Economic ‘Billiteracy’ infects National Party

Written By: - Date published: 4:00 pm, October 25th, 2007 - 12 comments
Categories: national - Tags:

The Dom yesterday ran a front page story by Tracy Watkins which used National Party figures aimed at showing that “Joanna Average” isn’t much better off than seven years ago despite significant wage rises.

Turns out that neither Bill English nor John Key got the maths right.

From Cullen’s press release:

On Tuesday, Bill English invented a ‘Joanna Average” – a sole income worker, without children on the average wage. Unfortunately, Mr English used gross income instead of net income when calculating the worker’s income. The error meant that Mr English, and the media reports that relied on his numbers, significantly understated the increase in take-home home pay over the last seven years.

The actual increase is more than three times higher than Mr English reported.

‘Not only was the National Party’s example dismissive of the significant impact Working for Families is having for hundreds of thousands of middle income workers, it was just plain wrong,” Michael Cullen said.

‘After Bill English used the inaccurate information in the House on Tuesday, John Key made matters worse by tabling the document in the House during Question Time yesterday. This was not a small error, especially for two people who make claim to economic credibility.

So National’s mislead us twice.

First, by messing up the maths: instead of being $500 better off, Joanna is actually closer to $1800 better off.

Second, by telling only half the truth: ignoring working for families, cheaper doctors’ visits, cheaper prescriptions and a range of other cost-saving policies.

National want to be taken seriously on economic policy. This won’t help.

12 comments on “Economic ‘Billiteracy’ infects National Party ”

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  1. Matthew Pilott 1
    25 October 2007 at 4:33 pm

    And not too long ago all the jackasses on the Right were lambasting Cullen for his mistake about Aussie tax rates – I wonder if they’ll give there ‘dream team’ the same critique?

    Wonder if this gem will make the front pages, as Joanna Average did? Wonder if the papers will get round to asking what will happen to Joanna Average’s prospective income under a National government with de-powered collective bargaining and all the cards in the hands of the employers…?!

  2. the sprout 2
    25 October 2007 at 4:37 pm

    hmm i feel a Press Council complaint coming on

  3. Sam Dixon 3
    25 October 2007 at 4:41 pm

    yeah, national got their calculations wrong.

    It should go nominal wage minus tax, then adjust the net wage for inflation. That would give you her 2000 net earnings in 2007 dollars for comparsion to her 2007 net earnings.

    Instead, they went nominal wage, minus tax, then stuffed up by using the number needed to adjust her gross wage for inflation.. that meant they got a larger number because they were compensating Jonna for the lost buying power of money she never had in her pocket in the first place..

    Now, I’ll admit, I looked at National’s press release last week and I didn’t see that ‘mistake’ and I only found it now because I was looking… (it could be a geinue mistake, it would be easy enough to make but when you’re putting out press releases for a mjor part with that material in it you’ve got to worry about the competence of people would make such a mistake)…

    but if I were Tracy Watkins and I was going to publish this on the front page – i would have asked someone from accounts to check the sums, or better yet get them to take the raw figures and give me the answer themselves. It would only have taken 5 minutes and there would have been a better story – wannabe finance minister can’t do his sums.

  4. Daveo 4
    25 October 2007 at 4:50 pm

    And they’re still using the average fulltime wage rather than the median wage for all incomes here I see. Talk about cherrypicking.

  5. rjs131 5
    25 October 2007 at 6:01 pm

    Just out of interest, how much on average, does the average single income earner expect to spend on such things as chearper prescriptions/dcotors visits etc or how much are such people suppose to be spending. Am i immume to an great outbreak of disease/sickness which means i dont go to the doctors as everyone else (particularly labour party supporters…)

  6. Pascal's bookie 6
    25 October 2007 at 7:18 pm

    rjs

    “Just out of interest, how much on average, does the average single income earner expect to spend on such things as chearper prescriptions/dcotors visits etc ”

    For the most part it depends on how many kids they’ve got.

  7. r0b 7
    25 October 2007 at 10:59 pm

    “Billiteracy” – lovely!

    Talk about amateur hour. No wonder they couldn’t calculate their GST correctly at the last election. Should we give them a go running the country? No thanks.

  8. Sam Dixon 8
    26 October 2007 at 12:11 am

    rjs –
    check out stats’ CPI figures – the weighting in that tells you how much of their income the average customer spends on everything.. you can then work out the dollar figure for that by looking at average income… or you can look at the GDP breakdown figures

    of course, you want medians for typical kiwis, as we know average figures are dragged higher by a few very rich people.

    Daveo-
    Yeah, even playing National’s game and just looking at a very pecular case (a person who is earning the average wage in 2000 and stil on the average wage in 2007 and works precisely fultime and has no other income and has no children) things have improved dramatically.

  9. all_your_base 9
    26 October 2007 at 10:07 am

    rjs131 as you and Pascal’s bookie point out, doctors’ fees and so on will vary between families and individuals.

    Hodgson’s release from a week or so ago suggests that for most families annual health bills will now have halved.

    “For a young family, the annual cost of going to a general practitioner has fallen from about $940 a year on average to around $440 while for an older couple who on average paid about $780 year, the cost is now around $340 a year”

    “Health prices decreased 3.1 per cent in the September 2007 quarter, with the main contributions coming from price decreases for pharmaceutical products (down 16.2 per cent) and general practitioner fees (down 15.4 per cent)”

    I’m delighted to hear that you’re in such strapping health rjs131. I’m also hopeful that you’re not beyond sparing a thought for those that aren’t so lucky.

  10. insider 10
    26 October 2007 at 3:56 pm

    Two things – Sam raises the very good question about why this got on the front page without checking. These things happen too often. There seems to be a lack of competent news editing in NZ. Just cos someone sez it doesn;t make it true, yet the media too often engage in mews ping pong (he said she said) without actually checking the facts.

    Also, do you have any comment on the NBR story about the Govt using false data to justify its home insulation programme that will cost new home buyers about $5000 extra?

    I would have thought that was a far more egregious offence given it will lead to a direct financial penalty when houses are hard enough to afford anyway.

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