Written By: - Date published: 10:01 am, April 29th, 2013 - 30 comments
Categories: capital gains, capitalism, class war, cost of living, david cunliffe, debt / deficit, economy, gst, kiwisaver, news, russel norman, same old national, spin, thinktank - Tags:
So the big Aussie banks in NZ are on course for showing they have made record profits in their last financial year, according to Richard Meadows on Stuff:
Banking analysts expect record-breaking profits from the ‘Big Four’ Aussie lenders this week, but their local offshoots’ performance may be slightly less dazzling. …
ASB, which follows a different reporting year, has already turned in a $365 million net profit for the six months to December, down 2 per cent from the previous period’s record result. On a normalised basis, which is the bank’s preferred measure, profit rose 7 per cent. …
Across the Tasman, the Australian Financial Review reported that analysts expected the parents of the local banks to book record half-year profits of a collective A$13.2 billion (NZ$16b).
The Sydney Morning Herald reported ANZ and Westpac’s cash earnings were expected to rise 7 per cent from the previous corresponding period, while the underdog NAB was tipped to gain 2 per cent.
Meanwhile, it seems that Kiwis are not the poor savers many politicians and journalists make us out to be. Apparently this is the conclusion of a report by the policy think tank The New Zealand Initiative (a bunch that prefer “Adam Smith’s invisible hand to government’s visible fist”). According to Catherine Harris’s article on Stuff, Kiwis are actually quite good savers:
In fact, New Zealand’s collective savings – from companies, government and households – had been “positive” for 38 of the past 41 years – in other words, its income was greater than its spending on consumption.
The savings figures did not include some forms of debt, though it did feature mortgage interest. But households’ net wealth had also risen.
So does that mean that the original money borrowed for mortgages is not included in the total debt of New Zealanders? Meanwhile, it argues that the problem is government policies that has caused the overall debt, even though it included government savings in NZ’s collective savings. The article claims that lack of saving is not the cause of NZ’s high debt levels:
In fact, the country’s chronically large current account deficit is the legacy of government policies between 1974 and the mid-1980s, says author and institute fellow Bryce Wilkinson.
“It was triggered by large trade deficits in the balance of payments, not least due to spiking oil prices, and exacerbated by the largely ‘Keynesian’ government deficit spending policy response.”
Since then, the large “net international investment position” – the $146 billion difference between assets New Zealanders own overseas and overseas-owned assets in New Zealand – had kept the current account balance in deficit.
I’m confused. It looks to me like they are trying Harris’s article does not provide support another claim in the lead sentence, that New Zealanders “also fear overseas investment unnecessarily“. Instead the article ends with reference to statistics that show,
Wilkinson also rejected the idea that Asians were taking over New Zealand. In fact, said the report, as of last year Australians owned 55 per cent of foreign investment in New Zealand, while those from Asean nations owned only 3.1 per cent.
Or is Harris and/or Wilkinson implying that Asean nation are “foreign”, but Australia isn’t?
I would have thought The New Zealand Initiative’s findings show that the (alleged) invisible hand is not stopping the foreign Aussie big banks ripping off Kiwis, and that their report is masking this by excluding some crucial forms of private debt.
Back in 2010, the NAct government launched a Savings working party because of their concerns about Kiwis not saving enough. Labour’s then financial spokesperson, David Cunliffe was skeptical. An Otago Daily Times article said:
“Having already cut New Zealand Superannuation Fund contributions and gutted KiwiSaver, the terms of reference for the Savings Working Group are now equally disturbing,” he [Cunliffe] said.
“New Zealanders all know `government savings’ is code for harsh cuts to essential services, `changes to the tax system’ are likely to favour the wealthiest kiwis, and references to `fairness and effectiveness of KiwiSaver’ could mean further gutting of this landmark scheme.”
When the report from the Savings Working group was released in February 2011, as reported by TVNZ, Cunliffe and Russel Norman were critical, arguing that the report put too much focus on cutting government rather than on private debt.
Labour’s finance spokesman David Cunliffe adds that the report also ignored any discussion about the impact of dramatically cutting public services.
Slashing government spending and raising GST would make the recession worse and be unfair to Kiwis, he said.
Russel Norman argued for a Capital Gains Tax (other than for the family home) was essential, in keeping with the Saving’s Group Report that showed that biases in the tax system were contributing to the inflation of house prices.
So, overall, the articles indicate the big Aussie banks are the problem, not kiwis’ inability to save. this is even though the New Zealand Initiative seems to be trying to skew the findings to support the NAct agenda for golvernment spending cuts.
We need better think tanks – especially, we need left wing alternatives to the current influential think tanks that begin with right wing assumptions about government intervention-bad; multinational corporates-good.