web analytics

It’s official: Key reveals “inertia” strategy

Written By: - Date published: 4:37 pm, May 18th, 2011 - 19 comments
Categories: brand key, Economy - Tags:

Speaking to Audrey Young in today’s Herald, Prime Minister John Key stated “the one thing I’ve come to learn is that the single biggest driving factor in Kiwisaver is inertia”. This confirms what many in the community have been thinking, and a few in the business world have been saying, that inertia is also the single biggest driving factor in the National/ACT/Maori Party government’s economic policy.

Not that Key’s government have been altogether idle. They have been borrowing furiously in a world awash with cash looking for a return. In contrast to the last several years where households over-borrowed from banks loaded with cheap overseas loans, now that households are pulling back the government is taking up the slack and borrowing extensively.

The borrowing is necessary to pay for liberal tax cuts, weighted heavily to the top 1% of income earners. Now that households are cutting back on their spending, the government intends to help them to cut back even further by removing benefits and the incentives for saving through Kiwisaver as part of its inertia policy. Government workers will also be asked to contribute to ensuring the government’s books don’t suffer as households did by giving up their jobs.

There’s a lot to be said for doing nothing.

19 comments on “It’s official: Key reveals “inertia” strategy ”

  1. William Joyce 1

    New election poster for National’s economic policy

  2. Can I go out on a limb and say that National is looking really rattled.  Its MPs have spent all day saying that Labour wants to tax turnover and not profits (as if).
     
    They are also saying that the tax/GST switch was fiscally neutral.
     
    The louder they keep shouting these things out the more removed from reality they are showing themselves to be.
     
    And this is at a time where they should be building up the budget.
     
    Methinks that they are in trouble and their lack of a coherent economic strategy is starting to show.
     
    And their beligerent insistence that people are better off is showing to ordinary people that they are totally out of touch.

    • Lanthanide 2.1

      “Its MPs have spent all day saying that Labour wants to tax turnover and not profits (as if).”
       
      This is in response to Labour highlighting the tax paid by farmers as being “too low” in a year that had high turnover but very low profit. It’s a clear whistle to their base – farmers and businessman – that Labour don’t know what they’re talking about.

      • ron 2.1.1

        Actually, Lanthanide the Labour pollies commenting in this had some very succinct and pertinent things to say. Among them was the concern that our “dairy boom” is as based on b”borrow and hope” as much as this incompetent Govt.’s fiscalm policy is.

      • kriswgtn 2.1.2

        Is that right?
        Obviously Blinglish knows this tax avoidance by farmers and has set his net to catch them
        I feel there be backlash on this so IT isnt just Labour stirring things up- (and National will be pay for daring to do so)

        http://www.stuff.co.nz/dominion-post/news/politics/5023193/English-sets-sights-on-farmers-tax

        I think its great>

        whose next??

        Family trusts?

      • felix 2.1.3

        Bollocks Lanth, it was in response to Labour daring to discuss the massive tax rort perpetrated by National’s voting base.

        And hearing every Nat mp shouting it over and over yesterday just exposed the shallowness of their own belief in their ability to present a viable budget.

        If they had any faith they would’ve been singing their own praises all day but it spoke volumes that all they had left was a ridiculous man of straw thrown up by Key at the last moment.

        And their desperation was writ large by their excitement at having something – anything, no matter how facile – to shout about.

        Desperate. Panicked. Deeply afraid.

        • Lanthanide 2.1.3.1

          Um, I don’t see how what I said is any different to what you said, except I said businessmen and farmers and you said “National’s voting base”.

    • Peter 2.2

      Agreed, it’s difficult to respect these people. No one claimed that they should be paying tax on turnover/sales. Nash is simply pointing out that the backbone of the economy are actually not very profitable and under existing tax laws pay a pathetic amount of tax compared to others. They could at least acknowledge the contribution of others and consider improving their contribution given their asset base.

  3. Maui 3

    Inertia ?

    A swan may look graceful on the surface, but under water there is a lot of paddling going on.

    http://www.stuff.co.nz/national/politics/5021302/Banks-makes-his-move-for-Epsom

  4. Matthew Hooton 4

    Key is not saying anything here different from what Michael Cullen’s personal economist (and former CTU economist) Peter Harris said when KiwiSaver was set up – that it uses inertia to get people to sign up to it, and stay in it. Try again.

  5. Afewknowthetruth 5

    Since we live in a scientifically illiterate society, we should not be surprised that our so-called leader doesn’t know the difference between force, work, energy, inertia and momentum.

    As for actually doing any work, why would he bother when he can collect a huge salary for tripping round the world smiling and shaking hands?

  6. ianmac 6

    If you have to explain, either you are hurting or you are feeling guilty. Hope Key is forced to justify/explain a lot more.

  7. Mike Smith 7

    Matthew

    I’ll check with Peter Harris what he said. However the scheme as Michael Cullen set it up didn’t rely on inertia but incentives which is why commentators such as Mary Holm have promoted it so much. It is those incentives which have made it successful and which Key and English are now about to reduce.

    • PeteG 7.1

      Far more successful (and costly) than anticipated, that suggests the incentives were overly generous. That’s why Mary Holm promoted it, it wasn’t just an attractive investment proposition, it was too generous to ignore.

      • Colonial Viper 7.1.1

        PeteG saying that savings are too costly to afford!

        Smart man!

        Another reason to move to Australia, where their savings scheme is already more than twice as generous to NZ’s pathetic efforts.

    • Matthew Hooton 7.2

      The “incentives” as you call them have certainly made a difference. You’d either be very very poor or very very stupid not to sign up to KiwiSaver given how extreme those incentives are – 100% guaranted for someone on $56,000. But inertia was also a deliberate factor – you are autmoatically signed up when you get a new job and have to take bureaucratic steps to opt out. Also, once you’re in you can’t get out (and the money just leaves your pay packet without you knowing it). Where the exact balance lies between incentives and inertia but Peter Harris and John Key are both right that the scheme harnesses the power or inertia to be successful. I doubt the changes, whatever they are, will make any difference to uptake and participation because the $1000 sign up “bonus” is apparently going to stay and, for those who are in, they can’t get out.

      • PeteG 7.2.1

        I doubt the changes, whatever they are, will make any difference to uptake and participation

        It could make a difference to active participation and the number of people electing to go on contribution holidays, although I think the expected 50% guranteed still makes it a good investment proposition – if that is the level of change and the compulsory minimum employee contribution doesn’t go up too much I’ll keep contributing.

Recent Comments

Recent Posts

  • NZ announces a third P-3 deployment in support of UN sanctions
    The Government has deployed a Royal New Zealand Air Force P-3K2 Orion (P-3) maritime patrol aircraft to support the implementation of United Nations Security Council (UNSC) resolutions imposing sanctions against North Korea, announced Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark. “New Zealand has long supported ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Pacific trade and development agreement a reality
    Pacific regional trade and development agreement PACER Plus will enter into force in 60 days now that the required eight countries have ratified it. Trade and Export Growth Minister David Parker welcomed the announcement that the Cook Islands is the eighth nation to ratify this landmark agreement. “The agreement represents ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Securing a pipeline of teachers
    The Government is changing its approach to teacher recruitment as COVID-19 travel restrictions continue, by boosting a range of initiatives to get more Kiwis into teaching. “When we came into Government, we were faced with a teacher supply crisis,” Education Minister Chris Hipkins said. “Over the past three years, we ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Border exceptions for a small number of international students with visas
    The Government has established a new category that will allow 250 international PhD and postgraduate students to enter New Zealand and continue their studies, in the latest set of border exceptions. “The health, safety and wellbeing of people in New Zealand remains the Government’s top priority. Tight border restrictions remain ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • First COVID-19 vaccine purchase agreement signed
    The Government has signed an agreement to purchase 1.5 million COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand, say Research, Science and Innovation Minister Megan Woods and Health Minister Chris Hipkins. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • International statement – End-to-end encryption and public safety
    We, the undersigned, support strong encryption, which plays a crucial role in protecting personal data, privacy, intellectual property, trade secrets and cyber security.  It also serves a vital purpose in repressive states to protect journalists, human rights defenders and other vulnerable people, as stated in the 2017 resolution of the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Ministry of Defence Biodefence Assessment released
    The Ministry of Defence has today released a Defence Assessment examining Defence’s role across the spectrum of biological hazards and threats facing New Zealand. Biodefence: Preparing for a New Era of Biological Hazards and Threats looks at how the NZDF supports other agencies’ biodefence activities, and considers the context of ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020
    New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020 Hon David Parker’s response following Thomas Piketty and Esther Duflo. Good morning, good afternoon, and good evening, wherever in the world you might be. I first acknowledge the excellent thought provoking speeches of Thomas Piketty and Esther ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Kaipara Moana restoration takes next step
    A Memorandum of Understanding has been signed today at Waihāua Marae between the Crown, local iwi and councils to protect, restore and enhance the mauri of Kaipara Moana in Northland. Environment Minister David Parker signed the document on behalf of the Crown along with representatives from Ngā Maunga Whakahī, Ngāti ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand and Uruguay unite on reducing livestock production emissions
    Agriculture Minister Damien O’Connor and Uruguayan Minister of Livestock, Agriculture and Fisheries Carlos María Uriarte have welcomed the launch of a three-year project that will underpin sustainable livestock production in Uruguay, Argentina, and Costa Rica.  The project called ‘Innovation for pasture management’ is led by Uruguay’s National Institute of Agricultural ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • 3100 jobs created through marae upgrades
    Hundreds of marae throughout the country will be upgraded through investments from the Provincial Growth Fund’s refocused post COVID-19 funding to create jobs and put money into the pockets of local tradespeople and businesses, Regional Economic Development Minister Shane Jones and Māori Development Minister Nanaia Mahuta have announced. “A total ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Health volunteers recognised in annual awards
    Health Minister Chris Hipkins has announced 9 teams and 14 individuals are the recipients of this year’s Minister of Health Volunteer Awards.  “The health volunteer awards celebrate and recognise the thousands of dedicated health sector volunteers who give many hours of their time to help other New Zealanders,” Mr Hipkins ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community COVID-19 Fund supports Pacific recovery
    The Minister for Pacific Peoples, Aupito William Sio says a total of 264 groups and individuals have successfully applied for the Pacific Aotearoa Community COVID-19 Recovery Fund, that will support Pacific communities drive their own COVID-19 recovery strategies, initiatives, and actions. “I am keen to see this Fund support Pacific ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community benefits from Māori apprenticeships
    Up to 50 Māori apprentices in Wellington will receive paid training to build houses for their local communities, thanks to a $2.75 million investment from the Māori Trades and Training Fund, announced Employment Minister Willie Jackson today. “This funding will enable Ngāti Toa Rangatira Incorporated to provide its Ngā Kaimahi ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Training fund supports Māori jobseekers
    Rapidly growing sectors will benefit from a $990,000 Māori Trades and Training Fund investment which will see Wellington jobseekers supported into work, announced Employment Minister Willie Jackson today. “This funding will enable Sapphire Consultants Ltd. to help up to 45 Māori jobseekers into paid training initiatives over two years through ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruakura Inland Port development vital infrastructure for Waikato
    The Government is investing $40 million to develop an inland port at Ruakura which will become a freight super-hub and a future business, research and residential development for the Waikato, Urban Development and Transport Minister Phil Twyford, and Māori Development Minister Nanaia Mahuta announced today. The funding has been has ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Appointments made to Defence Expert Review Group
    Defence Minister Ron Mark announced today the establishment of an Expert Review Group to review a number of aspects of the New Zealand Defence Force’s (NZDF) structure, information management and record-keeping processes.  The Expert Review Group’s work arises out of the first recommendation from the Report of the Government’s Inquiry ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • No active community cases of COVID-19
    There are no active community cases of COVID-19 remaining in the country after the last people from the recent outbreak have recovered from the virus, Health Minister Chris Hipkins said today. “This is a big milestone. New Zealanders have once again through their collective actions squashed the virus. The systems ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Clean energy upgrade for more public buildings
    More public buildings will be supported by the Government to upgrade to run on clean energy, the Minister for Climate Change James Shaw announced today. Minister Shaw announced that Lincoln and Auckland universities will receive support through the Clean-Powered Public Service Fund to replace fossil fuel boilers. Southern, Taranaki, and ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Schools back donations scheme for the second year
    More schools have opted in to the donations scheme for 2021, compared to 2020 when the scheme was introduced. “The families of more than 447,000 students will be better off next year, with 94% of eligible schools and kura opting into the scheme,” Education Minister Chris Hipkins said. “This is ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruapehu cycle trails gets PGF boost
    The spectacular Mountains to Sea cycle trail in Ruapehu District will receive $4.6 million in funding from the Provincial Growth Fund for two additional trails, Regional Economic Development Minister Shane Jones announced today. “This is an exciting development for the local community, and one that will provide significant economic opportunities ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Update to air border order strengthens crew requirements
    Additional measures coming into effect on Monday will boost our defence against COVID-19 entering New Zealand through the air border, Health Minister Chris Hipkins said today. “As part of our precautionary approach and strategy of constant review, we’re tightening the requirements around international aircrew,” Chris Hipkins said. The COVID-19 Public ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • A true picture of Māori business activity
    A better picture of the contribution Māori businesses make to the economy will be possible with changes to the way information is collected about companies and trading enterprises. Māori Development Minister Nanaia Mahuta and Small Business Minister Stuart Nash have announced a new option for Māori enterprises who are part ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • PGF funding for Taranaki projects
    The South Taranaki museum, a New Plymouth distillery and a Pasifika building firm will benefit from a Government investment totalling more than $1 million, Regional Economic Development Minister Shane Jones says. The $1.05m in grants and loans from the Provincial Growth Fund (PGF) will help the recipients expand and create ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Fijian Language Week 2020 inspires courage and strength during COVID-19 pandemic
    The Minister for Pacific Peoples, Aupito William Sio says the theme for the 2020 Fijian Language Week reflects the strong belief by Fijians that their language and culture inspires courage and strength that is strongly needed in times of emergencies, or through a significant challenge like the global COVID-19 pandemic ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Trades training builds on iwi aspirations
    An investment of $2.025 million from the Māori Trades and Training Fund will support Māori to learn new skills while making a positive difference for their communities, announced Employment Minister Willie Jackson today. “K3 Development Limited Partnership will receive $2,025,000 for its Takitimu Tuanui apprenticeship programme, which will support the ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Conservation Minister plants two millionth tree in Raglan restoration
    A long-term conservation project led by the Whaingaroa Harbour Care group in the western Waikato reaches a significant milestone this week, with the planting of the two millionth tree by the Minister of Conservation Eugenie Sage. “Planting the two millionth tree crowns 25 years of commitment and partnership involving Whaingaroa ...
    BeehiveBy beehive.govt.nz
    3 weeks ago