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The Standard

Slash and burn, Key’s choice

Written By: - Date published: 10:41 pm, March 21st, 2011 - 91 comments
Categories: budget 2011, public services - Tags: ,

John Key says there is to be no new money in the Budget. The health, education, and other locked-in increases  plus the Christchurch rebuild will come from cuts elsewhere. Cuts of up to 32%. It doesn’t have to be that way. The rebuild and the shortfall from the failing economy can be easily covered if Key wanted to. If he chooses to slash and burn, it’s because he wants to.

I took the 2011 spending that is outlined in the 2010 Budget, then I took off the ‘new spending’. That “$800 million of new spending” was actually only $394 million of new money and $410 million of cuts reallocated to other areas (what the Nats call a ‘top-down adjustment). Now, the new money won’t be there and the cuts won’t be reallocated, they’ll just be cuts.

Then, I looked at the things that can’t be cut:

  • You can’t really cut welfare and superannuation spending without cutting the size of the weekly payments (something National has pledged not to do). I realise that National is talking about cutting Working for Families at the top end but that will only save a few million unless the cut is so deep as to be politically unsustainable.
  • We can’t cut financing costs because that’s the interest we’re paying on our debt.
  • We can’t cut the GSF, that’s the Government Superannuation Fund and the government is contractually-bound to meet the commitments it made. Health and education aren’t getting cut (apparently) and are getting another $800 million, which is less than inflation and population growth.
  • Another billion has to be found to fund the government’s annual contribution to the rebuilding of Christchurch. Key says the budget won’t have any increase, so presumably the Christchurch rebuilding comes out of the existing pool.

So, what’s left after all that locked in spending? And how does that compare to what the other areas of government spending need just to tread water? Yeah, it doesn’t. We’re talking $3.75 billion in real cuts (only a billion of which is due to the quake rebuilding). That means nearly 19% slashed from housing, transport, police, defence, customs, conservation, justice etc etc.

I did the same thing but assuming the Nats won’t cut transport, and then again this time assuming they also won’t cut police and defence either.

The cuts for what is left are, of course, even deeper, up to 32% in real terms. Are you happy to cut 32% from the Kiwisaver,  and bio-security budgets? No. Well the money has to come from somewhere else then. What about 32% out of state housing? Or 32% out of R&D? Each area you wouldn’t cut means deeper cuts somewhere else.

The point I’m making is that this isn’t play money. The $3.75 billion in real cuts that Key is planning to make has to come out of the public services that you and I use, directly or indirectly. There’s a reason they call it the social wage – without it we’re poorer and we have to pay money out of our other income to try to cover the costs.

And what’s sucking all this money out of the economy and firing all those workers going to do to the wider economy?

What would I do? Well, the Budget shows that tax swindle from last year is costing $1 billion over four years, despite Key claiming again yesterday that it was fiscally neutral. So, reverse the tax cuts for the rich by moving the 33% rate back to 39% and keeping the corporate rate at 30%, not cutting it to 28% on April 1 as planned (oh, yeah, despite this ‘crisis’ the corporate rate is still being cut this year). That’s $1.4 billion right there. Then, get rid of those ETS subsidies, that’s another billion this year. Lets suspend new state highway construction, apart from the projects that are already underway. Well done, we’ve covered the shortfall, except for the earthquake costs.

Now, lets add that temporary earthquake levy that the vast majority of people support, $6 a week for each taxpayer is a billion a year.  That could be a flat levy on everyone or it could be progressively, whatever floats your boat.

Simply by reversing the tax cuts for the rich, taking away subsidies for polluters, stopping waiting money on white elephant highways, and putting on a widely-supported temporary levy there’s no need for any cuts.

If Key refuses to take these options and, instead, slashes public services it’s because he wants to cut them, not because he has to.

91 comments on “Slash and burn, Key’s choice”

  1. McFlock 1

    Key’s vision is blurred,
    so he’ll cut by a third.

  2. Lanthanide 2

    “taking away subsidies for polluters”
    If you take away the subsidies, but require companies still pay for the carbon tax, all you’ve done is pushed the costs from the public purse to the private one. So you’ll be increasing inflation and lowering everyone’s real income, which will mostly be felt by those on low incomes. The increased inflation will flow through to requiring higher government expenditure in the next budget (in salary increases if nothing else).

    • Marty G 2.1

      the economy is smaller and the costs are higher. the question is what goes as a result.

      Do you prefer to cut 32% from Kiwisaver, conservation, bio-security, housing, employment initiatives, aid, Mfat, communications investment, R&D, NZ on Air, NatRad, etc etc

      or

      cut a subsidy for climate change pollution

      I’m not denying it is costless in terms of flow-on effects, just as cutting public services isn’t costless.

      I’m arguing over where the cost of the situation we’re in falls. I think you agree with me that subsidising polluters to make the ETS less effective shouldn’t be a priority.

      • Lanthanide 2.1.1

        Definitely.

        I just think you should’ve mentioned it in your post, because it’s an obvious flow-on effect that cutting public funding of ETS costs would simply require private funding to make up for it, unless you just cut the ETS all together. Not mentioning it leaves you open for criticism about “fairies at the bottom of the garden” type wishful thinking.

        • Peter 2.1.1.1

          If we are talking about flow on effects, how about the flow on effects of reducing real spending and throwing more people out of work?

          The underlying question is, what is the best way to grow the economy because that is what we are told is needed to reduce the deficit long term? Keys way appears to be reduce Government’s activity in the economy and then wait for a private sector miracle to take up the slack.

          What is Labours alternative?

          • Rosy 2.1.1.1.1

            Growth, borrow, no levies on low and middle income – no position on upper income, reprioritise e.g. missles on frigates for Christchurch…. more here from his press conference.

        • Marty G 2.1.1.2

          don’t get me wrong, I appreciate that you’re on to it enough to raise these issues but every cut and each of the alternative funding options I’ve raised has basically the same multiplier effects.

        • Oscar 2.1.1.3

          Or how about just throwing the ETS out completely and going back to the drawing board on it. Where’s my 6 months of summer the alarmists promised?

          • Marty G 2.1.1.3.1

            I would prefer a carbon tax, rather than the complexity of the ETS but we’ve got the ETS now. Going through another 3 years of policy development to get a replacement is foolish when climate change is upon us now.

          • lprent 2.1.1.3.2

            Where’s my 6 months of summer the alarmists promised?

            Simplistic nonsense. Climate change is a changed climate. It doesn’t specify what direction the change proceeds in. We’re talking about the global climate having to disperse extra retained heat because of higher concentrations of greenhouse gases.

            In any one area that could mean more clouds and a higher rainfall over summer. Why? Because climate is a heat dispersal system and a changed heat pattern causes it to shift and there are many summer climate patterns known. If you’re really unlucky your climate change could bring you the summer monsoon

            But the reality is that climate shifts take decades to reach fruition and they are masked by weather patterns. So all we’re seeing at present in the climate patterns are shifts that people tend to view as just being within the normal variation of weather. You need to use stats to find if there has been a significant change.

            Of course that would require you to learn some stats ?

            • Oscar 2.1.1.3.2.1

              Oh yes, lets keep perpetuating the money merry go round.

              Of course it shifts over decades – 4 to 5 decades if I remember you saying rightly. 40 – 50 years is about the normal cycle in any regards.
              After all, the last time we had weather events this extreme was in the 40/50’s, so its about right.

              As for the ETS – who actually benefits from any money raised? It certainly ain’t the gummint, it certainly ain’t us plebs. So who? Oh that’s right, the Goreocracy.

              • Marty G

                who is the ‘goreocracy’ and how do they benefit from the ets?

                • Oscar

                  Nice little term I picked up at Deniers Anonymous. Refers to those who jumped on Gores bandwagon and is making themselves a nice little pile of cash in “being green”

              • lprent

                Not me. There is nothing significant in the 40-50 year range at a global level. The only cycles I’m aware of that influence climate energy globally at any usable significance (nice stats term..) level are:-

                • The solar cycle (Hale cycle) of about 11 years. The current data on the effect of that on climate is showing less of an effect that was expected, and the effect appears to be being swamped by greenhouse gas effects over the last decade.
                • Whatever caused the reduction in sunspots during the Maunder minimum in 1645 to 1715 and earlier (but probably the same event) in the Spörer Minimum in 1460 until 1550 which they are still arguing about causation. Probably the internal plume ‘geology’ in the sun by the looks of recent stuff from NASA. I suspect that eventually there will be a periodic pattern found for that in the 1000-2000 year range but it is going to be hard to get solid data on it..
                • The 26000 year Milankovitch orbital cycles.

                There are a number of other climate cycles known, but these are not changes in overall energy. They are just changes in how the energy is moving around. Global climate shifts rather than global climate change.

                BTW: Since this is heading into a science lesson – it’d probably pay to carry it on in OpenMike.

            • Bob 2.1.1.3.2.2

              Try and tell that to Ken Ring , but then again many have tried .

  3. her 3

    Borrow, borrow, borrow. Well he’s got to keep in with his banker mates. He’ll need a job eventually.

    • Pete 3.1

      Leaving uneven distribution (credits) after having already taken it as tax with WFF…

      I realise that National is talking about cutting Working for Families at the top end but that will only save a few million unless the cut is so deep as to be politically unsustainable.

      should be left alone, and instead impose an across the board increase for those on higher incomes – Simply by reversing the tax cuts for the rich??

      The only reason for this is because addressing the high cost of redistribution of WFF is “politically unsustainable”? Buying a few votes is more important than being financial sustainable?

      • Marty G 3.1.1

        pete. As we’ve been through before before, http://thestandard.org.nz/english-on-working-for-families/ cutting significant money out of WFF by making families on higher income get nothing isn’t as simple as it sounds. As Zet said:

        You can have lower overall payments, which hits everyone
        You can have a steeper abatement rate, which is like a higher effective tax rate on working families
        You can have a cut off point, which means that a family might be hundreds of dollars worse off if one of the parents earns one more dollar, which is just stupid economic policy.

        If you could show a way to stop families with incomes over $100,000 getting WFF without any of the problems outlined above, then I would support it. But we went through all the numbers and permutations last time. I’ve yet to see any clever solutions come out of the Right.

        I welcome your clever suggestions

        • Pete 3.1.1.1

          I know it’s not simple to undo the anomalies and nonsensical unfairness of WFF – but that doesn’t mean it should not be addressed. However we are probably stuck with ever increasing complexities, it’s far easier to add more and more ways of taking and giving tax than to simplify it. Politicians find it easy to give more, but very difficult to redress imbalances by taking some away.

          So most of us (especially in the middle income/tax band) will probably keep paying more, to subsidise the poor who don’t have enough (and the minority of those who use other’s money to cruise) and because many of the rich keep finding ways of minimising their tax exposure.

  4. higherstandard 4

    In the current economic climate we need all of the following

    higher progressive taxes
    lower government spending
    more user pays
    capital gains tax
    increased exploitation of our mineral resources

    • Colonial Viper 4.1

      An asset tax as well, similar to council rates, but which also applies to stocks and bonds.

      Yes mineral resources need to be used – eg from non schedule 4 land.

      Private high value, high employment enterprise needs to be strongly encouraged.

      • higherstandard 4.1.1

        Nah asset tax is silly – don’t tax assets which have been bought with tax paid income and which are liable for tax in relation to dividends etc, tax them once the asset has been realised for a capital gain or income.

        We can have a sensible discussion about it but unfortunately the tosspots in the major political parties won’t go near it as they are primarily interested in votes coming into November

  5. Steve Withers 5

    It would be a calculation that the flow on effects from making polluters pay would be less damaging across the board (“a little inflation”) than throwing people out of work and cutting specific services en masse….or moving them to the private sector (for tax-backed crony profits) and user pays.

    See it as flaking skin (cut a subsidy to a broad group) as opposed to cutting off your finger (savage budget cuts). Both involve a net loss in body mass. One is much less disruptive than the other.

    • Lanthanide 5.1

      Completely agree, but I think Marty should have at least acknowledged it.

      • Marty G 5.1.1

        There are flow ons from all the options. I don’t deny that not does it need to be pedanticly spelled out every time since it’s both undeniably true and obvious.

        These are 200-500 word posts to kick off debate, not theses. By fixating on minor content issues, you miss the opportunity to contribute to the wider debate.

        • Lanthanide 5.1.1.1

          Of the 4 specific options you listed, 2 of them are effectively raising taxes, so the impact is transparently obvious (and the whole point of the exercise). 1 of them is to stop construction on highways – a lot of this money goes into raw materials and specifically labour, so the actual impact will be on a particular segment of the economy.

          Changing ETS subsidies will result in petrol prices and power prices going up, at the very least, which affects everyone. This isn’t as immediately obvious as tax changes or as narrowly focussed as infrastructure changes (which is really shifting work to CHCH, not scuttling it completely).

          IMO it’s worth a mention. Yes, this is a small post to kick off debate, but that doesn’t mean you can’t throw in a sentence or two on the ETS subisides changes being “problematic, but best of the bad bunch we have to choose from”.

          “By fixating on minor content issues, you miss the opportunity to contribute to the wider debate.”
          Right-wingers are going to fixate on minor content issues and blow it out of proportion so that they can conveniently ignore the rest of your message. Better to head them off at the pass by acknowledging their point on your own terms, before they see a small chink in your argument and tune out. Unless you think the idea that any discussion is better than no discussion (and we just need to look at the abortion post to see merit in that).

          To actually debate the merit of changing ETS subsidies – it will put the price of petrol up, therefore stunting growth if not ensuring recession (by your own analysis that high petrol price = recession).

          • Bright Red 5.1.1.1.1

            the ETS subsidies just mean that taxpayers pick up the Kyoto tab compulsorily through our tax rather than as a result of voluntarily engaging in climate changing behaviour. That’s a bad thing. It weakens the price signal that the ETS is meant to provide without actually reducing the cost of Kyoto on the country.

            by your logic, it appears we should place low ETS charges ahead of everything else. We should then bin the ETS entirely, pay for all the Kyoto charges out of our taxpayer pockets and do nothing about climate change.

            You seem to think that shifting the cost of Kyoto from non-polluting activity to polluting activity and using the tax money thereby freed up to fund public services rather than cutting those services and the jobs they provide will hurt the economy I’m not sure you’ve shown how that is the case.

            • Lanthanide 5.1.1.1.1.1

              “You seem to think that shifting the cost of Kyoto from non-polluting activity to polluting activity and using the tax money thereby freed up to fund public services rather than cutting those services and the jobs they provide will hurt the economy I’m not sure you’ve shown how that is the case.”

              I’m not raising the point about shifting ETS costs because I’m saying putting the cost of it it on private people will hurt the economy compared to putting the cost of it on the government.

              I’m saying that shifting ETS costs from the government onto the private people doesn’t magically make the cost disappear, it’s still going to have to be paid. Because it’s essentially a consumption tax, like GST it is regressive, and therefore will fall hardest on those with lowest incomes, while the richest people are unlikely to change their consumption of carbon-emitting goods and services in the face of a small price rise.

              Also, as I mention briefly at the bottom of my post, getting rid of subsidies to business will result in the petrol price going up. There is strong evidence (provided by Marty) that high petrol prices stunt growth. So there already is evidence that shifting the cost of the ETS from the public to the private will in fact hurt the economy. Let alone rising electricity prices.

              captcha: classes

              • Bright Red

                “Because it’s essentially a consumption tax, like GST it is regressive, and therefore will fall hardest on those with lowest incomes”

                I’m not sure there’s any evidence that poor people consume more oil as a percentage of their income and, therefore, would face more impact from the ETS. Quite the opposite.

                “I’m saying putting the cost of it it on private people will hurt the economy compared to putting the cost of it on the government”

                How so? A tax is a tax. The question is whether the government’s Kyoto costs are covered by polluters or out of general taxation.

                • Lanthanide

                  “I’m not sure there’s any evidence that poor people consume more oil as a percentage of their income and, therefore, would face more impact from the ETS. Quite the opposite.”

                  Maybe not ‘poor people’, but certainly those in the middle class spend a bigger proportion of their income on petrol driving to and from work, school, kids sports etc than those in the upper class.

                  You’ve also ignored the price of electricity going up. ‘Poor people’ (I don’t even know who we’re talking about here) may not need any petrol at all as there are lots of alternatives, but very few of them will be going completely without electricity.

                  “How so? A tax is a tax.”
                  If “a tax is a tax” then you’d have no problem with putting GST up to 25% and reducing the top tax rates even further?

                  Clearly all taxes result in $$ in the government’s accounts, but where and from whom the money comes from can be radically different between the types of tax you introduce.

                  Either way there is going to be pain – cut ETS subsidies and so the private market must pay, or cut government services. The question is who shoulders the pain under these two scenarios. In the case of cutting government services, the brunt is borne directly by those who lose their jobs or have pay freezes for 3 years (or cuts!), but also by everyone who relies on government services, as well as making us less resilient and more vulnerable to shocks (like the earthquake) in the future. Cutting ETS subsidies spreads the pain out onto whoever uses carbon-emitting goods and services, which is every one (unless they live self-sufficiently), but some people will suffer more from the increased price on carbon than others will.

  6. Pete 6

    Slash and burn, Key’s choice

    Coincidentally “slash and burn” also seems to be Phil Goff’s choice of over the top sloganning on something that hasn’t happened yet.

    It’s hard to take seriously anything else he has to say when he fronts with meaningless electioneering rhetoric.

    • Draco T Bastard 6.1

      Um, Pete, JK has asked the government to cut $800m from the budget which, in no uncertain terms, is slash and burn.

      • Pete 6.1.1

        Um, DTB, what is the projected total budget for this year compared to last year? I don’t think it’s $800m less.

        • Lanthanide 6.1.1.1

          In real terms, after inflation and population growth, it is. That’s the problem.

          • Colonial Viper 6.1.1.1.1

            Is Pete making the assumption that the Left didn’t learn all about economics and fiscal policy after we were hoodwinked in the 80’s?

            Sorry mate, we’re more on the ball with this stuff now than ever before.

          • Pete 6.1.1.1.2

            It’s not the main problem – the main problem is income (reduced) versus expenditure (increased). Borrowing even more than we are now pushes a growing problem further into the future.

            If you haven’t learnt that CV then you’re not on the ball.

            • Colonial Viper 6.1.1.1.2.1

              LOL Pete when times are tough NZ families and those New Zealanders who are the most vulnerable need more help from the Government, not less.

              Do you know how you increase Government income Pete? While reducing borrowing. You got it – tax the people who can bear the burden without having to give up too much in their lifestyles.

              IE the top 5% of income and wealth holders.

              You condescending prick.

              • Pete

                You want to spend more on wages, spend more on benefits and pensions, reduce borrowing (that means paying it back, ie expenditure), presumably more on education and health, maybe a bit more on police, you’d have to keep spending more on justice and prisons.

                How many rich pricks do you think there are? After what you want there would be far fewer – on paper or in the country anyway.

                What if times stay tough after that? Who would you tax more then?

                • Colonial Viper

                  Where the hell do you think all these so-called rich pricks are going to pack up and go to?

                  Switzerland? Brunei? Belize? Somewhere else with 0% income tax rates? If that was such a big deal why aren’t they all gone already. Every time a country raises taxes on them by 5% what are they going to do? Sell up and move on again? They’d be idiots to run their lives like this. Trust me these people are so rich they won’t have to give up their Bentleys and Ferraris OK? Make you feel better?

                  By the way top 100 entries on the NBR NZ rich list control assets valued at roughly $55B. At a guess, that’s more than the bottom 2M New Zealanders control, put together.

                  I think there’s a little room to move, don’t you.

                  What if times stay tough after that? Who would you tax more then?

                  Times are going to get tougher. Western industrialised nations are at the start of a long term financial and fuel based decline.

                  No one escapes this decline, but no one should go hungry and cold in a bountiful land like NZ either.

                  • nadis

                    if all you need is 3.8 billion, it is really easy to find.

                    An 80% tax on all income over 150,000 or an 80% tax on all income between 13,000 and 15,000. Or an increase in the top marginal rate to 60%. Or an increase of 4% in GST. Or just nationalise (actually it would be labourise) 10% of the richlisters assets.

                    In reality the increase would need to be higher than all of those because of the mutiplier effect as you suck that money out of the private sector and recycle via the public.

                    Done.

                    • Colonial Viper

                      In reality the increase would need to be higher than all of those because of the mutiplier effect as you suck that money out of the private sector and recycle via the public.

                      You assumed the inverse of the multiplier effect, nadis. In reality, the increased needed would be LESS, not more.

                      The reason is because wealthy people do not spend their portfolios of assets into the economy. Those assets are held as stocks, foreign investments etc.

                      By taxing them, and then spending that Government revenue to pay wages for reconstruction etc. community economies would greatly benefit. Families would have a breadwinner and be able to pay their bills. The multiplier effect would come into force.

                      An additional $100,000 taxed on a multi millionaire may mean that millionaire has to liquidate a a fraction of his stocks from the ASX or NYSE to pay the bill. The Government then spends that money into the local economy – something that wealthy person was not going to do.

                      They don’t notice any significant fall in lifestyle. And a few families get an income to keep them going. Win win.

            • Pascal's bookie 6.1.1.1.2.2

              It’s not the main problem – the main problem is income (reduced) versus expenditure (increased). Borrowing even more than we are now pushes a growing problem further into the future.

              Pete, tell me your assumption isn’t that the recession will last forever.

              If you want to focus purely on the expenditure side, tell us what you would cut.

  7. kevyn 7

    Lets suspend new state highway construction, apart from the projects that are already underway.
    Do you mean lets suspend all the projects that are just getting restarted after Muldoon suspended them to save the economy in the 1970s, or just the two new ones that get Joycey so excited – Transmission Gully and Holiday Highway?

    I can’t see Goff going with this part of the plan, it will mean conceding that Clark/Cullen were wrong either to hypothecate the petrol tax or to introduce Government Policy Statements.

    • Marty G 7.1

      Transport funding exceeds hypothecated excise tax revenues -ie roads are being subsidised by the wider tax base.

      I would start by canning any project with a BCR under 1. That’s the holiday highway and transmission gully for starters. Then I would reassess other projects in light of realistic demand and oil prices, given that vehicle kilometres travelled on the state highway network is below 2005 levels and probably falling

      • Lanthanide 7.1.1

        I think probably the only Road of National Impotence they came up with that would be worth continuing with is the CHCH southern motorway, and ONLY because there is likely to be new suburbs springing up out west that need the connection. If it weren’t for the latest earthquake, IMO that motorway should be canned too. Bear in mind that it is a substantial way a long, with considerable actual work already done, whereas I believe those other projects are still at the planning stages?

        • Bored 7.1.1.1

          Heaven forbid Lan, I have had the pleasure of a tour of Rolleston, its predicated on oil. To live there without cheap fuel would be a nightmare. No offense to the residents as their life reflects that of most of us, tied to cars, driving miles to work or the shops with no alternative. If we are planning to move people out into automobile centric sprawl we will be misallocating funds and missing an opportunity to build a better life for urban dwellers.

          • Lanthanide 7.1.1.1.1

            Yes, it sucks, but building out west, rather than building upwards in the center of the city, is what’s going to happen in the next 5-10 years (assuming no huge oil price shocks and that something, anything, is actually built).

            But having a motorway out to the west (it isn’t going as far as Rolleston) will actually reduce fuel consumption of people driving into town. Building more homes, shops and businesses out west will mean those already in Rolleston should eventually have a shorter distance to travel to get to work/shop.

            So ultimately it is encouraging further urban sprawl, but if we accept that such sprawl is inevitable, then building the motorway has desirable benefits over not building it.

            • Bored 7.1.1.1.1.1

              See your point, but I think resisting urban sprawl needs to be a priority. High density housing does not have to be high rise, for example two storey terraces can be highly desirable if well architected. Good example here in Wellington is Thorndon Mews (Beaven of Chch) which is highly sought after, as are Walker and Athfields high density buildings of the 70s. What these places dont have are massive sections with rusting car bodies on motor mown lawns. They do have community which is what Chch needs most. Its promising that Athfield is already involved in Chch post the first quake.

              • Colonial Viper

                People need to be able to walk to their shops, their friends and family, and their work. That means complete communities of no more than ~5km radius.

                • Lanthanide

                  What about bikes?

                  • Colonial Viper

                    10km radius then? But worth bearing in mind that a lot of elderly and infirm will not be able to bike (or walk) that far. So a 4-5km radius seems more friendly to most in a community.

  8. randal 8

    most fiscal problems in our beloved country could be solved by raising taxes.
    however as we are a nation of rugged individuals who need the dosh to buy new hardly davisons and go on trip sto places where the natives dont really like us but want our money then he key cant impose new taxes in case he offends the noo noo heads.
    besides the manual from the business round table says raising taxes is an offence against the laws of the universe and key does not want to offend kerr and his mates in case they ostarcise him when he gets back to london after his sojourn in the colonies.

  9. TightyRighty 9

    apart from taking large amounts of money from a small number of people to distribute in small amounts to a larger amount of people, i.e. robbing peter (who tends to employ people) to pay for paul (who is usually employed by peter or his ilk), does labour have any other election policy?

    • Bored 9.1

      TR, have you ever considered that employers make their money from the margin they get from their staff producing something? What happens then is that the staff get some money redistributed to them from taxes on this margin / profit…..so who is robbing who? Some would contend that the original robbery is Peter (employer) robbing Paul (employee).

      • TightyRighty 9.1.1

        Others, more economically literate than you, would contend that the margin on the goods produced is the return on investement and the risk assumed with the investment. You’ve been spanked so many times on that argument, i’m surprised you are back for more. where an employer makes a margin because they have risked something to go into business and employ people, it’s profit. a benny sits on their arse all day and complains of poverty, and gets a return on their investment of nothing in the form of a benefit. on a percentage basis, who does better? benny – $0 outlayed, $256 pax per week. return of infinity on investment. business owner? lucky to see 30% a year as a return on investment, not even beginning to account for the hours worked and stress assumed. WFF recepients, they also have a much larger return on investment than the people creating the employment opportunities will achieve, say 1000-2000%.

        now who is taking supernormal profits?

        to summarise by putting it in socialist speak, supernormal profits = robbery, so benny’s ruined the economy as benny’s are highway robbers.

        In addition to admitting to admitting that labour have no other policy to be elected on except to tax the wealthy to pay for the poor, we have concluded that benny’s and their cheerleaders and creators (labour) are the ones who ruined the economy with their appropriation of super normal profits.

        • Bright Red 9.1.1.1

          TR’s vision of a brighter tomorrow, the unemployed of the great recession and their families starving in the streets.

          ‘I would help you’, he says, ‘but I can’t have you getting an infnite return on investment. It’s about priorities’

          • TightyRighty 9.1.1.1.1

            Sounds much more like your vision of the world bored. But you’ll be happy as you will all be poor together. That’s the real aim isn’t it?

            That’s a confirmation, labour has no policy other than recklessly tax the rich and spend it on vanity “progressive” projects. (More like progressively the country grows poorer under labour)

            • Colonial Viper 9.1.1.1.1.1

              Top 5% of income and asset holders should be far more heavily taxed so that we can afford services and common infrastructure for all to benefit from.

              It’s a pretty comprehensive plan for a enjoyable, equitable society, Tighty.

              Oh, and its under National that your neighbours and your extended family are getting poorer, Tighty, in case you haven’t noticed.

              That’s because Bill and John buy into the neoliberal free market bullshit which favours the top 1% of the population.

            • Bored 9.1.1.1.1.2

              Hey TR, FYI I have owned and managed companies very successfully for most of my working life. My understanding is based upon hands on making cash, no theory involved. As such I understand business and economics in a way most corporate types (and RWNJs) dont. Yes I live a contradiction, I take the profit from my workers mouths, and i dont agree with the system I play. For the record I had absolutely no need of the extra cash Shonkey gifted me. Consequently I gave it away. What did you do?

              BTW Your “risk” argument….you have to have something to risk before you can take a risk. Thats the basis of capital accumulation, dont give me the trite old crap about everybody can do it. The rich are already robbing the poor of that ability by taking the profits for ourselves.

        • Colonial Viper 9.1.1.2

          This is bullshit Tighty, you’ve tried to assess a beneficiary’s life as if it was a fucking business.

          All you are trying to justify here is that those who own the most capital in this economic system should be the ones who make the most money.

          And those who have no capital should be lucky to get fuck all. In fact, they should count their blessings to get crumbs on a cold tin plate.

          Guess what, more than a few people are tiring of this scheme at the moment.

          The wealthy are going to get taxed one way or another mate, its the only way to recut the upward wealth distribution that they have designed into this economic system, and to stop the poverty and hunger in what should be a land of plenty.

        • fraser 9.1.1.3

          TR

          what about a business where profits year on year have increased yet workers wages have seen minimal increases, stagnated or gone backwards?

          Productivity (as well as profit for the big players) has increased massively – wages no where near as much

          So, if “an employer makes a margin because they have risked something to go into business and employ people”, shouldnt that same rule apply to the employees who have risked their time and earning potential to help the employer realise his investment? (possibly to a different degree of course)

          Its a symbiotic relationship – the employer has little without the workers and vice versa. Screw one side to heavily and the whole thing tanks.

          (i think its important in the capital vs labour discussion to differentiate between SMEs and multi-nationals/huge corporates – they are completely different beasts with different dynamics at play. I think youre mainly talking about the SMEs, where much of the compliant from “the left” is directed at the other end of the sprectrum)

          also – why are you bringing up the unemployed? Stay within the goalposts you erected with your first comment

          • Colonial Viper 9.1.1.3.1

            What has happened over the last 30 years is that an ever increasing share of business revenue has gone into shareholder dividends, executive management and company profits, not wages of the ordinary workers.

            Edit: frequently small business in NZ gets screwed as well (<20 employees)

            The big cash have gone to the major multinational corporates.

            When National talks about being business friendly they mean the latter group of businesses, not the former. As evidenced by how they have managed downtown Christchurch.

        • Bored 9.1.1.4

          Others, more economically literate than you, …so TR when did you read Adam Smith, Marx, Samuelson, Keynes, Galbraith, Schumpter, Freidman? Would you like a loan of my well fingered copies? Actually for you not a loan, how about a rental? Alternatively there is the socialised alternative, the library for free.

        • RobC 9.1.1.5

          “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

          A. Lincoln, 1861

      • Pete 9.1.2

        Most employees are grateful they have the opportunity to earn money. It’s simpler and usually a lot safer than being an employer – the income may be lower but the risks are much lower.

        And most employers are grateful that people will work for them.

        Most of us have to earn money, we choose whether we want to try and make our own or work for someone else.

        • Colonial Viper 9.1.2.1

          No, it’s time to move to a more democratic socialist economy.

          Workers who work for themselves in collective and co-operative enterprise, who don’t need to be managed by some fat cat at the top and who as a consequence don’t answer to a small group of shareholders who otherwise wouldn’t know the first thing about the business, because the workers ARE the shareholders.

          • Pete 9.1.2.1.1

            The option’s there if any groups of workers want to try it.

            The fact is most people are happy to draw a regular wage and not be bothered by high financial risks, and most people aren’t into the administrative discipline that is required to run a successful business or co-operative.

            The short to medium term success/survival rate of small businesses suggests most people simply aren’t management or self management type people.

            And…the more people involved in the managing of any sort of enterprise the more chance there is of disgruntlement with some not pulling their weight.

            • Colonial Viper 9.1.2.1.1.1

              Well I think you got a few things wrong with your analysis, but something I will say is that the current set up makes it quite difficult to finance co-operatives (banks prefer the traditional one company owner model for instance), and yes, we have a workforce too used to being treated like dumb do as you’re told workers, so there is some reconditioning and additional training to be done there as well.

              And…the more people involved in the managing of any sort of enterprise the more chance there is of disgruntlement with some not pulling their weight.

              Which the collective can then sort out together, as a community.

              The short to medium term success/survival rate of small businesses suggests most people simply aren’t management or self management type people.

              Most managers aren’t management type people.

              • Pete

                How much experience do you have running businesses CV?

                Banks prefer security over their financing, it doesn’t matter so much what structure the co-operative/partnership is. How much experience do you have running businesses CV?

                Banks prefer security over their financing, it doesn\’t matter so much what structure the co-operative/partnership is. One of the most common forms of security is the family home. If that is threatened it can put a lot of strain on the business and the family.

                If you have a partnership/co-operative where there is disgruntlement amongst those involved it can get very messy, often the easiest solution is to wind it up and go your own way – as sole operators or back into employment. Or it can just crash and burn.

                If you have a partnership/co-operative where there is disgruntlement amongst those involved it can get very messy, often the easiest solution is to wind it up and go your own way – as sole operators or back into employment. Or it can just crash and burn.

                • Colonial Viper

                  ?

                  Banks don’t have much experience with or understanding of collective enterprises.

                  If you have a partnership/co-operative where there is disgruntlement amongst those involved it can get very messy, often the easiest solution is to wind it up and go your own way – as sole operators or back into employment.

                  Perhaps you don’t understand how democratic socialist enterprises work – its got similarities to how the major shareholders of an enterprise operate.

                  The slight difference is that everyone gets a vote in a democratic socialist enterprise, an equal vote. And whatever the majority votes for is what happens.

                  How much experience do you have running businesses CV?

                  Oh, I’ve been here and there, you know :)

                  • Pete

                    How much experience do you have with social democratic enterprises? Where do they work successfully?

                    Are they dependent on co-operation, understanding and financing by banks?
                    Are they ever hamstrung by indecisiveness due to the time it takes to get a majority to agree?
                    Do they ever employ workers? Or is everyone a shareholder? Is remuneration always equal or dependent on how much the majority thinks everyone is worth?

                    • RobC

                      Ahhh …. you do realise NZ’s largest enterprise is a co-operative?

                    • Colonial Viper

                      Hey Pete,

                      Enterprises set themselves up in a lot of different ways, look up Semco, also Mondragon. And as RobC suggests, Fonterra.

                      Are they dependent on co-operation, understanding and financing by banks?

                      Wow and just above you said that the banks would not pose a problem. Ideally a credit union or mutual savings bank, organisations with a common ethos, would be used, instead of a foreign owned private bank.

                    • Marty G

                      Fonterra – cooperative protected by special legislation
                      Telecom – former SOE
                      Contact – former SOE
                      Fletchers – got rich building state houses with government guarantees on its debt
                      Zespri etc – export cooperatives with protecting legislation

                      .

                      Meridian, Solid Energy, Genesis, Mighty River – SOEs that the financiers want to get their hands on because the private sector is incapable of creating large successful companies

                      .

                      face it, state capitalism and cooperatives are the model of successful business in nz

                    • Lanthanide

                      Marty – The Warehouse, Farmers are two large NZ-owned companies.

                      I’m sure there are lots of others.

                    • Colonial Viper

                      Lanth – they are two large NZ owned operations.

                      But that’s a pittance compared to the number a few years ago.

                      Carter Holt Harvey, Watties, Telecom, Contact Energy, Whitcoulls, DIC, Fisher & Paykel Appliances, Glaxo, National Bank, Post Bank, ASB, BNZ, Ministry of Works and Development,…

                      All gone (or partially gone) now. Ripped out of the country, currently either bust or sending profits from NZ to offshore shareholders.

                    • Pete

                      RobC – I know Fonterra is a co-op, but it’s quite different to what CV was suggesting. It’s shareholders are it’s suppliers (who own their own businesses), who aren’t involved in the general running of the co-op, and as far as I’m aware it’s workers are just employees and not shareholders. I suspect the fat cats at the top earn a bit more cream than the tanker drivers.

                    • Pete

                      I’m generally not a fan of large off-shore owned corporations (nor franchise owners) but they are a fact of modern business life in an increasingly internationalised economy.

                      Some markets are a mix of a few large companies plus many small businesses working alongside each other, eg construction, with a range of opportunities – I saw boys drop out of school into a carpentry apprenticeship and build their way up the income ladder.

                      While there is a tendency for companies to grow and merge and grow, markets change and will sometimes reverse that. Two examples are bakeries and breweries – I’ve seen large companies take over not just the manufacture but also the distribution and retailing (breweries) with bland mass produced products but that trend has reversed and now small bakers and brewers proliferate again with a wide variety of products.

                      For CV styled co-ops to start up and thrive all it will take is for a bunch of like minded people to get them going in preference to owner operated businesses. They are out there now, I’ve been involved in three partnerships over the years.

        • Bored 9.1.2.2

          Pete, you may be right that most people find it simpler and safer to be an employee. Risk aversion comes into play. In reality I would contend it is actually safer to have the control of being the employer simply because as you say most of us have to earn money. I am grateful to have my guys working, but i dont lose sight of who gets the profit.

          • Rosy 9.1.2.2.1

            I admire people who are business owners who haven’t lost the idea of the society they operate in. It’s refreshing to know that it’s not all about the short-term money for everyone. I suspect that on average these businesses will be around for a lot longer than those who disassociate themselves from their employees lives.

            It may be safer to be an employee, but these days I’m not so sure, there is so much legal protection for the owners of businesses that go under that if you get it right you can walk away with your house and other assets in tact whereas employees walkaway with nothing.

            But also there are a lot of very, very talented people who are emplyees not because they are risk averse, but because they’ve understood risk. They’re smart enough to know they need or want to stick with that talent rather than run a business which that have no talent for or they’ll not be able to make use of the talent they have. Or else they know that to use those talents there is not enough of a market to do so by going it alone – chefs, scientists, engineers etc, etc.

            Businesses and the country cannot operate without them but are paying less and less of their share of educating them. I’m picking that NActs cuts will only increase this tendency

            People who successfully run businesses have special talents too and they may have to work their way to financial security just as employees do. I wish there were a lot of people would work out before they took other people’s money that they had no talent for business, and if they were employees they would have been sacked.

  10. Rich 10

    Legalise and tax drugs: that’d bring in tax revenues, reduced policing, justice and prison costs, income tax on drug manufacturers and sellers, tourist dollars, etc.

    • Lanthanide 10.1

      Good idea. Can’t see “we need it for the tax revenue” being a huge vote-winner though.

    • burt 10.2

      Publish the stats for how much Police & court time is taken up prosecuting people for personal use. Never assume that simply because you haven’t seen the stats that they haven’t been pondered for some time now.

  11. Pete 11

    It is very clear that the government intends to employ the shock doctrine as described by Naomi Klein.

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