Newshub and NZ Herald report Misleading Garbage about ACT's van Velden not following Treasury advice
In their rush to discredit the new government (which our MainStream Media regard as illegitimate and having no right to enact the democratic will of voters) the NZ Herald and Newshub are arguing ACT's Deputy Leader Brooke van Velden is not following Treasury advice regarding the coalition's desire to repeal Fair Pay Agreements.
"Fair Pay Agreements: Leaked Cabinet paper reveals Workplace Relations Minister Brooke van Velden at odds with official [Treasury] advice" screamed Newshub, adding van Velden was soon to undermine the employment of "women, Māori & Pasifika and young people". Meanwhile, the NZ Herald hysterically screamed, "Government shaken by leak of Cabinet paper, criticising urgent repeal of law to lift wages, conditions of low-paid workers"
Not true. The NZ Herald & Newshub should have done proper reporting & spoken to the Treasury Secretary, Caralee McLiesh, about whether or not her advice has been followed by ACT Deputy Leader. Caralee is an economics coauthor of Andrei Shleifer at Harvard University. He states (see reference below), "Heavier regulation of labor [which includes collective representation by unions] is associated with lower labor force participation and higher unemployment of the young". There is no way Caralee would ever have advised Cabinet that Labour's Fair Pay Agreement regulations would unambiguously produce the opposite effects. Shame on the NZ Herald. Shame on Newshub.
More generally, any competent Treasury would never advise a government that strengthening sector-wide union power would for sure be beneficial to the economy & low wage groups. Debate has raged across thousands of articles for decades as to whether or not unions - especially the sectoral ones which were empowered by Labour - are good or bad for efficiency and equity. There are a ton of reasons in theory why unions may increase unemployment of low income workers, decrease productivity and increase the cost-of-living. Identifying the real-world effects of unions has been difficult since they are classified in economics as being an institution - and institutions tend to change only slowly over time. Furthermore, measuring the precise characteristics of institutions is fraught. (By contrast, measuring a variable like a stock price is simple by comparison, making empirical work easier).
Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. Rob blogs at Down To Earth Kiwi