Labour – too popular

70 comments on “Labour – too popular ”

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1. Brett Dale 1

   12 October 2008 at 2:53 pm

   In a city of over a million people, I would expect the town hall to be fill.
2. Steve Pierson 2

   12 October 2008 at 2:57 pm

   you’re a real ray of sunshine aren’t you, Brett? Lynn is saying this is unprecendented in his experience
3. lprent 3

   12 October 2008 at 3:00 pm

   Yeah and I’ve been going to these since 1987… I’ve never seen it filled to overflowing.

   It took a while to get in. Checking people for invites. The carpark below the town hall should have given me a hint. Had to park way to close because that was overflowing as well.
4. burt 4

   12 October 2008 at 3:03 pm

   Buy shares in Restaurant Brands tomorrow. A hard fought election campaign like this one will see massive KFC voucher sales push the company profits through the roof.
5. IrishBill 5

   12 October 2008 at 3:05 pm

   Hey Lynn, the Herald’s talking 700 at the Nats’ launch, do you have a guesstimate for Labours’?
6. Daveo 6

   12 October 2008 at 3:06 pm

   Burt. You’re a bigoted prick.
7. lprent 7

   12 October 2008 at 3:17 pm

   I just asked someone from the town hall staff. Capacity is 1500 and there are probably a hundred odd outside. Inside it is PACKED!

   The NZ Herald is doing their usual quality of reporting – useless
8. burt 8

   12 October 2008 at 3:21 pm

   Daveo

   In late 1999 a mate of mine who was at that time a stockbroker advised me to buy Restaurant Brand shares if Labour won the election. He said the $20 welfare xmas bonus would bolster the profits of KFC and Pizza Hut. You know what – he was right. Restaurant Brands had a much stronger than normal January and I cashed in my shares in March. I made a tidy profit on the back of popularist spending of tax payers money to buy votes. What makes you think this year will be any different ?
9. Steve Pierson 9

   12 October 2008 at 3:24 pm

   Burt you know you’re in trouble when you’re trying to use stock market fluctuations to prove you’re not a bigot. Embrace what you are or be embarrassed by it, but don’t pretend you’re not a bigot.

   Lynn, the live stream is really jumpy. did she say there are now 900,000 members of Kiwisaver?

   [lprent: I was outside the hall…]
10. Joel 10

    12 October 2008 at 3:39 pm

    Wouldn’t surprise me. I was shocked to read on Stuff that earning 45,000 a year I would have roughly $92,000 LESS on my Kiwisaver account under National in 30 years than I would with Labour. Thanks National but I’d rather not be screwed out of the scheme I only just signed up with.
11. burt 11

    12 October 2008 at 3:44 pm

    Joel

    I find it rather interesting that for 9 years we have been saying we can’t afford tax cuts when there has been surpluses BUT with large deficits forecast the Labour party and their supporters are defending high spending of tax payers money on KiwiSaver. Given the borrowing that will need to be done to balance the countries books over the next 10 years how much do you think every $1of tax payers money contributed to KiwiSaver will actually cost?

    When we were running surpluses and KiwiSaver was introduced many financial commentators said they it would be interesting to see if we could sustain the generosity of the scheme. (not as generous as the parliamentary scheme but generous on world standards). Now we have dire times on our hands and Labour want to keep on robbing peter to pay paul? Go figure.
12. Joel 12

    12 October 2008 at 3:54 pm

    Yeah but how generous are the tax cuts for the upper echelon of this country? I am no less hard working than someone earning 10x what I earn, and life surely is easier for that person, but they are rewarded more for their effort (even if that effort is no greater, if not even less than my own). I simply do not see anything coming out of a National Government that will help me in the coming years. I prefer to see that my retirement is secure and that I have employment.

    Now if income were directly related to effort and so forth then I would agree that the greater your income the greater your tax cut, however it simply isn’t.
13. Daveski 13

    12 October 2008 at 3:54 pm

    It’s an interesting point Burt. Likewise, the point that a 2% threshold would make KS more attractive and accessible to people who are would otherwise not be able to afford it. I would have thought that would have been more positively received here.
14. Joel 14

    12 October 2008 at 3:55 pm

    Oh might I add that I am about to finish my tertiary studies in the next year with honours with a BSW (well all going to plan with honours).

    So it really cannot be said that i don’t work hard or have done little to advance myself.
15. Joel 15

    12 October 2008 at 3:55 pm

    Daveski, the 2% is for employers. Employer contributions will not be 4%, but 2%.

    Not sure how that is win win for workers…
16. burt 16

    12 October 2008 at 3:59 pm

    Joel

    I am no less hard working than someone earning 10x what I earn, and life surely is easier for that person, but they are rewarded more for their effort (even if that effort is no greater, if not even less than my own).

    I understand that position Joel, but don’t forget that with progressive taxation the person earning 10x what you earn is probable paying 15x more tax than you. Pegging the amount of tax back to 10x the amount of tax you pay is hard to call unfair. The “tax cuts for the rich” cry is a bit uneducated and nasty, the reality is that if the tax rates were regressive then they would be giving more advantage to the “rich” but as they are still progressive (perhaps not as progressive under National compared to Labour) the rich are still paying a higher percentage of their earnings as tax than you are – even after “rich prick” tax cuts.

    If you punish them too hard to pay for the things you cannot afford yourself they will leave the country – then who will pay?
17. forgetaboutthelastone 17

    12 October 2008 at 3:59 pm

    wow – Labour has presented a whole list of policies ‘going forward’ – while national could only talk about their shitty tax cut package.

    Who’d a thought the much hyped tax-cut package would end up being an albatross around the neck?
18. Brett Dale 18

    12 October 2008 at 4:01 pm

    Disagree that its unprecedented, I would expect this from all the major parties, and have seen town halls fill in my past experience.
19. burt 19

    12 October 2008 at 4:03 pm

    Davski

    The reality is that with increasing unemployment and high inflation many people will stop contributing to their KiwiSaver scheme during harsh economic times. People who can afford to still contribute 4% will reap the benefits of the tax payer contribution so the end result will be – The rich pricks scoop the tax payers money while the hard pressed workers get zip. Unintended consequences.
20. Joel 20

    12 October 2008 at 4:07 pm

    I understand that Burt but I am a strong believer that we are all Kiwis and we need to take care of each other regardless of who we are. I know if I was a high income earner I would know that my taxes are helping those less fortunate to survive.

    While I do believe there are people who exploit the systems we have in place, I don’t believe that there are many people who enjoy being on a benefit or similar. It is barely subsistence living. Personally I have been surviving off a student allowance the past 3 years and its a huge struggle. If my degree wasn’t so demanding (with months of practical placements etc) I would definitely be out there supplementing my income because its definitely not fun to go through every week wondering how to pay for necessities.

    But I am very grateful to those people who pay these taxes to support my tertiary studies and a time will come very soon where I will begin to repay that debt. I find the tax system fair in that at the end of the day you only pay 39% in the highest bracket once you hit that threshold. Considering the gap between rich and poor in NZ is already too large, how can this be seen as a bad thing!

    I could name a few countries in Europe where you would be looking at paying for a heck of a lot more, and would have other huge costs thrown on top of you (ie compulsory car insurance and medical insurance). Being compulsory the price for these is pretty phenomenal…
21. Daveski 21

    12 October 2008 at 4:28 pm

    Joel

    I understand we could be talking about different things but the point I was making was that many employees couldn’t afford to get in at 4% – myself included 🙂

    The KS parameters were deliberately set up to make it attractive to get Kiwis to save given our reluctance to save.

    I think Burt is right that the unintended consequence was that it actually provided benefits to those rich pricks 🙂
22. Joel 22

    12 October 2008 at 4:38 pm

    Is 4% the lowest rate you can get in? I thought there was a 2% contribution rate…

    Or is it simply 4% and 6 or 8%? I am not 100% up to speed on it either as I am currently not making any contributions but already have about $1380 in there.
23. Brett Dale 23

    12 October 2008 at 4:42 pm

    I opted out of kiwisaver, the reason there are 900 thousand members is because you are automatically enrolled in it, you don’t have a choice, that is Aunty Helen for you.

    If you had to sign up for it, Im guessing there will be around 100 thousand in it.
24. Tamaki resident 24

    12 October 2008 at 4:44 pm

    Joel – there is currently a 2% contribution rate, but it is being phased out, and is not well publicised.

    The changes proposed by National wouldn’t be so bad if they had employers matching contributions up to 4%, thus providing an easier entry level for those on lower incomes.
25. Tamaki resident 25

    12 October 2008 at 4:47 pm

    “I opted out …, you don’t have a choice”

    I don’t understand your logic – you DO have a choice Brett (as you indicated) to opt out.
26. lprent 26

    12 October 2008 at 4:56 pm

    Irish: Looks like the herald was reporting 700 at the National party launch. Needless to say they didn’t report the numbers at the Labour party launch.

    http://www.nzherald.co.nz/nz-election-2008/news/article.cfm?c_id=1501799&objectid=10537085

    http://www.nzherald.co.nz/nz-election-2008/news/article.cfm?c_id=1501799&objectid=10537081
27. forgetaboutthelastone 27

    12 October 2008 at 4:56 pm

    my wife and i are planning on signing up. Was waiting to see what National would do to it – and also i was unsure if i could spare 4% of income.

    I would have joined anyway coz of the free $1000. Now I am thinking that if National gets in I will join to get the thousand, then get out of it when I no longer have to contribute.

    Get my 1000 bucks and run. Course if Labour gets in I’ll keep it in there, no worries.
28. Satty 28

    12 October 2008 at 5:01 pm

    Brett – The Kiwisaver statistics of September 2008 shows nearly 400,000 active choice member!

    Around 300,000 members were automatically enrolled and did not opt-out compared to 170,000 people that opted out of the scheme.

    The majority of the people is clearly interested to be with Kiwisaver.
29. RedLogix 29

    12 October 2008 at 5:01 pm

    TR,

    No no, you don’t understand right wing logic.

    By the time Brett got to the end of that sentence you are puzzling over, the phrase that Brett began it with “I opted out” had fallen off the edge of his attention span… so from his perspective concluding with, “you don’t have any choice” made perfect sense.

    You have to keep in mind that these guys are very short term thinkers.
30. the sprout 30

    12 October 2008 at 5:14 pm

    RL you’re quite the psychotherapist.
31. Brett Dale 31

    12 October 2008 at 5:36 pm

    I didn’t have a choice to be opted in, yes I had a choice to opted out, which I did straight away.

    My point being, is most New Zealanders have apathy, and wouldn’t of been bothered to fill out the opt out form.

    I’m pretty sure if you weren’t automatically enrolled in kiwisaver, there would only be around 100 thousand kiwis in it.

    I rather handle my own money and not have Aunty Helen handle it for me, that is right wing logic.
32. RedLogix 32

    12 October 2008 at 5:47 pm

    Good grief, I see from the Herald article that even Key himself has picked up on this shower flow standards proposal:

    He criticised Labour’s tolerance of New Zealand First leader Winston Peters and its “nanny state” initiatives such as regulating the flow rates of new showers.

    I could understand the ignorati infesting the KB sewer feasting out on this, but from the man who is proposing himself as Prime Minister?

    I expect political differences of opinion on political matters; that is normal and healthy. But to get it so completely wrong on a simple matter of good practise and encouraging the uptake of efficient new designs and technologies, is frankly baffling.

    Is John Key really this stupid?
33. RedLogix 33

    12 October 2008 at 5:54 pm

    Brett,

    Good luck to you. Fortunately KS was designed to allow people like you the choice of opting out.

    Of course investing on your own account means that you are now fully exposed to the risk of your own personal choices. You may do very well, or you might loose the lot… who can tell?

    Investing in a KS scheme (they are run by non-government corporates, Aunty Helen has nothing to do with them of course) does however mitigate your risk. Institutional fund managers will in normal times be able to access high grade investments individuals cannot, and will usually be far better diversified than you could manage.

    On the other hand, don’t whatever you do migrate to Australia. Their 9% scheme really IS compulsory.
34. Felix 34

    12 October 2008 at 6:04 pm

    Don’t worry about Brett, from what I’ve gathered he seems to know what he’s doing.

    Most people just aren’t financially literate enough to do what he does.
35. Brett Dale 35

    12 October 2008 at 6:06 pm

    Yes Redlogix,

    If I do well it’s because of the choices I make, if I fail it’s because of the choices I make, and that’s the way it should be.
36. RedLogix 36

    12 October 2008 at 6:17 pm

    Brett,

    if I fail it’s because of the choices I make, and that’s the way it should be.

    I will take that statement at face value in good faith.

    The problem is this… what happens then? What happens if you really DO loose the lot and at the age of 65 you have no way to recover? Under the present structure you would only have National Super to allow you to survive, perhaps another 20 or 30 years of life.

    At that point what would be you attitude to the Nanny State then? How would feel when listening to arrogant young men vociferously attacking ‘bloated government’, demanding radical tax cuts?

    The sense I get from what you are saying is that you are keen to privatise your gains… but equally happy to socialise your loses.
37. Quoth the Raven 37

    12 October 2008 at 6:43 pm

    Talking about labour being popular, I thought I’d point out this article.
38. Brett Dale 38

    12 October 2008 at 7:19 pm

    No I wouldn’t rely on the nanny state.

    I don’t put my eggs in one basket, when I save, its at my time and on my terms and on my terms and that has worked well.
39. RedLogix 39

    12 October 2008 at 7:36 pm

    Brett,

    So that means you are not planning to claim National Super? Regardless of what happens? If you had NOTHING else to fall back on? You would sooner starve than “rely on the nanny state”?

    I’m wondering just where you would draw the line.
40. Brett Dale 40

    12 October 2008 at 8:00 pm

    I will have something to fall back on, the money that I don’t have to put into kiwisaver gets invested after a while, its thats simple.
41. KiwiGirl 41

    12 October 2008 at 8:07 pm

    forgetaboutthelastone wrote;
    “I would have joined anyway coz of the free $1000. Now I am thinking that if National gets in I will join to get the thousand, then get out of it when I no longer have to contribute.
    Get my 1000 bucks and run. Course if Labour gets in I’ll keep it in there, no worries.”

    I am too old to join KS but I still pay taxes – and they are going to give free $1000 handouts to morons like this.
    God help our little country.
    And how many parents have signed up their children to “get the $1000”.
    Perhaps we shouldn’t be so concerned with the world financial situation. We’re managing to screw our country up quite nicely all by ourselves.
42. randal 42

    12 October 2008 at 8:29 pm

    gee kiwigril…you sound just like the chiselling pinchpenny’s in the natoinal party. its only money and by the time the kids get it they will have paid enough taxes to cover it several times over. and please layoff the New Zealand sux crap. Its getting boring and downright unpatriotic.
43. RedLogix 43

    12 October 2008 at 8:30 pm

    Brett,

    You keep evading the question. I accept that you believe that you “will have something to fall back on”… but that is not what I am asking.

    Have you thought for a moment just how many well informed and capable people just like you have been totally wiped out in the last few months alone? You may even have some gold squirrelled away somewhere, but not even that is safe if the govt decides to commandeer it. (This has happened before…).

    I am posing a hypothetical, but not unrealistic question. No-one really has any idea what fate is in store for them. The modern social democratic state endeavours to maintain a ‘safety net’ for those who need it. It is there for everyone, even for you.

    All I am asking is; are you so very averse to the ‘nanny state’ that you would sooner fall to oblivion, than accept it’s help?
44. Brett Dale 44

    12 October 2008 at 8:45 pm

    Depends on what help it is, my taxes pay for healthcare, so if I need an operation I will accept the operation, I will walk along the footpath that my taxes have helped pay for.

    If I was really desperate, well I would try and stand on my own two feet before I accept help, there are lots of things you can do without government help.

    At this stage in my life, I would rather control my own money (the little that I have) than have Aunty Helen dictate what I do with it.
45. KiwiGirl 45

    12 October 2008 at 9:07 pm

    Randal, it’s not the money per se; it’s the attitude of “I’ll take the money and run”
46. Joel 46

    12 October 2008 at 9:08 pm

    If these National supporters were in a country like Turkey they’d be strung up.

    We are doing bloody well in little old New Zealand, much better than many other countries in the current times. Hmm… I wonder why… possibly the last 9 years of prudent responsible governance that has secured a decent future and opportunity for all, including the tangata whenua.
47. Joel 47

    12 October 2008 at 9:11 pm

    Kiwigirl, lets be honest that is NOT the attitude most people have and if Labour remain taking the money and running is not an option. The scheme has been well implemented in that sense. If you do opt out early from the scheme due to hardship etc your government bonuses are subtracted from the amount. Similarly if you take the money out for your first home deposit, again the government bonus is removed and remains in the account until retirement.
48. RedLogix 48

    12 October 2008 at 9:15 pm

    At this stage in my life, I would rather control my own money (the little that I have) than have Aunty Helen dictate what I do with it.

    Fine. No problem. In fact that is exactly the position I have taken. I’m too old to effectively start with KS at this point, so my money is better invested reducing my commercial debt and improving my cash flow.

    But that was the great thing about KS. It was NOT compulsory, you and I both had the choice not to avail ourselves of it, and we took that choice because it made sense to us.

    The difference between us is this. I never saw KS as “Aunty Helen” dictating to me what I did with my money. Just the opposite. We were given a choice to opt out, a choice of companies to invest with, and each of those companies likely offered a range of schemes and strategies to select between.

    From my point of view, KS offers a surfeit of choice.

    I fail utterly to see how anything about KS amounts to nanny state compulsion. Now I am assured that you are a well informed person, so I am going to give you the benefit of the doubt and suggest that you know all this as well as I do.

    So I challenge you again. Why all the negativity toward KS? Surely you cannot object to your fellow New Zealanders enjoying the same long term payoff from saving and investment that you are enjoying too?
49. Chris 49

    12 October 2008 at 9:17 pm

    how, pray do tell brett, does “aunty helen” tell you what to do with your money more than any other western democracy?

    Oh and this aunty helen stuff is a bit trite. especially after john key’s little daddy talking to his kids act from the front seat of a holden. I’ve never seen more patronising crap in my life
50. burt 50

    12 October 2008 at 9:20 pm

    I’m with KiwiGirl on this. It’s all very well for people to take the handouts but hey reality check – somebody else is paying for that. I’m sorry it’s not a Helen God given right that you can just help yourself to the tax payers purse just because there are rich pricks that have more than you.

    Indeed how many people have signed their kids up to KiwiSaver to claim the $1,000 handout? What proportion of these kids are from affluent families?

    Is this just another of the unintended consequences where the rich pricks kids start life with $1,000 growing away and the poor don’t? What about when the kids turn 18 – the rich pricks will pay their kids a salary, just enough to match the govt handout and the poor kids parents won’t be able to afford to do that will they….

    Once again, unintended consequences. Like rich prick kids investing interest free student loans to pay for their OE. Sure it’s great that rich pricks money is being stashed away for retirement via KiwiSaver – but just how well is it really being redistributed or is it actually making the gap between the rich and the poor worse? – much worse in 50 years time!
51. RedLogix 51

    12 October 2008 at 9:29 pm

    burt,

    It’s all very well for people to take the handouts but hey reality check – somebody else is paying for that.

    Well usually the same people taking the ‘handout’, are usually the same people paying for them via their own taxes.

    For how many years now have we heard from the right that “tax cuts were not a bribe, because you could not bribe people with their own money”?

    I invite you then to think of the KS incentives as just a form of tax cut…. that should settle your nerves.
52. randal 52

    12 October 2008 at 9:30 pm

    speak for yourself burt. who are you to say what other people do or dont do, tell us what you are going to do or shut up. othewise its just your glutinous pseudopic ego expanding over everything in a gooey mess
53. burt 53

    12 October 2008 at 9:37 pm

    RedLogix

    No I can’t think of KiwiSaver as a tax cut. It’s only a tax cut if you can afford it. Sure I can, I’m getting my tax payer funds – why wouldn’t I. I would go 20% of my salary if it was matched dollar for dollar by the govt but you don’t hear me screaming for that do you.

    The problem is if the kiwi battler earning $35K living alone can not afford to put 4% of their salary into KiwiSaver – then where is their return on the tax they have paid to support other people banking their cash?
54. Joel 54

    12 October 2008 at 9:42 pm

    In that case Burt would you like to explain by people who are earning less than 40,000ish are better of with Labour’s tax cut plans than those of National? And of course has more security surrounding public services etc, the things that we take for granted, like cheap doctor’s visits.

    I just thought since you gave the example of someone earning 35K….
55. Gooner 55

    12 October 2008 at 9:42 pm

    Give up burt. You’re better off walking up to the nearest wall and banging your head against it and repeating it ten times.

    These guys and gals think money grows on trees and can be plucked off said trees at will and spent like drunken sailors spend it.

    Burt, they say this election is about trust. Who do you trust to lead us into a recession? Who do you trust to pay $650 million for a train set worth $150? Who do you trust to lead us into ten years of budget deficits?

    Yep. Labour too popular by far in their own echo chamber of a campaign launch.

    Meanwhile, out knocking on doors this afternoon Labour wasn’t very popular. Not by a long shot. In the beltway that is, not preaching to the converted.
56. Joel 56

    12 October 2008 at 9:46 pm

    Gooner, I think who the question is who do you trust to sell the rug out from under your very feet?

    Not sure that adding to infrastructure for the future can be seen as untrustworthy…
57. burt 57

    12 October 2008 at 9:52 pm

    Joel

    Neither major party has the balls to put in place a zero rated threshold. If the first $10K was tax free and the next bracket extended to about 40K then the battlers would get a kick ass tax cut. The same kick ass tax cut everybody would get. Recoup the lost revenue via a genuine wealth tax (say above $150K) and bobs the guy your auntie sleeps with. Earning $250K in in Aussie attracts a much bigger tax bill than earning $250K in NZ – and we say they have had years of Tory govt…..

    Personally I though National’s tax cut package was weak, I think it was both wrong and foolish to leave that hole like they did.
58. Joel 58

    12 October 2008 at 9:59 pm

    Id be inclined to agree with that tax plan of yours burt…

    I simply do not believe in cutting state services though. And I don’t believe the state ‘wastes’ money. Rail in my mind was a very good investment considering the times we are facing.

    So I am still voting Green, despite everything. If we can get better public transport and LESS road building in the future we will be better off for it. Not sure what they plan on running on all the roads they are building (aimed at Labour as much as National tbh).
59. Julie 59

    12 October 2008 at 10:07 pm

    I’m not a Labour person, and I’d never been to a Labour launch before, but I can confirm what lprent said in his post – the Town Hall was overflowing, I was in the second to last row of seats right up in the Gods, and apparently the organisers had originally thought they probably wouldn’t have enough to open the mezzanine (which was chocka too). I didn’t actually realise at the time that there were overflow rooms with tellies.

    It was a wonderful positive occasion, and I was really struck by the goodwill in the room. I had to take the baby out because it turns out he doesn’t like big rooms full of clapping people, and several people offered to help, and in fact said we should stay and they didn’t mind the crying. I was particularly impressed with one of The Edge’s crew who came up later and checked we were ok, he was just lovely. Despite the delays getting in, due to the large crowd and the ticket checks, and then the slow process of getting out again, it really was a very upbeat atmosphere.

    And I loved the big floaty letters. Oh and the announcement about re-training allowances 🙂

    Sorry to get boringly back on topic.
60. RedLogix 60

    12 October 2008 at 10:15 pm

    Who do you trust to pay $650 million for a train set worth $150?

    Where did you get that number from?

    Toll was originally asking $1billion, and the govt offered around what they thought was the book value, about $500m as I recall. What transpired was a classic hard-nosed negotiation that lasted over a year. In the end at $650m the govt probably got the better of the deal.

    Of course if perchance the govt HAD simply nationalised the rail system and paid Toll $150m, then no doubt all the righties would have been screaming “theft of private property” to all high heaven.

    The fact is that the rail system was worth exactly what the one willing seller was prepared to accept from the one willing buyer. It’s called the market price. Surely you understand that?
61. Meg 61

    12 October 2008 at 10:17 pm

    Julie…I was just behind you and wanted to say hey. But wriggly was so settled I thought I would disturb him! That guy was nice, I heard him ask if you needed anything. Anyway it was a fab launch and your little son is the cutest baby I think I have ever seen. hehe sorry to get boringly off topic to cute babies. rock on labour
62. RedLogix 62

    12 October 2008 at 10:19 pm

    Julie,

    Thanks for that. The few times I’ve been around Labour or Green party people in a group, I’ve been struck by two things; just how representative of all New Zealanders they are, and how GOOD the atmosphere often is.

    I’m glad you had such an excellent day.
63. burt 63

    12 October 2008 at 10:30 pm

    RedLogix

    The price was the price when it came to the purchase of the Railways. The question is – was it wise to spend all that money now, money that will need to be borrowed for welfare/KiwiSaver/WFF over the next few years?

    All this puff and bluster about borrowing for tax cuts being folly – we will be borrowing for welfare and for tax cuts but we own the Railways – where will the money come from to refurbish them? From more borrowing or will we just put it off for 10 years? and if so … why the hell did we buy them now with a recession underway?
64. r0b 64

    12 October 2008 at 10:56 pm

    why the hell did we buy them now with a recession underway?

    As luck would have it, Irish Bill has just done an excellent post – A real economic plan – which provides the big picture that should answer your question Burt.

    (Julie – RedLogix – ditto).
65. RedLogix 65

    12 October 2008 at 11:06 pm

    Burt,

    If the current global crisis turns truly pear shaped, then all our current debates will amount to so much piffle. Here is what happens in a great depression.

    People loose confidence in where their next dollar will come from. They stop spending, and hang onto their cash. In other words the velocity of money drops dramatically. (Which is exactly what is happening in the inter-bank lending and commercial paper markets right now).

    Because an individual is relatively vulnerable, when faced with very tough times, they tend to become very risk-averse and batten down the hatches. This is rational behaviour for the individual, but very bad for the economy as a whole. It merely exacerbates and prolongs the downturn.

    By contrast governments are far more robust. It is much harder to bankrupt a government than an individual, so when faced with a depression governments can take up the risk that individual citizens have abdicated. A depression is the time when governments should actually borrow more and spend more.

    A tax cut alone does not work. All that happens is that the individual either uses that cash to reduce debt or hangs onto it…. a tax cut alone does not restore the confidence essential to increase the velocity of money again.

    At least that is the basic idea of Keynsian economics. It is my guess that the crisis we are lurching into will call all of Keynes ideas into play, but on a new global scale that we have not ever seen before. That is the subject of a much longer post.

    Night all.
66. burt 66

    12 October 2008 at 11:32 pm

    RedLogix

    I recall Helen Clark saying that going from gross debt being 20% of GDP to 22% of GDP is absolute lunacy and madness. So I didn’t think that her or Dr. Cullen understood a lot about Keynesian economics. Perhaps the say whatever it takes and the understanding of the concepts sometimes get a little confused.
67. randal 67

    12 October 2008 at 11:43 pm

    burt the only one confused here is you. your post is meaningless and incomprehensible. back to primmer one boy and dont come back here till you can frame a coherent sentence.
68. burt 68

    12 October 2008 at 11:45 pm

    randal

    Sorry dude I used a few big words. Let me make it a little more simple for you.

    How come when National say they will borrow for infrastructure they are bad but when Labour say they will do that they are good?
69. lprent 69

    13 October 2008 at 12:05 am

    burt: Because what National was proposing to do (but didn’t) was not to borrow for infrastructure – but to borrow for consumption, ie to pay for tax cuts. Now you might think that taxcuts get used for something useful. But I’d say, that from having looked at several cases, it gets used almost entirely for non-productive consumption.

    They dressed it up pretty by saying that they’d pay for some ‘infrastructure’ out of debt. Now the things they were proposing to do, like the 1.5 billion in to the house fibre were just outright stupidity economically – it was just more blind consumption.

    Anyway, those things didn’t need to be paid that way if they hadn’t wanted to do bigger and deeper tax cuts. In the end they lost their nerve and instead of using debt, they cut future savings (kiwisaver) and future innovation (R&D rebates) to pay for current consumption. Basically that comes out to the same thing in my book – more short term consumption and no change to the issues that allow our economy to adapt.

    Now raising debt to put some tangible improvements in productivity that benefits everyone to one degree or another both now and into the future is a much more productive.

    The issue is really about if tax-cuts and feel-good ‘infrastructure’ (ie good electoral slogans like ‘think big’) are more effective than productive long-term investments in terms of where our economy needs to be in 20 years.

    The state can make those types of choices, because they can carry the level of risk in times of recession and depression. It is only the dull of thought like Key or English who keep thinking like it was a decade or so ago. Of course all of that relies on having an ability to carry more risk by the state – ie that some previous Conservative/National government hasn’t already bankrupted the state with tax-cuts or feel-good ‘infrastructure’ spending that is not productive (but makes for great slogans on election billboards).
70. Brett Dale 70

    13 October 2008 at 5:35 pm

    I have no problem with kiwi’s wanting to sign up with kiwisaver, I have a problem with being automatically sign up.

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