- Date published:
8:14 am, March 5th, 2020 - 64 comments
Categories: making shit up, national, same old national, Simon Bridges, spin, tax, uncategorized, you couldn't make this shit up - Tags:
Simon Bridges gave another car crash of an interview on Radio New Zealand yesterday morning.
He chose to attack the country’s response on Covid 19. There is an unwritten rule that you do not get all political in times of a crisis because the country needs leadership, not petty squabbling. Because often the country is relying on professional advice which should normally be respected.
Siouxsie Wiles at the Spinoff expressed the rule well:
I do understand that you lead the Opposition. I get that it’s your job to hold the government to account, and that this is an election year. Of course you and your caucus are keen to score points against the government wherever you can. But the reality is, you don’t actually have to oppose everything it does. Sometimes, such as in the case of a public health emergency, it might be worth putting the kneejerk response on hold.
I was really disappointed to hear you get stuck into the official response to the coronavirus outbreak and the testing regime in comments relying on anecdotal feedback.
And when I heard your colleague David Bennett, MP for Hamilton East, telling the listeners of Hamilton’s local radio station FreeFM that the government had “dropped the ball, big-time and put New Zealanders’ safety at risk”, and that people “should be out there panic-buying”, well, then I started to see red.
I can’t quite believe I need to tell you this, but during a serious outbreak of a new infectious disease, the last thing we need is for our elected representatives to be undermining the important messages coming from the government, scientists, and public health officials.
What was the nature of Bridges’ criticism? He wants everyone to be screened, even if they don’t meet the criteria for screening set by the professionals. This is against medical advice given to the Government and also ignores the fact that we will run out of testing kits if we do so.
And he has a solution to the crisis and it is … drum roll … tax cuts!
The country is facing the possibility of a trade downturn. What better way to deal with the situation by weakening the ability of the country to respond by increasing deficits and depriving it of options.
Corin Dann was having nothing of this nonsense. There was this fascinating exchange after Bridges criticised the state of the country’s economy and proposes a tax cut.
Dann: Most economists would argue we have a fiscal war chest, we have $12 billion worth of surplusses forecast, we have got debt at below 20% of GDP, unemployment at 4%, even if you’re right it is going to be a marginal difference isn’t it?
Bridges: It depends on what you do. But if you look at the economy last year the latest Reserve Bank [growth] projection at 1.6%, in the last five years of the Key Government we grew it at 3.5% …
Dann: But even if you are right Mr Bridges it does not change the fact that the fundamentals, the amount of debt, the ability of the New Zealand economy to absorb this hit is still there one way or the other.
Bridges: This all speaks to the inheritance that the Government got but the point of that growth is that in terms of small businesses, in terms of households and their rental costs and so on they do not have the protection, the buffer. Now the issue …
Dann: Why don’t they have the buffer? They do, the Government has the surpluses, it has the low debt to spend?
Bridges: Really? No I am talking about the impact in the sector that low growth in the economic situation for those small businesses and for the households …
Dann: Just a second Mr Bridges how will it help the Crayfish industry if the economy had been growing at half a percent more, they’ve lost their market.
Bridges: Well fundamentally families would have more money in their pockets. I mean they would have more ability going into this to do something. But the other side of it is if the Government can’t see it or doesn’t acknowledge where we are and they say “Look everything is ok you know 1.6% whatever GDP per capita lowest it has been for a very long time it doesn’t matter” that to me suggests they will not be able to solve this and get to the remedy. So lets get to the remedy. It seems to me when I have listened to Grant Robertson being interviewed by you, there’s a lot of nice talk, he’s read the treasury breach ah brief but he doesn’t have any sense of a comprehensive overall.
Bridges then talked enthusiastically about a tax cut for middle income earners. But when asked about an increase in benefits he said “if people make their case”. He said that benefit increases were not proposed.
Get that? With blind faith Bridges thinks that a tax cut will steer the country through the crisis. But when asked about a benefit increase he says the case would have to be proven.
How crazy is that? If a business is struggling it will be making little or no profit, ergo will pay little or no tax. A tax cut will do diddly squat to help it. But a highly profitable business will have its owners high fiving each other and planning overseas holidays and buying imported goods, behaviour which will have little beneficial effect of the local economy.
But give a beneficiary extra money and they will spend it locally. A bit more food, a trip out for the kids. Things with local beneficial effect.
Simon your prejudices are showing.
The Government’s thinking is typically more nuanced. From Jane Patterson at Radio New Zealand:
Finance Minister Grant Robertson said ministers were working through on a “sector by sector, region by region” basis.
“This is affecting businesses very, very differently”, he said.
“We’ve obviously got export-focused businesses where we’ve seen some immediate impacts… we’re working that through, we’ve got people on the ground.”
He has left open the option of tax cuts or direct cash payments to people to stimulate the economy; Robertson seemed to favour the latter as it would be a one-off measure.
Part of the work being done now was to gauge what level of spending may be necessary, he said.
“I think it’s really important we do do this in a measured way, we’ve got to make sure that anything we do actually gets to the people who need it, that it actually solves the problem that we’ve got and is sustainable.”
At the moment the economy was “continuing to tick over”, Robertson said, although “clearly there are significant problems for particular industries and particular regions.”
I cannot go better than Imperator Fish’s attempt to explain in what circumstances a tax cut would help.
Tax relief is Simon’s answer to every problem. But he may have a point this time. As our society inevitably collapses from the weight of the many economic and social shocks triggered by Covid-19, and as small communities of wretched people cling to life amidst the rubble of our once-mighty cities, scratching through the ruins for something, anything to eat, and fighting other groups to the death for what few resources remain – sometimes with little more than sticks and clubs as weapons – it will be some comfort that marginal tax rates have reduced.
National’s approach is to brazenly try and gain political advantage by attempting to use a pending crisis to push an ideological solution that will not work and will not improve things. Shame on it.