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The Standard

Economy

Written By: - Date published: 8:25 am, April 3rd, 2011 - 80 comments
Categories: economy, education, privatisation, public services, same old national - Tags: , , ,

The economy, shall we say politely, is facing some difficulties. The global financial crisis (combined with a drought) sent us into recession; but we had zero net crown debt, so the government was ready for lean times, like the squirrel with nuts stored for winter.

With a National government there was no plan as to how to weather the economic storm.  Those nuts that were squirrelled away were spent on a tax cut for the already wealthy; John Key broke his promise not to raise GST to balance out tax cuts for the rest.

What would have been better would have been a stimulus.  The cycleway is not so much the wrong idea as (by only employing a couple of hundred people) just far too small.  Government spending should be counter-cyclical – spend when times are bad and save when times are good – to balance out the rest of the economy.  The government is not a business, but instead sets the macroeconomic tone.

There was plenty that could have been spent on.  There was a housing shortage before the Christchurch earthquake, with 15,000 state homes needed.  There is a massive chance to invest in Public Transport in Auckland and elsewhere.  Hospitals need upgrading.  Plenty to get the economy going again and to have allowed us to recover ‘aggressively’.

Jobs are created directly, but also indirectly – all those new railway and hospital builders have a bit more cash and will spend it, and those businesses that benefit will do so in turn – the wheels of the economy wind back into life.

If you were determined to do your stimulus by tax cut, you would give money to the poor, who’ll spend it – perhaps by creating a tax-free zone at the bottom of the income tax scale.  You don’t give the extra money to the rich, who’ll inevitably save it, completely failing to stimulate the economy.  No jobs will be created.

You should take the opportunity to invest in skills, so when the recovery comes we’re ready to take advantage.  You don’t cut apprenticeships and tertiary training, pushing more onto the dole.  As it is we have building firms going to the wall, with virtually no apprenticeships and skilled tradesmen heading to Australia at precisely the time we need to be gearing up to fix an acute housing shortage.

This is also not the time to attack the public service.  You cut the fat in the good times, when the private sector will pick up the spare workers.  As it is there is very little fat (as global ratings agencies agree), so Bill English intends to cut muscle.  There was a promise to ‘cap not cut’ the civil service – with 2000 jobs gone already and more on the way this is yet another promise that has been shredded (along with the one not to restructure the civil service – as National merge all the departments they split in the 90s).

Cutting the public service at this point not only adds to very long dole queues but deflates the economy further, as seen now in the UK (0.5% GDP drop in the last quarter) and in the 90s here after the Asian crisis.  Those added to the dole queue don’t have the cash to spend to keep the private sector going through harsh times.

And so with all this growth has halted.  The small amount of stimulus Labour put in before the 2008 election has done its dash at the end of 2009 and in 2010 we saw below population-rate economic growth – a decline per capita.  Wages rose 1.9%, but the high inflation was more than double that, so on average we all got poorer.

And National still don’t have a plan.

Their only thought in 2008 was ‘tax cuts’, a mantra they’d been repeating for 9 years and now had to implement, appropriate or not.  In 2011 they’re left with ‘asset sales’, an idea that failed in the 90s and will fail again now.

New Zealand has one of the largest disparities between Gross National Income and Gross Domestic Product in the OECD, at around 7%.  The difference?  Money that heads straight overseas to foreign owners and lenders.

What will asset sales do?  Just expand that difference.  Whilst John Key wants to sell to ‘Mum & Dad’ investors, Contact shows how quickly those shares will head overseas.  And with it, ever more of our economic sovereignty, our real wealth, our ability to control what happens here.  It will not benefit New Zealand in the long term, just give the government a short sugar rush of cash, before moving more of our economy offshore.  Once again National go in for short-termism and quick profit at the expense of the economy like all those pre-GFC bankers.

A real plan for the economy would involve investment in skills and education, to foster the next generation of inventors, scientists, entrepreneurs.  It would involve looking at what we can do to help those in the productive and exporting parts of the economy, those in the inventive or hi-tech areas – ie those who actually create wealth for this country.  You wouldn’t cater to the (Australian) banks and the speculators, but rather weigh fiscal and monetary policy in favour of the producers.  You look at encouraging savings (KiwiSaver, New Zealand Super Fund and more) and using those savings to invest in New Zealand innovation, not housing that just leaves us all more beholden to those overseas banks.

Of course after National left the cupboard bare with their tax cuts and then we had the earthquake, any future government does face hard choices.  The government books aren’t dire, but there’s not cash-to-flash either.  So plans can’t be for the big stimulus that would have been great, but rather just have to look at re-structuring our economy as outlined above.  There are a number of other things too – not least reducing our dependence on oil, and the general greening of our economy to make sure we can survive the future – but that might have to wait for another post…

80 comments on “Economy”

  1. r0b 1

    Excellent, thoughtful post.

    A real plan for the economy would involve investment in skills and education, to foster the next generation of inventors, scientists, entrepreneurs.

    Far too long term and strategic for Nats. They want a short term quick fix from the cargo cult of tax cuts for the rich and the mumbo jumbo of the invisible hand. Waiting for Godot…

    Good luck in North Shore by the way. I’ve been impressed with your posts here so far. Be great to see you in parliament!

    • Afewknowthetruth 1.1

      I must disagree. Some aspects of the commentary are correct, but the author appears to be fairly clueless about the big picture.. Or scared to mention it.

      1. The reason we are in the parlous state we are (worldwide) is because we are living in a post peak oil world. Without energy nothing happens. With less energy less happens. And energy prices rise. Peak per capita energy was around 1979 and we are now into declining total energy. A continuous drop in living standards worldwide is inevitable. Like most people, Ben seems to be clueless on this matter and is living in the past.

      2. Development [in the orthodox meaning if the word] is not the answer, it is the problem. Development reduces the sustainability of communities, the nation and the entire planet. Development is what it driving the envronmental collapse we are now witnessing. Again, that seems to be hard for the scientifically illiterate to understand.

      3. The world is run by bankers and global corporations, for the benefit of bankers and global corporations. They are more shortsighted than everyone else.

      4. Industrial civilisation has no long term future. Either industrial civilisation collapses, due to declining energy and declining mineral resources, or desperation attempts to prop up industrial civilisation -via deep water drilling, converting food into liquid fuel, tar sands, nuclear power, strip mining etc.- render the Earth largely uninhabitable in a few decades. That seems to be the option most people prefer.

      • Galeandra 1.1.1

        Soooo…. what’s your political/governmental solution,then? The comments you make are hardly brand-new insights,and people in Average Street still need to eat and clothe their kids, get about the place and so on. Your response is not very useful.

        • Afewknowthetruth 1.1.1.1

          There is no governmental solution under the present system. Central government and local government [as they currently operate] are very much part of the problem.  By constantly pushing for economic growth, for population growth and for more urbanisation  they exacerbate every predicament we face.  And they stand in the way of appropriate responses to the predicament  -permaculture and powerdown.  

          Only when we have an informed general populace will there be any possibility of societal change. And the chance of having an informed general populace is close to zero at this point of time, I’m afraid  -the above article being a clear demonstration that the culture of denial persists.

           So individuals need to make their own preparations for the meltdown rather than looking for outside assistance. That means getting on with permaculture and powerdown immediately.

          • RedLogix 1.1.1.1.1

            I think lots of people know this is a possibility, but cannot know for certain what the future holds.

            So we tend to try and have a bob each way… a bit of gardening here and there, while hanging out on a job and paying down the mortgage.

            It’s that bloody mortgage (literally ‘death contract’) that is the biggest social controller of all.

  2. PeteG 2

    National did have a plan – to change little in their first term, hence their nickname, Labour Lite.

    The key thing will be what plan they signpost in the next budget, and what policies they go to the electorate with in November.

    In the meantime it’s worth noting that at this stage Labour don’t have a plan either.

    • Draco T Bastard 2.1

      Actually, both parties have a plan – they just haven’t communicated it much yet. NACT, though, will go with more tax cuts for the rich and the selling off of the family silver (in other words, more trashing of the economy to benefit the already rich).

    • MrSmith 2.2

      So Pete National have spent the last 2 1/2 years wait for it drum roll please ………….. trying to get back in for another 3 years!

    • <i> In the meantime it’s worth noting that at this stage Labour don’t have a plan either.</i>

      Ummm yes it does.

      Next post by PeteG – No it doesn’t
      Next post by me – Yes it does.
      ad infinitum.

      PeteG I am saying that you are either talking about something you have no idea about or you are deliberately spreading misinformation.  If you had the slightest inkling of the Labour party you would realise at last year’s conference there were a number of papers presented and that the Policy Council of the party has been beavering away developing these into policy.  It will not, repeat will not be released until the right time which should be around the time of the election campaign.  Some stuff may come out early but this is the inevitable approach that opposition parties take because otherwise the Government will steal their best ideas.
       
      EDIT: Oops tags do not work …

      • lprent 2.3.1

        Nope not in the new editor – it has visual controls 😈

        I’m trying to put in a flag to allow people to toggle it on and off. But it has some annoying bugs.

  3. Jum 3

    Pete G
    National always had a hidden plan, the plan you don’t take home to the real Mums and Dads. It’s in the emails of Hollow Men for all the world to see – the greed, the manipulation, the selfish grabbing of our children’s future wealth and whatever couldn’t be stripped and sold off will be destroyed. National and its acolytes disgust me.

    Whatever NAct say to the public will be a lie. You’re already perpetrating the lies. Labour has always had a plan. Their plans have always been about raising up people not moneytraders’ bank balances. Their plan was a steady, upwardly mobile plan for everyone and NAct have done their utmost to destroy that.

    Like MMP, in the times when the bulldog Hide got in with so few votes, and nobody wanted to admit they’d voted for it, nobody will admit to having voted for National or Act. We can tinker and improve MMP to get rid of the asset-eating hyenas like Hide, but National – there’s nothing ethical nor remotely humane left to make it worth continuing their life support system.

    Even Douglas is leaving; trouble is he’s already completed his nasty little plan of creating cheap labour in a once proud little country, called New Zealand, but now owned and controlled by everyone but ethical New Zealanders.

    • Afewknowthetruth 3.1

      I must remind you that it was a Labour government that destroyed the fabric of NZ society in the 1980s. And it was a Labour government that carried on with the proglobalisation, pro-international corporatissm, pro-free trade, pro-money-lender agenda under Helen Clark.

      Try taking the blinkers off.

      • bbfloyd 3.1.1

        i’ve found, over the years, that any argument that attempts to oversimplify an issue tends to miss the important points in said issue.. using slogans to back an argument devalues the attempted point being made.

      • Jum 3.1.2

        Afewknowthetruth

        And I must remind you that Roger Douglas and the business rotundtable had control over Labour in the 1980s and Helen Clark had little control over what that fish and chips group did.

        The fabric had already been ripped to shreds by the time Helen Clark moved into Labour as PM in 1999. Whatever mistakes she and Cullen made re carrying on the selling off is miniscule compared to Douglas and Richardson and now Key and English.

        If you seriously believe that there was much she could have reversed in the new century apart from uplifting New Zealanders and trying to get back a reasonably level playing field, given half the controls over New Zealand and New Zealanders were already deals done and contracts made then you need to take your blinkers off.

        She knew National and Act would rush into a free market with anything and anyone. At least some control would have been made over the China free trade deal as regards our workers. No, I have taken them to task for all sorts of things and shall continue to do so. They’re still better than NActMU.

        As for Labour being government in the 1980s. What a joke. It was Act then and it has been Act since 1984 and you need to accept that. A year before Labour even gained the Treasury benches in 1999, Douglas was working with Treasury on his plan. ‘His’ no doubt a cover for all manner of low-lifes seeking to own and control New Zealand.

        Any investigation into global politics throws up the ‘it’s all about the money, honey’ moneytrader thinking. If you think she as PM of New Zealand could have held that at bay, then you lose some of my earlier respect for your point of view, Afewknowthetruth. Your post 1.1 is excellent but in attacking Labour which is more green aligned than NAct (we can fight over the degree later) you will get NAct. Good luck with that.

        This year it is totally up to the people of New Zealand to decide what is more important to them. I hope it’s not selfish greed.

        • Carol 3.1.2.1

          I think it was quite hard for the left in most countries to stand against the international neoliberal tide, because there have been strong pressures coming from corporates, the media and the most powerful western countries to adopt the neoliberal way.  I disagreeed with some things the Calrk government did, but they did resist the strongest of the neoliberal pressures, and made a bit of a buffer for NZ.  This buffer has, of course, been largely torn away by a couple of years of NAct.

          • Jum 3.1.2.1.1

            You’re absolutely right, Carol.  The work Clark and Cullen and Co did to stop the full frontal attacks by the extreme rightwing will be recognised one day.
            Until then, we have to put up with the 5th rate government our citizens voted in 2008.  But Labour is on notice.   If they act in any way as a NAct lite government in 2011, and I am confident of them winning, then I will attack them.  Social support systems must take precedence again as they did in 1999 to 2011, but with more courage and more planks against the garbage right wing that intend to feed off us.

            • Jum 3.1.2.1.1.1

              Yes, 2008 to 2011 there were still planks of support but NAct, I am unhappy to say, has finally finished unravelling them.

            • Herodotus 3.1.2.1.1.2

              “The work Clark and Cullen and Co did to stop the full frontal attacks by the extreme rightwing will be recognised one day.” Yes some already attribute what they had achieved in NZ. Allowing a country to follow the lines of the 80’s. Looking after the rich, allowing NZ to continual to fail financially and socially, and what did eventuate from the Lab strategy? The one that was to move up into the top 1/2 of the OECD rankings …. We fell further and slipped a few more places. Jum a few quickies for you .. How was our current account? most peoples “increase” in wealth was from where? how was it that NZ wages were going backwards? how is it that a family earning twice the average income is considered wealthy? and finally how is it that all Lab politicians I have corropsonded ( 5 from the front bench in 06/07)did not have an idea what a livable wage is for a family ( a basic I thought that PM, Min fin, Min of Soc Wel would have a strong hold on)? They had no idea and still dont on what it costs to live, how to fix it,  just what to say. With a diet of words from a politician, result we starve, just look atthe inadequate benefit levels that have been set 
              ps to those running the site nice user friendly modes 😉

              • Jum

                herodotus
                Aren’t the OECD ratings wonderful – you can pick out rates you can use to your advantage and ignore the ones that don’t.
                Current Account – ask the people why they were silly enough to fall for the ‘you can have it now’ mantra – honestly you people make me tired – and the marketing spin  Labour didn’t force people to go out and buy what they couldn’t afford.  The greedy moneytraders spun that.  NAct spun what you are spinning now.  They are now government.  The thought of another term with more people like you? – like eating brussels sprouts.
                Wages – ask the national supporting businesses why they insist on paying low wages to their employees when they can get away with it – thank goodness we have a minimum wage (at least for now).  Guess what – wages are an expense and businesses hate expenses.  Answer me why when NAct came in, very soon after business was saying they could handle the recession and keep their staff, a group of NActs visited and suddenly staff were being laid off; NAct had told them they could take on new staff under the 90day probation and treat them like shit.  That’s business for you; that’s NAct for you.  Happy a happy life with your neos.
                Liveable wage for  a family – do some homework yourself, you lazy hooah.  Try the Otago uni scales for a nutritional diet for children, for teenagers, for men, for women.  Check out the rents which Labour kept at reasonable levels but NAct are increasing stealthily – they do everything stealthily.
                 
                As for you… goodnight.  You’ve already wasted too much of my valuable time.

                • Herodotus

                  Jum- ince to see yet again someone who cannot answer what should be a simple question – A livable wage, and yes I have done some work on it. Lab has not and that is my issue, those in the party have no idea.
                  Labb accordingly to T Mallard kepf the rents low by giving subsidies for the landlord. Remember the reason that Lab opposed the tax changes … because rents will increase. I never saw a policy of subsidising landlords on any manifesto
                  Re OECD is was helen Clark and co who referred to this sio I am not cherry picking- refer to 2000-07 budget comments and see what reference the lab govt placed in it, until the last budget when it was not commented on. So dont throw this crap at me talk to those within Lab at the time who used this measure for NZ to progress-unfortunately you need policies, committment not just good luck to achieve, and Lab whilst lucky were not that lucky
                  All the problems you associate with Nat can also be leveled at Lab, (low wage growth, benefit levels that remained unchanged after adjustments etc) and as long as many here view the world Lab Good = Nat Bad , the crap that Lab dished out will be forgetton and we will end up with another lite govt that continues along the neolib track. Try and open the other eye JUM so you can see the world, and look at what was and is happening. No wonder lab lost 08 they forgot to experience the real world.

        • ZeeBop 3.1.2.2

          Pretty simple, dob in a drug dealer. Then the people who are behind National won’t have their fix to comfort them. If you love your children dob in a drug dealer, people who wield such power and don’t care how they hurt the citizens of NZ have to be self-medicating on something illegal. Key lied, he said no cuts to services, no GST and he could give a tax cut to the rich, now he won’t break the tax cut, who does he think he’s kidding? Its your classic bait and switch, now we are in debt to the tune of the cost of tax cuts for the top end of town. Like nobody noticed! Labout could see Key could not count and quite openly called him on trust. Why will nobody talk Key who knows this economy backwards to task for no being able to count how tax cuts would cause massive government borrowing and are now forcing cuts to services and rises in taxes for most citizens.

  4. bbfloyd 4

    pete… you have no idea how boring it has gotten seeing that tired old mantra trotted out every time someone puts forward a relevant critique of this govt’s obvious shortcomings… (labour has no plan).

    it’s utter rubbish, and if you were to think past your own mental blocks you would recognise it for the “common sense” that it is… it surely can’t be that hard to see that sensible, forward thinking policies, and decisions that actually work are preferable to slick ad campaigns and cynical propaganda.

    common sense shouldn’t have to be dressed up in tinsel to get across to people.. it speaks for itself, and the ones who can’t see that are the ones doing the most damage to our future.

  5. burt 5

    Ben

    Ever so slightly thought provoking post. “Participated”.

    Next time you try and spin the National bad line you might want to add the context that 2008 was pretty much a re-run of 1990 where the outgoing Labour govt departed with the economy in tatters and hidden financial time bombs broadsided National & NZ tax payers to squeals of delight from myopic Labourites who would rather we all starved under Labour than flourished under National.

    • seeker 5.1

      Bert

      In what way do we “flourish” under National??

      • Lanthanide 5.1.1

        By broadening our culinary horizons.

        My bf read the post about cockroaches and cat food over my shoulder, and said “the last time I remember hearing these sorts of stories was the late 80’s and early 90’s.”

      • Galeandra 5.1.2

        and ‘pretty much a rerun’ is just a straight out fabrication as Burt has been told over and over. Troll

    • Draco T Bastard 5.2

      Ah, look at that, burt’s back with his National good, Labour bad false dichotomy.

      The 4th Labour government was the first Act government – the economy was trashed by neo-liberalist policies, the ones that NACT are following now. We will never flourish under NACT, in fact, we never have done.

  6. Tangled up in blue 6

    Yes great post.

    I would love to see a post outlying the justification of voting Labour over National this election. The general public view seems to be that Labour failing as an opposition party justifies supporting the National Party although it has has failed NZ’s economy.

    • bbfloyd 6.1

      T.u.i.b….the perception you talk about is one pushed relentlessly by the tory lapdogs in the media.. the reality is rather far from that. of course, doing the right thing by ones constituents, and representing them at every opportunity isn’t as “exciting” as yet another photo opportunity, but it actually counts, because that is what true democratic representation is.

      i really find facile assumptions based on propaganda to be as irritating as they are boring and counterproductive.

      • infused 6.1.1

        Sorry but you’re wrong. If that were true, why does Labour still suck in the polls?

    • Jum 6.2

      Tangled up in Blue

      Maybe the public has to be asked what they think is a failing in Labour. Are they suggesting that Labour isn’t being attack-dog like NAct? I thought they made it quite clear they didn’t like bad behaviour in government, although it never seemed to bother them when National/Act were doing it.

      Maybe the New Zealand public is just selfish and greedy and if promised some money will back NAct, without remembering the tax which NAct gave but also took much more away in stealth.

      I certainly can’t blame people wanting extra money when their wages are so low to begin with. NAct’s quoting ‘take home wage’ not improved gross wage is just another example of their slimy cunning.

      I don’t really know what New Zealanders want. They have reacted to what the top-down leaders of the country have done in the 80s and 90s – got greedy and selfish. I thought the building up of Kiwis in the last decade would be enough to bring back some hope but NAct has effectively crushed that in just a couple of years.

      We must always remember that New Zealanders voted in a slick moneytrader, when globally, voters were turning off the neo-greed. They are certainly gullible. Perhaps a course in political history in early schooling might reinforce the basic truth that the government is only as good as the voters. Maybe that’s why Kiwis still ‘love’ Key. They’re too embarrassed to admit they made a mistake and have sentenced the rest of New Zealanders to a miserable future.

      It’s great having freedom as an individual. Trouble is, a group of individuals working together is needed to get back this country’s reputation as a caring, socially-minded place. I hope it is Labour/Greens/Progressive. It certainly won’t happen under NActMU.

      • infused 6.2.1

        Yeah blame the people. Maybe you should look outside-in. Labour have been utterly useless for the past two years.

        They were useless in 2008, which is why they got chucked out. I still don’t think Labour has woken up to that. It’s like “What have we done wrong?”

        • Jum 6.2.1.1

          Yes, infused, I will blame the people, all those who voted in NActMU. Thank you for your kind offer.

  7. burt 7

    Ben

    Of course after National left the cupboard bare with their tax cuts

    Have you forgotten that Cullen left the cupboard bare and when Labour departed there was a decade of deficits forecast ?

    Let me guess Labour’s tax cuts were good because they were designed to get Labour re-elected but Nationals tax cuts were bad because they… well because National did it of course.

    This little reminder from May 2008 might help you remember how it really was Ben rather than how you wished it was;
    http://www.nzherald.co.nz/audrey-young/news/article.cfm?c_id=1501219&objectid=10511832

    • bbfloyd 7.1

      burt… you’re quoting an arch tory to show “proof” of your illogical opinions? you’d be a worry lad.

    • burt 7.2

      bbfloyd

      OK, fair enough you can target the messenger – are you brave enough to say Cullen never made a statement about the cupboard being bare around the time of the 2008 election ?

      Funny thing the facts being able to stand independently from who repeated them…. Wake up bbfloyd….

      • ianmac 7.2.1

        When Labour take over in November by winning the Election, will they find that National has left the cupboard bare? Shame on them.

      • Colonial Viper 7.2.2

        are you brave enough to say Cullen never made a statement about the cupboard being bare around the time of the 2008 election ?

        You’re saying that the cupboard was bare, burt?

        Yet English still managed to give the rich a whole lot of tax cuts? If the cupboard was bare where did the money come from? Oh yeah, he borrowed it from the Chinese. Borrowing money from the Chinese to give to the rich.

        Smart people you’re backing, burt.

  8. Jum 8

    Burt,

    Seriously, learn to compare like with like.

    Cullen brought back a railways (with 75% support from New Zealanders). If Joyce stopped living in the 19thC with his vicious, selfish disregard for huge swathes of the population who can’t or don’t drive, by disallowing rail coaches to be built professionally and competitively in New Zealand by men absolutely behind giving quality work for quality belief from government and by using valuable land to build unneeded ‘holiday’ roading at this time of recession and repression, then New Zealand would be progressing not regressing.

    Key gave huge tax cuts, and continues to do so, to only a few. We have seen zero positive results in the economy for him having done so.

    Get the story right, Burt. Act left New Zealand in financial and social tatters in 1990. Act left New Zealand in social and financial tatters in 1999; Labour left New Zealand with zero government debt – don’t blame Labour for greed within society which was tempted by moneytraders and the ‘you can have it now’ mantra. NAct created ‘futures’ debt in departments like ACC to make the figures look worse than the truth which was a fund managed financially by valuable shareholdings with Government. The recession, brought on by the rich bros reduced that shareholding, not Labour.

    JKeyll and Hide and English have squandered that excellent inheritance on tax cuts to the rich which have gone nowhere in this economy and they have reduced a huge portion of New Zealanders to rags.

  9. Sanctuary 9

    I see Mr. Hickey continues to bang his debt drum in the Herald – http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10716700 and in particular the on-going campaign against WFF. What absolutely astonishes me about Mr. Hickey’s prescriptions is his total silence on stagnant wage growth and the political realities that underlay the Labour decision to introduce WFF. Mr. Hickey appears to think that the government should just axe WFF, free child care and interest free student loans as if these will have no impact whatsover on vast numbers of New Zealand families. If the Pigs on our Animal Farm are the absentee landlords who demand monopoly rents from their NZ banks and other businesses then I would like to see Mr. Hickey to include some thoughts on we can force the Jessie’s and Bluebell’s of New Zealand’s compliant Quisiling class to put wages and salaries up. These people at the moment can get away with simply refusing to lift wages and salaries in line with productivity growth, inflation or in line with anything except their own and their coporate overlords greed and self-interest.

    For better or worse, the Labour government chickened out in 2000-2001 when confronted by a truculent capitalist class and it’s threats of a capital strike. Unable to move the entrenched neo-liberal fanaticism of our managerialist class, Lbour sought other ways to re-distribute wealth to maintain middle New Zealand’s standard of living. To my mind you cannot discuss axing WFF without addressing the need to reform labour relations laws to allow wage and salary workers to achieve meaningful pay rises. To simply do away with WFF – as Hickey appears to advocate – would be to suck so much spending out of the NZ economy that it would collapse into a severe depression.

    Like most of New Zealand’s simplistic economic commentators Hickey fails to take into consideration the reality that power, social and cultural considerations inform political decision making at least much as simple raw economic data, and he simply to fails to grasp that the economy is not an island uninfluenced by the needs of the people who work in it. To my mind, this strain of particularly obtuse analytical stupidity is rampant in our economic commentary, and it means you would get economic advise that is at least as useful from a professor of divinity or philosophy as you get from the likes of Bernard Hickey.

  10. tsmithfield 10

    “Their only thought in 2008 was ‘tax cuts’, a mantra they’d been repeating for 9 years and now had to implement, appropriate or not.”

    It would be interesting to see what governments would do if those wealthy, who pay the bulk of tax in NZ, decided to bugger off on mass and take their wealth with them. Then I bet governments from whatever political persuasion would be offering all sorts of tax incentives to get them to come back.

    Perhaps those on the left should think about this possibility. As it could happen if they get their wish to put tax rates back up for the wealthy.

    • Draco T Bastard 10.1

      The top 10% own about 50% of the wealth but fail to pay 50% of the taxes. This would indicate that they are not paying the bulk of the tax.

    • RobC 10.2

      Given we have 6 y.o.’s eating cockroaches and elderly eating cat food, if all the rich and wealthy fucked off life may actually get better.

      • Draco T Bastard 10.2.1

        No “may” about it – life would be better just so long as we were smart enough to prevent them from taking our wealth with them. We really can’t afford the rich.

        • tsmithfield 10.2.1.1

          If the top tax rates are dicked around with again, a tax strike would probably fix the problem. Similar to what happened with the TV licences awhile ago.

          • RedLogix 10.2.1.1.1

            Explain to me where the rich would go for lower taxes?

            Korea or Mexico?.

            • tsmithfield 10.2.1.1.1.1

              Actually, Britain looks quite good. Especially for those with companies.

              • Colonial Viper

                Let them go to the UK then TS.
                They are in a more miserable social and economic situation than NZ, and their austerity measures are leading to massive social upheaval and unrest.
                People who decide to relocate their lives based on tax rates need their heads read.
                And of course, the discussion misses the point completely – people move for higher incomes, not for lower taxes. Bill and John can’t deliver on higher incomes so they fake it with lower taxes.

                Hey how come there aren’t any more paragraph gaps when I press return? Darn except this one when I edited the comment.

                The other thing is, why participate in a race to the bottom of the barrel in terms of tax rates? That’s as sensible as a shop trying to reduce it’s pricing close to zero, thinking that is going to attract the types of customers it wants.

                NZ should find niches where it is strong and go for them.

                • I like Monbiot’s comment on the argument when it was raised in England.

                  He said:

                  “It’s a bitter blow. When the ­government proposed a windfall tax on bonuses and a 50p top rate of income tax, thousands of bankers and corporate executives promised to leave the country and move to Switzerland. Now we discover that the policy has failed: the number of financiers ­applying for a Swiss work permit fell by 7% last year. The government must try harder to rid this country of its ­antisocial elements. ”

                  Link is at http://www.guardian.co.uk/commentisfree/2010/feb/22/bankers-executive-flight-tax-avoidance

            • RobC 10.2.1.1.1.2

              We established this the other day. Somalia – 0% tax rate.

          • Pascal's bookie 10.2.1.1.2

            Hey T, hear this lot; this notion of yourn; that rich folks’ll flee the high taxes and suchlike. The Galt thesis, or whatevs.

            Cite? Sounds fairly testable. how about we look at where the millionaires live and what the taxation is. Perhaps within the US? Migration between states is simple and has less negative consequences, making the shift easier. Also, we have a graph.

            http://www.asymptosis.com/1098-if-millionaires-vote-with-their-feet-they-apparently-dont-care-about-incomes-taxes.html

          • Jum 10.2.1.1.3

            Bring it on.  A huge embarrassment will result.  If a reasonable tax rate is given for the middle income earners and a really high one for the wealthy and they take a tax strike on the really high one, we won’t notice.  We won’t notice because the wealthy pay so little to begin with.  And when we remove the tax cuts from them because it has to be aligned to what tax they supposedly pay, they’d be even poorer.
            Or maybe we could just be a fairer society and give money from those wealthy who didn’t pay tax to those who did and then the wealthy may be welcome when they get old and need our support.  But they will go overseas to collect their money which is overseas and they’ll spend it overseas, as they always have.

          • felix 10.2.1.1.4

            O NOEZ!! If tsmithnorrisellissgeorge’s mates all piss off, who’ll suck all that excess money out of the economy?
            And where would we find people talented enough to replace them in their oh-so-important corporate roles?
            Lol.

        • LynW 10.2.1.2

          Agreed Draco T Bastard. Corporate welfare is crippling us!

    • Jum 10.3

      Stop the utter tripe TSmithfield.

      Those wealthy don’t pay tax in New Zealand; that’s moneytraders lore 101. They just steal ours. They should be jailed not knighted for the damage they have done.

      The bulk of taxes are paid by the middle income earners that don’t have accountants or overseas bank accounts or’special financial support’ from government.

      In fact if they left the wages of New Zealanders would go up. The ethical standards in New Zealand certainly would.

      Another one for my list of NAct toadies who stand to gain from ripping off the New Zealand worker:

      TSmithfield

    • ianmac 10.4

      Actually the exodus might be a good thing. New Zealand would be left with a poorer but more just society, I reckon TS.

    • Galeandra 10.5

      By ‘their’ wealth you mean the billions belonging to people like Messrs Fay & Richwhite? Ha! Didn’t they take their wealth to Geneva anyway. Or is that sort of thing just urban myth? And where does Doug Myers live these days?
      The ‘wealthy’ in my youth paid high taxes and got a high social return. Today the “taxes” are just as high: PAYE, GST, insurances for income protection, and against disability or premature death, as well as for private healthcare without rationing or waiting lists, & retirement orientated investments that are required to live in a modest way in old age. All add up to a damn sight more than 39% or 45% or even 55% of gross earnings, and a lot of the ‘tax’ paid for these services goes straight to corporate profits.
      Most of these needs were met by public services paid for out of taxation under the old regime.

  11. Jum 11

    Hickey was a ring-in for NAct. He’s just like Colin James who purports to want the best for New Zealand and even New Zealanders believe it or not, but somehow along the way, the only people who suffer are the workers.

    His recent pretence to want the best for all New Zealanders was a lie. Colin James columns are always slanted towards the neo-cons in government.

    Whenever people like that gain, the rest of New Zealanders always lose. Neo-cons always remove the safeguards or ensure there aren’t any because perpetrating their sentences on citizens in any country they control needs a desperate compliant population.

    That’s the only plan NAct and the advisers like Hickey and James have – remove the safety measures, turn on the gas and watch the populace rip each other apart in their rush to reach higher ground.

    It’s disgusting in a country like New Zealand; that is what makes this current recession so unforgiveable; there was no need for it to be so bad here. Greed made it so.

  12. seeker 12

    @Burt 11.12am

    Did you go to lunch?

    I am still waiting to hear in what way(s) you believe we ‘flourish’ under National.

    • burt 12.1

      seeker

      We don’t flourish under National, well not at least in the first 2 terms of recovering from Labour tax and spend recession causing policies. Did you forget that when Labour left office we had a decade of deficits forecast?

      Poor Ben seems to think that the failed economy that National took over was their fault. I guess 9 years of Labour policies might have created a domestic recession but that’s National’s fault right ?

      • Draco T Bastard 12.1.1

        Did you forget that when Labour left office we had a decade of deficits forecast?

        Which was due to…

        Oh, that’s right, a global fucken recession which NACT has made much worse in NZ by cutting taxes for the rich while increasing taxes on the poor.

      • burt 12.1.2

        You are a moron. Labour left office with a decade of deficits predicted because of what National did in the 18 months after that occurred. What a twat.

        [Burt I know these are anxious-making times we live in… but do you think you might do your bit keep the tone less confrontational?….RL]

        • Colonial Viper 12.1.2.1

          English has steered the country into a fiscal iceberg. He created a fragile economy which was then further frakked by the earthquake.

          • ianmac 12.1.2.1.1

            Actually not sure that he steered into an iceberg CV. I think that he was paralysed with indecision and no one was steering our ship. And Key was too busy flouncing for the cameras.

        • Draco T Bastard 12.1.2.2

          burt, you make absolutely no sense. Labour left office with a decade of deficits predicted because of the GFC. NACT have made that worse by cutting taxes and so increasing the deficit.

  13. seeker 13

    Thanks Burt

    But you wrote:

    “myopic Labourites who would rather we all starved under Labour than flourished under National.”

    – so obviously you believed we would flourish under National. Why? Am genuinely interested.

    • burt 13.1

      seeker

      I think you missed the point. for example;

      Just before leaving office Cullen spends all the spare cash on railways, he left the cupboard bare knowing full well it was a maintenance spending shackle on what would be a cash strapped economy for National.

      National have been borrowing from day one because all Labour did for 9 years was bank the over taxation to reduce national debt. The govt were awash with cash and personal/consumer debt skyrocketed. With one of the lowest national debt to GDP ratios (and one of the highest personal debt ratios) in the world and a failed stagnant economy what option was there but to borrow.

      Now of course it’s National’s fault isn’t it…. because like Labour they also gave overtaxed people tax cuts to win the election. Just National’s were bigger and they won so therefore they are evil.

      • Colonial Viper 13.1.1

        and a failed stagnant economy what option was there but to borrow.

        Blah blah running the old “There are no alternatives” line are we burt?

        How about not giving billions in monies back to the already wealthy, that’s an alternative. How about levying a one off property and income tax to help rebuild Christchurch, that’s an alternative.

        But I will agree with one thing – Labour did let private debt levels rise way too high – essentially allowing our Australian owned banks to borrow from overseas up to the eyeballs.

        all Labour did for 9 years was bank the over taxation to reduce national debt.

        Don’t be ridiculous, the reduction in our public debt levels was what saved our bacon in the GFC, and also what gave Bill and John such an easy time.

        And what are they doing with this cushion? Gifting it to the already wealthy.

      • RedLogix 13.1.2

        Just before leaving office Cullen spends all the spare cash on railways

        burt it was $670m. Less than three weeks of borrowing by the current govt.

        As for being a ‘maintenance shackle’ on a National govt… well hell that would only be fair. After all it was a Nat govt that sold the rail system to a pack of corporate asset strippers in the first place….was it not?

        As for this idea that NZ is overtaxed…. NZ already has one of the lowest total taxation on personal income in the OECD.

        • Pascal's bookie 13.1.2.1

          RL, burt thinks that running a surplus is overtaxing. Labour was obviously overtaxing; the fact the were running surpluses proves it so.  But when National runs a deficit, that’s Labour’s fault.

      • Macro 13.1.3

        burt
        You should have a read of this:
        http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all
        This is where Nact want NZ to go. We are well on the way – Govt’s since 1984 have been leading us down this garden path towards greater inequality. There was some respite between 2000 and 2008  – but not much. NZ now has the 6th highest income gap (how much richer are the top 20% to the bottom 20%) of around 7 (ie they are 7 times more wealthy) after Singapore and the USA with income gaps of around 9 and a half. These figures are for Western “Developed” countries. p17 “The Spirit Level” no you don’t like that book – but the facts are the facts!
        I suppose you may consider yourself to be one of the top 1% and are quite happy that things progress along the path of redistributing wealth by more handouts to those who do not need it. I myself am also fortunate to not to have to worry where the next dollar is coming from. But the path of increasing inequality is patently an unjust path. It leads to increasing social unrest, and ultimately revolution. Societal disruption is not something unique to the Middle East – as the French well know.

      • seeker 13.1.4

        Thanks Burt
        I think you have courteously tried hard to answer my question, but no matter how I try I can’t agree with your assertions.
        My observations and experiences since the eighties have led me to conclude that the majority of people do not flourish under National or any other Conservative party/ideology.I also notice the horrible irony today that starvation has returned to our great country (see A Class Massacre) and this is under National not Labour as you feared.“myopic Labourites who would rather we all starved under Labour than flourished under National”.
        I agree with Macro @ 8.29pm. and hope that one day you will see the truth too.

  14. randal 14

    somepeople on here think this government really cares about people.nada. they only care about themselves.
    the whole country can go to hell in a handbasket and they will still be sitting pretty so why should they care?

    • Afewknowthetruth 14.1

      Agreed.  The average politician is a self-serving liar.

      Jum.
      Cuba has stood up to ‘the neofascists’ remarkably well for over 50 years. Starting from an incredibly impoverishsed base and against a continuous US blockade , Cuba has built up one of the highest doctor- to- patient ratios in the world, has one of the lowest inequality of income rates, and one of the most sustainable food production systems anywhere. Helen Clark could have easily stood up to the free marketeers  -she just didn’t want to. Tresury ruled the roost under Labour,  just as it did under National.  HC was quite happy with that arrangement. Besides, HC had her eye on a UN position and wasn’t going to rock the boat.  And don’t foget she was forever tripping the world looking for free-trade deals to sign instead of getting real solutions  to the predicament implemented. I vividly recall contating her to discuss real solutions to our predicament: she ‘wasn’t interested’ ( of course).

      The reason we have a National government right now is because people were thoroughly sick of Helen Clark and Michael Cullen  -who was personally responsible for losing billions of dollars of our money- and the direction they were taking NZ.  All the preconditions for the implosion we are experiencing were set in place under the 9 years of HC and MC. National have just made it worse.

      Please don’t think that by criticising Labour I am supporting National or Act  -they are more lothesome than Labour. I am just saying is Labour is not the answer because Labour  doesn’t have any strategies that will work.  Labour consists of a bunch of incompetent fools who just want to tweak the knobs slightly when what is required is a total rethink.

      The choice on offer does not appeal to me at all:  off the cliff ulltra-fast under National or a off the cliff a little more slowly under Labour. Two faces of the same coin.  That”s why I won’t be voting for either.

  15. Carol 15

    Crown Lynn provides a bit of a study in what has happened to our economy since the 1980s.  Real productivity headed offshore, NZers now have little control over their capacity to generate a stable, secure and adequately-paid workforce.  Meanwhile, the unions role in keeping the employing classes honest has been weakened.

    Crown Lynn succeeded as a producer of pottery since the early 20th century, through trial and error, ingenuity, hard graft, close contact between owner/manager & workers, government protection from international competition. Albeit this was done through using a significant number of modestly-paid, women workers.  According to NZ History Online:

    Successful Government lobbying to place higher tariffs on imported goods assisted in the company’s fortunes. By 1960 it reached its peak production of about 10 million pieces, becoming the largest pottery company in the Southern Hemisphere at that time.

    But after the 1984 neoliberal shift, Crown Lynn/Ceramco collapsed

    Crown Lynn became Ceramco in 1974 and diversified into a series of new interests, including electronics, appliance wholesaling and making acquisitions including Bendon lingerie. Ceramco announced the Crown Lynn factory closure on May 5, 1989. By then staff numbers had fallen to between 180 and 220, and many amongst the largely female workforce believed that the Government had sabotaged the company by allowing cheap imported tableware into the country. Crown Lynn’s share of New Zealand’s domestic tableware market was then less than 20% in value, despite the company’s successful move from the lower end of the market to a more middle ground.

    Ceramco’s mangement blamed that lack of a shift to flexible labour laws:

    Ceramco blamed the closure in part on union inflexibility in a pre-Labour market reform economy. Although Crown Lynn was showing signs of recovery after years of trading losses, the company simply could not compete with the advanced manufacturing technologies of Asia and Europe. All of Crown Lynn’s assets, including plant, designs and brand name, were sold to GBH Porcelain Sdn Bhd of Malaysia in September 1989.

    But such a shift in labour laws in the long run would only have shifted NZ workers to being underpaid, over-worked and/or casualised.  So now, the famed brand of Crown Lynn is a thriving foreign company, based in Kuala Lumpur.

    We need a government who will, once again, back NZ producers, enable and support innovation and experimentation, and protect the NZ producers and workers from powerful overseas corporate competition.

    • mikesh 15.1

      “We need a government who will, once again, back NZ producers, enable and support innovation and experimentation, and protect the NZ producers and workers from powerful overseas corporate competition.”
      Agreed. Our workers shouldn’t have to compete with firms whose only advantage is that they underpay their workers and provide crummy working conditions. We should be prepared to impose tariffs, or other forms of protection, not to protect our workers so much as to protect our workplace values.

    • Afewknowthetruth 15.2

      It was much the same story for the tanning industry under successive National and Labour governments.  NZ went from a producer of finished leather products  -shoes, handbags etc. to a supplier of semi-processed hides and skins for overseas tanneries. The same with most of the textile industry: sell the raw material and buy back the finished goods. Timber: sell the logs, buy back the furniture.  Food: sell all the best stuff overseas and buy in cheap, low quality food from China etc.  Great for the charlatans and saboteurs who have been looting the country for the past 30 years.

      Now that the economy is close to completely rooted ordinary folk can’t get decent jobs and can’t afford good food and good clothing. Thanks a lot Labour and National. 

      Mind you we can’t simply blame the poltiical parties; the ‘idiots’ who keep voting for them are just as much to blame. More so, in fact.     

  16. clandestino 16

    Essentially what’s required is a phased withdrawal from GATT and its regional spawn and tariffs on certain important industries reintroduced to enable NZ lead time in preparation for the inevitable slump in global trade brought about by, amongst other things, energy scarcity. 

    Those who are truly against the ‘neo-libs’ – who, with the Uruguay rounds in the 80s and 90s gutted sustainable employment in western countries, and who with the Doha round are obsessed with bringing about mass social dysfunction in the third world through imposition of ‘efficient’ agricultural practices – must surely be in favour.

  17. Mamadoc 17

    Hey Ben – whare does the agricultural sector fit in? they are still great producers and should be in a place to do more- the world is alwaysgoing to need food and fibre….

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