Impact unfair— C.S.U.
By PATRICIA HERBERT in Wellington The wage-price freeze hit the wage-earner while other sectors grew riqji, according to a report released yesterday by the Federation of Labour and the Combined State Unions.
Their 30-page report titled, “Opening the Private Books,” says that the burden of the recession has been shared unfairly and suggests that the sacrifices necessary for recovery should be borne by those who can best afford them.
The report is intended as -background reading for next week’s Economic Summit Conference, however the F.O.L. and the C.S.U. assert that it does not reflect the sort of positions that they will adopt at the conference. It is a well-researched but in some ways bitter document which points to deep divisions in New Zealand society and implicitly questions the possibility of achieving consensus between interest groups and a. willingness to work together. While recognising the need for belt-tightening, it asks the question: If the cupboard is bare, who emptied it? Essentially its theme is that large amounts of money have been made by some sectors while wages have been frozen and the income gap between rich and poor has become far more pronounced. “Big business is doing very well,” it said. A recent analysis bf 13 of New Zealand’s largest industrial companies showed that their tax-paid profits increased on average 25.2 per cent last year.
Similar results were recorded by medium-sized firms. A survey of 27 showed that they experienced profit growth of 20 per cent to 30 per cent.' The report’s figures suggest that the windfall was not limited to manufacturers. Retailers fared well too because of the 1982 tax cuts, the relaxation of hirepurchase requirements and an increase in the level of personal indebtedness.
Profit gains in the 40 to 50 per cent range were “most common” in this sector, the report said. It also found that the banking, finance, and insurance industries had “profited heavily” from recent economic circumstances and “are in a position to make a substantial contribution toward any process of adjustment.” Some had their growth held to about 25 per cent, others nearly doubled their profit and the majority experienced increases of 40 to 55 per cent, it said. Companies dealing in speculative investments, both in property and on the share market, also did well. The report lists six, of which five achieved at least 60 per cent profit growth. It showed that shareholders were quickly rescued from the slump caused by the imposition of the freeze and the downturn in the Australian economy and that from the end of 1982 their position was “reversed with dramatic effect.” This continued through last year when share prices rose 96.5 per cent, it said. To demonstrate the point, the report studies the rise in market capitalisation value of New Zealand’s top 50 companies in 1983 and finds that to experience the same sort of accretion wage earners would have had to have had an increase after tax of $83.60 a week for the full duration of that year. The increase in business profitability could have
been used as a source of investment funds to expand output and create jobs, the report said. It quotes a survey of 50 industrial enterprises which showed however, that for every $1 of extra profit earned in the last financial year, 89c was paid in dividends and only 11c held within the company. It concludes that the brunt of the freeze has been borne by wage and salary earners and even then, not equally, because the 1982 and 1983 tax cuts favoured those on higher incomes. The report said that since the last wage order, the take home pay of the bottom 20 per cent of workers had fallen about 7.3 per cent while that at the top 20 per cent had risen 1.1 per cent. Almost all the figures it quotes pre-date the devaluation. It says that “unless cer-
tain adjustments are undertaken the general widening of inequality as between wage earners and other sector interest groups will be aggravated.” The president of the F.0.L., Mr W. J. Knox, and the chairman of the C.S.U., Mr Ron Burgess, issued a joint statement to accompany the report. “We have been told that now is the time for restraint and for a tightening of belts,” they said. “Belts can tighten in two ways. They can be tightened by pulling in a few notches or they can be tightened as well-fed stomachs extend outwards. We had to Mow whose belts have been tightened and how they were tightened.” The “private books” were dramatic, they said. “They show that company profits are booming, that vast fortunes are being made on the share market and that dividend pay-outs are rising.” This meant that New Zealanders were not equally placed to make sacrifices. One sector was doing very well while others were struggling under very severe difficulties, they said.
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Press, 7 September 1984, Page 1
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815Impact unfair— C.S.U. Press, 7 September 1984, Page 1
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