Labour policies could add $2.8 billion costs to business

28/09/2020

Labour policies will add up to $2.8 billion in costs to businesses:

“Jacinda Ardern needs to front up and explain to New Zealanders how much Labour’s policies will hurt the New Zealand, economy National’s Economic Development spokesperson,” Todd McClay says.

“Labour have not shown New Zealand any costing of the economic impact from their recent policy announcements.

“The cost of their policies might not show up in the government’s books, but they will be paid by all New Zealanders – through fewer jobs, lower wage increases and a decline in economic growth.

“So far, Labour has committed to lifting the minimum wage; increasing sick leave requirements; creating another public holiday; and less flexible working agreements.

This won’t only add costs to businesses it will reduce productivity which is already too low.

“The total cost of Labour’s policies could be as much as $2.8 billion per year for New Zealand businesses. What does Labour say the costs are?

“Business NZ said an employee’s absence is currently estimated to cost about $1000 per employee, or $1.8 billion across the economy, will Labour’s policy on sick leave double this?

“Based on previous MBIE estimates of minimum wage increases, raising the minimum wage to $20 will likely cost the economy around $280 million per year.

“An additional public holiday could cost as much as $700 million in extra costs for businesses, based on average wages and the size of the New Zealand workforce.

“The solutions businesses need to grow New Zealand out of our current recession is help with paying the bills, not even higher bills due to Labour’s costly policies.

“New Zealand needs to know what the impact of these policies will be on our weak economy. These policies have consequences.

“Time for some answers.”

These added costs imposed on businesses show Labour is building a barrier to economic recovery:

With businesses failing and unemployment rapidly increasing, Labour’s plans are like throwing petrol on a bonfire, National’s Economic Development spokesperson Todd McClay says.

“Nearly 100,000 small businesses have had to borrow $1.6 billion from the Inland Revenue Department (IRD) just to cover their cashflow under Labour.

“Grant Robertson thinks he can continue to pile costs on businesses while ignoring the real and disastrous impact. Repaying this debt will be even more difficult with Labour’s agenda to raise the cost of doing business.

“Labour’s announcements of a higher minimum wage, a new public holiday and an increased sick leave could cost the economy $2.8 billion per annum.

“These are not small costs that can be easily absorbed. They amount to over $1000 per employee.

“Despite prompting from National on Friday, Labour has been unable to make a case as to why these policies will be good for our weakened economy.

“Labour’s plans will also lead to higher power prices for businesses of over 30 per cent for industrial users.

“Labour’s idea that $5 billion to $10 billion could be spent on a pumped hydro scheme in Central Otago without raising power prices has been described by electricity company executives as ‘dreamland’.

“Labour need to front up with their assessment of the impact these policies are having on the economy.

“These higher costs will affect Kiwis through fewer jobs, lower pay rises and a smaller economy.

“National will create an environment where businesses can grow and prosper. We’re supporting businesses with $10,000 to hire new staff and provide modern, flexible working practices.

“We will work with businesses, not against them, to create more jobs and higher incomes for Kiwis and their families.”

Some commentators say there is little difference between National and Labour.

In some matters they are right, but not when it comes to the economy.

Labour plans to add costs and complexity which will make it more expensive and difficult to employ people and add other costs to business.

In stark contrast National plans to cut red tape and taxes. This will make it easier to employ people and for businesses to invest in themselves and grow.

National is focusing on what matters, Labour has lesser priorities:


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