Clark David: Minimum Wage Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Clark David: Minimum Wage Amendment Bill — First Reading 
[Sitting date: 29 August 2012. Volume:683;Page:4929. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I move  
That the Minimum Wage Amendment Bill be now read a first time. 
 If it becomes apparent during the debate that scales have fallen from sufficient National members’ eyes and the Minimum Wage Amendment Bill has the necessary support I will nominate the Transport and Industrial Relations Committee to consider the bill. I want to start by telling the story of a woman I met recently. We will call her Wendy. Wendy is up at 4 a.m. and off to her first cleaning job. She works two jobs. She is home at 6 p.m. and tuckered out. Wendy does not smoke and she does not drink. Wendy cannot afford luxuries and for her that now includes heating her house. She recently suffered a broken leg on the job and receiving 80 percent of her wage whilst off work meant she could not meet her rent. This proud woman who has successfully raised six kids mostly on her own had to rely on assistance from a family member for help. The story does not stop there. Wendy still has one kid at home—a teenager with hollow legs. Feeding her family comes first but as a diabetic her health is suffering in the long term. Her doctor tells her she should eat a more balanced diet. She knows what that is but can no longer afford the ingredients. White bread is cheaper than brown bread. Wendy is on the minimum wage and has worked all her life. Restrictions on adult and community training mean she cannot afford to retrain. She fears she will one day have to reside in a boarding house. 
A minimum wage of $15 an hour will mean $60 a week for our lowest-paid workers over a 40-hour week. A minimum wage of $15 an hour will mean extra earnings of $427 million a year for our lowest-paid workers. Most of that money will be spent on essentials—food clothing and health care—and will go straight back into the economy. It is well documented that those living on or below the breadline spend their money on essentials. By contrast the very top earners are more likely to spend extra earnings on overseas trips and other things that are of no direct benefit to our economy. The minimum wage has to be one that families can live on that rewards hard work and that helps stem the flow of thousands of people to Australia where wages are much higher. Statistics on departure to Australia are familiar to us. Roughly 1000 a week currently and 1030 from Dunedin alone last year left permanently to live in Australia. 
This Government has the worst economic record of any Government in the last 50 years. Reports in recent days show that inequalities in New Zealand are the worst they have ever been. The rich are getting richer and the poor are getting poorer. Those in the middle are feeling the squeeze too as the median wage recently dropped 3 percent. People are feeling the pinch after the 2010 tax switch. Inequalities are growing since that tax package which increased GST and gave the biggest tax cuts to those who were already wealthy. These growing inequalities begin to be addressed by my bill. Maori Pacific people women youth and part-time workers are more likely to benefit from an increase in the minimum wage. 
Even if the National Party believes that unemployed people are bad and do not want to work—a view I do not share—it should agree with conservative economists who argue that good wages are exactly the incentives required to get people into work. Minimum wage increases have lagged behind productivity increases over recent decades. For the health of our communities they need to increase in a sustainable fashion. If Government future ambitions for growth are to be realised the fruits of that growth need to be shared. My bill helps to ensure that that is the case. 
Public uncertainty about the effects of the minimum wage increase mirrors general uncertainty amongst economists and other experts. For many economists—I learnt this through my time at Treasury—a direct link between a minimum wage and employment changes is the Holy Grail and we can expect a Nobel Prize for whoever explains it properly first. Some say a high minimum wage will cost jobs. At some point that is undoubtedly true. If we increase the minimum wage to $30 an hour some employers will struggle to cope. But the relationship between minimum wage and unemployment is not clear cut. It is best illustrated with an example. Of the 9 years between 1990 and 1999 the National Government increased the minimum wage by a total of 70c in 9 years. Unemployment ranged between 6 percent and 11 percent. By contrast when Labour was last in Government the minimum wage was increased by $5 over 9 years. Unemployment plummeted to amongst the lowest levels in the OECD. 
Australia’s higher minimum wage has proven a boon for attracting ambitious young Kiwis. Its minimum wage equates to nearly NZ$20. No wonder 40 percent of a record 158000 New Zealanders who have left for Australia under the Key Government were aged between 18 and 30. Young talent knows that it will get paid better in Australia. Australia has of course benefited from a minerals boom but to attribute all its success to that would be a mistake. An aggressive savings policy means that A$1 trillion in investment capital is constantly searching for a home. Australia has also valued its labour market. People are attracted to Australia for the higher wages. The fact that their top earners pay much more tax than New Zealanders does not enter the debate. People are attracted to Australia for those higher wages. In fact top New Zealand taxpayers have one of the lowest tax wedges in the OECD—and that is those who actually pay tax. If we do not distribute the proceeds of our economy fairly we will continue to hollow out our workforce as young folk head across the Tasman. They are calling it “Generation Oz”. 
What about the effect on business? We know that a modest change like the one proposed will likely have no effect on unemployment. The Department of Labour reached the same conclusions when it studied minimum wage increases under this Government. This is perhaps a surprise to many but a sober assessment of the facts will also suggest that many small and medium sized enterprises will actually be advantaged by a minimum wage rise. That is because many small businesses already pay above the minimum wage. They know how hard it is for their employees to make ends meet on the minimum wage they value their employees and they believe in them. Often these small to medium sized enterprises struggle to compete against other larger firms that appeal to the lowest common denominator. The National Party if it opposes this bill will not be the friend of small business. 
Inequality has grown dramatically in New Zealand over the last three decades. The last Labour Government began to address this imbalance by ensuring 25 percent real growth—real growth—in the economy and made sure that it was shared more fairly. Working for Families saw over 100000 kids brought out of poverty. Income-related rents and better primary health care attacked drivers of poverty but much more needs to be done. When over half of a minimum wage earner’s income is spent putting a healthy meal on the table for family every night it is not possible to pay rent buy school uniforms meet incidental expenses and heat the house. We taxpayers effectively subsidise low wages through the health system. All of us contribute moneys that are spent treating the preventable diseases of poverty. It is not good for our social fabric to have kids with empty stomachs developing respiratory illnesses rheumatic fever and other illnesses through living in damp cold houses and it is not good for our economy either. 
Unfortunately the Government has put our country in reverse. Our economy is going backwards; only population growth props up numbers in our stagnant economy. GDP per capita has dropped; real wages are lower than when National took over. Kiwis are leaving permanently for Australia at the rate of 1000 per week. Sadly the Government’s 2010 tax package has ensured that the fruits of our economy are shared even less fairly than they were before. For the vast majority any personal benefit of the 2010 tax package was quickly swallowed up in GST increases inflation and sundry others like increased prescription charges. 
Poverty illness and underachievement will not be addressed until we ensure that the conditions are right for all Kiwis to succeed. We need to start by ensuring every New Zealander can afford food clothing and shelter for themselves and any family they support. A $15 minimum wage brings us closer to achieving this.