It’s worth having a look at Bill English’s performance on Q+A the other day. What’s telling, to my mind, is that English can’t present a real vision or even any spin-free information. Why not? Because his tax swindle is about taking from us and giving to the elite, and he can’t just come and say that.
MR ENGLISH … Businesses who do that [increase their prices by more than the GST hike] are really taking a risk. When your consumers are being so careful, if you put your prices up, people are going to be very sensitive to that. They’ll just move to someone else who hasn’t put their prices up.
GUYON And is that the only weapon – the market? Or can you clamp down on these people?
MR ENGLISH Well, the market is the weapon that works, actually.
Lolz. The wonderful market. Let’s leave it to those wonderfully efficient markets. Wait, aren’t these the same wonderful markets that failed so badly that the world’s governments have had to step in with borrowed trillions to prevent complete financial collapse.
GUYON OK, you said the vast majority of New Zealanders were going to be better off under your tax switch when GST goes up and the income tax comes down. Is there any group of New Zealanders… You’ve crunched the numbers over the last few months – is there any group of New Zealanders who will be worse off?
MR ENGLISH Well, I think that will depend on some individual circumstances. For instance…
GUYON What are they?
MR ENGLISH Well, there’s some groups, for instance, who don’t pay any accommodation costs. Because for most people, the cost of their housing and accommodation – they don’t pay GST on that, so they don’t have GST going up on it. But there are a small group of people who don’t pay any accommodation costs. There may be other people who are living on borrowed money, for instance. So there’s a few groups who may. There may be some individuals who put their heads up. But in the end, this is not just about whether people are better off – they’ll believe that when they see it – it’s about the longer-term need to balance the economy to strengthen it.
But that Nice Man Mr Key told me that I would be $50 a week better off. Now, it’s not about whether people are better off?
GUYON We had a New Zealand Institute of Economic Research forecasting paper out recently. They say that 50% of households will see their tax cuts eaten up by the end of the year. Do you agree with that?
MR ENGLISH No, I don’t, and I don’t know how they calculated that.
Who to believe? The country’s leading economic institute? Or Double Dipton, the man who claimed that cutting contributions to the Cullen Fund at a time when it was buying up assets at once-in-a-generation low prices was the sensible thing to do?
GUYON They say, though, that they estimate that 50% of households will be worse off after a year, at the end of the year, given rising food prices, GST and other one-off charges. I mean, there are a lot of costs in the economy going up.
MR ENGLISH Yeah, but when you add them all together, there’s actually some prices going down – like fuel and food prices have actually been dropping, not rising [petrol’s actually up 14.5% since English came to power]. When you add them up in the round, inflation is relatively low. Look, there’s no free lunch here. This is not a lolly scramble. It was never meant to be.
But, again, that Nice Man Mr Key told me I would be getting $50 a week of lollies. The truth, of course, is that the tax cut money hasn’t magically appeared out of thin air. The income tax cuts are paid for by the GST increase and a billion dollars of borrowing.
GUYON Yeah, and that may well be true, and that’s the theory of it, but for a lot of people, it’s going to be what’s in their pocket, and that’s fair enough for those people. And it isn’t much, is it, when you’re on the average wage of around $45,000. Your tax switch gives them $12 a week – three cups of coffee, really.
Or a block of cheese.
GUYON But when they look at someone on your salary gets $143 a week after this tax switch, and, say, someone starting out as a teacher on $37,000 gets $13 a week. Is it really fair?
MR ENGLISH It is, and we put a lot of information out around the budget.
GUYON What’s fair about that?
MR ENGLISH Well, it’s because we’ve increased the effective tax rate on property in particular. When you average it out across the income groups, most of the property tends to be owned by the higher income groups.
That may be but we all know that most wealthy people, especially the very wealthy, are not property investors – they’ll get the massive tax cuts but no depreciation clawbacks.
Imagine you’re a typical taxpayer, the Deputy Prime Minister for instance, and you’re renting your family home out to Ministerial Services who are then providing that home to you for your family to live in, you won’t be able to claim depreciation any more. On the other hand, say your rort was discovered a year ago and you’re not doing it now, then the changes to the depreciation rules mean nothing and you (already on seven times the starting teacher’s wage) walk away with eleven times the tax cut.
In the end of the interview, Guyon asks English about the abysmal growth track we’re on. English’s spin is that slow growth is good (funny, a few weeks ago he was misconstruing Labour’s record on growth to claim it was slow. I didn’t realise he meant it as a compliment). English says growth is slow because people are spending less and saving more. Now, English is an ex-Treasury official so he knows that isn’t true. GDP includes both consumption and capital formation (ie. savings/investment). The fact of the matter is that any new capital wealth we are accumulating is counted in that abysmal 0.2%.
My challenge to English is to stop spending all his time deceiving and actually come up with an economic strategy. One that isn’t based on cycleways and spinning.