Tuesday, September 14, 2010

It's a Class Quake


Commentary: John Minto

It took three days but it was a welcome announcement from Prime Minister John Key that the government will meet some wage costs for Christchurch workers in small businesses (less than 20 employees) who are unable to work because of the earthquake.

Key's payment plan expects to help around 10,000 workers meaning an initial cost of $15 million. It sounds a lot but it's a piddle in the pool compared to the eye-popping sums we are likely to hear before the end of the week when the government announces its first comprehensive rebuilding plans.

The government will provide $350 a week for the next four weeks and John Key hopes employers will top up the pay to each worker's usual rate when they are unable to work. In general terms (and yes there will be exceptions) companies are more easily able to withstand the financial shock of four weeks without work than are families which struggle to make ends meet in our chronic low-pay economy.

And employers will need to step up because even a worker doing 40 hours on the minimum wage ($12.75) would receive $510 gross a week so Key's $350 gross is at best a minimal start.

I'm not sure if the two were related but Key's move came a day after a media statement from Unite Union's Christchurch organiser, Matt Jones, who asked why it was that the government's first post-quake days were dominated by offers of financial help for businesses, property owners and rebuilding infrastructure.

"John Key will bail out property owners and big business using state cash but who will help out the thousands of low-paid Christchurch workers who have lost jobs and incomes because of the quake? Key should provide instant cash relief to Christchurch's struggling working population."

It seems the eternally pragmatic John Key saw the need to stem criticism that he was unsympathetic to the most hard-hit families - hence the package. Too often workers are a late addition to the list for government support - especially when they are low paid and vulnerable. They should be top priority every time.

Three days earlier the government's first thoughts went to property owners who almost by definition will not be as badly off as those with no property assets who struggle from week to week in low-paid, insecure jobs.

But those without insurance on their family home will not be so lucky. There will be many families who abandoned insurance payments in recent years as they fought to save money and retain their homes during the recession. These are among the very people the government should be stepping up to help but John Key is clearly less sympathetic, saying "the very strong message we need to send to New Zealanders is they need to have insurance" and that only in cases of extreme hardship will the government help.

So while Key is happy to see these people (on low or modest incomes in most cases) struggle and teach them a lesson, he had no such feelings towards the well-off investors in South Canterbury Finance a few days earlier. The government backed up their poor investment decisions with a $1.6 billion bailout but is now resistant to putting up its hand up for those who, through no fault of their own, are far less able to cope with a financial hammering from the earthquake.

Bailing out the corporates comes naturally to Key while the most vulnerable must wait in line for a bowl of gruel.

As one of my work colleagues said - it's a class-quake.

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