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New Zealand’s poor in this new crisis

Written By: - Date published: 9:16 am, April 11th, 2020 - 126 comments
Categories: australian politics, China, Economy, election 2020, Free Trade, International, trade, uncategorized, unemployment, workers' rights - Tags: ,

Covid 19, as BBC analyst Emily Maitlis explained clearly yesterday, is not some great leveller.

The families who are going to be most damaged by this massive growing recession are those who face the disease every day, who are as she notes are “bus drivers, shelf stackers, nurses and care home workers” as well as the freight drivers, utility maintenance workers, shop workers, and security guards – in short some of the poorest paid of our society as well as those at high exposure risk.

Emily Maitlis has done a really good, cold intro and a service to us all.
This coming economic crisis has already hit our working poor the worst. Such workers are the ones without savings to tide them over. They were already living hand-to-mouth. They don’t have the time or unlimited digital bandwidth to blog their problems, or have Zoom or Team meetings and work from home.

It is also hitting the middle classes with a previous semblance of stability as flagbearer companies like Air New Zealand who has now fired thousands of pilots, air crew, most of our opinion-leader magazines, tour operators, ports and airports, sports athletes and stadiums, and more. Wave after wave of employment death is coming.

It’s how it hits the poor, thought, that’s telling this time. In the Global Financial Crisis over a decade ago, the people it hit the hardest in the first 6 months were those with mortgages. Middle class or aspirant. Not this time.
In that 2008-9 crisis the peak-to-trough economic fall took over a year to eventuate and it was a fall of about 6% of GDP.

In the Covid-19 crisis happening now, it’s occurring over just two months so far and will be a fall of over 10% of GDP.

And this time, there’s no finance and bank executives to blame.

The depth of this is so severe that there is no point scrambling around with bullet points about how to save one economic sector or another. Way too early.

Those who were poor, with poor children, anxious and precarious, undernourished, and poorly housed, will likely be even poorer as a result of this.

Similarly, small countries like ourselves are small boats finding themselves in a weaker overall position in a gradually post-Covid19 ocean. The pattern of Chinese economic growth will change, as will the force of political will upon economic organisation. Since our fate is tied to that of Australia, our part in that economy will change.

My current bet is that China’s leadership has completely understood that their fate lies in doing everything within their power to ensure a rapid normalisation. You get a sense of how their companies are doing that here.

China’s economy will recover faster than that of the United States because China has controlled the recovery from the virus better. Six weeks after the initial outbreak, Chinese supply chain congestion is averaging at 73%, up from 62% at the worst. That means 73% of their goods are getting onto the store shelves. Overall confidence is also climbing. A stat that shows how deep the hit is, and how the bounce is also strong: real estate transactions fell to 1% of 2019 at shutdown, and are now back to 47% of 2019. That’s still a mighty fall.

Such a scenario gives a huge global advantage to China. What we supply now to China with tourism gone, mostly, is services like education and consumer goods like food and beverage. China’s consumers will reward the countries who responded the fastest and made themselves at least as safe as themselves. So China’s likely fast recovery also benefits fellow fast-recoverers Australia and New Zealand.

If China is smart it will accelerate the RCEP trade talks as an unambitious first step in building on the much more comprehensive CPTPP. Both exclude the United States, and both include New Zealand. A really bold China would rapidly build upon a successful RCEP and a revived Belt and Road into an Asia-Oceanic version of the Marshall Plan.

We’ll know if China’s up for that kind of macro-regional leadership as it celebrates the centenary of the Chinese Communist Party. It was the poor that formed them.

The stated objective of their 2021 centenary is to “build a moderately prosperous society in all respects.” Seems a modest goal for New Zealand to aspire to something similar.

In 2019 58.3% of our exports by value went to Asia led by China, and a further 15.5% to Oceania led by Australia.

So about 74% of our trade is led by Australia and China. Those two hold our fate.

As New Zealand’s state massively increases its reach and force over the next year to cope with the near-death of its tourism, air passenger, airport, and related industries, it will resemble the responses of massive states such as China who have the capacity and the assent of their citizens to be orchestrated out of poverty and towards prosperity.

New Zealand also has a looming date on its horizon – the 2040 bicentenary of our founding – which will be marked by 2020’s events.

Nine years after 2040, China has the centenary of the People’s Republic of China, for which their goal is the stronger “build a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious.” We just don’t do statist rhetoric like that anymore. It was the poor who fought and successfully rose up to form that new Chinese nation.
For the poor of us – who are mostly working poor still – the government started off last year with some reasonably mild goals to massively decrease poverty across a series of measures. They are a whole lot more real in this 2020 crisis.

The month from now until our budget – and for the four months to our September 19 election – are the only window New Zealand will have for at least a century to do what Labour did in the 1930s. Labour’s courage to profoundly transform social and economic policy was a key part of its continuing electoral success: people bought the vision and voted on the results. In 1935 – as now – Labour displayed a high level of cohesion and discipline (sure it never lasts, but let’s use it). It was the working poor that formed Labour ,and the working poor who elected them.

What is at stake is the ability to completely redirect the economy and our society toward raising up the working poor bus drivers, shelf stackers, nurses, care home workers, freight drivers, utility maintenance workers and otherwise all those who are increasingly ground down – as they were from a different crisis 90 years ago.

Five months from now in September will determine if New Zealand leads itself, or if it’s going to sit and wait for Australia and China to tow us in their wake.

126 comments on “New Zealand’s poor in this new crisis ”

  1. SPC 1

    The first and most importanty step is to identify all the QE debt/money provided to government to keep the economy on life support as being immediately forgiven – to disappear from the public debt when the pandemic is over.

    That allows a more generous response to immediate and on-going economic distress (including paying the dole to kiwis in Oz – to avoid pressure on housing here).

    Acceptance of such debt both limits our future and confirms our timid acceptance of the permanence of a neo-liberal regime.

    • aj 1.1

      Debt. Yes, debt was already a noose around the economy. Debt that can't be paid, won't be paid. We ain't seen anything yet, as the world tries to adjust to the new reality.

      • SPC 1.1.1

        At the moment the world has coped with the GFC with really low interest rates – that has resulted in an asset/wealth ponzi scheme – shares and property. That will just go supersonic if the same is done again.

        Nations with really high debt only afforded by low interest and living within budget austerity …. the nation state diminished and ravaged by corporate greed and entrenched poverty and without the means to deal with it.

  2. SPC 2

    With nurses and the resident doctors, there are two actions we should apply.

    First, end their TD repayments – and over 5 years they continue to work in the health system write their debts down to zero.

    Second, fund improvements for ward staffing ahead of the requirment for minimum ward staffing levels and to something similar for resident doctors who are eploited by onerous shift obligations.

    • JanM 2.1

      'Back in the day', as they say, doctors, like teachers, worked off their student bursaries by staying in the country and working for one year for every year of study

      Good idea eh?

      • Peter chch 2.1.1

        Not really, as by working overseas they are exposed to the latest technology and working practices that a small and relatively isolated nation like NZ can never even come close to providing.

        We still get the benefit of their training, just delayed a little until their return

        • SPC 2.1.1.1

          Got any statistics about how many nurses return after working overseas? And how many of those that do work in the field here (more onerous working conditions – low staffing and low pay).

        • JanM 2.1.1.2

          Most of them don't come back as far as I can see and the few I know have gone overseas for better pay not to improve their knowledge

  3. Bazza64 3

    SPC most of the money provided by government in this crisis has been borrowed, probably a massive amount from offshore. I don’t think you can say that should be written off without the lenders consent & very unlikely that would happen. It would be great if that did happen, but very unlikely.

    The reserve bank has stepped in to prop up the government bond market so has in effect printed some extra money.

    Good article in the NZ Herald from Fran O’Sullivan this morning asking our mega rich to step up in this crisis, some who have already done so.

    • SPC 3.1

      What I am saying we should finance this by QE/prinitng the money – not adding to our repayable debt (to local or foreign bond buyers).

      Every dollar added to national debt because of this pandemic undermines the capability of government, the nation state, and popular democracy.

      Indebtedness is the means by which corporates profit from public incapacity and extract wealth from the people into the hands of the few. It also leaves provision to the poor to private charity.

      • pat 3.1.1

        that ignores the fact that much of what is being financed isnt being provided by the NZ economy

        • SPC 3.1.1.1

          Most of it is money to pay subsidised wages via business to workers or benefots so people can buy food and pay rent.

          Then there is money to cover for the loss of tax/GST revenue to pay for government services.

          What payment to foreigners for …

          • pat 3.1.1.1.1

            everything still coming into the country…. including health sector supplies.

            "Re-establishment of a USD swap line

            The Reserve Bank has re-established a temporary USD swap line with the US Federal Reserve. This will support the provision of USD liquidity to the New Zealand market, in an amount up to USD 30 billion. This is a facility that is being offered to many other central banks globally."

            https://www.rbnz.govt.nz/news/2020/03/the-reserve-bank-is-committed-to-ensuring-smooth-market-functioning

            • SPC 3.1.1.1.1.1

              They print money and provide us with a debt facility – nice for the imperial power …

              Trapped in a system where capitalism is dominant and some more dominant than others within that system.

              • pat

                it is not a philosophical argument but a matter of practicalities.

                • SPC

                  Back in the day Savage just printed the money to build state houses … there is no inflation with pandemic/depression unemployment.

                  You either live sovereignty, or you pay tribute to imperial capital – literally. And given that results in indebtedness and consequential austerity/poverty …

                  • James Thrace

                    Every country can print its own sovereign currency.

                    As you point out SPC, Savage did it in the 1930s.

                    However, forgiving that debt is what leads to hyperinflation. We do not want to become another Weimar or Zimbabwe.

                    No. The best thing to do with QE is to ensure it is taxed back out of the economy within a short timeframe of being created. Two years seems to be the optimal timeframe.

                  • pat

                    it is not as straightforward as that…yes we can issue as much of our currency as we see fit (or as the country demands) but that dosnt happen in a vacuum…it impacts the desirability of our currency and hence its value….there is no set formula for determining at what point faith is lost in a currency but when its reached you find out after the event and regaining that faith is an exceedingly difficult task. That wouldn't matter so much if we could provide all we needed with NZD but sadly we (and most of the world) cannot unless we revert to a very basic existence….are you willing to gamble that on the majority knowing when that point is approaching?

                    • James Thrace

                      Markets lose faith in a currency when they cannot see what a country is doing to remove the excess money from the market it has just dumped into it.

                      It is all well and good to say "free money! Money printer go brrrrrr" but without saying "we are putting in 100bn over the next 12 months, and to pay for this we are imposing a tax on empty properties at the rate of 10%p.a. based on the CV value of the property, increasing taxes on incomes over $2million to 45%, and imposing a land sales tax of 4.5% on all but residential property" then markets can see that the government is making moves to take some excess cash out of the market.

                      W B Sutch advocated for money printing as the state was sovereign. He was at great pains to point out that a state should take back that extra money out of the economy in as short a timeframe as possible to reduce inflation.

                      As far as economists go, I don't think any of the modern day Chicago/London School of Economics acolytes come close to Sutch.

                    • pat

                      exactly….you can dispense it but you have to have a viable backing to it…and that requires production….somebody has to produce the goods that support the value…and the goods (or services) have to be desired and ultimately competitive.

  4. Blazer 4

    The OTC derivatives market is a notional $US586 trillion.They are private contracts ,not subject to public scrutiny.

    The sheer ,mind boggling volume of unpayable debt in the world, will ensure a debt jubilee and a reset of the world financial system….it is just a matter of…when.

  5. Bazza64 5

    We could do that, but it would have other massive costs to the general public. It would create huge levels of inflation, our dollar would drop as investors ditch the currency of a nation that tries to inflate its way out of trouble. A large drop in the dollar would be an absolute boom for exporters, but costs of things we need to survive, fuel, all imported goods would go up massively & the lowest earners would be hardest hit.

    A small amount of extra money printing would be helpful, but too much & it all comes unstuck. If it worked so well every country would just print money & all our financial problems would be solved. If only it were so easy to solve without any hardship.

    • SPC 5.1

      There is not a normal economy during a pandemic – and there would be no inflation resulting from a government printing money to subsidise wages not being paid by business. The economy is still going to be smaller, not larger than before.

      There is no real currency impact if other nations are doing the same.

      • Wayne 5.1.1

        SPC,

        There is a big difference between printing money (which the govt is not doing) and borrowing (which the govt is doing).

        My understanding is QE is most likely to work in a growing economy, or at least one that has future prospects ion growth. It won't work in a shrinking economy, or one that is stagnant. In that case the principal effect would be inflationary.

        • SPC 5.1.1.1

          Meh – there is going to be growth recovering from a pandemic shut down of the economy or a GFC or a depression (Savage 1930's).

        • RedLogix 5.1.1.2

          Yes. Perhaps readers here might want to consider the incredibly destructive Peronist trap that Argentina has fallen into. We aren't anywhere near there yet, but we want to be very wary of heading in that direction.

          • SPC 5.1.1.2.1

            There will be enough debt around the next year or two because of a budget deficit legacy (decline in business acitvirty) without taking on debt to keep the economy on life support this year.

            Confusing a prudent pandemic response with garden variety second rate economic management over the long term is being more than a little careless with the facts of this.

            For mine I am wary when governments socialise the debts and the profits are privatised by those who own most of the assets already (cheap debt – rising value to privately held assets and offload of government assets on the cheap and expensive to taxpayer PPP arrangments to deliver for government).

            • RedLogix 5.1.1.2.1.1

              Confusing a prudent pandemic response with garden variety second rate economic management over the long term is being more than a little careless with the facts of this.

              I was careful not to confuse this. NZ is clearly dealing with a specific crisis, but the question remains … what if unintentionally we finish up drifting down the 'right wing socialism' path that has held back Argentina for so many decades?

              It's a country with immense potential, yet underperformed politically right from the beginning. Their modern history is a catalog of mistakes worth not repeating.

    • Treetop 5.2

      How would this affect house prices and purchasing a home?

  6. Bazza64 6

    What you say may have some truth in the very short term, but why did Grant Robertson, a very intelligent man, not go for this option instead of borrowing the funds & increasing our government debt by billions ? I think he understands that without fiscal discipline our country would end up like other countries that have used this option in the past & in a couple of years a $3 loaf of bread costs $50.

    An immediate cash payment to low income earners of say $1,000 to $2,000 would be a good short term help.

  7. pat 7

    How the less well heeled fare as this crisis will I suspect be largely determined by the outcome of the election later this year.

    Will we follow the mindless mistake that appears is going to unfold in the US of austerity for the masses and QE for the owners of capital …

    https://www.businessinsider.com.au/reagan-economist-arthur-laffer-tax-cuts-stimulate-coronavirus-trump-economy-2020-4?r=US&IR=T

    …or will we spread the load, compress the remuneration band and provide fiscal support to the productive sector of the economy?

    Think it fairly obvious whos more likely to follow the US lead.

  8. Bazza64 8

    The best option to help us out of this I think would be a drop in low income tax rates & an increase in the top personal tax rate + an increase in company & trust tax rates.

    Some sort of wealth tax or an increase in GST on luxury goods (Ferrari’s, Chanel, jewellery). Someone will have to pay for all this & that is probably the best option, for a few years anyway.

    An increase in Working for families & most likely the pension becomes income or means tested. Can’t see any other way to reduce government debt in future.

    • Wayne 8.2

      Right at the moment the worst thing you could do is increase company taxes. Two points, one, most companies won't be paying tax anyway, and two, the companies that are will need their cash for future growth (and employment.

      I can see the case for a tax increase on higher incomes.

      This is not a time for across the board increases in welfare spending. Already there is an increase in basic benefits and the minimum wage.

      All extra government spending now has to be job focused, and saving those companies that can be saved.

      A very large number off small to medium sized businesses will fail if they don't get a cash infusion very soon. Some of them will fail anyway. But it does appear that in NZ many SME's (especially those with less than $250,000 revenue) operate with less than one months cash. Without an immediate cash injection they will fail, irrespective of whether they could survive in the medium term.

      I reckon that the govt should consider an immediate grant scheme, say $15,000 for businesses with turnover $50,000 to $100,000, $20,000 for those $100,000 to $150,000 turnover, $25,000 for those with turnover $150,000 to $200,000 and $30,000 for those between $200,000 and $250,000. They would need to show a drop in turnover of say 30%.

      This is different to the job subsidy. It is for the company to pay at least a proportion of lease costs, power, IT costs etc. That way the company can stay in existence and pick up again as the economy recovers.

      This scheme would be comparable to the govt guaranteed loan scheme for businesses with more than $250,000.

      • pat 8.2.1

        most of those cash injections will be dead money….if a business has been operating at that level of cash reserves pre covid they are not going to survive the reduced activity environment with a one off cash injection…and is why the banks are administering the business finance package and not politicians.

        • Wayne 8.2.1.1

          My proposal is related to businesses/companies with less than $250,000 turnover. They are not covered by the govt backed bank scheme. that only applies to companies with more than $250,000 revenue.

          If the govt does nothing for these smaller companies there will hundreds of thousands more unemployed than there need be.

          I appreciate that the self employed already qualify for the $5485 pwe week payment. This is for that group of businesses who are probably employing 1 to 3 staff.

          • pat 8.2.1.1.1

            You may wish to have a look at the statistics around small businesses….there will be few that employ staff with a turnover less than 250K so you are in effect describing sole traders or contractors who qualify for the wage subsidy (no employee enterprises even in 2016 had an average turnover of 206K)…which i might add has been paid in advance as a 12 week lump sum.

            In the overwhelming majority of cases your proposed grants will make no difference to the viability of these small businesses so all you are doing is briefly delaying the inevitable…dead money.

      • SPC 8.2.2

        Some businesses need their working capital restored – butchers/greengrocers and their suppliers are the more obvious ones – because of perishable unsold product.

        For others it is cost – the government should offer to cover 50% of rent where the landlord agreed to halve the charge. And as an interest free loan.

      • McFlock 8.2.3

        I'd say that benefit increases are a great way to inject cash into businesses in the areas that most need it.

        • pat 8.2.3.1

          Would depend on what your business was ….quite simply theres going to be less demand for virtually everything and many industries were already suffering from oversupply hence the poor cash reserve positions…theres going to be a clear out and grants will do little to stop it the ones that are going to survive will survive without it (occasional exception) and all the grants do is delay that rationalisation….its worth remembering that the failure rate for small business is incredibly high in ordinary times and those who contract or sole trade are always one decision away from being out of work.

          • McFlock 8.2.3.1.1

            It won't do the luxury goods market much direct benefit, but places with lots of beneficiaries won't have many designer boutiques anyway.

            But what it does mean is that all the basic places will keep their turnover, maybe even to the point that they employ more people. That cash will trickle up.

            Money to companies keeps the brand on life support for a short term, but longer term they'd be better off adapting to the new economy. How they manage that transition is up to them, but if their suppliers or market is cut out there isn't much business for them to conduct.

            • pat 8.2.3.1.1.1

              Agree a benefit increase would assist many businesses to make up some lost revenue but suspect that option will be considered in light of the fact that the number receiving the benefit is going to increase substantially….its going to be a gnarly problem.

              I suspect there will be more focus on (re)training for identified shortfalls and possibly some form gov backed financing for approved enterprises to either start or expand alongside gov sponsored projects.

              • McFlock

                Yeah, benefit increases aren't the only measure needed, by any means.

                It's just an easy way to ensure money gets to deprived areas and keeps businesses going there.

                Some real deficit spending needs to happen, in a number of ways. Funnily enough, the case study for "don't print cash" is Weimar Germany, but I can't for the life of me find a reference that shows the amount of money it tried to print as a % of GDP at the time. The other point is that if we start to see inflation, we can always stop printing money.

  9. Foreign waka 9

    Time for a universal income, reducing the retirement age and having stronger checks and balances on speculation.

    I can hear the screams right now, but think about it.

    Universal income, no student loans, no special support payments, no other subsidies. This reduces and flattens the administration across a whole range of social payments. The mirage that is currently on offer means that the education of the person at the counter matters so much so as to decide between food or empty pantry. Take all the maze out of the system and it becomes far more affordable.

    Reducing the Pension age to 63 means that work places that will (yes they will!) come at a premium can be taken up by the younger generation that raises kids.

    Checks and balances on speculation: i.e. tax structure for investments, property and bonds.

    For example:

    Less tax for investments made in the transport structure that really connects between home and work, shopping and recreation. More into amassing homes and building structures. A progressive tax system would need to be looked at.

    Of cause this will not kill all ills as there are many more issues that would be affected by such change. It might be a start to something sustainable.

    I am not an economist but for me the economy is also no play thing as it seems for so many who constantly set us into the ground with little regard for those who ultimately pay the price.

    • solkta 9.1

      If there was a UBI why would there also be a pension with an entitlement age? Not making much sense here.

      • RedLogix 9.1.1

        The current NZ Super is essentially a UBI. It works incredibly well despite routine bleating from economist's that we 'can't afford it'.

        Still the level at which it's paid out is based on the assumption that the recipients are unlikely to be able to work again, nor increase their income. This is not true of the wider working population, and so it's probable that any UBI paid to retired people is going to always be at a higher level than that paid to others.

        Indeed I can visualise a tiered level of payments; a child UBI paid at say $4k pa, a youth UBI over the age of 16 paid at say $8k pa, and eventually an adult UBI paid at say $14k pa, leaving the retired UBI at say $22kpa.

        Each of these tiers could be sequentially introduced. With bi-partisan support the whole scheme could be introduced quite gradually over a period of even a decade or so.

        • Foreign waka 9.1.1.1

          RL My suggestion was mainly aimed of reducing complicated systems and make sure some equity for all is maintained. Your tiered levels sound good to me.

          I am certain that systems and means can be found to create a more peaceful, less reliant on oil centered society. To do this a means of having social peace must be implemented. How and with what, many great minds are around…is there a will?

          • gsays 9.1.1.1.1

            In regards superannuation, perhaps an 'education' campaign.

            Where, if you are working, have income from other sources or great wealth, you opt out of collecting super.

            Along the likes of smoking and drunk driving, it becomes a social no-no to 'double-dip'.

            "Stay away from the super, you are saving $."

            • solkta 9.1.1.1.1.1

              But Muldoon promised it to them! You will never get over that hump of entitlement with significant numbers.

            • KJT 9.1.1.1.1.2

              Why not simply have a higher top tax rate?

              And CGT, and maybe inheritance taxes over One mill.

              You can be sure that if the wealthy didn't get super, it would have been, "gone by lunchtime" decades ago.

              Reducing or getting rid of our functioning UBI, that already exists is not progressive.

              It is going backwards.

              • gsays

                My point is not to reduce nor make it unavailable.

                It is to create a narrative around taking one for the team, a sacrifice, also having a thread of greed running through the yarn. boom boom!

                Thereby influencing culture.

                I remember when smoking in pubs was stopped. I was a publican in a small rural town. When the topic came up, being able to describe it as a worker safety issue took most of the wind out of most sails.

                • KJT

                  That will be the result though.

                  Keep it universal, and have the top tax rates and wealth taxes we should have had all along.

              • Carolyn_Nth

                Higher tax rate for higher incomes is the answer. Means testing super would benefit the middle classes more than low income retirees. Middle classes are more into negotiating the admin required, and manipulating their responses to make it under the means test cut.

                In the past I've seen stats showing middle income people are the biggest beneficiaries of all kinds of means tested social welfare.

                Making any benefit universal, including super, ensures that all low income people get it without hassle, plus reduces stigma, etc.

        • dv 9.1.1.2

          AND adjust the tax system so that high earners UBI is recovered. (not a surtax, general tax._

        • solkta 9.1.1.3

          Many Super recipients carry on working and have had a lifetime to build up assets. People with disabilities would be so much more deserving. And people who endure long illnesses are also disadvantaged as they cannot build their asset base or get an education. Once you add in all the differing categories of deserving you end up with a system as complex than the one we have now. Just because someone is old, that does not make them more deserving.

          And no Super does not work well. It transfers large sums from younger tax payers to wealthy old people. As you mention below you can't separate tax from UBI. Super is not a UBI without the tax brackets to claw it back from wealthy people.

          • SPC 9.1.1.3.1

            Those with disabilities should be on the same rate as super, and at least the dole rate if they have a working partner.

            As for Super, one wonders why those on the dole c $250 can only earn $100 without a high rate of abatement (90 cents), whereas someone 65 gets $425 and can earn as much as they want from a job on top of that.

          • RedLogix 9.1.1.3.2

            Just because someone is old, that does not make them more deserving.

            Hell and just a few days ago I was getting yelled at by KJT for promoting the 'the deserving and undeserving poor' meme. Vile and right wing I was told this was …devil

          • Foreign waka 9.1.1.3.3

            Solkta

            Basically, what you are saying is that people with health issues and many are elderly, will be disadvantaged. Not if the health system is properly organised. Less managerial and more hands to the task.

            Our focus has to be equity as the challenges right now will be to not have democracy eroded and liberties taken away in the name of necessity.

            Its like a magician, look to one hand as the other takes your freedom.

            • solkta 9.1.1.3.3.1

              No, i'm saying that people shouldn't get more money just because they are old.

              • In Vino

                Hey, solkta. Who do you think you are? I grew up in the 60s, hated Muldoon, voted for Rowling and the retention of the old Labour Super. But the majority of knuckleheaded selfish dummies in this country (how little has changed!) voted for Mudoon, who is now more reviled by Tories than lefties.

                BUT the entire country at that time took Muldoon's deceptive promise seriously: not through selfishness, but because Kiwis in general agreed that old retired people should get automatic super, and not the mingy current amount that we now get as a result of that Richardson bitch. It was part of our ethos, our idea of a fairer society.. All decent Kiwis believed in this ethos, and it is not avaricious selfishness causing some to leap to its defence even nowadays.

                So, as I asked, who do you think you are, coming along, changing all the rules because it suits your neo-lib ideas that you accept as normal, and, with an arrogant sense of moral entitlement, telling an entire older generation that they do not know what they are talking about?

                I am prepared to agree that nobody needs super until they have retired, but otherwise I think it should stay universal, and be restored to pre-Richardson levels, like all benefits.

                • KJT

                  I know that many older people are dead against reducing or removing super, not because it will affect them. (It won't be removed from those who are already retired or close to it), but they want it to be there for future generations.

                  We know, once it has gone, it will be very hard to get it back.

                • solkta

                  Who the fuck do you think you are making assumptions about my age and ideas and what i think is normal. I grew up in the seventies and can remember the "cossack ads". I have been active in left wing politics since my early twenties.

                  This discussion is not about whether old people should receive a social wage but rather whether old people should receive more if this payment was made universal for all adults. It is not neo-liberal to think that younger people should be able to live in dignity as well as the old. Rather it is clearly socialist.

                  I suggest it is you who has the "arrogant sense of moral entitlement". I'm not quite sure where i have "told entire older generation that they do not know what they are talking about".

                  It looks to me like you are telling me that i am not entitled to have an opinion. There is only one appropriate reply to that: OK Boomer.

                  • In Vino

                    So we are not so far apart. I would just point out that retired people are a bit different to normal 'adults' in that they can no longer work to supplement the proposed UBI, which looks like being lower than the current pension (recognised as insufficient for living to a reasonable standard.)

                    I knew I was making assumptions about your age, etc – but I felt you were presenting in that way.

                    • solkta

                      I don't know anybody who has retired at 65. The only person i can think of was my grandfather and the age then was 60. If people have the right in demand skills they can get new jobs at 65+, but for those who haven't they are fucked from 50..

                      I don't think you took the time to read what i was actually saying.

                    • In Vino

                      Perhaps you should have read mine more closely – "I am prepared to agree that nobody needs super until they have retired,…"

                      As I said, maybe we are not so far apart.

          • KJT 9.1.1.3.4

            And many, including most women, have not! "had a lifetime to build up assets".

            • solkta 9.1.1.3.4.1

              Most women over 65 own their own home. If they are in a relationship in the nature of a marriage then they own half of any assets their partner has accrued. It is not looking good for younger people coming through though. Home ownership drops off further with each generation.

              • KJT

                That is now. The so called,, boomer, generation have less than 60% retiring owning a house. From 80% in the previous generation.

                That is going to be an issue, as the current rate of super won't even cover rent, unless it drops.

                The result of Neo-liberal "reforms".

                It may be the boomers kids, inheriting their Grandparents houses, that end up better off by the time they retire.

              • Carolyn_Nth

                I'm a boomer woman, and never owned a property. And I'm middle class. It's worse for women on lower incomes

                Also, I know a couple of older women, when their marriage split up, they found it difficult or impossible to buy their own property with half the money from the shared house – so are renting, and rented while bringing up the children as a single parent.

                Meanwhile, millennials in my extended family own their own homes – often with some financial help from their middle class boomer parents.

    • RedLogix 9.2

      All good stuff FW.

      Can I encourage you to think of a UBI more as a component of tax reform (think of it as a 'negative tax') than a welfare device.

      That way it becomes more natural to integrate structural tax reform into the whole package.

    • Wayne 9.3

      An UBI is impossibly expensive. The government is going to be borrowing enough just to save jobs. It cannot afford a massive increase in welfare spending that is not covid emergency related.

      • Chris 9.3.1

        If no UBI, we're left with our current welfare system which is in dire need of repair. What can we afford to do along these lines? Or do you think the current system doesn't need repairing?

        • SPC 9.3.1.1

          Paying the dole to non working partners (reduces WFF tax credits and modernises the welfare system) and a UI to those under 25 not working full-time or in full-time study (gig workers, casuals part-time workers – this supports internships/apprenticeships and entrepreneurial development)

          • In Vino 9.3.1.1.1

            But I fear that Wayne and his ilk will say that your and any other repairs to the Welfare system are also impossibly expensive… We will get the same lie we got back with Rogernomics: "Lets get the economy right first, then we can fix Education, Health, Welfare, etc.."

            It was of course utter pigshit; The Rich profit-gouged to their hearts' content without ever admitting that there was now enough wealth (they never do) until the 1987 crash, when, of course, we all had to take cuts and help rebuild the shattered economy again.

            It will be the same old story…

      • RedLogix 9.3.2

        An UBI is impossibly expensive.

        Only if you look at it as a 'welfare' payment. If you consider it holistically as a 'negative tax' and set income tax levels appropriately (typically in the 30% range), then essentially the UBI is entirely clawed back for medium income individuals who don't need the safety net.

        But the point is that if their circumstances change, then automatically the safety net is in place for them.

        Yes a lot more cash is churned by IRD in that everyone gets paid the UBI and most people immediately pay it back in PAYE, but that is just computer digits and has no practical significance.

        • SPC 9.3.2.1

          At what tax rate do they pay most of the UI back? Not any we have now.

          • RedLogix 9.3.2.1.1

            Well as a very simple 'toy' model, lets just consider a UBI paid at $10k and a flat PAYE tax rate of 33%.

            By the time you have an income of $30k then your PAYE balances out your UBI exactly and you are paying an overall NET tax rate of zero.

            When you get to an income of say $120k then you're paying $40k PAYE, less $10k UBI leaves a net of $30k tax or about 25% overall tax rate. Which is about what we pay now.

            I'm not endorsing this very simple toy example, but it shows how a UBI can be easily designed to have an a total tax impact not a lot different to what we have now.

            • SPC 9.3.2.1.1.1

              So those getting $12,500 dole after tax, get $10,000 and pay tax at 33 cents in the dollar out of that … thus $6666 …

              • RedLogix

                I think there is a disconnect here.

                Honestly I'm not sure how to answer your question. The model I described above doesn't have any 'dole', nor is the UBI component of income 'taxed'.

                The premises you are offering lie outside the model. Just focus on the fixed untaxed UBI and the flat PAYE income tax … the numbers very simply fall out of that.

                • SPC

                  You mentioned earlier, an adult UI of $14,000 – which is above the dole amount ($12,500 and the current rate for super for those over 65).

                  Paying the lower $10,000 amount would make even Ruth Richardson blanche. And a flat tax rate was the dream of Roger Douglas – though I do appreciate the 33% rate gives it the semblance of viability (for mine it also needs an estate tax and stamp duty on higher value property).

                  If however it means we cannot afford WFF or AS, its introduction would raise child poverty levels. To retain them might require compulsory health insurance, 20% GST (including financial charges) and a land tax and end to payment of super to those working over age 65.

      • Foreign waka 9.3.3

        Hi Wayne

        My comment was not about the current pandemic but rather the aftermath.

        There are some 62 headings of various support payments from government and god knows how many variances. Imagine the whole implementation apparatus – reduced substantially. The same money could pay the UBI to all these govt employees and then some.

        We have to move away from 100 managers looking after 20 people in those organisations as their interest will be to maintain status quo. This alone costs a fortune and still not one poor person is fed.

        We can and need to do better than that with the resources we have.

        As for the payments made right now, they go to companies and to maintain workplaces. However, not all of them will survive. The unemployment rate will increase, some economists say up to double digits. Worse still, these workplaces might not come back as technology will supplant many.

        So we need to think about this now and not when unrest hits the street.

        My comments are just ideas that I propose might be worthwhile to think over? Maybe not?

        • gsays 9.3.3.1

          A UBI isn't expensive if there Transaction Tax accompanying it. Bring the currency traders into the tax take, all the share traders etc.

          I know it has been posted before but it bears a repeat viewing:

          • pat 9.3.3.1.1

            we dont need (or want) currency traders…thats half the problem..a UBI isnt 'unaffordable' per se but it does carry risk…and that risk is potentially catastrophic.

  10. RedLogix 10

    Similarly, small countries like ourselves are small boats finding themselves in a weaker overall position in a gradually post-Covid19 ocean. The pattern of Chinese economic growth will change, as will the force of political will upon economic organisation. Since our fate is tied to that of Australia, our part in that economy will change.

    The scale and pace of this change is going to be far more dramatic than we imagine.

    The US is going to react to this event as it always does … once they decide to change direction they're all in. In this case their gradual disengagement from international institutions that has been happening since Clinton and the end of the Cold War is going to accelerate. In the US mind COVID-19 is going to be the fault of the Chinese, and rightly or wrongly the US is going to pull back from China just as fast as it can.

    That has huge consequences for Chinese exports.

    It was the poor who fought and successfully rose up to form that new Chinese nation.

    China was a dirt poor dysfunctional backward hellhole under Mao. It wasn't until the Nixon initiative in the 70's and their opening up to global trade in the 80's that this changed. The conditions that made this transformation possible are now going away.

    Such a scenario gives a huge global advantage to China.

    Maybe. I can see the superficial logic of this, but whether it holds up to scrutiny when you consider the extreme dependency the Chinese economy has to crucial imported materials, from oil, petrochemical products, fertilisers, ores and even basic food stuffs remains to be seen.

    In every geographic sense China is desperately exposed to insecure shipping lanes and unstable partners. Especially ME oil. And this is before we consider all their close neighbours who, to put it politely, are in no mood to do them any favours.

    And given their ageing demographics (yes that one child policy did have an impact), there is no hope for a domestic led consumption recovery either.

    I'm not trying to make a prediction here; but assumptions that the rise of the CCP to a glorious 100th year celebration of marxism are based more on wishful thinking than anything else. Yes China will remain important, but it has some big road bumps to negotiate first.

    • Ad 10.1

      Here's a reasonably comprehensive overview of where China gets all its energy requirements from.

      https://chinapower.csis.org/energy-footprint

      And here's a little one from Columbia university on the relationship between the China-US trade war and energy security:

      https://energypolicy.columbia.edu/research/commentary/high-anxiety-trade-war-and-china-s-oil-and-gas-supply-security

      I agree there are also pessimistic scenarios for China as well.

      • RedLogix 10.1.1

        Interesting links but they miss some crucial points. Sadly China is one of the worst places on earth for renewables, there is fuck all sun and even less wind potential.

        The only reason why the CCP can build out so much solar is that they subsidise it all to hell and back. None of it makes any energy or economic sense. And in order to generate meaningful supplies they have to grossly overbuild, which only digs the debt hole deeper.

        There is a lot of poorly informed hype on the internet about China's 'green revolution' but none of it sustains much scrutiny when you look at the hard physical realities.

        https://www.globalwindatlas.info/

        https://solargis.com/maps-and-gis-data/download/china

        https://e360.yale.edu/features/why-chinas-renewable-energy-transition-is-losing-momentum

        Building massive solar farms in the Tibetan plateau is about the only realistic option, but then keeping the panels clean in the face of frequent sand storms, and the distance to the populated centres where the energy is needed are far from ideal.

        The link you provided points to a very sobering aspect on their oil supply. Look at where 85% or more of it comes from … via big fat slow supertankers that have to traverse some potentially very hostile waters.

        When the CCP defied the world by annexing the South China sea and thumbed their noses at the 'freedom of navigation' principle, you just know this has the potential to bite them in the arse very hard indeed.

        • Ad 10.1.1.1

          What's surprising to me is that China in the South China sea appears to be doing the biting, and getting away with it for quite some time.

      • RedLogix 10.1.2

        As for the ME. Consider this article.

        The Saudis can afford to crush the oil price in order to collapse OPEC's oil economy because they have U$2t stashed away to tide them over, but Iran, Iraq, the Gulf states, Azerbaijan, Russia, Venezuela are all going to hurt and hurt badly.

        This is the Saudi's opportunity to take the regional civilisational collapse they so badly want to the next level. The ME is desperately complex, but at the core of it lies the slow burning conflict between the empire seeking Iranians and the feudal Saudis.

        Going to make GOT look like choir boys on a Sunday picnic.

        • Ad 10.1.2.1

          I see China working pretty assiduously to become less and less dependent upon sea shipping for both oil and natural gas. It will never happen completely with either of course ,but it will decrease.

          The Belt and Road has a number of oil and gas pipeline initiatives. The big Russian one is now in operation, but there are plenty that now go directly to China from the Caspian Sea.

          https://multimedia.scmp.com/news/china/article/One-Belt-One-Road/gasPipeline.html

          There's nothing but Chinese manufacturing wins to be gained from a sustained oil price war across OPEC and Russia.

          https://theodora.com/pipelines/east_asia_pipelines_map.jpg

          There are also plans to extend major pipelines for Chinese consumption through to Turkey and Iran,That would seriously undermine US influence in that region, such as it remains.

          https://www.sciencedirect.com/science/article/pii/S2352484719300034

          I am reasonably clear-eyed about the risks China faces, but it's pretty evident that they have been for a while. They are striking deals to secure supply accordingly.

          I would sure hate to see China decrease its reliance on Australian natural gas. It's unlikely to happen, but that's a massive customer to have reliance upon. Certainly in Australia's interests to have or prosperous CHina.

          • RedLogix 10.1.2.1.1

            China needs about 12m barrels (650,000 tonnes) or six two million barrel supertankers a day to keep their system running. It takes 20 days for a supertanker to get from the Persian Gulf to Shanghai … a round trip of 40 days. That is something in the order of 1 – 200 ULCC ships constantly making the trip back and forth. China will never have a navy capable of defending such a target.

            Pumping oil overland is quite expensive, pumping it 3 – 6000 km is very expensive. And these pipelines are every bit as vulnerable as the supertankers. Besides current pipeline capacity would have to be at least quadrupled to meet even current needs … and while this is not impossible … it's at least another decade away.

            Whichever way you cut it, China depends on resources that of necessity must be transported vast distances across sea lanes or territories they do not necessarily control, nor will always be friendly to them.

            And this is only one of their strategic vulnerabilities. What happens for instance when an increasingly assertive and ethnically aware Turkey ( a nation with a very capable military) determines that China's treatment of their Turkic brethren the Uighurs must be redressed?

            This is no slur on the Chinese people … the problem we are really talking about is geography and demographics. It matters more than we like to think.

  11. Incognito 11

    I’ve been waiting for a Post like this!

    • roblogic 11.1

      i too was waiting for a delusional panegyric to the glories of China and the success of globalism

      • Incognito 11.1.1

        I largely ignored that aspect; the focus on the poor piqued my interest.

        • Poission 11.1.1.1

          What is poor?

          I grew up in the most remote part of NZ,we had no power until the 70's.Tilley lights and kerosene refrigeration were the mod cons (although we had flush toilets and septic tanks with wetback stove)

          Hay making was 4 hp (literally) milk and butter came from the nearby cow,clothes were hand made,as was bread and baking with veges and fruit on farm.

          Still no cell phone coverage and limited internet,and electricity four times the cost of the rest of nz.

          • Incognito 11.1.1.1.1

            The context of “poor” is in the OP. As with CC, this global crisis of unprecedented proportion is likely to lead to absolute poverty levels. We can wait for this to happen and then revise our ‘definition’ accordingly followed by years (decades) of hand wringing or we can try to do something (more) proactive for a change, this time …

            The idea-box (or should that be whiteboard?) is open.

          • Ad 11.1.1.1.2

            Ahhhh…. we used to be poor………

            https://www.youtube.com/watch?v=VKHFZBUTA4k

            • Poission 11.1.1.1.2.1

              After working 15 days ,I have four days off.I shopped for 3 different people who after rent have around 66-80$ a week to live on.I paid the electricity for 2 of them.

              They all got good treats this week blueberries,kiwi berries ,and good quality meats .What have you done.

              • Ad

                Earned a salary

              • Foreign waka

                Poission

                Thank you, it is true humanitarian and not everybody puts the money where the mouth is. It is easy to despair and not to anything when overwhelmed by the sheer amount of need. It takes a lot to overcome this "hump" of emotion.

                I don't want to diminish anybody's efforts to help and show the humanitarian side. However, in a bigger context the question remains: how long can any individual do this and how can we look at preventing overwhelming need in the first place. A lot of consideration and thinking is required to get a fair and equitable solution. Not just for today but for tomorrow and the next generation.

                Thank you for providing help for people in need.

  12. TootingPopularFront 12

    The hypocrisy of the BBC to talk about a Corbyn government being ideal to deal with the crisis is utterly breathtaking.

  13. Ian 13

    Changing the definition of essential businesses and allowing businesses to operate safely NOW would save thousands of businesses,without ANY government subsidy.

    • pat 13.1

      and potentially undo the positive impacts of the lockdown on the health crisis and threaten the health system in this country for a marginal improvement in the economic position

      • Ian 13.1.1

        The vast majority of Kiwis are smart enough to work under the protocols and procedures needed to stop the spread of the virus. Are aussies a lot smarter than us ?

        • pat 13.1.1.1

          Are they?….and if the reports I hear from Aussie are widespread (and Im told it is) then if they are smarter than us we'd have to be pretty bloody stupid.

          • Ian 13.1.1.1.1

            Time will tell. Unfortunately, this Government is short on talent, has a history of balls ups and quite frankly couldn't organise a piss up in a brewery. I am very concerned that this government is completely out of it's depth when it comes to the rebuild.

            • pat 13.1.1.1.1.1

              this government that couldnt organise a piss up in a brewery has in the space of weeks implemented the most timely and effective response to a global pandemic on the planet.

              • Ian

                An island miles from nowhere could have been isolated months ago. Hone Harawira could have done a better job. Without destroying the local economy.

                • pat

                  be sure to vote for him then

                • Graeme

                  Ian, our economy would have been pretty much destroyed by the global effects of this pandemic, and the pile of bodies from carrying on as normal domestically would have finished off what was left.

                  So the economy would have been fucked either way, the only difference is whether we have, or how big is, the pile of bodies.

                  What do you love more, your parents and grandparents, or your money?

                  And before you come back and call me shit, my business won't be seeing any cashflow for at least another month or two, maybe this year (I'm in Queenstown), and I'm not going to be looking at a profit for at least a couple of years, kind of like 1987 and 2008. Recessions happen when we go too fast, every one is different, and no-one seems to see them coming. Especially on the right.

                  • Ian

                    Graham,we need to carry on. I run a business that is deemed essential and follow the protocols and procedures dictated by the Government.We are operating pretty close to normal. If I can do it ,I'm sure many other businesses can do it.The pinheads in Wellington need to allow more businesses to operate ASAP. My parents and grandparents died many years ago from old age.

                    • Graeme

                      Carry on and what? Kill people? Look at the shit fight going down in New York, do you want that here, because that's the result of trying to prioritise the economy.

                      We're buggered whatever we do, the disruption and death from this pandemic is destroying the global economy, not just New Zealand's. All we can do is try and limit the damage to people.

                      You are very fortunate, you and your staff live on the job and in very separate bubble, with no interaction with the general public.

                      We're retailers and our business is all around interaction with the public. What we sell requires considerable interaction with the customer. We'll be shut down to, or beyond, Level 2, as will bars, restaurants and pretty much the rest of Queenstown.

                      I ran into a builder mate in the supermarket carpark yesterday. He used to be of a similar view to you, that he could manage it. After seeing the complete loss of discipline in our local supermarket he'd changed his mind. You can control yourself, you've got no control over what other people, your customers, do.

                    • Foreign waka

                      Ian

                      You are privileged that you can operate being classified as an "essential" business. Say thank you that you can still post a profit while many of your clients fear for their livelihood. Say thanks for being one of the lucky ones and be humble. Otherwise I would think you are one of those that have greed in their mind, their hands in others pockets and a heart of stone.

                      Happy Easter

                    • Gabby

                      Well what are you whingeing about then.

  14. adam 14

    So basically like all history – when the crap hits the fan – the weakest get it in the neck first.

    I don't see the point in repeating the same mistakes and letting the elites away with their bullshit this time – nor the lackys of the elites. Both groups need to be put in their place for their utter failure with the economy.

    It's time we stopped listening to the hard boiled tripe of our so called betters.

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