Higher wages fewer jobs

January 15, 2020

The  increase in the minimum wage costs jobs:

Confirmation that the Government’s unbalanced minimum wage rise could cost 17,000 jobs and lump taxpayers with a $125 million bill is an alarm bell for small businesses, National’s Workplace Relations and Safety spokesperson Todd McClay says.

MBIE’s recently-released Minimum Wage Review 2019 reveals the Labour-led Government’s proposed change to $18.90 per hour on April 1 will cost the economy 6500 jobs and increase Government expenses by $62m a year, as well as drive up inflation.

Moving to a $20 an hour minimum wage by 2021, which the Government is proposing, could cost the economy 17,000 jobs and increase expenses by $125m a year.

“The minimum wage changes will see small businesses struggle more at a time when the Government should be supporting them, not working against them,” Mr McClay says.

“The Government is making it harder for small businesses to employ people, harder for them to invest in training and development, and harder for them to get ahead.

“These projections could prove to be much larger if our economy continues to slow and the labour market weakens, as it has already under the Labour-led Government.

“Everyone wants high wages for workers, which is why National increased the minimum wage every year in Government. But we believe the minimum wage should go up in a balanced way that doesn’t go too far, too fast.

Employers expect modest increases in the minimum wage but this government’s fast-tracking bigger increases is too much too quickly, at too high a cost.

“Hard-working Kiwis are already doing it tough because of the Labour-led Government’s poor policies, which are driving up the price of petrol, rent and other living costs.

“The best way to put more money in workers’ pockets is to let them keep more of what they earn. What good is raising the minimum wage if workers are being taxed to the eyeballs?”

Would tax cuts be better than increasing the minimum wage?

An orchard owner in Central Otago is rallying against minimum wage increases, arguing reducing the income tax of a portion of low-wage earners would help them more and do less harm to small businesses.

But a tax expert says it makes more sense to give low-wage earners more social support than to ‘‘tinker’’ with the tax system. . .

The business owner said she did not want to be named out of concern people might react angrily to her view the minimum wage should not be increased.

‘‘I’m all for people getting more money in their pocket.

‘‘The Government needs to look at how they can ensure lower-paid people get more in their wage packet, without damaging especially smaller companies.

‘‘What is the point of more money in a pay packet if the result of that is that it is going to cost jobs, and it gets swallowed up by higher prices for the basics, like fuel and electricity and rents and groceries?’’

Wage rises are a cost to business . If they’re not at least matched by a gain in profit businesses have to increase prices to compensate. That feeds into the economy and soon eats into any increase in pay. If people are paid more but have to pay more for goods and services they’re no better off, and if there are fewer jobs those who lose, or can’t get, a job are worse off.

She said she had a better idea of how to get more money to low-wage earners.

‘‘If they’re going to up wages all the time why don’t they bring the PAYE [rate] down?

‘‘Lower-paid people can have an immediate solid increase in their take-home packet.’’

If you follow the principle of less tax on things we want to encourage and more on things we don’t, tax cuts on wages is good. The trouble is most lower to middle income people pay little or no net tax.

Tax specialist and managing partner at Findex in Dunedin Scott Mason said he had a lot of sympathy for business owners struggling with the increasing cost of wages.

He agreed with the orchard owner the increase in minimum wages could lead to employers not hiring new staff.

‘‘They’ll defer taking an employee on for a longer period of time. Which then has a counterintuitive impact on the economy, accepting of course we’ve got pretty full employment at the moment.

But reducing the income tax low-wage earners paid was ‘‘tinkering with our overall tax settings’’.

‘‘The reality is those on minimum wage — when you take into account their tax rate and their social benefits — aren’t generally net taxpayers anyway.

‘‘We’re basically using the tax system, the people who are net taxpayers, to subsidise [low-wage earners] further.

‘‘It may or may not be right — it’s just a much wider debate is the point I’m making.’’

He said it would be a better idea to increase social welfare to help those more in need.

‘‘If you were going to use the tax system to do it, you’d be better off tinkering with the likes of Working for Families or those sorts of things rather than changing tax rates.

‘‘If you change the tax rate then it affects all taxpayers.’’

If you increase WFF it affects all taxpayers too because that’s who pays for it.

What we need is increased productivity and profits and a reduction in business taxes could help that.

That in turn could lead to sustainable growth in the economy which would, in time, lead to sustainable increases in wages.

That would be much better than wage increases by government decree which have nothing to do with the value of the work employees do, nothing to do with a businesses ability to pay that additional cost and a lot to do with job losses.

 

 

 

 

 


Rural round-up

September 2, 2019

Government policy, rule changes are hitting farmers in the pocket – Hayden Dillon:

A capital crunch is starting to impact farmers as the banks get more cagey about lending to dairy and the sheep and beef sectors, writes Hayden Dillon, head of agribusiness and a managing partner at Findex.

Things are looking okay externally. The big picture for our safe, efficiently produced protein is still strong, as shown by good commodity prices. But three domestic drivers have converged to cause difficulties for farmers, particularly those with a lot of debt or wanting capital to grow.

Firstly, changes imposed by the Overseas Investment Office have affected the value of and demand for land. We no longer have the same foreign capital coming in for our biggest farming sector – sheep, beef and dairy and our productive assets there. . .

More farmland goes into trees – Pam Tipa:

A large foreign-financed but New Zealand owned investment company has brought a big station in the Wairarapa for forestry development.

Social, employment and environmental sustainability issues will be included in plans to ensure a stable local rural community, it claims.

Kauri Forestry LP, a forestry business built, managed and governed by Craigmore Sustainables, has purchased Lagoon Hills Station in Wairarapa. . .

Could India be the next big thing for New Zealand sheep meat? – Jamie Gray:

Hopes are running high that India could be the next big thing for New Zealand sheep meat exports if the two countries form closer economic ties.

The Regional Comprehensive Economic Partnership (RCEP) involves 16 countries – the 10 members of ASEAN, plus the six countries with which ASEAN has free trade agreements—Australia, China, India, Japan, Korea, and New Zealand.

The meat industry has expectations that RCEP will form a platform that will allow New Zealand access to India, which at the moment imposes high tariffs on imported goods.

“My personal view is that India is the next big prize,” Tim Ritchie, chief executive of the Meat Industry Association, said. . .

 

Online training platform Tahi Ngātahi: A ‘game-changer’ for wool harvesting industry:

Shearing stalwart Jock Martin is the driving force behind online training platform, Tahi Ngātahi, which is revolutionising the way the wool harvesting industry trains its workforce.

Martin has been part of Otago and Southland’s wool harvesting scene for over 30 years and is a second generation shearer.

Passionate about improving skills and safety, he believed new e-learning platform Tahi Ngātahi was the ‘game-changer’ the industry has been waiting for.

Keeping workers injury-free in a physically demanding occupation is a big issue for the wool harvesting industry. . .

From vegan interns to visiting preschoolers, all are welcome at the ECO School – Rebecca Black:

“Do you mind goat’s milk in your tea?” Dani Lebo is a considerate host, though she quickly admits goat’s milk is really the only option because there are no other milking animals on her farm.

So goat’s milk it is, fresh and delicious.

The goats, like everything on five-hectare Kaitiaki Farm, are a deliberate choice. They’re lighter on the steep clay-heavy hills than cattle or sheep. . .

Time to move the ‘meat vs plant’ debate beyond crude headlines – Joanna Blythman,:

After all those months of BBC News regurgitating the bandwagon ‘reduce red meat to save the planet’ script, what a refreshing change it was to hear a thoughtful discussion on the Today programme with Patrick Holden, director of the Sustainable Food Trust, arguing convincingly for more, not less, red meat consumption.

While Vicki Hird from Sustain stuck to the ‘less but better meat’ mantra, Holden moved on this stale and overcooked debate. He argued persuasively that every country should align its diet to the productive capacity of its land. In other words, what’s on our plates should reflect the ecology of the country we live in. Two-thirds of UK land is grass, so red meat and dairy should form a significant proportion of our diets. When these foods come from fully pasture-fed animals, we can eat them, as Holden put it, sustainably, and with a clear conscience. In terms of climate effects, any methane produced by livestock is short-lived and offset by the benefit of the carbon that is sequestered in the permanent pastures they graze. . . 


Rural round-up

June 5, 2019

Climate change burden, benefits must be spread fairly – Gavin Evans:

 (BusinessDesk) – Setting stringent climate change targets without understanding their cost or feasibility risks placing an unfair burden on some sectors, climate change professor David Frame says.

Moving New Zealand to a net-zero carbon economy will have benefits but also real costs and it is important both are shared across the community. That will probably require creative approaches from region to region and from sector to sector, he said at the New Zealand Minerals Forum in Dunedin last week.

Policymakers need to focus on emissions – rather than the resources they come from – and find a way to broaden the discussion beyond electorally-easy targets like heavy industry and coal. Agriculture also receives a lot of pressure that “isn’t really justified,” he said. . . 

New way to work out who’s who in the paddock – Sally Rae:

How do ewe tell one sheep from another?

Greg Peyroux and Benoit Auvray, the co-founders of Dunedin-based Iris Data Science, might well have the answer.

They have been working on sheep facial recognition to cheaply re-identify sheep, potentially removing the need for ear-tags while also solving other farm management and broader issues.

While facial recognition had been developed for cattle in the United States and pigs in China, the pair were not aware of anybody doing it for sheep.

Sheep face images were collected and fed into a machine-learning model. . . 

 

Danone cleared to indirectly hold up to 65% of Yashili NZ –  Rebecca Howard:

June 4 (BusinessDesk) – Danone SA can indirectly hold up to 65 percent of Yashili New Zealand Dairy Co after its Danone Asia Pacific unit got a green light from the Overseas Investment Office to purchase up to 49 percent of the local dairy processor.

“The applicant has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character. The applicant has also demonstrated financial commitment to the investment,” the OIO said in a statement. . . 

Cherry exporter announces major Cromwell investment:

New Zealand Cherry Corp is expanding its operations and investment in Cromwell.

NZ Cherry Corp is a long established, locally owned Cromwell business. Its 32ha cherry block is the largest netted orchard in New Zealand. During cherry season it employs up to 500 staff and harvests up to 800 tonnes of cherries. It exports to 10 countries.

Director Paul Croft says following the recent purchase of a 244ha block of farmland adjacent to its existing orchard, NZ Cherry Corp is doubling the size of its orchard and turning 4ha into worker accommodation. . . 

 

Dairy export volumes advance to new record:

Dairy export volumes hit a new high after rising 19 percent in the March 2019 quarter, adjusted for seasonal effects, Stats NZ said today.

While dairy volumes were strong in the quarter, actual dairy prices fell 7.5 percent. That means dairy values rose only 9.5 percent, seasonally adjusted.

Dairy products are New Zealand’s top goods export, accounting for more than a quarter of the value of all goods exported in the March quarter. . . 

Shareholders back Primary Wool Co-Operative, providing strong support for the organisation’s future:

Primary Wool Co-Operative (PWC) shareholders have placed their organisation on an extremely strong footing for the future, providing overwhelming support for two key resolutions at the co-operative’s 44th annual general meeting.

Farmer shareholders voted in favour of maintaining PWC’s 50% shareholding in CP Wool, as well as over 98% supporting a constitutional change enabling a capital raise to back CP Wool’s five year strategic plan at the meeting in Dannevirke on May 23. . . 

Caring for stock in wild winter weather:

With winter now starting to bite, the Ministry for Primary Industries (MPI) is reminding pastoral livestock farmers of their animal welfare responsibilities, whether animals are kept at home or sent off-farm to graze.

“This time of year can be challenging for farmers, with wet and muddy conditions increasing risks to the welfare of their livestock,” says Kate Littin, Manager Animal Welfare.

“Many farmers, particularly in Southland and Otago, choose to break feed stock on crop over the winter months. It’s a great way to provide food for animals and protect pastures, but does require careful planning and good stockmanship to avoid welfare risks that wet weather can bring. . . 

Rural credit squeeze putting pressure on farmers:

Rural credit squeeze putting pressure on farmers access to capital.

Dairy farmers who are currently facing the two major challenges of falling land prices alongside increasingly restrictive access to capital are being encouraged to focus on a robust budgeting process and get on the front foot with their bank manager.

Findex Head of Agribusiness Hayden Dillon said “access to funding is becoming more of an issue, despite the good payout and this is putting some farmers under pressure” . . 


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