2019 03 – News from New Zealand

A Letter From Our New Zealand Correspondent

Feargus O’Raghallaigh

A ‘Light on the Hill’?

“I try to think of the Labor movement, not as putting an extra sixpence into somebody’s pocket, or making somebody Prime Minister or Premier, but as a movement bringing something better to the people, better standards of living, greater happiness to the mass of the people. We have a great objective – the light on the hill – which we aim to reach by working for the betterment of mankind not only here but anywhere we may give a helping hand. If it were not for that, the Labor movement would not be worth fighting for.”

Ben Chifley, Labor Party leader and Prime Minister of Australia, Speech to NSW Labor Party, 1949

Is Ardern in the Chifley mold? Is she tracing the steps of his Kiwi counterpart Michael Joseph Savage? Both, by the way, were ethnic Irish. Going by some of her pronouncements she is hitting some Chifley notes, with her talk of alternatives to growth and GDP measures of performance and a new living standards/wellbeing framework for assessing government policy performance.

Last month I dealt with the travails endured by one union in trying to negotiate with one employer in one business sector in one New Zealand town. It was a story representative of what every union faces in respect of every employer and place of employment in New Zealand – whether private sector or public. In essence in this country collective negotiation on pay and conditions is overridden by principles of commercial contract law through employer imposition of individual contracts prevailing over collective agreements.

Another result – and it is related – is that New Zealand today is a low wage economy. It is also not simply a low-wage regime but one, systemically, of impoverishment of those at the very end of economic and business chains and their families. It is at its worst one of hunger, of intergenerational family and community disintegration, of crime and physical decay. There is a strong racial dimension to it all with Maori most damaged by the regime. Yet all of this has a coherent purpose. It is that described by Michel Foucault. Impoverishment and all that goes with it has purpose: to construct in effect, society as a controlling Benthamite panopticon.

[The panopticon was a building in which a single watchman without the inmates being able to tell whether or not they are being watched.  Bentham thought it equally applicable to hospitals, schools, sanatoriums, and asylums, but he devoted most of his efforts to developing a design for a Panopticon prison.  In a letter, he described the Panopticon prison as “a mill for grinding rogues honest”.[1]]

The disruptive impact extends into the business of business and the delivery of public services: again purposefully chaotic and degenerative. It is based on businesses unrestrained by unions and collective action, racing each other to the bottom on wages and conditions. In such chaos, rot and decay, accumulation thrives – even if within it, its own winners and losers thrive, flourish, decay and rot: but that is the law of capital, of the jungle.

Pundit assessment is that Labour was shocked to find itself in government post the 2017 general election, leading a coalition with the Greens and New Zealand First, and with a very appealing and popular prime minister, Jacinda Ardern. But it had on this view, no policies, nor governmental agenda, none.

The fundamental problem (apart from having no policies) was and is for the Labour leadership, Labour: Labour is Labour and what it represents in modern politics it must for the leadership also hove to the ‘voices of business’, be ‘realistic’, ‘business-friendly’ etc. It is impossible to square this. So Labour has pitched it all down the road: there are lots and lots of bowls bouncing down bendy byways, a bit like Cork road bowls – committees, groups, commissions and so on to consider and report.

One reported a few weeks ago, the Fair Pay Agreement Working Group. The idea of Fair Pay Agreements (FPAs) was floated by Labour’s Iain Lees-Galloway in opposition. He now finds himself in government, the Minister for Workplace Relations and Safety. A first move was to install a working group headed by Jim Bolger, a former leader of National and PM and a good old-fashioned Irish Catholic country boy Christian Democrat.

Love is not an aspect of relations between James Brendan Bolger and his old party. For one thing an extreme pro-market and anti-union faction first, forced him against his beliefs into extreme anti-trade union legislation and shortly after, in 1997 rolled him as PM (when he was at a Commonwealth Conference). Jim has neither forgotten or forgiven – and now he’s pronounced in a sense on (the worst) part of his own governmental legacy. His proposition is: ‘bin it all’.

The working group report makes a number of points. For example New Zealanders work longer hours and produce less per hour than in most Organisation for Economic Co-operation and Development (OECD) countries. Productivity growth over recent decades has been poor with economic growth largely been driven by increased labour force participation and immigration, rather than by labour productivity. It is a low-skills, low pay and low productivity economy.

Wages have grown but much more slowly for workers on lower incomes than those on higher earnings. Productivity growth has outstripped wage increases generally. Inequalities in the distribution of incomes and wealth have widened and deepened. New Zealand has over the decades slipped well down the OECD living standard rankings. All of this is significantly attributable to weakened unionisation but also to an economy highly dependent on commodity production (farming, lumber etc).

There are two prescriptive aspects to ‘Bolger’. First, there is the government vision: that the employment relations framework should create a level playing field where good employers are not disadvantaged by paying reasonable, industry-standard wages. The regime should also encourage a highly skilled and innovative economy with well-paid, decent jobs.

Second, to all of this end, there is a proposed return of collective bargaining based on FPAs in the workplace world.

An FPA bargaining process should be initiated by only workers and their union representatives.

There should be two circumstances where a FPA collective bargaining process may be initiated:

Representativeness trigger: in any sector or occupation, workers should be able to initiate a FPA bargaining process if they can meet a minimum threshold of 1000 or 10 percent of workers in the nominated sector or occupation, whichever is lower. The representativeness threshold should cover both union and non-union workers

Public interest trigger: where the representativeness threshold is not met, a FPA may still be initiated where there are harmful labour market conditions in the nominated sector or occupation. The conditions to be met under the public interest trigger should be set in legislation

It is important for agreements to cover all workers – not just employees – to avoid perverse incentives to define work outside of employment regulation; and, a testing proposition politically, “Most of the Group agreed that to achieve the Government’s objectives, all employers in the sector or occupation should be covered by a Fair Pay Agreement (FPA).”[2] *


There is no doubt but that ‘Bolger’ unfettered would radically change the New Zealand workplace in both the private and public sectors. In both however I see severe employer resistance.

For example in municipal transport, local authorities are the ultimate providers – but rates-funded and secured by periodic public procurement competitions that operate on a lowest tender basis. Wellington has in the last year re-procured supply of its urban rail services (awarded to Transdev) and bus services (mostly awarded to NZ Bus). Both winners concentrated on union-wrecking and slashing pay and conditions in their winning tenders. The awarding authority (Greater Wellington Regional Council) went along with this. Wellington is not alone, it is much the same in Auckland and other cities. In Wellington bus drivers are literally walking off the job – it isn’t worth it. Services are being cancelled and routes suspended off-peak.

In road haulage and in courier companies workers have been forced into ‘self-employment’ – and also having to finance their trucks, trailers, vans and related equipment, insurance and so on. Self-employment and sub-contracting also prevail in construction. It is also seeping into the public health system with District Health Boards forced by law to behave as private, for-profit companies.

Everywhere working hours are long, conditions such as holiday and sick pay no longer operate. A six-day week is widespread as is the 12-hour day. In sectors such as horticulture and viticulture much work is seasonal – and undertaken on a subcontract regime by temporary migrant workers imported from Pasifika.

The employer trope will be (is) competitiveness, efficiency, productivity. The problem is that’s the problem with New Zealand’s current condition. The trope has not delivered on any indicator one chooses. Labour’s de rigueur trope of listening to the ‘voices of business’, being ‘realistic’, ‘business-friendly’ and so on will have to be abandoned. I am not holding my breath. Ardern is no new Chifley.


[1] https://en.wikipedia.org/wiki/Panopticon

[2] There is lots more. Go here for a good summary/links page: https://www.interest.co.nz/business/97869/jim-bolger-chaired-group-details-proposed-fair-pay-agreements-system-report-workplace