The Government is spinning a false narrative when it tells the nurses, and the nation, that the nurses’ pay offer is the best they can provide, given the lack of money.
“The Government’s bank provided private banks and financial institutions with $55 billion dollars last year and there was no suggestion of a lack of money,” said Don Richards, the national spokesperson for Positive Money New Zealand.
“Our Reserve Bank simply printed the money, debt-free, and bought up $55 billion in bonds from the banks.”
But the problem isn’t with the so-called money printing itself, says Richards. The problem is how the Reserve Bank went about it.
Part of the reason it gave for providing the banks with the money was to reduce interest rates (which were already at a historical low after years of the Reserve Bank pushing rates down to unsustainable levels). “This was like using a steamroller to crack a walnut,” he said. After $55 billion of spending, interest rates came down by less than half a percentage point for about three months, before taking off again.
A secondary reason for giving banks this new money was to provide them with liquidity. This sudden, massive injection had the totally predictable result of driving up house prices, increasing inequality and providing a boost to the private banks’ already bloated profits.
Contrast this largesse towards the financial sector with our nurses who have been battling staff shortages, long hours and emotionally draining work in the face of Covid-19, Omicron and now the winter flu season. Elective surgery is being cut across the country and health professionals are looking overseas for better pay and conditions. Our health system is under siege, due to a lack of money.
Richards points out that, if the money had gone directly into the real economy — as it did with the Government’s wage subsidy and Covid Response and Recovery Fund projects — it need only have printed a fraction of the money it provided to the banks.
He cautions that the Reserve Bank money should not go directly to pay for the nurses’ wages, rather it should be used to pay for infrastructure such as roading, hospitals, schools and other public works.
By not spending tax money for infrastructure, that tax money and the billions of interest payments saved annually can be used to pay for nurses’ pay rises and other essential social services.
“Our economy does not need to limp along from crisis to crisis, as there is more than enough money available to pay for essential services.” says Richards.
Learn more about Positive Money’s view on how we should change the way public services and infrastructure are funded — and how we can also reduce inequality and make housing affordable again.