Day: March 7, 2019

Nurses, pay equity, and the real structural problems

Michael Reddell Housing, labour market, Productivity

I’ve heard or read a couple of strange stories in the last day or so about the nurses’ trade union making the case for a “pay equity” settlement for their members.

Of course, the very notion of “pay equity” settlements is bizarre, fit only for somewhere like the old Soviet Union.  Some government officials decree that job x should be paid the same as job y, as if the price of a banana should be adminstratively and arbitrarily set equal to, say, the price of a kiwifruit because the two might have (say) similar nutritional value.

But what interested me were two lines being used by the nurses in support of the view that they were underpaid (neither line seemed to have much to do with the false equivalency of “pay equity”, but were rather intended to support the claim that nurses were –  absolutely –  underpaid).

The first, reported here, was this

“In Australia, nurses can be paid as much as $90,000 as a base rate with penal and on-call rates as well. The limit in New Zealand sits around $68,000.”

Last I looked, real GDP per hour worked in Australia (in comparable – PPP –  terms) was 41 per cent higher than in New Zealand.  That is the best aggregate measure of labour productivity.  You’d expect wages and salaries for most jobs to be higher in Australia than they are in New Zealand.   That appears to be so for nurses.   A larger share of New Zealand’s population is in paid employment than is the case in Australia, so the difference in per capita income is a bit smaller, but still just over 30 per cent.  In material terms, Australia is now a richer and more successful country than New Zealand is.  Those gaps keep (slowly) getting wider.

Because of the somewhat-common labour market between the two countries that creates some specific problems for New Zealand.  Plenty of people will look across the Tasman, weigh up the pros and cons of the heat, the snakes and spiders, and the challenges and opportunities of big cities, and move.    Since our somewhat-common labour market applies across the board (not just, say, to public sector nurses), it isn’t a problem we can fix by simply agreeing to all pay ourselves more.  Those sorts of outcomes have to be “earned”  –  not about individuals working harder, but about the economy as a whole finding better and remunerative opportunties, lifting earning possibilities for everyone.  Do it enough, and one day that might even be a net flow of New Zealanders coming back from Australia (Ireland managed it, it can be done).

I’m sure the Nurses Organisation is better connected to people at the top of the government than I am, so I can only urge them to suggest to their friends and allies who currently hold office that economywide productivity might be elevated quite a long way up the list of government priorities (in the Labour Party “Our Plan for New Zealand” brochure dropped in my letter box the other day it featured not at all).  Remind them, perhaps, that for decades New Zealand has been failing on this count, reducing successive governments to pretending to a success that just hasn’t been achieved.  In consequence, wages are much lower than they really should be, and we’ve been more limited than anyone would have liked in dealing with all sort of other social problems.

(Of course, from a Nurses Organisation perspective the strategy I’m proposing would fail any sort of cost-benefit assessment: neither National nor Labour show any sign of being seriously interested in doing what it might take to generate much better productivity and incomes, and (by contrast) the nurses seem to have the government wrapped around their little finger on the pay-equity path to improving their own position. But I’m sure nurses are public-spirited people, and they have children too, not all of whom will choose to be nurses.)

The other strand of the nurses’ argument was a bit closer to home. A Wellington hospital nurse was quoted as saying

Only a quarter of the nurses she worked with lived within walking distance of their hospital.  The result was that only a quarter of the nurses Ms Hopkinson worked with lived within walking distance of their hospital.

“We can’t afford to live in the communities we nurse in, we’re priced out of these neighbourhoods.”   12 years ago when she started, nurses lived in the central city, but that was no longer the case.

“They’re commuting from Featherston, from up the Kapiti Coast, Upper Hutt; they’re a long way away and they won’t be able to make it to us after an earthquake.”

Even in Wellington, it did seem a bit of a stretch to argue for a pay rise so that nurses could walk to the hospital when the 1 in 300 year earthquake hits.  The present value of the cost of that possible post-quake complication will be pretty small indeed.

Now, as it happens I do live within walking distance of Wellington hospital. It is a pleasant middling suburb, and when I was younger I knew lots of nurses who lived in the neighbourhood, attended our church etc etc.  It was close to their work and convenient.  As I’ve noted previously, I bought my first (three bedroom, 30 year old) house in this same suburb 30 years ago –  actually bought it from a teacher who was moving to Wanganui where housing was more affordable (it was near the peak of the then-boom).  The Reserve Bank’s inflation calculator tells me I paid about $296000 in today’s money for that house.

Real wages and productivity have increased since then.  Real GDP per hour worked has risen by a third, so roughly speaking spending $400000 on a house today would bear a similar relationship to incomes as $300000 then.

You cannot buy any house in Island Bay –  still less a three bedroom house, 30 year old, decent-sized section, garage etc – for $400000.  As it happens, earlier this week a real estate agent sent me a several page list of sales in the area in the last few months.  The cheapest property sold was a unit with no land at all, and 60 square metres of house: that went for $400000.  The next two cheapest ($507K and $570K) were also units and had 60 and 70 square metres respectively.  The cheapest house that looks roughly comparable (size, age, but much smaller section) to that first house of mine went for $805000.   The median price across those particular 37 properties was $960000.

It is insane.  No wonder nurses can’t afford to buy anything decent reasonably close to Wellington Hospital (there are slightly cheaper suburbs, but they’ll all have had much the same escalation).   It is not that nurses are underpaid.  And it isn’t just the nurses.  Anyone in a moderate-income job –  especially if there is only one income, or one fulltime and one part-time income –  will really struggle.  And, much as I quite like Island Bay, it isn’t Fendalton or Remuera or St Heliers –  yes, we have a beach too, but even with warming sea temperatures the sea is always more ‘refreshing’ than inviting.

It simply isn’t an issue about nurses, or nurses’ pay.  It is a straightforward consequence of vicious choices that a series of central and local governments have made to mess up urban housing markets.  Government has failed, very badly.  And if it perhaps doesn’t impinge too terribly on the children of the wealthy, it greatly restricts the options of most everyone else looking to get into the housing market, nurses included.  They are, to put it, colloquially, stuffed.  And if that isn’t you or your children yet, it will be mine in a decade’s time.  (Rents are not my primary focus, but in an age in which real interest rates are at record low, real rents should also be lower than ever.)

I’m sure the Nurses Organisation is better connected to people at the top of the government than I am, so I can only urge them to suggest to their friends and allies who currently hold office that fixing the urban land market might be elevated quite a long way up the list of government priorities (in the Labour Party “Our Plan for New Zealand” brochure dropped in my letter box the other day it featured not at all).   Nice Mr Twyford appeared to understand the issue when he was in Opposition, but there has been as little action from him in government as there was from the class enemies of the Nurses Organisation, the previous government.   Remind him, perhaps, of those fast-growing cities across swathes of middle America where good houses really are still affordable.  There is no shortage of land in New Zealand, not even in Wellington (except to the extent the Nurses Organisation friends at the Wellington City Council make it artifically so.   Do not just paper over the cracks, but fix the problem at source.

(Of course, from a Nurses Organisation perspective the strategy I’m proposing would fail any sort of cost-benefit assessment: serious land-use reform from either National or Labour still seems like a long shot (by contrast) the nurses seem to have the government wrapped around their little finger on the pay-equity path to improving their own position. But I’m sure nurses are public-spirited people, and they have children too, not all of whom will choose to be nurses. All of whom will eventually want houses.)

From any sensible policy perspective, so-called pay equity is just daft.  From the perspective of any particular group of workers, perhaps it is the fastest path ahead –  zero-sum game (well, worse) across the whole economy, but beneficial for those particular individuals. But, probably without really being aware of it, the Nurses Organisation put their finger on two really big symptoms of policy failure in New Zealand –  productivity/earnings and housing – that affect almost everyone.   While pursuing their own short-term self-interest, I would urge them to add their voice to the call for serious structural reform in these two areas.   They need it.  We all need it.  Political parties, meanwhile, keep on failing to deliver.

The China Council defends itself

Michael Reddell China, NZ politics

After my interview on Morning Report yesterday about Jenny Shipley and the New Zealand China Council, the Executive Director of the China Council Stephen Jacobi was tweeting that it had been a “hatchet job”.    This morning Radio New Zealand interviewed him: he observed that my comments, noting that the China Council in effect served as a propagandist for Beijing’s interests, had “put me off my muesli”.

It was a fairly soft interview that really did nothing to dispel the suggestion that the China Council – substantially funded by the government, with two very senior public servants on the Board –  serves, in effect, as a propagandist for Beijing’s interests.  The fact that the people involved probably think they are primarily serving their own commercial interests, and perhaps even some warped conception of the national interest, doesn’t change that.   Unfortunately, the interviewer didn’t ask Jacobi for a single example of a case where the China Council had been critical of the PRC.  For the record, I haven’t been able to find a single example.   Around a regime so egregious –  in the way it operates at home, in other countries, in New Zealand, in commercial and in political spheres –  that really tells you all one needs to know.   It looks a lot like a body solely motivated by deals, dollars, and donations, and using public money to try to keep the public quiet.   When you treat as normal a regime that represents so much that is evil, you serve their ends, even if that is not necessarily your conscious intent.   A well-publicised gala dinner for the emissary of the CCP/PRC, just helps make that more egregious.  Supping with the devil, without even a desire for a long spoon.

But the interview probably was useful in explaining to listeners some of how the China Council works.  It is an incorporated society, sponsored by the previous government, with substantial government funding (and senior public servants on the Board).  The rest of the funding comes from the corporate or individual members of the Council, who are able to leverage the government funding to advance their business interests around the PRC (not necessarily directly –  as Jacobi notes, Fonterra doesn’t need the China Council to handle its relationship with the PRC –  but in managing the climate of opinion in New Zealand, attempting to neutralise any criticisms of the PRC).  There is no PRC government money involved, but two of the Executive Board members also hold positions in PRC-sponsored entities in China (the Confucius Institute worldwide programme and the Boao Forum).   One of the Advisory Board members was a former member of the PRC military intelligence system, and a Communist Party member.

Jacobi claims that the China Council works for all New Zealanders and in the national interest. You might have supposed that that is what we have the Ministry of Foreign Affairs and Trade (even NZTE) for, and what we elect politicians for.  The former work to politicians, and the politicians themselves we can toss out.    The China Council seems more about trying to articulate a view of the national interest that happens to suit the commercial imperatives of those involved.  Of course, it is pretty well-aligned with the views of senior figures in both main political parties, which boil down to “if at all possible, never ever say anything that might upset Beijing”, while cowering in the corner even when friends and allies (or fellow New Zealanders) are under attack.  If a life worth living is about more than just dollars, it is a pretty sick conception of a “national interest”, although easy to see how it might be in the narrow individual business interests of some firms, universities etc.   Jacobi claimed that none of the people involved would allow themselves to be duped or a mouthpiece for a foreign government.  At one level I’m sure that’s true: they aren’t duped, they are simply prioritising their commercial interests over any sense of decency, or of the integrity of our own political and social system.   These things just don’t matter (enough) to them.

I had a look yesterday at the rules of the China Council

china council rules incorporated society

I was interested to learn that, for a body set up and sustained by the government, allegedly to advance the “national interest”, actually it is a self-perpetuating oligarchy.   You can only join this Council (not the Executive Board, but the society itself) if you are invited to do so by the Executive Board.  And who appoints the Board?  Why, the Board itself appoints its own members.    In a genuinely private organisation that might be just fine  (their choice) but this is a publicly-funded, government-sponsored body, where two of our most senior public servants themselves sit on the Board.   Don’t expect (for example) Anne-Marie Brady to be showing up on the council any time soon –  a Council that can’t even bring itself to express concerns about the way a New Zealand citizen, expert on the PRC, appears to have been harrassed and worse by people rather more directly attempting to serve PRC interests.

As I said, it was a pretty soft interview.   Jacobi was asked about my suggestion that the Council never ever says a word critical of the PRC.  He parried this by observing (correctly enough) that they do note from time to time that there are differences in our systems, and that he even says (again from time to time) that the way we interact with the PRC needs to take account of our values.    But it just doesn’t make any practical difference, and neither Jacobi nor his masters (on the Executive Board or in Wellington) seem to want it to.  Such things shouldn’t get in the way of the dollars (whether exports or political party donations).    When news of possible ban on Huawei emerged, the China Council’s statement seemed a lot more concerned to protect Huawei than it did about the national security etc of New Zealand.  When the GCSB was issuing a statement about PRC state-sponsored intellectual property theft, the China Council was totally silent –  not a press statement, not a tweet nothing.    When serious concerns have been raised by Jian Yang’s past, included acknowledged misrepresentations on his immigration/citizenship forms, the China Council goes into bat for this former PRC intelligence officer, keeps him close on their Advisory Council, and repeatedly attempts to invoke the x word.   When public debate, led by the work of Anne-Marie Brady, gets going, the China Council can only lament it.  It never substantively engages –  for example with the specifics of Brady’s work.  And that is the sort of thing I mean when I say that the China Council (whatever their individual subjective intentions) objectively serves Beijing’s interest and ends.

As I said the other day, there might well be a place for some public funding for a serious think-tank or independent body devoted to serious analysis, research, and debate around the nature of the relationship with the PRC.  It is a big and a powerful country, with values very much not our own, and there are all manner of dimensions to a relationship.  The China Council is nothing of that sort –  in its own purpose statements, it is an advocacy body, championing ever-closer relationships with a regime so evil, with no serious interest in exploring risks, threats, or downsides.  That serves Beijing’s interests.

Towards the end of the interview Jacobi was asked about the position of Jenny Shipley on the China Council’s Executive Board.  Jacobi attempted to parry that by suggesting it was above his pay grade (a matter for the Executive Board) –  which might leave one wondering why Don McKinnon (the chair) didn’t front up instead.   Jacobi told us that McKinnon had spoken to Shipley, but said that he wasn’t aware of the content.    With a full week having now passed since the High Court judgment was handed down, and with the Prime Minister not willing to express any concern, it looks as though she is going nowhere.  In fact, Jacobi went on to speak highly of Shipley (former Prime Minister, “widely respected in China”), and to note that the China Council is not a financial institution or a commercial organisation.  That’s true.  It is more than that; it is a New Zealand government sponsored organisation.    I’m sure there is some fondness for Shipley in Beijing –  cover for Jiang Zemin against protestors all the way through to interviews declaring how wonderful the Belt and Road Initiative is.   But this is someone who presided over the failure of a major company in New Zealand, allowing it to trade for years while insolvent, failing in her basic duties.   That isn’t acceptable conduct in New Zealand.  A person with that track record –  perhaps especially when a former Prime Minister –  shouldn’t be holding high-profile semi-government appointments.  For her to keep on doing so tells you about the Prime Minister’s, the Foreign Minister’s, and the China Council’s Board and Executive Director’s values and priorities.  Again, it wouldn’t appear to be decency and integrity.

As it happens, skimming through the China Council rules I came to the section headed “Expulsion”.  It had this provision under which the Board could expel a member

expulsion

Seemed to cover the Mainzeal situation and the recent High Court ruling quite well.

But if the self-perpetuating business and political people on the China Council board –  including the Secretary of Foreign Affairs no less –  think Shipley’s ongoing presence among them isn’t unbecoming or damaging to their interests, it really probably tells you all one needs to know about the tawdry China Council, simply pursuing the dollars and always looking away from the evils –  at home, abroad, and here –  of one the worst regimes on the planet today.  Propanda isn’t just telling upbeat lies, it can include minimising evil and treating as normal and respectable the perpetrators of those evils.

But quite at home with Ardern, Haworth, Bridges, McClay, Goodfellow and the rest of our political “leaders”.

Postlude

In a post the other day, I ran an extract from this article about PRC forced labour camps from the Italian site Bitter Winter.  A prominent New Zealander later told me it had shaken him.  Here is another extract

The living conditions in prisons are deplorable. Prisoners often eat vegetable-leaf soup with insects floating in it. As a result of malnutrition, they often feel dizzy and do not have the strength to work.

To ensure that prisoners complete their work even when physically exhausted, the prison authorities resort to torture.

The interviewees report that prison guards incite the more vicious prisoners to discipline other inmates. Thus, it is common to be beaten by “prison bullies” when someone fails to complete the task. Mr. Zhu told Bitter Winter, “If a prisoner cannot complete their task, the prison guards will tie the prisoner’s hands and feet to an iron fence, and they are forced to stand continuously except during meals. Whether in winter or summer, they remain continually tied up for three or four days and aren’t allowed to sleep.”

This sort of thing is just fine by the China Council, Jenny Shipley, or Stephen Jacobi?  Or do they just not care.  Hard to tell which is worse.

We can’t fix other countries.  We can demand some self-respect and decency around how we do things here.   Neither Jian Yang nor Jenny Shipley has any place near a China Council that really served New Zealand interests, consistent with New Zealand values.