The fiscal hole

47 comments on “The fiscal hole ”

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1. David H 1

   31 January 2013 at 10:21 am

   You know what would be best for NZ would be to have Parker and Cunliffe working together. But that’ll never happen.

   The ABC faction are determined that Cunliffe is bad for Labour (Them) so he is to be ostracised and sent to the back of the class by the angry teacher. Shearer NEEDS to put Cunliffe in as Deputy Leader and kick the ABC crowd to the kerb. Let them stew on the back benches.
   • Anne 1.1

     31 January 2013 at 11:41 am

     You know what would be best for NZ would be to have Parker and Cunliffe working together.

     They did work together once then we lost the election and personal ambitions got in the way. That’s history now, so there’s no reason why they couldn’t work together as a team again.
   • mike 1.2

     31 January 2013 at 1:14 pm

     Oh for christ’s sake David H get off your bloody hobby horse – it’s predictable, boring and adds precisely nothing to the discussion. Negativity like yours is the ultimate turn off.
     • David H 1.2.1

       31 January 2013 at 9:09 pm

       Really me negative??? have you seen the polls today ??? They are negative enough. So get it right, and DON’T blame me for Labours obvious failings.
2. Andre 2

   31 January 2013 at 10:48 am

   Greens released this today. http://t.co/QEFq0Ggt Previously unseen Reserve bank internal paper from May 2012: loan to valuation ratios limit house inflation
   • CV - Real Labour 2.1

     31 January 2013 at 11:50 am

     Steve Keen has been pushing for rental income to loan ratio limits as the way to cap mortgage growth driven house price bubbles.

     Let’s say a house is expected to fetch $20,000 pa if it was rented out. A rental income to loan ratio limit of 20 would limit the maximum value of any mortgage on that house to $400,000.

     A person’s income becomes irrelevant in determining the maximum value of the mortgage, unless it is too low to service the maximum sum listed above.
     • Lanthanide 2.1.1

       31 January 2013 at 12:39 pm

       The rental cap is an interesting idea, but hard to administer (who says this house is worth $21k PA or $23k PA?). Simply requiring a 20% deposit is much easier to manage, although it doesn’t cap house prices directly it still prevents people from up-bidding and getting themselves trapped into a mortgage they can’t really afford (or go tits up when the shit hits the fan).
       • CV - Real Labour 2.1.1.1

         31 January 2013 at 12:42 pm

         The rental cap is an interesting idea, but hard to administer (who says this house is worth $21k PA or $23k PA?)

         I wonder if you could extend or enhance the current ratings valuation system to cover it.
         • Poission 2.1.1.1.1

           31 January 2013 at 12:52 pm

           Ring fence the investment properties,once the interest bearing security (mortgage has been realized) you cannot offset for further purchases.
       • Draco T Bastard 2.1.1.2

         31 January 2013 at 12:47 pm

         (who says this house is worth $21k PA or $23k PA?)

         That would be the market.
         • Lanthanide 2.1.1.2.1

           31 January 2013 at 1:50 pm

           Yes, but we’re talking about applying for a mortgage on a house you want to buy here. If the house is currently owner-occupied, there is no “true” market estimate of what it is worth as a rental.

           Furthermore, if the property is currently tenanted, that’s also not an indication that you couldn’t find someone who was willing to pay more for it than the current tenants were.

           The other aspect is that some houses would simply not be attractive as a rental for whatever reason, but perfectly acceptable for an owner-occupied house. People wishing to buy such a house would be penalized by an arbitrary price.
           • Draco T Bastard 2.1.1.2.1.1

             31 January 2013 at 2:12 pm

             Yes, but we’re talking about applying for a mortgage on a house you want to buy here. If the house is currently owner-occupied, there is no “true” market estimate of what it is worth as a rental.

             There would be rental properties around the area that the rental would be based upon. That’s what the market price is – the average of all the prices.

             Furthermore, if the property is currently tenanted, that’s also not an indication that you couldn’t find someone who was willing to pay more for it than the current tenants were.

             And thus the market price would go up.

             The other aspect is that some houses would simply not be attractive as a rental for whatever reason, but perfectly acceptable for an owner-occupied house. People wishing to buy such a house would be penalized by an arbitrary price.

             Thus the market price to buy the house would be low.

             Really, all you’ve done is come up with reasons as to why the market doesn’t work – and failed to realise it.
             • Lanthanide …

               31 January 2013 at 3:44 pm

               “There would be rental properties around the area that the rental would be based upon. That’s what the market price is – the average of all the prices.”

               “And thus the market price would go up.”

               You’re not making sense here. First you’re saying you base your price on nearby houses, but then if I find a specific individual who is willing to pay more than the market price, the market price has gone up? Where does this process end? How do we find a genuine price someone is willing to pay to rent house X to as to apply this funding ratio?

               “Thus the market price to buy the house would be low.

               Really, all you’ve done is come up with reasons as to why the market doesn’t work – and failed to realise it.”

               No, I’ve come up with reasons why using the rental market price to assess the price of an owner-occupied house doesn’t work. It’s a fundamentally different market and prices aren’t completely transferable.
               • Andre …

                 31 January 2013 at 3:52 pm

                 UAE has put a 50% deposit cap on housing and did it without notice..NZ as said 20% seems good
                 • Andre …

                   31 January 2013 at 4:02 pm

                   http://t.co/RV5RAOg9 NZ borrowing housing 6.33 billion
               • Draco T Bastard …

                 31 January 2013 at 7:10 pm

                 The market price is the collective price not the individual price.
                 • Lanthanide …

                   31 January 2013 at 8:53 pm

                   So now we have to decide if the house in question is at the median, or whether it’s in the 1st or 4th quartile, or the 90th percentile, just so we can work out how much you’re “allowed” to pay for it.

                   For people with sufficient deposit on hand to be able to reduce their deposit and increase the proportion borrowed, they could always ‘gift’ or otherwise transfer their hard cash to the vendor outside of the sales process and thereby avoid the whole limitation in the first place.

                   Seems mightily unworkable, compared to a simple LVR ratio.
                   • Draco T Bastard …

                     1 February 2013 at 8:24 am

                     And what have I been saying about the market?
3. muzza 3

   31 January 2013 at 12:08 pm

   Is this the same David Parker removed from his post ,for filing false tax returns…

   Fantastic!

   [lprent: No. He stood down (was not removed) when questions were raised about the some tax returns by the opposition at the time and was subsequently cleared of any wrong-doing.

   I suggest that you at least look at what the actual information before commenting with a complete pile of bollocks. In fact, take a two weeks off to give you time to do so. I’m uninterested in this site getting sued for defamation because you are too lazy to look up wikipedia. ]
   • r0b 3.1

     31 January 2013 at 12:18 pm

     No, it is the same David Parker who stood himself down when questions were raised, and was shown to be completely in the clear. There were no false tax returns.
     • muzza 3.1.1

       31 January 2013 at 12:30 pm

       Then why did he *stand down* R0b?
       • r0b 3.1.1.1

         31 January 2013 at 12:35 pm

         The usual reason that ethical people stand down while allegations are being investigated I guess – to protect those that they work with. “Ethical” – link here if you need to look it up.
       • Lanthanide 3.1.1.2

         31 January 2013 at 12:40 pm

         It’s a good tactic if you think about it, muzza.

         Someone accuses you of doing something you absolutely know you did not commit and there is no evidence that you did. Stand down, because you know it’ll all be cleared up soon anyway. It’s a win-win, because you end up looking principled and also have the proof you did nothing wrong.

         Only idiots like yourself would read something bad into it.
         • muzza 3.1.1.2.1

           31 January 2013 at 2:32 pm

           Look at all the crew who come out, and again with the insults…

           Saying he stepped down *willingly*, would be fanciful thinking!

           Did Parker get his position back , having been cleared?
           • One Tāne Huna 3.1.1.2.1.1

             31 January 2013 at 2:38 pm

             🙄
           • Lanthanide 3.1.1.2.1.2

             31 January 2013 at 3:45 pm

             “Look at all the crew who come out, and again with the insults…”

             Stupid is as stupid does.
             • Rogue Trooper …

               31 January 2013 at 5:05 pm

               dum de doo (fortune cookie anyone?)
       • Te Reo Putake 3.1.1.3

         31 January 2013 at 12:41 pm

         Because he has ethics. Look the word up, muz, but, caution, you might find the concept challenging.
         • McFlock 3.1.1.3.1

           31 January 2013 at 1:23 pm

           I dunno.
           Farbeit for me to defend the vacuously gullible, but the way this government is going, how many people are used to politicians who have the integrity to avoid even the appearance of corruption?

           Fuck, 29 people die and the minister resigns a single portfolio (doesn’t even take a pay cut), and appears genuinely perplexed as to why journalists are asking if she should resign for realsies. Is it any wonder our local tinfoil hat crowd would assume serious criminal wrongdoing if a politicians voluntarily stands down?
           • One Tāne Huna 3.1.1.3.1.1

             31 January 2013 at 1:35 pm

             Project Onan may not survive this: the team leader’s credibility is now seriously in question.
   • tc 3.2

     31 January 2013 at 1:16 pm

     compare his behaviour to Blinglish, Banks etc when their integrity/ethics are called into question over serious breaches of rules.
   • muzza 3.3

     31 January 2013 at 4:52 pm

     LP, you have to be joking don’t you!

     I read the wiki write up, which is about a weak as you seeing it to be credible (wiki)

     My questions were reasonable, there was contention around Parkers standing down, to which Parker never sued anyone, nor received an apology, or retraction, so your concern of defamation, is egotistical nonsense!

     Perhaps you can critique Ian Wisharts reporting around this matter!
   • infused 3.4

     31 January 2013 at 7:41 pm

     How can the site be sued for defamation when it’s hosted overseas and the site is not a single entity as you love to keep telling us?
4. tc 4

   31 January 2013 at 1:30 pm

   This hole was there in Blinglish’s pre election budget and followed up with negligent and wreckless comments like ‘best guess’ on asset sales etc.

   ‘Quietly in the background’ is nice and helps somewhat but it doesn’t win votes……I’d like an opposing party that gets in the govts face over their campaigned lies and wilful mismanagement.

   This should’ve been sloganised pre the 2011 election and carried forward, they don’t like it being taken to them.
5. bad12 5

   31 January 2013 at 3:04 pm

   Ah yes, the Fiscal Hole, started by Bill the Minister of Finance thinking that He could cut taxes for the top tiers of income while giving nothing to the lowest except what He seen as ‘compensation for the raise in the rate of GST at the same time,

   In effect the raise in GST became for those on the lower incomes and the economy an ongoing act of regressive economics, as prices went up those on lower incomes having to spend more on less while being taxed more through the raise in GST simply bought less and thus the economy spiralled downward,

   More unemployment occurred in the economy as those with the least bought less as the rise in the price of anything also took from them more taxation via GST, the National Government then exacerbated the problem via stealth taxation such as the ongoing raising of taxation on tobacco products, this simply lead to even less economic activity in the local economy and so downward the spiral went,

   i have this picture of the beast that is capitalism eating itself starting at a point of the anus, having gained a taste of shit and liking it this beast of capitalism has engaged in a frenzied orgy of eating the host and now cannot stop until it has in fact consumed the unsavory brains of the beast itself,

   Turning the triangle that is taxation up the right way would instantly fix this situation where the triangle of gain should sit among the lowest paid income group as opposed to where it now sits among those with the largest incomes…
6. bad12 6

   31 January 2013 at 3:30 pm

   National tho have a plan, yes a plan, to address this fiscal hole, you wont find this plan on National dot com or anywhere else but a plan the National government do have,

   It’s called moving 40,000 people off welfare is this grand plan of the FAILURE of a National Government,

   More thought went into the selling of this National Government plan to the ‘electorate’ than was actually used to (a), realize that the Billion Dollar baby they bred themselves, the fiscal hole, was not as if by magic going to be closed by the spending of those who had been further enriched by the tax ‘switch’ in the higher echelons of earnings, and (b),more thought went into this ‘plan’ by the National Government than went into Ruth Richardson and Jenni Shitly’s 1991 benefit cuts although the intent of both the benefit cuts of 1991 and the new National government ‘plan’ have exactly the same intent,

   The sum total of the National government plan is to shove 40,000 individuals off of the benefit system and while as a selling point some thought has been given to such things as the provision of ‘more’ money for training as such niceness is from a basis where such funding for training was previously slashed the nett effect of such monies even if private business take up the offer is too little too late, mere selling points to keep the middle class un-worried aside, the plan is for the 40,000 individuals to no longer receive income from the state and what becomes of those individuals is of little or no concern to the National Government,

   Both the 1991 benefit cuts and the current National Government plan to remove 40,000 individuals from the benefit system actually look good on a piece of paper when placed alongside that of the fiscal hole,

   BUT,

   Removing 40,000 benefit payments equating to the spending of a billion dollars a year into the economy by those 40,000 beneficiaries is simply the beast of capitalism having gained an insatiable appetite to eat it’s own shit devouring it’self in an effort to find more of the same to consume, and will simply lead to the fiscal hole theoretically being closed by the kicking from the role of 40,000 beneficiaries remaining the same as the local economy contracts further…
7. tracey 7

   31 January 2013 at 3:34 pm

   And the borrowing, oh the borrowing
8. AmaKiwi 8

   31 January 2013 at 5:15 pm

   Has someone done the numbers on the effect of removing the housing allowance for low income families?

   In my opinion, the housing allowance is National’s “landlord benefit program.” It allows landlords to charge higher rents because WINZ gives money to beneficiaries to pass on to their landlords. If it was eliminated, rental prices would drop.

   In my opinion, the housing allowance is one more National Party tax transfer to the middle income and wealthy real estate speculators, cleverly disguised as supposedly advantageous to the poor.

   Questions:

   1. How much is the annual cost of this program to the taxpayers?
   2. (more difficult to answer) How much would rental prices drop if it were terminated?
   3. How much would housing prices drop if it were eliminated?
   • bad12 8.1

     31 January 2013 at 7:22 pm

     Without having the number of new HousingNZ tenancies to put those who could no longer pay the ‘market rents’ into canning the Accommodation Supplement would seriously hurt a hell of a lot of people,

     I have no objection to any Government simply setting maximum levels of rent in the private sector based upon the tenants income but we have to remember that Governments have to be re-elected,

     We need at least 100,000 State rentals befor the issue of the 1.2 billion dollars in Accommodation Supplement can even begin to be addressed and i would suggest that the number of State houses i quote would have to grow far above 100,000 befor the Accommodation Supplement which is really a direct subsidy to the banking industry who’s mortgages it is helping pay for could be canned…
     • AmaKiwi 8.1.1

       31 January 2013 at 9:35 pm

       The Accommodation Supplement feeds a lot of pigs at the trough.

       Landlords get higher rental income.
       As property values go up, banks make more on larger mortgage loans, councils get more in rates on inflated property values, realtors churn more properties. The government gets more GST.

       The biggest losers are the low income people who do not qualify for the supplement but have to pay higher rents because of it. They and the taxpayers are really getting screwed.

       With so many snouts in the trough, this is a program that will be very hard to kill. But looking at who profits and who pays, it should be killed.
       • bad12 8.1.1.1

         31 January 2013 at 9:57 pm

         I don’t disagree with you but as i explained above there would need to be the serious provision of one hell of a lot of HousingNZ rental properties befor that could happen unless you like the thought of a whole lot of people,kids included, living under bits of plastic in a drainage pipe or under a motorway bridge…
9. Saarbo 9

   31 January 2013 at 9:42 pm

   The tanking of the economy by National was absolutely predictable as soon as National announced that they were increasing GST by 2.5% in Oct 2010 and decreasing the top tax rate. Combine that with their obsession with reducing the size of the Public Sector, why they would think that would be a good idea while we are dealing with the biggest economic decline since the Depression I will never work out.

   I wonder if it has something to do with the fact that Bill English is from a Farming family. When farmers hit hard times they just tighten up. They dont think about the revenue side of their business because that is beyond their control, that is sorted by an export body, they are dealing with commodities, the revenue value per unit of their product is determined externally. Generally if a farmer can produce the maximum quantity of their product for as little as possible they will succeed. This is the mentality of Bill English. Just button down and all will be fine. But the problem is that National are tanking the economy, he has oversimplified things and unfortunately our economy is the victim. I have mentioned a number of times the fact that Labour has an average GDP annual growth nearly a full 1% above Nationals. The reason for this obvious, Labour run more balanced policies…now they just need to sort out their internal personnel issues (Leadership!!!) and their atrocious advice they seem to be receiving, and their terrible social media strategy and they might start getting somewhere.
   • Zaphod Beeblebrox 9.1

     31 January 2013 at 10:43 pm

     Not sure that having a few less public servants makes that much difference to the GDP, though the cuts probably don’t contribute much to public service effectiveness and policy development.

     The bigger concern are the cuts to welfare payments. NZ welfare is strongly means tested for a reason. Wages are so low that a hi percentage of the population require govt top ups in order to maintain their health, the education of heir children, to be able get about to access government services and for employment. Take those payments away and a lot of those people become huge burdens to he health, the justice, the education and the social welfare systems. It costs hundred of thousands of dollars to keep hospitalising homeless people when they get sick and how much does it cost the prison and justice systems when somebody turns to drugs out of desperation?

     Cutting welfare ultimately costs the taxpayer millions. Definitely the wrong way to go from an economic viewpoint
     • bad12 9.1.1

       31 January 2013 at 11:16 pm

       Ever heard of the multiplier effect, its a common enough equation and economics 101 for anyone that’s studied such a dark art,

       The multiplier effect says i should take issue with you over there being no sad loss over the National Government canning the jobs of a few civil servants,

       A few civil servants??? do you actually know how many civil servants this present bunch of Slipppery lead little Shysters have sacked, do you actually care???,

       It aint a few, its a few 1000’s, given that the multiplier effect shows that in an economy when you remove an employment position then in the wider economy you have really removed the equivalent of another employment position,(not necessarily by one person but by hours worked),

       This multiplier effect when you remove as this Government has blocks of employment positions by the 1000’s effectively ratchets up to somewhere in the realms of 1 1/2 to 2 employment positions in the wider community that become unsustainable because of the loss of income being spent into that economy,

       To simplify this for you, sack 10 workers from a government office block and the nearest food shop cuts the hours of the part-timer, do that by the 1000 and the part-timer goes down the road along with one of the full time staff,

       As that occurs the ripple effect out into the wider economy continues, the lawn-mowing contractor loses a bit of biz so sacks the part-timer He had on the payroll,

       In effect, the beast of capitalism having had a taste of its own excrement carries on eating into the body of the host…
       • Zaphod Beeblebrox 9.1.1.1

         31 January 2013 at 11:41 pm

         As you can tell, I’m no economist but surely any money saved in one area of spending gets spent somewhere else. My beef is when money is cut in from are that are of great benefit to the public ie keeping thousands of families healthy dry and safe and splurged on stuff hat has no benefit ie roads of no significance.
         • bad12 9.1.1.1.1

           1 February 2013 at 12:05 am

           Not a bad conjecture from someone claiming no knowledge of economics, the best that can be said of the money saved being re-distributed elsewhere in the economy is yes as far as the civil service cuts go it appears that the spending on ‘consultants’ went up quite dramatically as the civil service was cut by those many 1000’s,

           This tho simply serves to alter the flow of monies spent into the economy, by paying the equivalent to a consultant of 3,4 or 5 civil servants salaries to 1 consultant we can safely assume that the consultant isn’t going to visit the food shop nearest to the consultancy 3,4,or 5 times more often than the combined number of civil servants would have and it would be ridiculous for me or anyone else to suggest that the consultant will have the lawn mowing contractor round mowing the lawns 3,4, or 5 times more often than the 3,4 or 5 civil servants would have been had they kept their employment,

           There are variables within this whole economic equation such as the civil servant being reasonably skilled getting a job elsewhere but as there are only X amount of jobs in an economy this would simply limit a school leaver or a jobless person from gaining that employment,nonetheless the basic equation remains the same,

           Cutting benefits or tossing people off of benefits without them taking up employment as the current figures seems to indicate is occurring does exactly the same thing, looked at from a purely economic perspective removing such amounts of money from a local economy simply leads to more of the same–unemployment and a further shrinkage of the economy,

           The beast of capitalism as espoused by the present National Government it would seem has an insatiable appetite to eat it’s own flesh…
         • Draco T Bastard 9.1.1.1.2

           1 February 2013 at 12:07 pm

           As you can tell, I’m no economist but surely any money saved in one area of spending gets spent somewhere else.

           Not when it’s government spending being cut and the private profits are still going up. Under those conditions, which National has brought about with it’s policies of reducing wages while cutting taxes for the rich, then what we will and do see is massive increases to the top incomes and decreases everywhere else.

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