Knowing what makes a great nurses’ pay offer
Asked at the Budget lock-up what contingencies there were to meet the high expectations of nurses, teachers, police and other large groups of public servants for a catch-up pay round, Finance Minister Grant Robertson was cagey.
Public-sector pay claims have been one of his top three headaches since taking the job.
But he didn’t want to negotiate in public, hinting instead that somewhere in the Budget documents was a clue about the Government’s capacity to meet wage demands from its employees. It turns out the detail was hiding in plain sight, on page 47 of the Summary of Budget Initiatives, in the fine print of a three-line item labelled ‘‘Other Tagged Contingencies’’. How could we have missed it?
Estimated at $619.6 million in the financial year starting July 1, and rising to $649.6m in the 2020 financial year, this is the Government’s selfdeclared operational slush fund – a guess at the cost of all manner of demands on the public purse.
‘‘Often initiatives are commercially sensitive or relate to negotiations that have yet to take place, such as wage negotiations,’’ the Other Tagged Contingencies note blandly observes.
This week’s $250m doubling of the pay offer to nurses by district health boards has come from this pot. So, too, will settlements offered to teachers, police and a variety of other public servants, whose expectation of a leg-up from a Labour-led coalition is a political itch that cannot be ignored.
Rather, the question is how much of a salve will it require for the nurse’s union, the New Zealand Nurses Organisation, to accept a deal that, on the face of it, should be hard to turn down.
While the union’s rhetoric remains fiery, it must be questionable whether nurses will strike against an offer that gives them a cumulative 9 per cent base salary rise in three steps over the next 18 months, plus an immediate $2000 lump-sum payment, a range of improved allowances and two new pay grades that will allow better rewards for the most senior nurses.
Beyond the three-year term of the current proposal is a promise to resolve the nursing profession’s pay equity claim, setting the scene for a further material uplift at that time.
So far, the union’s objections to the offer relate more to process than substance. The DHBs have been cheeky in putting detail of the offer in the public domain, perhaps not trusting the union to put an unexpectedly fulsome proposal fairly to a membership pumped up to walk off the job.
For Robertson, his contingency funding is already looking stretched.
And from the Government’s perspective, it would much rather there was not a winter of industrial action disrupting hospitals.
Whether the union pushes for industrial action will, at least in part, be a calculation about the impact on a Government it supports and its relationships with the wider union movement. Either way, a boost to public-sector incomes is now clearly signalled, with flow-on into private-sector wages almost inevitable in the next couple of years.
With the Treasury already forecasting a continuation of above-inflation wage growth over the next three years, and the fiscal stimulus of the July 1 Families Package yet to be felt by lowerincome households, the stage is now set for robust domestic consumption in the medium term.
That should keep the economy ticking, which is important because the forecast increases in the tax take are fundamental to affording a public-sector wage breakout, while keeping to the Government’s self-imposed Budget responsibility rules.