Could the unions bring down the government?

Pattrick Smellie

I was listening to Pattrick Smellie on the radio, talking about all the strike action suddenly happening around the country. First nurses, then teachers, now public servants, and the police are to come next. I had just put the whole thing down to the fact that now that we have a Labour-led government, the unions want their pound of flesh. Well, Pattrick has an interesting take on this. This from him, writing for Stuff Quote:

Asked at the Budget lock-up what contingencies there were to meet the high expectations of nurses, teachers, police and other large groups of public servants for a catch-up pay round, Finance Minister Grant Robertson was cagey.

Public sector pay claims have been one of his top three headaches since taking the job.

But he didn’t want to negotiate in public, hinting instead that somewhere in the Budget documents was a clue about the Government’s capacity to meet wage demands from its own employees.

It turns out the detail was hiding in plain sight, on page 47 of the Summary of Budget Initiatives, in the fine print of a three line item labelled “Other Tagged Contingencies’. End quote.

The Budget had made allowance for contingencies, and it seems the unions are intending to wring every last drop of that fund for pay increases for its members. Quote:

For Robertson, his contingency funding is already looking stretched.

And from the Government’s perspective, it would much rather there was not a winter of industrial action disrupting hospitals and then potentially schools and other essential services.

Whether the union decides to push on for industrial action will, at least in part, be a calculation about the political impact on a Government it supports and its relationships with the wider union movement, which has battles on other fronts. End quote.

But he thinks they will. Quote:

Either way, a substantial boost to public sector incomes is now clearly signalled, with flow-on into private sector wages almost inevitable in the next couple of years.End quote.

In this particular Stuff article, he was talking primarily about the stimulus to the economy of the extra pay packets coming up, ignoring for some reason, the obvious effects of inflation which will follow as night follows day. But Smellie seems to think that the unions have another agenda, rather than just looking out for their members and it is very interesting. Quote:

With the Treasury already forecasting a continuation of above-inflation wage growth over the next three years anyway, and the fiscal stimulus of the July 1 Families Package yet to be felt by lower income households, the stage is now set for robust domestic consumption in the medium term.

That should keep the economy ticking along, which is important because the forecast increases in the tax take are fundamental to affording a public sector wage break-out, while keeping to the Government’s self-imposed Budget responsibility rules. End quote.

Tonight on the Larry Williams Drive show, hosted by Heather du Plessis Allen, Smellie took the whole idea one step further and claimed that the unions are trying to force the government to abandon their Budget responsibility rules by rolling out pay claim after pay claim knowing that their self-imposed responsibility rules won’t hold up. Something will have to give. But as the unions wield a lot of power over this government (or at least over the Labour faction of it) they are betting on the fact that they will win and the government will be forced to adopt a much less cautious approach to fiscal management (which is precisely what the unions want).

If he is right, then the government is going to face some seriously tough choices. Either they give in to the unions and go into a tax and spend approach to fiscal management, (They are heading down this road already) or they have to front up to an electorate already feeling the effects of some of their policies, with increased fuel prices and put their hands out for more money. Or they will borrow more and increase the government debt (so carefully managed by the last government). Either way, their credibility will be shot to pieces for good.

So, one way or another, it looks to me that the unions will bring down the government. Either they will force them to break fundamental electoral promises or they will bring about industrial action so bad that it will cripple the country and everyone will be screaming for an end to it.

My money is with the unions getting their way. Either way, there are interesting times ahead.

 


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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

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