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Saturday, November 24, 2007

When Is A Bonus Not A Bonus? 

Well secondary teachers have recently negotiated a new three year agreement with the government which is decidedly average in terms of two key areas. Namely wage increases and class sizes. Teachers crapped out by having 79% voting in favour of it though I imagine if they took the Auckland figures only it would have been far more even. The cost of living in Auckland (mainly of course house prices) has made teachers more hardline but with no weighting in the big centres taking the cost of living into account we are always going to get stiffed.

Its interesting that in NZ you can be a 'professional' but still qualify for Family Assistance, Accomodation Supplement and get a Community Services Card.

Anyway, to the original point of the post. When is a bonus not a bonus?

PPTA members received a 750 dollar bonus as part of the agreement. However that was before tax of course. After tax it came out at about 480 dollars. I then called up the IRD to tell them about it and our family assistance payments are going to be cut by 17 dollars a week until the end of the tax year so in essence the 750 dollar bonus is going to wind up being about 180 dollars in my pocket. I dare not call Work and Income or else our Accomodation Supplement will get slashed and the bonus will end up costing us god damn money. The IRD have these stupid thresholds rather than having some fluid sort of system which alters based on percentages and unfortunately we have just popped over one of these abitrary numbers.

I suppose at the end of the day we should count ourselves lucky that we live in a country where we even get these benefits.

But then again if we were taxed at 8% instead of 35% like I was in Korea we wouldn't fucking need any of it!!!

And on class sizes. Parents and teachers have consistently said they want smaller class sizes but the government has basically done jack to get them down. In the recent agreement they have said that they will "endeavour" to get them down to 26 on average per teacher. Apparently endeavour is a legally binding word meaning that they must do their best to meet that target but so far it seems the way they are going to go about this is to work with schools on timetabling to get the numbers down. After talking with the person responsible at our school he says it is impossible. Our Year 9 classes next year are forcast to be in the region of 34 per class. Our rooms are barely able to fit that many desks and chairs in let alone have the ability to talk to the students one on one for more than 3 seconds a lesson and check their work. And that's if you have a class that is well behaved (yes, some are).

I look forward to the government pulling its head out of its arse and realising that schools need to recruit more teachers and get more of them in schools. And how do they do this?

Get smaller class sizes and pay us buggars more.


tax cuts, more pay, less students.

Not asking for much now are we?

I'm more interested in what's going to happen in a about a decade. I'm led to understand the average teacher age these days is somewhere in the late 40s.

You think class sizes are big now, just wait and see how big they can get.
It won't get any worse than it is.

Teachers would simply walk off the job on mass because the government would have reneged on the contract.

But it has to get better than it is.

My job is sweet. My classes this year were 21, 25, 23 and 22 respectively but that was in part due to having two junior classes where they were either low band or had had half a dozen kids kicked out of school or removed by their parents with the writing on the wall.

I had 34 fourteen year olds last year in a mid band class which was an interesting experience.

It's not something which the government wants to keep up with though.

The average age of teachers is interesting. Our school is reasonably old but in my department I am one of the oldest at 31.

But there certainly aren't nearly enough young people entering the profession which the government (sucessive ones) is virtually on its own in deserving the blame.

You get what you pay for.

NZ ranks about 20th in the OECD in terms of spending on education and yet we rank 6th in terms of achievement. And yet we still can't get no respect from the media and government and to a significant respect society.

Hows about our business community start churning out stats like that.
I have a similar experience of pay increases and bonuses etc., albeit without losing extra money in the form of cuts to allowances.

In my part of the University sector pretty much everyone who is full time is also over $60k a year, and so in the top tax bracket. And pretty much everyone is full time.

We got a 6% pay increase negotiated by the Union, to much hoopla along the lines of "above the rate of inflation" and "costing the government $x million" ... which was ratified by over 98% of the members from memory.

No one seemed to mention that in fact we would only see 60% of the heralded pay increase. As most people would lose 39% in tax, and another 1% to ACC.

A small increase in employer payments to superannuation would help a little on the other side of the ledger.

But overall, it was next to nothing for me, and I suspect not adequate to keep up with inflation.

If I had lost even more money in the form of cut allowances etc. I would have been gutted.
The thing is that when I get my 4% pay increase soon it will mean a couple of thousand extra, but once allowances are cut accordingly (and they will take a big hit) the actual amount that I am better off will be about 1%. And compare that to inflation (which is not taxed I might add!) and we will actually be worse off.

Something that never seems to be brought up. A 4% pay increase minus over 1% in tax equals about a 2.8% pay increase. So chances are a 4% pay increase will even mean that Joe Blogs with no allowances whatsoever is still going to be slightly worse off.

And for Joe Family Assistance and Accomodation Supplement Blogs like myself you are actually clearly worse off.

We would need at least a 6% increase to about break even I'd guess.

But neither the IRD nor the government takes this into account nor gives a shit.

Probably hard for them to work out when a 4% pay increase for the PM actually works out at about 10,000 bucks compared to the 1-3,000 for the rest of us.
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This comment has been removed by the author.
Two scenarios very roughly:


If you are in the top tax bracket you lose 40% of any increase.

So basically a 6% increase becomes a 3.8% increase (i.e., someone on $60k would net about another $2,200 a year).

Although this percentage figure assumes you're keeping all of your existing pay - which you ain't.

Someone on $60k probably nets about $45k (excl. any rebates, supplements). So the extra $2,200 represents a 4.9% increase in net income.

Official inflation last year was 3.2%, so you're do slightly better than that. It wouldn't take too many cuts to allowances and such to put you in the red though.


If you are in the middle tax bracket you lose 34% of any increase.

So basically a 4% increase becomes a 2.7% increase (i.e., someone on $50k would net about another $1,350 a year).

Although this percentage figure assumes you're keeping all of your existing pay - which you ain't.

Someone on $50k probably nets about $38k (excl. any extra rebates, supplements). So the extra $1,350 represents a 3.5% increase in net income.

Official inflation last year was 3.2%, so you are idling in neutral. Any cuts to allowances and you are in the red.

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