While we approved of the infrastructure aspects of Dr Cullen's speech yesterday we were angered by his insinuation that employers were not investing enough in productivity and that they might not be passing the benefits of productivity on in higher wages.
In Wellington and elsewhere employers are facing enormous pressures to increase wages, they have to pay more to retain and attract new staff. Unfortunately, economy wide, productivity growth is not keeping pace with wage growth. This means that wage growth is coming at the cost of such things as company profitability or capital investment or increased charges (the extra wages have to come from somewhere).
We agree with Cullen that productivity needs to grow more quickly, but we dispute that the problem is at the firm level. It is at Government policy level. Government is too big relative to the economy, taxes are too high, and our infratructure is not up to scratch. Cullen's speech essentially conceded two of these points.
