Counting The Cost.

New Zealand’s Pay Equity Revolution was, ultimately, unaffordable.

THE PEOPLE’S SELECT COMMITTEE on Pay Equity (PSCPE) is looking for evidence. Dame Marilyn Waring, who announced the creation of PSCPE and introduced its members, insists that the Coalition Government dismantled the existing Pay Equity regime, and cancelled all 33 claims awaiting adjudication, without evidence. Or, at least, without evidence it was willing to test before a real parliamentary select committee.

Dame Marilyn’s insistence that the Coalition was flying blind, legislatively-speaking, is difficult to sustain. For a start, it ignores the single most important piece of evidence that solid evidence exists. Namely, that the Coalition was willing to sustain serious electoral damage to rein-in Pay Equity in its current form.

Governments don’t go out of their way to court electoral disaster, and yet this is exactly what the National-Act-NZ First parties were willing to do. Which suggests very strongly that what they were looking at – i.e. the evidence before them – was powerful enough to justify the risk.

So, what were they looking at? The answer would appear to be that they were looking at a massive escalation in the projected cost of Pay Equity settlements. How massive? In light of the fact that by re-writing the Pay Equity legislation, and sending existing claimants back to square one, the Coalition Government was able to free-up an additional $13 billion, the Crown’s liability must have been huge.

Remembering always that the Coalition’s reforms do not eliminate Pay Equity. Its scope has been restricted, certainly, but claims will continue to be made and settlements reached. Accordingly, a substantial sum will have to be kept available in anticipation of future Pay Equity claims being resolved.

Without the Coalition’s intervention, however, the processes of Pay Equity, as determined by the Labour Government’s 2020 legislation (supported, it should be noted, by National, the Greens, and Te Pāti Māori, but not Act) would have seen the quantum of these “unquantifiable contingent liabilities” expand, year upon year, until they reached fiscally unsustainable proportions.

In their search for evidence of the Coalition’s malfeasance in the matter of Pay Equity, it is to be hoped that PSCPE will also set out clearly the opportunity cost of restoring the status quo ante. Making it clear to all the aggrieved women, on whose behalf the “people’s” select committee has been set up, how many schools, hospitals, and other key public infrastructure projects will have to be paid for out of higher taxes and/or increased borrowing, if Minister of Labour Relations Brooke van Velden’s Pay Equity reforms are repealed – as Labour is promising.

Now, it may be that the prospect of higher taxes does not daunt the intrepid band of former MPs recruited by Dame Marilyn to sit on PSCPE. (Jackie Blue, Jo Hayes and Belinda Vernon from National, Nanaia Mahuta, Lianne Dalziel, Steve Chadwick and Lynne Pillay from Labour, Ria Bond from New Zealand First and Sue Bradford from the Greens.) Sadly, not all New Zealanders enjoy the gold-plated superannuation scheme made available to MPs. Reducing the amount of money ordinary workers get in the hand is not the sort of fiscal policy that the voting public generally responds to with enthusiasm. Moreover, increased borrowing just means higher interest costs, which means there’s less to spend on schools, hospitals and other key infrastructure projects. A lose-lose proposition – whichever way you look at it.

Another piece of evidence likely to be of interest to the voters of New Zealand is why the whole Pay Equity process has, historically, involved institutions funded, either directly, or through massive subsidisation, by the Crown. Teachers, nurses, librarians, early-childhood and aged-care workers are all, wholly or in large part, supported by the taxpayer.

That level of taxpayer support would have risen dramatically, however, when large numbers of private-sector employers found themselves obliged to make Pay Equity-driven adjustments to their female employees’ wages and salaries. This is because the 2020 legislation assured private-sector employers that the cost of making such adjustments would be borne by the Crown.

Yes, you read that right. The state was proposing to shoulder the entire burden of implementing Pay Equity. It isn’t hard to see why the Minister of Finance might have been ever-so-slightly freaked-out by the prospect of “unquantifiable” (but almost certainly expanding) Crown liabilities rendering future budgets nonsensical. Presumably, this is why van Velden’s reforms made it very clear that the full cost of successful private-sector Pay Equity claims would be met by, ahem, the private sector.

Perhaps Dame Marilyn, internationally-acclaimed for her studies on “women’s work”, could hazard a guess as to how many female employees of private – as opposed to public – enterprises would be willing to lodge Pay Equity claims that could, if successful, require their bosses to bear the steep wage rises needed to achieve parity with males employed in comparable industries. Is it possible that they, and the unions representing them, might be reluctant to risk it? Aware that such increases could easily precipitate massive lay-offs – or even the outright closure of financially precarious enterprises.

And, speaking of unions, it is surely no accident that PSCPE is being bankrolled by the Public Service Association. The PSA is far and away New Zealand’s largest union organisation. Alongside the unions representing teachers and nurses, it accounts for three-fifths of the 16 percent of the New Zealand workforce still belonging to a trade union.

Unsurprisingly, it was the PSA’s National Secretary, Fleur Fitzsimons, who shared the stage with Dame Marilyn at the launch of PSCPE. It is Fitzsimons and her state-sector union colleagues who deserve most of the credit for shaping the Pay Equity regime into something suspiciously reminiscent of the centralised, state-supported, wage-bargaining machinery of yesteryear. (Another powerful motivation for the urgent intervention of a Coalition Government assembled from the Right!)

It is also to be hoped that PSCPE, in its search for evidence, will ask its sponsors (which also include the NZ Council of Trade Unions) why the representatives of the hundreds of thousands of women employed as check-out operators, shop-assistants, office-workers, cleaners, receptionists, and waitresses, were less prominent than state-sector union officials on six-figure salaries at its launch. Was it because these working-class women, alongside their minimum-wage working-class male counterparts, aren’t fortunate enough to be the beneficiaries of a taxpayer-funded wage-and-salary enhancement scheme for female members of the Professional/Managerial Class?

Viewed dispassionately, the passage, under urgency, of the legislation changing the rules relating to Pay Equity was a fiscal and political necessity. In the face of such necessity, Winston Peters’ quotation from Shakespeare’s Macbeth was apt: “If it were done when ‘tis done, then ‘twere well it were done quickly.”

Given the firestorm of criticism which erupted the moment the Coalition’s intentions became known, the idea of allowing the Opposition to feed that conflagration for the weeks and months required to shepherd a bill through Parliament at the usual speed was not one any government eager to be re-elected could have encouraged. Especially following the example of massive mobilisation provided by Māori resistance to the Treaty Principles Bill. Taking just 48 hours to turn the Bill into an Act meant that the unions were able to muster no more than 200 activists to a “snap” protest. Given weeks and months, the CTU might have mobilised 200,000.

Labour and its surrogates can bluster all they like about the Coalition’s alleged “abuse” of parliamentary procedure, but few New Zealanders who pay attention to politics will be impressed. They have seen Labour resort to urgency without hesitation when political necessity required it. Legislating at speed, while clearly not ideal, remains a vital means of ensuring that a properly constituted House of Representatives retains the power to protect the policies of the majority from extra-parliamentary pressures.

For all the gravitas which Dame Marilyn’s involvement has conferred upon PSCPE, it is important not to lose sight of the fact that it represents a deliberate attempt to morally overpower what is now the law of the land. Such evidence as it produces will, almost certainly, be used to contradict – not support – the Government’s arguments. In spite of its name, the committee has no mandate to speak for the people of New Zealand. Indeed, by openly declaring its purpose to be the restoration of the 2020 version of Pay Equity, let the fiscal chips fall where they may, PSCPE declares itself quite openly as part of the extra-parliamentary pushback.

The National Party’s John Key memorably described Michael Cullen’s Working For Families legislation as “socialism by stealth”. He was wrong about that, but any conservative politician applying the same description to the 2020 version of Pay Equity would be much nearer the mark. What else, after all, should we call a state-sponsored and administered scheme generating wage increases for hundreds-of-thousands of inequitably rewarded women workers at the expense of the state? Or, more precisely, at the expense of setting up “unquantifiable contingent liabilities” rendering responsible economic management of the state all but impossible.

The political lesson is clear: Revolutions made by Acts of Parliament can be unmade by Acts of Parliament – and should expect to be. Those requiring “evidence” in support of this grim verdict, have only to read a little history.