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What will Key cut?

Written By: - Date published: 10:37 am, February 1st, 2011 - 26 comments
Categories: education, public services - Tags: ,

The early childhood education cuts have hit – families will face an average $20-$45 a week increase in the cost of sending a kid to kindy. And Anne Tolley is signaling more to come. But it’s not just the education of the next generation that’s for the chop as National seeks to balance the books after its tax cuts for the rich binge.

This year, the government will spend $70 billion. With inflation expected to be 5% this fiscal year and population growth of 0.9%, just to stay even in real per capita terms government spending needs to go up by about $4 billion. That’s just reality. Instead, the government will only increase it by $700-$800 million, a 1% nominal increase but a 5% cut after inflation and population growth.

Where will it come from?

Key (aping David Cameron) says Health will get the basic increase it needs. A 6% increase on its $14 billion  budget is enough to eat all the extra budget allocation and a bit more once you count the extra needs of the aging population.

The increase in the cost of social welfare, including superannuation, is unavoidable. Benefits and super are automatically adjusted for inflation and people will keep on hitting 65. Even if unemployment numbers finally start to fall a little, it’s a drop n the ocean compared to the $9 billion a year bill for super. Key has pledged not to alter the pension and I seriously hope he’s not stupid enough to prolong the recession with benefit cuts like National did in 1991. So, that’s another $22 billion, rising by $750 million next year, locked in.

We can also rule out cutting finance costs – the money we pay in interest to our debtors, which is projected to rise by $600 million to $3.6 billion next year. And the Crown’s legal obligation to the Government Superannuation Fund – $300 million rising to $360 million.

$40 billion gone, $30 billion to go and we need to cut $1.4 billion just  to cover increases in the welfare, borrowing, and health bill.

I’m going to rule out nominal cuts for Police, Transport, and Defence – leaving them just the 6% cut due to inflation and population growth.

$22 billion left, $1.4 billion in cuts plus no inflation and population adjustments.

The only thing of any significance left is education with its $12 billion budget. Either it takes a big 10% cut or the assorted other small budget departments (Conservation, Housing, MFAT/aid, Customs/Biosecurity, MED, IRD, Morst etc) and Kiwisaver inducements will have to take savage cuts on the order of 20% in real terms.

I think we’re going to see cuts to early childhood and tertiary education, possibly the re-introduction of interest on student loans. Kiwisaver tax credits will be canned and there will be widespread cuts of 10-20% for departments, which means a less capable government (pray for no more major disasters) and more costs being lumped on to households.

All of this is completely unnecessary, just like asset sales. National did not have to borrow billions for tax cuts for the rich. And public debt is not at crisis point – we’re projected to be back in surplus in four years. No, this is all about ideology.

National has manufactured a ‘crisis’ to justify an agenda of tax cuts, public service cuts, and privatisation, which will undermine our future by weakening education and research, reducing private savings, and increasing foreign ownership of our strategic assets.

26 comments on “What will Key cut?”

  1. Bunji 1

    And indeed they’re already floating further cuts to ECE…

    National Ltd: Selling New Zealand’s Future.

  2. Anthony C 2

    Well he can’t cut research funding because that paid for the first tax cuts…

    Maybe tertiary education with the last sprinkle of Kiwisaver on top.

    Kiwisaver will be a pity too, speaking for myself my Kiwisaver has clawed back the loss from the GEC and is now growing, seems like a bad time to slice it even more.

  3. One could just as easily ask where the $1.8b in additional spending that Phil Goff has promised just in the last week will come from

    • Blighty 3.1

      from closing tax loopholes, new top tax rate, scrapping the new missile system, ring-fencing property losses (and hopefully canning motorway projects)

      • Uncle Helen 3.1.1

        Scrapping welfare handouts, introducing a flat income tax that’s the same for everyone, removing the right to vote for anyone who doesn’t pay tax or obey the law, dismantling the entirely useless 90% of the civil service that’s engaged solely in wealth redistribution.

    • Anthony C 3.2

      Yes one could if you were looking to misdirect. But last I checked National have the treasury benches for Budget 2011.

  4. It is called a strategic deficit Martyg, a strategic deficit …

    • Shane Gallagher 4.1

      All a ploy to create a crisis and then sell the country’s last assets to their rich mates here and overseas.

      The national standards in education are all about privatizing education… and then on to health (expect a crisis in the funding the health service soon).

      We have just seen the biggest transfer of wealth from the poor to the rich since the 1920s in the current financial crisis and NACT are just sweeping up the last scraps here in NZ for their rich buddies.

      Anti-spam: tricks – so appropriate!

  5. In some areas 40 % of 3 year olds are not in early child education according to Tolley. Nothing is being done to encourage this group. Were I the minister I would put my resources into getting all 3 year olds into ECE, instead the focus is on National Standards. Someone needs to explain to parents/caregivers the benefit of even 10 hours a week for a 3 year old attending ECE.

    Tolley if there are no kindergatens and child care centres in an area why not?

    Tolley has put the cart before the horse regarding the education of 3 year olds in particular.

  6. Lanthanide 6

    It seems quite unlikely they would introduce interest on student loans in 2011. They’ll save that up for 2012 after they’re re-elected.

    People voted for National for their promise of $50/week tax cuts and that they weren’t going to touch interest-free loans. Lots of idealistic young idiots bought it, and I think they’d very quickly go back to the left if National tried to do that.

    Having said that, though, National did bring in the 10% bonus for early repayments in 2009. I said at the time “here’s the carrot, where’s the stick?”. The stick is obviously interest back on student loans – maybe they’ll just stick it in at a low rate like 3% + retain the 10% bonus, so that way people can’t complain about how generous they’re being.

  7. Deadly_NZ 7

    And the Savings working group report is out too here’s a link I put it up on Google docs for any who want it.

    https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1eClXgZnVWjqGeIpR0nkUuL7RM3KiTDuBBZ9wBHK3GbNanKf8HWRzTApGu_tj&hl=en_GB&authkey=CNX3g_QF

    And as usual there’s granny Herald still spouting FUD for the NACTS that we are in danger of falling like Greece. What a load of Horseshit they are lumping all the private debt in just like every other article the write or is it more like Propaganda that they Spew ?

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10703400

  8. randal 8

    the one thing he is not going to cut is the amount his friends are going to make when they stag the share floats of privatised (read: looted) state assets

  9. Graham 9

    If a tiny percentage of the population were stopped from leeching most of the countries resources and cash, then the budget problem would be solved.

    A lot of these proposed cuts are going to create more unemployment now and in the future.

    • Colonial Viper 9.1

      Graham, don’t fuss, if unemployment is truly increased by these measures, employers will have more power to suppress the ages paid to labour.

      Surely this is a very good thing for business in NZ. Ahem, and Australia.

  10. tsmithfield 10

    I think Key is hooking into a change of mood in the electorate. Otherwise, why would he be talking tough about cuts in the budget etc in election year? Perhaps promising less this year will actually be more in terms of votes.

    It seems to me that people are waking up to the fact that we can’t go on borrowing money indefinitely. Sure, our government debt is currently quite low by international standards. However, at the rate at which we’re borrowing, it won’t take long to become a major problem. Also, overseas creditors look at the combined government and private debt as an indicator of the creditworthiness of the nation as a whole, so the government needs to do as much as possible to ensure its side of the equation is going the right way.

    Perhaps people are waking up to the reality that its better to make some hard decisions now rather than have harder ones imposed on us later.

    • Irascible 10.1

      So if the people are waking up to the issues around borrowing why hasn’t it dawned on Key & English? All I read & hear is the mantra if we sell off the state assets we can spend the money while continuing to borrow to pay off those, like Key & English, who received the big tax cut benefits under the successive NACToid budgets.
      Face it TS your great political lover is a financial failure – escpecially on the macro-economic level.

  11. sean14 11

    Looking at it another way, where will Phil get the money from?

    • Anthony C 11.1

      You know what ‘looking at it the other way’ actually means don’t you?

      For your future reference the “it” suggests looking at a topic from a different angle, not looking at different topic altogether.

    • Lanthanide 11.2

      Reversing unaffordable tax cuts that National irresponsibly gave to the top 10% of income earners.

      Next.

      • sean14 11.2.1

        Won’t even come close to Phil’s inexhaustible appetite for spending.

        Next.

        • Colonial Viper 11.2.1.1

          Apart from the small fact that the last LAB government had 9 consecutive budget surpluses.

          And under Bill and John’s fiscal incompetence, NZ is headed for 3 strikes out with a ballooning deficit.

          ‘Next’ Government needed is correct.

  12. Afewknowthetruth 12

    No action within the current paradigms will get us out of the very deep hole we are in, a hole that all previous governments -both National and Labour- were digging for years by borrowing and squandering. .

    The NZ economy is critically dependent on imported energy in the form of oil, and the price of Brent oil has just about reached $100, up 40% from what it was 6 months ago: since we import around 4/5 our oil, that will blow a huge additional hole in the government’s budget.

    The only thing that will cause the oil price to drop significantly is collaspe of the global econmy. Catch-22

  13. prism 13

    Aft..truth – Labour repaid debt. Can’t be accused of borrowing and squandering in such a cavalier fashion just so you can made a grand statement of disgust. They didn’t do some things that would have helped the country but let’s look at the facts. The oil price is going to impact badly and ‘blow a huge additional hole in the govt’s budget’, that’s a fact to be concerned about.

  14. Draco T Bastard 14

    The biggest problem with all the political parties is that they believe that the economy = money when the economy is the resources we have and how we use/renew them.

  15. Bored 15

    The things Key can be relied upon to cut are:
    * taxes for the rich.
    * access to basic social services to pay for the cuts.

    The rest he will flog off, if it aint nailed down it will be fire saled to his mates. In Russia they call this kleptocracy.

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    2 days ago
  • Review: The Block Party
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    2 days ago
  • Hard News: The media awards are dead – long live the media awards!
    Friday's Canon Media Awards was the most interesting instance of the long-running national ceremony in a long time, maybe ever. There were notable insurgencies – The SpinOff took two awards from 11 first-time nominations, Radio NZ's The Wireless won Website… ...
    2 days ago
  • Hard News: The media awards are dead – long live the media awards!
    Friday's Canon Media Awards was the most interesting instance of the long-running national ceremony in a long time, maybe ever. There were notable insurgencies – The SpinOff took two awards from 11 first-time nominations, Radio NZ's The Wireless won Website… ...
    2 days ago
  • New research confirms water fluoridation does not cause bone cancers
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    2 days ago
  • Redline on the Labour Party
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    2 days ago
  • Selfie-takers think they’re the greatest
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  • UCOL cutting the staff who lifted student results
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    2 days ago
  • Another Road Only Harbour Crossing on the Cards?
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    2 days ago
  • Leaked UK Briefing Shows NZ-EU Trade Deal is a Sham
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  • Gordon Campbell on bank scandals and air crashes
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    2 days ago
  • March Against Monsanto
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    Its our futureBy ScoopBlogPush
    2 days ago

  • Key’s “brain fart” on tax cuts news to English
    John Key didn’t tell his own Finance Minister he was about to go on radio and announce he wanted $3b of tax cuts, just days after Bill English ruled them out, says Labour’s Finance spokesperson Grant Robertson. “In Parliament today… ...
    10 hours ago
  • What I’m looking for in Budget 2016 – A better start for our tamariki
    Ensuring the best start for our tamariki is a priority for me in everything I do. And so in Budget 2016, my first budget as an MP, I looking for the Government to make a real investment in the wellbeing… ...
    GreensBy Marama Davidson
    11 hours ago
  • What I’m looking for in Budget 2016 – A better start for our tamariki
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    GreensBy Marama Davidson
    11 hours ago
  • Denise Roche: What I’m looking for in Budget 2016 Pt II
    Aotearoa’s new New Zealanders,  come to our country in vulnerable position: – often away from the culture, communities and families they know, sometimes in neighbourhoods without familiar faces and often encountering barriers to employment. With net migration at 50,000+ a… ...
    GreensBy Denise Roche
    15 hours ago
  • Equal Pay and Budget 2016
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    GreensBy Jan Logie
    17 hours ago
  • Equal Pay and Budget 2016
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    GreensBy Jan Logie
    17 hours ago
  • A great Budget would
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    GreensBy Catherine Delahunty
    17 hours ago
  • Budget building materials policy backfires
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    17 hours ago
  • Smarter, Better, Cleaner, Stronger
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    GreensBy Gareth Hughes
    18 hours ago
  • Govt must come clean on tax cuts in Budget
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    2 days ago
  • Grant Robertson Pre-Budget Speech
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    2 days ago
  • Budget must deliver for middle New Zealand
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    2 days ago
  • Our housing emergency – why we have to act
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    GreensBy Marama Davidson
    4 days ago
  • Will funding boost for sexual violence services go to the right places?
    This week the Government announced $46million for sexual violence services. This announcement was a result of decades of work by advocates and everyone who submitted to the Select Committee inquiry into funding for sexual violence services that I initiated with… ...
    GreensBy Jan Logie
    4 days ago
  • Will funding boost for sexual violence services go to the right places?
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    GreensBy Jan Logie
    4 days ago
  • Denise Roche – What I’m looking for in this year’s Budget
    Two of the things I’ll be looking for in the Budget next week are more funding for refugees and for our arts and culture sector. More funding for refugees I’m a strong supporter of the #DoubleTheQuota campaign and its goals… ...
    GreensBy Denise Roche
    4 days ago
  • Denise Roche – What I’m looking for in this year’s Budget
    Two of the things I’ll be looking for in the Budget next week are more funding for refugees and for our arts and culture sector. More funding for refugees I’m a strong supporter of the #DoubleTheQuota campaign and its goals… ...
    GreensBy Denise Roche
    4 days ago
  • Car rego victims must get a refund
    Motorists who have been overcharged for their car registration should get a refund, says Labour’s Transport spokesperson Sue Moroney.  “Minister Nikki Kaye’s ‘faulty risk’ rating scheme has blown up in her face with over 170 different models of car having… ...
    5 days ago
  • Council statement shows they just don’t get it
    The Auckland Council’s statement today shows they don’t understand the problems created by the urban growth boundary, says Labour’s housing spokesperson Phil Twyford.  “I have been the first to defend the Auckland City Council when Bill English has been blaming… ...
    5 days ago
  • Inspecting electronic devices a potential privacy threat
    Labour is expressing concern for New Zealanders’ privacy rights as the Government signals Customs will have the power to inspect electronic devices coming across the border, says Labour’s Customs Spokesperson Rino Tirikatene. “We agree that customs officers should have the… ...
    5 days ago
  • The Price of Water
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    GreensBy Catherine Delahunty
    5 days ago
  • Caption It NZ!
    Today I received a petition from the NZ Captioning Working Group urging the government to legislate for accessibility via closed captioning for deaf and hard of hearing New Zealanders. It was timely because today is the fifth Global Accessibility Awareness… ...
    GreensBy Mojo Mathers
    5 days ago
  • Older Kiwis to miss out on electives
    The Government is not doing enough elective surgery to keep up with New Zealand’s ageing population, says Labour’s Health spokesperson Annette King.  “It’s damning that the targeted national intervention rate for cataract and knee and hip surgery is the same… ...
    6 days ago
  • Most principals say their college is underfunded
    The Government must substantially increase funding for secondary schools in next week’s Budget after a new survey found 86 per cent of principals consider their college under-resourced, Labour’s Education spokesperson Chris Hipkins says. “Just 14 per cent of secondary principals… ...
    6 days ago
  • Bill English and Nick Smith on different pages
    The Government’s support for Labour’s policy to remove the Auckland urban growth boundary is good news, but National needs to clarify its position, Labour’s Housing and Auckland Issues spokesperson Phil Twyford says. “The Acting Prime Minister has acknowledged our position… ...
    6 days ago
  • Bill English and Nick Smith on different pages
    The Government’s support for Labour’s policy to remove the Auckland urban growth boundary is good news, but National needs to clarify its position, Labour’s Housing and Auckland Issues spokesperson Phil Twyford says. “The Acting Prime Minister has acknowledged our position… ...
    6 days ago
  • Labour calls for independent inquiry into illegal fish dumping
    The Labour Party is reiterating its call for an independent inquiry into New Zealand’s fishing industry after two reports revealed the Ministry for Primary Industries turned a blind eye to widespread fish dumping in New Zealand waters, says Labour’s Fisheries… ...
    6 days ago
  • Mt Karangahake and Newcrest Mining
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    GreensBy Catherine Delahunty
    6 days ago
  • Robbing Aucklanders to pay Rio Tinto
    New Zealand’s national electricity grid stretches the length of the country and contains some 11,803 kilometres of high-voltage lines and 178 substations. It wouldn’t make sense for competing power companies to duplicate and build their own expensive electricity transmission system… ...
    GreensBy Gareth Hughes
    6 days ago
  • Government should abolish Auckland urban growth boundary
    The Government should rule out any possibility of an urban growth boundary in Auckland Council’s Unitary Plan if it is serious about fixing the housing crisis, says Labour’s Housing spokesperson Phil Twyford. “Over 25 years the urban growth boundary hasn’t… ...
    7 days ago
  • Kiwis don’t want iPads for Land deals
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    7 days ago
  • Homelessness – National has failed all of us
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    GreensBy Marama Davidson
    1 week ago
  • Moko case should never have been manslaughter deal
    Confirmation again yesterday that the manslaughter charge in the Moko Rangitoheriri case was a deal done by the Crown Prosecution Service is justifiably the cause of outrage, says Labour’s Children’s spokesperson Jacinda Ardern.“This should never have been a case where… ...
    1 week ago
  • Overseas investor funds school’s digital devices
    The Government must address the inequality laptops and tablets in classrooms are causing after a Queenstown school was forced to use a donation from an overseas investor to get their students digital devices, Labour’s Education spokesperson Chris Hipkins. “Documents obtained… ...
    1 week ago
  • Child Youth and Family Review and Domestic Violence
    This Government has consistently failed to recognise the links between Child Youth and Family Services (CYFS) and intimate partner violence. For me, the recent review of CYFS has highlighted this misunderstanding of the dynamics of domestic violence and its impacts… ...
    GreensBy Jan Logie
    1 week ago
  • Child Youth and Family Review and Domestic Violence
    This Government has consistently failed to recognise the links between Child Youth and Family Services (CYFS) and intimate partner violence. For me, the recent review of CYFS has highlighted this misunderstanding of the dynamics of domestic violence and its impacts… ...
    GreensBy Jan Logie
    1 week ago
  • Canterbury rebuild: How wood is a better choice for the new city
    It was interesting to attend the ForestWood Conference in Auckland recently and learn about the extent of innovation in the wood processing and manufacturing sector. The forestry sector may be New Zealand’s third largest export earner, but raw logs make… ...
    GreensBy Eugenie Sage
    1 week ago
  • Canterbury rebuild: How wood is a better choice for the new city
    It was interesting to attend the ForestWood Conference in Auckland recently and learn about the extent of innovation in the wood processing and manufacturing sector. The forestry sector may be New Zealand’s third largest export earner, but raw logs make… ...
    GreensBy Eugenie Sage
    1 week ago
  • Key plucks $3b out of thin air – reckless and irresponsible
    John Key refuses to give up on his dream of tax cuts to the wealthy, despite being shot down by Bill English, and is resorting to plucking numbers out of thin air, says Labour’s Finance spokesperson Grant Robertson. “On radio… ...
    1 week ago
  • John Key woefully out of touch on homelessness
    John Key is completely out of touch if he thinks desperate South Auckland families forced to live in cars can simply go to Work and Income for help, Opposition Leader Andrew Little says. “Many of these families are working and… ...
    1 week ago
  • Under-reporting shows need to review quota system
    The Government must launch an independent review into New Zealand’s 30-year-old Quota Management System following a new report suggesting gross under-reporting of catch in the New Zealand fishing industry, Labour’s Environment spokesperson David Parker says.  “The Auckland University report found… ...
    1 week ago
  • Investigations into tertiary institutions overdue
    A Tertiary Education Commission investigation into the Tai Poutini Polytechnic is overdue and should have been launched last year, Labour’s Associate Education (Tertiary) spokesperson David Cunliffe says. “Labour has been calling for an inquiry into potential rorts at Tai Poutini… ...
    2 weeks ago
  • Investigations into tertiary institutions overdue
    A Tertiary Education Commission investigation into the Tai Poutini Polytechnic is overdue and should have been launched last year, Labour’s Associate Education (Tertiary) spokesperson David Cunliffe says. “Labour has been calling for an inquiry into potential rorts at Tai Poutini… ...
    2 weeks ago
  • Where is the fair share for most New Zealanders?
    Most New Zealanders reading the news that chief executive pay has risen 12 per cent in the last year will be wondering when they are going to get their fair share, Labour’s Finance spokesperson Grant Robertson says. “More and more… ...
    2 weeks ago
  • Where is the fair share for most New Zealanders?
    Most New Zealanders reading the news that chief executive pay has risen 12 per cent in the last year will be wondering when they are going to get their fair share, Labour’s Finance spokesperson Grant Robertson says. “More and more… ...
    2 weeks ago
  • Mega media merger is bad news
    Some people call newspapers “tomorrow’s fish and chips” but this week’s news around a mega media merger is not an issue we should discard. Media giants Fairfax and APN News & Media announced they were in discussions to merge their… ...
    GreensBy Gareth Hughes
    2 weeks ago
  • Mega media merger is bad news
    Some people call newspapers “tomorrow’s fish and chips” but this week’s news around a mega media merger is not an issue we should discard. Media giants Fairfax and APN News & Media announced they were in discussions to merge their… ...
    GreensBy Gareth Hughes
    2 weeks ago
  • National puts Easter trading in the too hard basket
    All Labour MPs will vote against National’s move to leave Easter trading laws up to councils, Labour’s Workplace Relations spokesperson Iain-Lees Galloway says.  “Despite this being a conscience vote, Labour MPs are united in their opposition to the Government’s moves… ...
    2 weeks ago
  • National puts Easter trading in the too hard basket
    All Labour MPs will vote against National’s move to leave Easter trading laws up to councils, Labour’s Workplace Relations spokesperson Iain-Lees Galloway says.  “Despite this being a conscience vote, Labour MPs are united in their opposition to the Government’s moves… ...
    2 weeks ago
  • Law Commission speaks up for domestic violence survivors
    I want to give kudos to the Minister for Justice for getting the Law Commission to review options for how our justice system responds when victims of domestic violence kill their partners. This is a relatively discrete piece of work… ...
    GreensBy Jan Logie
    2 weeks ago

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