taking industrial action. People inevitably compared the cost of the bridge with the need to pay for a settlement with the nurses.

The two are not strictly comparable. Whatever the cost of the nurses' pay and conditions settlement, it will be an annually recurring one. The bridge will take five years to build and then the annual costs will be maintenance (including depreciation).

The bridge proposal will stand or fall on its own merits. So far there is very little information for the public to make an assessment in that respect.

Auckland is already bitterly divided over the idea of a second harbour crossing. Photo / NZME

We should not be guided by what might be called cyclophobia. I say that even though I was nearly collected on the intersection of Customs and Albert streets one evening by a cyclist charging down Albert St through a red light. The real issue is what is the likely future cycling and walking usage of the bridge and how many cars will that take off the existing bridge. I suspect the answer is not a very large number.

In any case, history is not on the new proposal's side.

As usual, Auckland is already bitterly divided over it, a tendency which has seen many a previous second harbour crossing proposal going nowhere.

In addition, the small but vociferous cycling community has a tendency to react to any cycleway proposal with demands for improvements which have seen the final cost double or treble compared with the initial estimate (which is the main reason for the slow progress on building a true cycleway network in our largest city).

The truth is, we find it difficult to make hard choices where there is any prospect of somebody being disadvantaged, or worse still, where somebody else gets an advantage that we do not.

The so-called "feebate" proposal to encourage the use of electric and hybrid vehicles is already under attack on such grounds. Some people may have to pay more for a new ute until there is a range of suitable electric or hybrid ones.

Perhaps, instead, people will look more closely at the fuel consumption and emissions figures and transition through more environmentally-friendly options. The upper limit on the subsidised vehicles — $80,000 — cuts out nearly all the luxury vehicles.

If all this helps reduce the number of overly large SUVs on our roads and in our parking lots, it will be to the good in many respects, even if we have to put up with a few more middle-aged men in lycra.

Some choices are not as hard as they first seem: one can always look away.

- Sir Michael Cullen is a former Labour MP and Minister of Finance.