Fair Pay versus Tax Cuts: The Madness of Priorities in NZ
By Dr Harpreet Singh | drhsinghnz.substack.com | FB: @DrHSinghNZ
When a government faces widespread strikes from teachers, nurses and health professionals, the logical response should be to invest in the backbone of society: education and healthcare. Yet New Zealand’s current policy choices tell a different story, one that raises serious questions about priorities and fiscal sense.
The Cost of Fair Pay
Before the nationwide strikes on 23 October 2025, the government’s latest offers to three critical sectors amounted to $229.7 million for teachers, $72.9 million for nurses and $17.9 million for allied health and ACC staff. In total, this represents $320.4 million annually.
This figure is the cost of ensuring smaller class sizes and better learning outcomes, safe staffing in hospitals and clinics, and retention of skilled professionals in public services. In short, $320 million is an investment in human capital, social stability and long-term productivity.
The Price Tag of Tax Cuts
Contrast that with the government’s tax relief package, which costs $14.7 billion over five years, or about $3.7 billion per year. These cuts disproportionately benefit higher-income earners while delivering minimal relief to those struggling with rising living costs. Economists warn that such tax cuts widen inequality, reduce fiscal space for essential services and fail to stimulate meaningful economic growth compared to targeted public investment.
The Irrationality
Put this in perspective. Annual tax cuts cost $3.7 billion. Annual cost to meet fair pay demands is $0.32 billion. That means the government could fully fund fair pay increases for teachers, nurses and health staff more than eleven times over with just one year’s worth of tax cuts.
Why This Matters
Tax cuts are politically attractive but economically shallow. They deliver short-term applause while starving the very systems that sustain a healthy, educated and productive population. Meanwhile, underfunded schools and hospitals lead to teacher shortages, nurse burnout and patient risk, and declining public trust in essential services.
The Smarter Choice
Redirecting even a fraction of the tax-cut budget towards fair pay would stabilise critical sectors, improve social outcomes and boost long-term economic resilience. Instead, the current approach prioritises headline-grabbing tax relief over structural investment in people, a choice that history will likely judge as short-sighted and fiscally foolish.