Steven Joyce: Governments wage plans a farce from the past


One of the strange contradictions of the current New Zealand Government is that they are a self-described transformational outfit featuring one of our youngest-ever Prime Ministers, and yet they are so deeply nostalgic for the past.

I’m not talking about the recent past, but a time that occurred before many of them were born, or at least when they were starting primary school.

Whether it’s the grand centralisation of government services like health, education and water, the pouring of hundreds of millions into forgotten corners of the rail network, their hankering to dismantle the energy market, or their command and control mentality both in Parliament and with the Covid response, it’s like the last 40years never happened.

They seem determined to repeat the failed policy experiments of the (quite) distant past, only in a world which is vastly different.

Nowhere is this more apparent than in the labour market, where the Government is going all out to make a pig’s ear of things with their planned return to centralised wage bargaining and their obsessive fear of skilled migration. Both of these shibboleths are hangovers from the 1970s which have nothing useful to say about the challenges faced by most businesses and workers today.

Centralised wage bargaining controlled by the Government, unions and the then Employers’ Federation may have made sense once, although that’s being generous. In this modern world of knowledge workers, niche exporters, contracting and sub-contracting and working from anywhere, where the world is your market as much as your local town, such a top-down structure is a total anachronism. That it survives in the public sector, notably the underperforming health and education sectors, is no advertisement for the model.

Tell a technology business selling medical instruments to the US, accounting software to the world, or sending rockets into space, or a tourism business desperately staying above water taking movie tours in Matamata, or a niche hotel on the West Coast, that their wage rates will be set by a set of all-knowing bureaucrats and busybodies in Wellington, and they’d look at you like you are from a different planet.

When nearly every business is in its own niche and its own operational environment, national standardisation is highlyillogical.

Maybe the sponsor of this throwback law, Michael Wood, fancies himself as a latter-day Jim Bolger or Stan Rodger, Ministers of Labour in the 1970s and 80s. They were fond of wading into disputes between unions and employers and metaphorically cracking some heads to settle disputes and determine wage rates for workers inthe same industry up and down the country.

It is just as well BusinessNZ finally showed some spine this week and said they wouldn’t take any further part in this mad experiment. Now all it needs is for industry associations like the Employers and Manufacturers, Hospitality New Zealand, and the Retail Association to say the same and there will be no nationwide counterparties for the Government to negotiate with.

Maybe then we could consign this idea back into the dustbin of history.

Also this week came the news that the Government’s Soviet-style centrally-planned approach forwhich skilled workers will be allowed into the country during these Covid times, has failed. Of the 300teachers they planned to import, none have arrived. Of the 50vets they deigned to allow in, nine have turned up. Of the 200critically needed dairy workers, three have arrived. And none of the urgently needed crane operators for the Ports of Auckland have made it here.

Much of this will be down to the mess that has been MIQ, and the Government’s inability to operate the border safely with more than a trickle of people arriving. But it is also symptomatic of a wider issue. The current Government is deeply suspicious of any employer trying to grow their business by hiring people from offshore when they can’t find people here. They are also deeply suspicious of international education, an industry where our education providers were paid to bring bright young things from around the world to be educated here, with some staying to work afterwards.

The Government has given every sign that the skilled migration tap won’t be turned on again once the border is finally open. And that is causing problems in industries like ICT, game developing, and high-tech manufacturing.

While the universities are pumping out as many engineers and software developers as they are funded for, we can’t organically train enough people with these skills to meet the needs of these fast-growing companies. Also, nobody graduates with five or 10years experience, and experienced people are crucial to fill the leadership positions that keep these companies growing.

The Government’s anti-migration message is getting through to people both offshore and onshore. After decades of being a welcoming environment for skilled professionals from around the world who help our country grow, it is becoming well-known that New Zealand has put away the welcome mat. That just makes it harder to attract the talent we need, whether they be teachers, vets or anybody else.

Meanwhile, countries like Canada and Australia are working hard to poach the talent we already have here, and that risks making the shortage worse. Stories are steadily cropping up of companies setting up new sites and offices offshore in order to keep growing, because there is no sign of them being able to bring the talent here.

Clever entrepreneurs who are our best hope for raising productivity and creating a high wage economy won’t just hang around and delay growing their businesses because the Government says so. Unlike resource-based industries like food and fibre, they don’t have to be here.

Knowledge businesses can be run from anywhere — and unless we sort skilled migration out, we will be exporting jobs rather than importing workers.

We used to say we wanted to grow high-tech industries and the services sector so we’d be less dependent on commodity exports. We now have a big hole in our exports where tourism used to be, which needs filling fast.

Now is not the time for frivolous experiments in labour market policy that restrict the growth of industries like ICT and high-tech manufacturing.

We need our Government to have a modern view of how to successfully regulate a 21st century labour market, not an archaic one. Centralised wage bargaining and fortress New Zealand migration policies are relics of the past. They should be left there.

– Steven Joyce is a former National MP and Minister of Finance.

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