July, 2003

The CTU monthly commentary - July, 2003

Comment

The Government will soon consider the Post-2005 Tariff Review. This review has been taking place for over a year now. The CTU has made several submissions during this process. While we are pleased that a Labour/Alliance Government imposed a 5-year tariff freeze from 2000, there are major concerns about the impact of any reduction in current tariffs. One of the reports received by the Government notes that the removal of tariffs will result in a 17% fall in domestic market share in the clothing sector and 22% in footwear.

Back in 1987 clothing, footwear and textile tariffs were between 40% and 65%. By 1990 they had been cut to between 25% and 40%, by 1995 they were down to between 21% and 35% and by 1999 to between 12.5% and 19%. Hours worked fell by 57% from 1986 to 2001. In other words there has been a massive effect on jobs. The CTU has argued that a further cut in tariffs will undermine the industry development strategy just being established in this sector. We have also argued that there is little or no likely gain for consumers compared with the risk of job losses. This will impact particularly on women and M?ori.

The CTU monthly commentary - June 2003.

Comment

Is the cost of living higher in the Auckland region than in the rest of the country? The intuitive answer is "yes". The main driver of this answer is the cost of housing - whether you own or rent. A secondary factor is the cost of transport. However an analysis of the Consumer Price Index for the last 15 years doesn't provide much support for this view. I have made up a table showing this (see below). What it shows is that the national index and the Auckland index are very similar. The differences have been extremely small and have gone in both directions. At the moment for example, the index for New Zealand is 1098 and for Auckland is slightly lower at 1094. However, the index is derived in the first place from a "basket of goods" that is meant to represent typical consumption patterns. This means that expenditure categories are weighted. The current weightings are: Food 17.21%, Housing 19.63%, Household Operations 15.35%, Apparel 4.69%, Transport 16.90%, Tobacco and Alcohol 8.72%, Personal and Healthcare 8.37%, Recreation and Education 8.56% and Credit Services 0.58%. So one of the issues is whether the average Auckland-based person spends 19.63% on housing and 16.9% on transport. It is possible that the weighting for housing in particular is too low to reflect the proportion of expenditure on housing for someone in Auckland. This means that if the cost of housing is rising, then the CPI would tend to understate the effect of this rise for an Aucklander. But the main issue is that the indices show the changes in prices over a period, rather than measure actual differences in price levels between regions. I am still trying to get more detail out of Statistics NZ on that one.

Article for the New Zealand Herald, by Mike Ward, the national health and safety officer for the Engineering, Printing and Manufacturing Union.

Picture this: you're 18 years old and you've just got a job as a pine technician. But first you've got to buy chaps, boots, a safety helmet, earmuffs, safety glasses and a couple of compasses. The bill comes to $1700. Or this: You've got three kids and a mortgage to feed and your take-home pay is $300 a week. If it rains and you don't work, you don't get paid. You've got a choice between setting aside the $25 a week you're given in lieu of safety equipment, or putting bread on the table.