web analytics

Key tries bad stats to mask pathetic record

Written By: - Date published: 8:44 am, February 9th, 2011 - 39 comments
Categories: john key, wages - Tags: ,

Key’s line was pure spin. An attempt to cover a shockingly poor economic record with fairytale statistics. Here’s John Armstrong doing what Key hoped he would – regurgitate the line unchecked:

“Key also produces figures to show the price of goods and services has risen by 6 per cent since the last election, while the after-tax average wage has actually gone up by 16 per cent.

Thank tax cuts for that. The figures might be right. But they won’t equate with most people’s experience in the nation’s shopping malls.”

‘Might be right?’ John, if you don’t have a lackey that can check these facts, flick us an email.

Here’s how it goes:

2008Q4 2010Q4
Average Weekly Earnings $              791.91 $              838.73
Net income using tax rates in force at the time $              640.86 $              710.75
Consumer Price Index 1072 1137
Inflation-adjusted average weekly wage $              679.72 $              710.75
Change after inflation and tax cuts 4.6%
Minus 2.5% extra GST on net income 2.5%

(incomes and CPI from Stats, tax rates from Treasury)

So, the average wage after tax and inflation has risen 2.5% thanks to those tax cuts (it’s down without them). That’s not the 10% Key is claiming. And it’s not the right figure to use because it’s dragged up artificially by the fact the rich are still getting pay rises, the fact that the rich got big tax cuts, and the fact that those on low incomes are most likely to lose their jobs in the recession and so stop being part of the average.

Averages suck at telling us the ‘typical’ experience and it’s no good if you don’t count families whose breadwinners have lost their jobs in the recession. Fortunately, we can look at the median household income instead.

2008Q4 2010Q4
Median Weekly Household Earnings $          1,257.00 $          1,236.00
Net income on tax rates in force at the time $          1,001.79 $          1,057.29
Consumer Price Index 1061 1099
Inflation-adjusted average weekly wage $          1,037.67 $          1,057.29
Change after inflation and tax cuts 1.9%
Minus 2.5% extra GST on net income -0.4%

(incomes and CPI from Stats, tax rates from Treasury)

And even this measure, which shows household incomes have dropped in real terms even when you count the tax cuts, isn’t wholly satisfactory because it doesn’t show the fact that those below the median have gotten poorer a lot quicker than those above it. There’s no nice way to show that including the effect of tax cuts with the statistics available.

At the end of the day, you don’t have to decide who wins this battle of the statistics. Trust your own eyes: look around you, is the typical Kiwi family really 10% wealthier since Key came to power? Or is Key lying to you to cover his arse?

39 comments on “Key tries bad stats to mask pathetic record ”

  1. ghostwhowalksnz 1

    I bet Key counts the tax cuts Labour gave just before the election as part of ‘his’.
    The trick is to use a figure before Oct 08 as the starting point.

    • lprent 1.1

      I bet Key counts the tax cuts Labour gave just before the election as part of ‘his’.

      Those are in the Q4 2008 figure that Marty was using.

      • tsmithfield 1.1.1

        Why shouldn’t he? After all, Labour only gave them to try and counter National’s tax cut promises. So in a sense, it was National’s tax cuts.

        • ianmac 1.1.1.1

          Much of what you say TS is interesting. That one is just ridiculous!

          • tsmithfield 1.1.1.1.1

            In what way is it ridiculous?

            From a cause and effect standpoint, it is obviously true. National caused Labour to offer tax cuts by forcing Labour to move toward National’s own tax cut promises. If National caused Labour’s tax cuts, then National was responsible for them, so therefore, they were National’s tax cuts on the basis of first cause.

            • Rosy 1.1.1.1.1.1

              I’ll look forward to you claiming Labour had a good world cup (if it goes ok) because they caused it to happen.

              • tsmithfield

                A little different, in that there is a considerable amount of management required after the event has been initiated, so there is plenty of scope for things to go well or badly depending on what has happened in the intervening time.

                In the case of the tax cuts, there was no way in hell that Labour would have offered tax cuts unless they felt under pressure from National’s tax cut promises. Cullen hated tax cuts. For instance, he even cancelled his mean-spirited chewing gum tax. So the argument from first cause is very strong here.

                • Rosy

                  I thought not

                  • tsmithfield

                    Its just you need to be able to draw a direct causal relationship between event A and event B. Thats not so easy to do in the example you provided.

                • ghostwhowalksnz

                  Nationals tax cuts were promised but NOT delivered, remember they were rushed in place in December and mostly repealed 6 months later.

                • Lanthanide

                  No, he didn’t cancel them. He just never passed them because of National making a big deal out of how (supposedly) misery they were.

                  Also, you say that the World Cup is different, because it requires a whole lot of management in place to allow it to be pulled off.

                  Really that’s no different from tax cuts – it requires management of the entire economy of New Zealand for 8 years before tax-cuts by Labour were affordable. If Labour hadn’t managed the economy so well, the tax-cuts wouldn’t have happened.

                  • tsmithfield

                    “If Labour hadn’t managed the economy so well, the tax-cuts wouldn’t have happened”

                    You can’t say that is necessarily so. Tax cuts might have occurred because the economy was in terrible shape and needed stimulus.

                    However, it is very clear that Cullen hated tax cuts and that Labour were not in the slightest bit interested until National inspired the nation with their promises for tax cuts and left Labour having to follow suit.

                    • ghostwhowalksnz

                      The reason Cullen didnt like tax cuts was because the economy was overheated from 2005 onwards. Of course when the GFC kicked in from Sep 2007 , the tax cuts were part of the stimulus and that was a good idea when they are properly structured.
                      National is now OPPOSED to the first $5000 being tax free.

        • Bright Red 1.1.1.2

          That’s actually the stupidest thing I’ve seen you write. Next you’ll be crediting Japan with investing the nuclear bomb, after all the yanks only built it because the Japs brought them into the war.

          We could go back further if you like and credit the tax cuts to Seddon, who introduced progressive income tax in NZ in the first place.

          • tsmithfield 1.1.1.2.1

            Not at all. If a direct line of causation can be demonstrated then it is necessarily true. Basic physics really.

            • Lanthanide 1.1.1.2.1.1

              There is a direct line of causation between the Japanese bombing Pearl Harbour and the Americans bombing Hiroshima. So it’s necessarily true that the Japanese should take credit for the atomic bomb – basic physics really.

              • tsmithfield

                Not a direct line in that case. There are a myriad of ways the war could have gone after that event depending on decisions from both sides. Also, the A Bomb depended on external events such as discoveries in physics etc occurring at the right time. So the line of causation is not at all clear. Certainly, Japan’s bombing of Pearl Harbour contributed to the eventual A bombing of Hiroshima, but it was not the direct cause. And, you couldn’t say that the bombing of Hiroshima may not have occurred anyway, given that the Japanese may have found some other way to initiate the war.

                However, in the tax cut scenario, there was absolutely no way that Labour would have given tax cuts if the Nats hadn’t been promising them first. The evidence is clear from Cullen’s extreme reluctance on tax cuts. Therefore, there is a direct line of causation. So, it is perfectly reasonable to say that on a cause and effect basis that National caused Labour to offer tax cuts.

                • Pascal's bookie

                  The evidence is clear from Cullen’s extreme reluctance on tax cuts. Therefore, there is a direct line of causation.

                  No where near true actually. You would need to show that Cullen wouldn’t normally cut taxes when faced with the economy of 2008.

                  Could be any number of reasons for the tax cuts. Stimulus for one. Is it possible that Cullen was influenced by Keynes? I’d say it’s likely.

                  See also, cuts to the business rate.

                  It looks like Cullen would cut taxes for economic reasons if he thouight there were economic reasons to do so. You confuse this with the National party who have an ideological preference for tax cuts under any condition, and assume that Cullen must be the same, except in reverse.

                  So much for any generalised ‘extreme reluctance on tax cuts’

                  We do know how he repsonded to Nat pressure to cut taxes in 05 though, when the election was going to be tight. So there is some actual evidence against your thesis.

                  • tsmithfield

                    PB: “We do know how he repsonded to Nat pressure to cut taxes in 05 though, when the election was going to be tight. So there is some actual evidence against your thesis”

                    You have provided further evidence of how much Cullen hated cutting taxes, and refused to do so, banking on winning a tight electoral race instead.

                    However, in the last election, Labour was being trounced in the polls, so tax cuts were offered by Labour in absolute desperation, despite Cullen’s hatred for tax cuts.

                    So I think you have provided further evidence to back up my point, not refute it.

                    • Pascal's bookie

                      So your argument is that Cullen didn’t cut taxes when it could have made a difference in a tight race, but did when it wouldn’t make any difference?

                      You’re an idiot. And floundering.

                      Fact is there are other reasons that he may have cut taxes, and there are other times when he did cut taxes. Against those facts, your stupidity can pound all day, but it won’t fool anyone.

                    • tsmithfield

                      Here is a TVNZ article from back in the day

                      The focus will be on how big any tax cuts are and whether they will be generous enough to stave off an onslaught from National, who earlier this week said they would base their tax cut policy on the one they held at the last election.

                      Clearly the tax cuts from Labour were in response to an “onslaught from National”. Clearly, National caused Labour’s tax cuts.

                      Your move.

                    • Pascal's bookie

                      And what is that supposed to prove? A journalist saying what ‘the focus’ will be on is alsmost as stupid as your own pie eyed imaginings of what was going on.

                      In any case, all that quote is saying is that tax cuts are the only thing National had going for them. Which was true enough, but it doesn’t follow that Cullen’s tax cuts were ’caused’ by National.

                      Good grief. Re: your idiocy, I rest my case

          • tsmithfield 1.1.1.2.2

            See my reply above about Japan.

            You can’t really go back as far as you think and claim direct causation. That is because you need to demonstrate, for example, that the tax cuts have only occurred because Sedon introduced income tax. However, you can’t say that because if Seddon hadn’t introduced income tax, someone else probably would have.

    • Bright Red 1.2

      that’s probably how he gets a higher figure than Marty does, by counting stuff that occured before he was PM.

      Reminds me of Goff in Parliament yesterday:

      “You know what the Prime Minister’s big claim to fame was in the beginning of his speech? The Rugby World Cup… all his own work. (laughter). Helen Clark got us the World Cup. Trevor Mallard got us the World Cup”

  2. Deadly_NZ 2

    The little pic used for this article shows what he thinks of the ‘little people’

  3. Colonial Viper 3

    I wonder if Key’s bad stats is going to help pay for the median household’s 1kg of cheese, 4L of milk, and 20L petrol today.

    No, didn’t think so.

  4. Craig Glen Eden 4

    Goff did a good job yesterday in the house. Key should have gone early with the election he may well be the highest polling for preferred Prime Minister but I dont think he will be in Government come 2012. All the bullshit is coming home to roost the next few months are going to be interesting as more and more people start seeing the effects of the do nothing smile and wave Prime Minster.
    You can get along with bullshit stats and positive puke stories for a time but when Kiwis household incomes go backwards sooner or later they are going to think this smells like crap, tastes like crap John Key you are crap.

    • ghostwhowalksnz 4.1

      Key cant go early, the double dip recession is starting to bite, they are hoping to talk up the aspiration a lot more before November. Its laughable but hes allowed to get away with it. Liz Hurley any one, I guess she will be a VIP guest at the RWC for sure

  5. Adrian 5

    Key is doing everything he can to lose, or is it just extreme hubris mired in stupidity. This morning Tuku Morgan floated the idea of iwi getting a large share of any assets going up for sale. Quite apart from the pros and cons for their argument, if it gets noisy before Nov 26 the Nats can kiss goodbye to another 5 or 6% who see this as the cost of keeping the MP on side. I feel as if getting rid of Key and co is becoming easyier by the day.

    • marsman 5.1

      Great,then Key can use his new C.V. for his next job:
      John Key
      Currency Raider
      Asset Stripper.
      Liar for Hire
      Anti-spam word : leaving !!!!!!

  6. Goes along with this gem from the Dipton dipshit…

    “People are saving harder and paying down debt quicker than we thought,” said English.

    “They’re not rushing back to the shops. New Zealanders are being careful with their spending …”

    http://www.stuff.co.nz/business/money/4636890/Double-dip-recession-possible-English

    Uhh Bill…we’re not saving or paying down debt or rushing back to the shops cos we’re broke as and pretty much living hand to mouth by the skin of our arses, you fucken idiot !!!

    • Lanthanide 6.1

      “People are saving harder and paying down debt quicker than we thought,” said English. ”

      Or, actually, the “tax switch” didn’t work out quite as you’d planned. Worked out pretty good for the top 5% of course, but they aren’t the movers and shakers of the national GDP figure.

    • KJT 6.2

      People are cutting spending and paying down debt so they can afford to move to Australia if there are enough lunatics still willing to vote NACT back in.
      Like “turkeys voting for Christmas”.

  7. SPC 7

    It’s wrong to presume that all income at the average level is spent (some is saved) or that all spending attracts GST (mortgage payments do not) – so there cannot be a 2.5% deduction for GST. More like 2%.

    So it’s a 4.6% on the average income and 1.9% on the median income gain before a 2% GST cost.

    Of course the gain for some is eaten up in the lower rent income with the change in depreciation rules etc.

    The other point to note is that the reason that some feel poor, is because the cost of their necessities has gone up faster than the average CPI figure and because of a projected cost of child care/education coming up.

  8. Irascible 8

    I presume Bill English’s claim that NZers are now saving, thanks to GST increases, mythical tax cuts for the workers, a miserly 25c hour increase to minimum wage and increased costs for all government services combined with reduced efficiency, will now be converted into Key’s claim that when he hocks of the people’s assets they’ll use these savings to buy their property back before his foreign asset stripping mates get their cheque books open?

  9. dunners 9

    You made some errors in your caluctions.

    You counted the gst rise twice – once in the inflation figure, then you counted it a second time.

    And you used the gst rise of 2.5%, and for some reason took that off 100% of wages.

    But people don’t spend 100% of wages on gst items. Those on low incomes spend a significant amount on non-gst items like rent or mortgage payments.

Links to post

Recent Comments

Recent Posts

  • Twenty highlights of 2020
    As we welcome in the new year, our focus is on continuing to keep New Zealanders safe and moving forward with our economic recovery. There’s a lot to get on with, but before we say a final goodbye to 2020, here’s a quick look back at some of the milestones ...
    3 weeks ago

  • Bay Cadets learn skills to protect environment
    Bay Conservation Cadets launched with first intake Supported with $3.5 million grant Part of $1.245b Jobs for Nature programme to accelerate recover from Covid Cadets will learn skills to protect and enhance environment Environment Minister David Parker today welcomed the first intake of cadets at the launch of the Bay ...
    BeehiveBy beehive.govt.nz
    11 hours ago
  • Cook Islanders to resume travel to New Zealand
    The Prime Minister of New Zealand Jacinda Ardern and the Prime Minister of the Cook Islands Mark Brown have announced passengers from the Cook Islands can resume quarantine-free travel into New Zealand from 21 January, enabling access to essential services such as health. “Following confirmation of the Cook Islands’ COVID ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Supporting communities and landowners to grow employment opportunities
    Jobs for Nature funding is being made available to conservation groups and landowners to employ staff and contractors in a move aimed at boosting local biodiversity-focused projects, Conservation Minister Kiritapu Allan has announced. It is estimated some 400-plus jobs will be created with employment opportunities in ecology, restoration, trapping, ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Border exception for some returning international tertiary students
    The Government has approved an exception class for 1000 international tertiary students, degree level and above, who began their study in New Zealand but were caught offshore when border restrictions began. The exception will allow students to return to New Zealand in stages from April 2021. “Our top priority continues ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Tiwai deal gives time for managed transition
    Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • New member for APEC Business Advisory Council
    Prime Minister Jacinda Ardern has appointed Anna Curzon to the APEC Business Advisory Council (ABAC). The leader of each APEC economy appoints three private sector representatives to ABAC. ABAC provides advice to leaders annually on business priorities. “ABAC helps ensure that APEC’s work programme is informed by business community perspectives ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Govt’s careful economic management recognised
    The Government’s prudent fiscal management and strong policy programme in the face of the COVID-19 global pandemic have been acknowledged by the credit rating agency Fitch. Fitch has today affirmed New Zealand’s local currency rating at AA+ with a stable outlook and foreign currency rating at AA with a positive ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Additional actions to keep COVID-19 out of NZ
    The Government is putting in place a suite of additional actions to protect New Zealand from COVID-19, including new emerging variants, COVID-19 Response Minister Chris Hipkins said today. “Given the high rates of infection in many countries and evidence of the global spread of more transmissible variants, it’s clear that ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • 19 projects will clean up and protect waterways
    $36 million of Government funding alongside councils and others for 19 projects Investment will clean up and protect waterways and create local jobs Boots on the ground expected in Q2 of 2021 Funding part of the Jobs for Nature policy package A package of 19 projects will help clean up ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand Government acknowledges 175th anniversary of Battle of Ruapekapeka
    The commemoration of the 175th anniversary of the Battle of Ruapekapeka represents an opportunity for all New Zealanders to reflect on the role these conflicts have had in creating our modern nation, says Associate Minister for Arts, Culture and Heritage Kiri Allan. “The Battle at Te Ruapekapeka Pā, which took ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Better care for babies with tongue-tie
    Babies born with tongue-tie will be assessed and treated consistently under new guidelines released by the Ministry of Health, Associate Minister of Health Dr Ayesha Verrall announced today. Around 5% to 10% of babies are born with a tongue-tie, or ankyloglossia, in New Zealand each year. At least half can ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Prisoner disorder event at Waikeria Prison over
    The prisoner disorder event at Waikeria Prison is over, with all remaining prisoners now safely and securely detained, Corrections Minister Kelvin Davis says. The majority of those involved in the event are members of the Mongols and Comancheros. Five of the men are deportees from Australia, with three subject to ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Pre-departure COVID-19 test for travellers from the UK and the US from 15 January
    Travellers from the United Kingdom or the United States bound for New Zealand will be required to get a negative test result for COVID-19 before departing, and work is underway to extend the requirement to other long haul flights to New Zealand, COVID-19 Response Minister Chris Hipkins confirmed today. “The new PCR test requirement, foreshadowed last ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • PM congratulates New Year Honour recipients
    Prime Minister Jacinda Ardern has added her warm congratulations to the New Zealanders recognised for their contributions to their communities and the country in the New Year 2021 Honours List. “The past year has been one that few of us could have imagined. In spite of all the things that ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • David Parker congratulates New Year 2021 Honours recipients
    Attorney-General and Minister for the Environment David Parker has congratulated two retired judges who have had their contributions to the country and their communities recognised in the New Year 2021 Honours list. The Hon Tony Randerson QC has been appointed a Companion of the New Zealand Order of Merit for ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • New Year’s Honours highlights outstanding Pacific leadership through challenging year
    Minister for Pacific Peoples Aupito William Sio says the New Year’s Honours List 2021 highlights again the outstanding contribution made by Pacific people across Aotearoa. “We are acknowledging the work of 13 Pacific leaders in the New Year’s Honours, representing a number of sectors including health, education, community, sports, the ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Supporting seniors to embrace technology
    The Government’s investment in digital literacy training for seniors has led to more than 250 people participating so far, helping them stay connected. “COVID-19 has meant older New Zealanders are showing more interest in learning how to use technology like Zoom and Skype so they can to keep in touch ...
    BeehiveBy beehive.govt.nz
    3 weeks ago