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Oram on the budget and Treasury fantasies

Written By: - Date published: 7:09 am, May 25th, 2015 - 75 comments
Categories: budget 2015, debt / deficit, economy, national - Tags: , , ,

Extracts from Rod Oram’s piece in the SST as posted on Facebook:

No worries, it’ll all come right, the Budget assures us

Everything economic will come right by 2017, the government assures us in its latest budget. Businesses will enjoy higher commodity prices, moderate wage inflation, modest interest rates and a manageable dollar. Citizens will thrive on more jobs, low inflation, more spending and only moderate increases in house prices. And the government will benefit from higher tax revenues, enabling it to double new spending, increase its budget surpluses and cut taxes – just in time for the 2017 election.

This sunny view is based on Treasury’s economic forecasts accompanying the budget. Treasury believes serious shocks to the global and local economies over the past decade, and particularly over the past year, will fade quickly away. Dairy and oil prices will rise, inflation will resume and economies will motor on, whether in stagnant developed or slowing developing countries.

But what if the world is experiencing profound shifts? What if, for example, deflation is driven by structural causes such as ageing populations and rapid technological change?

This air of unworldly calm also pervades the budget itself, which the government has entitled “A plan that’s working”. Sure enough, there is a bit more money for health, education, police, corrections and other core services. But our population and inflation will both rise by 1.4 per cent in the year ahead, Treasury forecasts. So, the extra spending announced for core public services won’t cover rising costs and demand. So there’s no chance for real wage increases for teachers, nurses, doctors and other public servants.

So this budget, as the six before it, is a triumph of micro-management. The government has mastered the skill of switching small sums around to give the illusion of progress. What’s missing from it, and the six before, is any glimpse of the world we live in, let alone the political leadership we need to survive and thrive in it.

Nailed it.

75 comments on “Oram on the budget and Treasury fantasies”

  1. Peter 1

    ….. I for one would like to see Mr Key give us his views on, say , a strategy for NZ ports …… addressing the short term concerns of focus groups appears to be his main focus

  2. Charles 2

    In the old days every “man woman and child” worried about the national (small n) deficit, children were given milk to drink at school, voters generally disliked the government, tariffs and tax were heavy, and you could live on a pension without fear of dying of hypothermia or resorting to catfood. No one knew what a dumpster might be. Electricity, water, and telephone services were owned by the government, there were trains carrying manufacturing materials. Trust in the police was high and essential services had professional shift staff, their officiers not much concerned for the cost of saving property and lives. Unemployment was non-existent, and pakeha liked to complain about “the maoris”. Banks opened special childrens accounts, accepted deposit for 1c or 2c and encouraged children to save. They didn’t advertise on black and white TV.

    Now children have fallen into poverty conditions, no one much cares about the National (capital N) deficit unless it’s implied they might have to contribute, it’s not fair and too expensive to supply children with food at school, voters love the government and it’s cult leaders, tarrifs and taxes are light, and you might not be able to live on a pension without resorting to dumpster diving. Electricity, water, and telephone services are privately owned and the train tracks got pulled up, so raw materials go by road on trucks. Trust in police is non-existent – unless you’re white, male and rich, or know someone who is – the officiers of essential services are concerned with profit and safety systems need volunteers and charity to keep running. When someone is lost at sea or in the bush, they’re blamed for the rest of us having to go look for them. Unemployment is high, and pakeha like to complain about “the maoris” – just before leaving for Australia. If you can find a bank teller in your town it’ll cost you. There aren’t 1c or 2c pieces anymore, but plenty of cheap debt, and banks advertise on colour TV that they “live in your world”.

    Can’t wait for 2017. Can’t wait for budget number seven.

    • Draco T Bastard 2.1

      In the old days every “man woman and child” worried about the national (small n) deficit, children were given milk to drink at school, voters generally disliked the government, tariffs and tax were heavy, and you could live on a pension without fear of dying of hypothermia or resorting to catfood.

      Which particular ‘old days’ are you talking about? It wasn’t until Muldoon brought in NZSuper in 1975 that the Old Age Pension was a liveable amount. Before then it was somewhat less.

      • Tracey 2.1.1

        Can you recall what the widow’s pension was?

        • joe90 2.1.1.1

          In 1970 the weekly widows rate was $13.75 with $10 for one dependent child, $11 for two dependent children and $1 for each additional dependent child.

          under SUMMARY OF RATES OF SOCIAL SECURITY BENEFITS

          http://www3.stats.govt.nz/New_Zealand_Official_Yearbooks/1970/NZOYB_1970.html#idsect1_1_52751

          • Tracey 2.1.1.1.1

            Thanks Joe.

            A widow received the same amount as an unmarried superannunant…

            Key referred to his mum during his budget speech but left out how she was on the same as an over 65

            More when you factor in the children.

            WHY don’t Labour or the press know this stuff?

            • Tracey 2.1.1.1.1.1

              Invalids’—
              Unmarried person, 20 years or over 715 13.75
              Unmarried person under 20 years 611 11.75
              Married man with wife included 1,300 25.00
              Married woman 650 12.50

              We did have full employment in those days…

              • John

                Tracy says “We did have full employment in those days…”

                In 1970 we had a population of 2,811,000 and 1,215,000 people employed (43% employed).

                In 1970 we have a population of 4,500,000 and 2,355,000 people employed (52% employed).

                So in those days we had an extra 9% of the population (9% of todays population is 405,000 people ) who were not working.

                They just didn’t appear in the figures.

                • weka

                  There’s a difference between not-employed and unemployed. The 1970s stats would need to be broken down by gender and probably class to understand them.

                  Full employment = all people who need/want a job having one.

                  • John

                    That certainly wasn’t the case in 1970.

                    Solo mothers with babies didn’t even get a the DPB.

                    Then there were unofficial work for the dole schemes where if you showed you were capable of leaning on a shovel you could get a job with the falsely named “Ministry of Works”.

                    • Colonial Rawshark

                      That Ministry helped build this nation, you ungrateful shit head

                    • weka

                      “That certainly wasn’t the case in 1970.”

                      What wasn’t the case in 1970? Are you saying there weren’t enough jobs to go around?

                    • John

                      Let’s go back to your rose tinted 1970 employment levels.

                      If we did, today we’d have and extra 400,000 people out of work.

                      Duh.

                    • weka

                      You’re not making sense John. Is there a reason you can’t answer my question?

                    • joe90

                      Solo mothers with babies didn’t even get a the DPB

                      You’re right, in 1970 it was a family maintenance allowance.
                      /

                      A sole parent is paid at the rate of $10.00 a week for the first dependent child, increased by $1 a week for each additional dependent child.

                      http://www3.stats.govt.nz/New_Zealand_Official_Yearbooks/1970/NZOYB_1970.html

                    • tracey

                      John

                      stick to your knitting.

                    • tracey

                      “Solo mothers with babies didn’t even get a the DPB.”

                      Unless the father had died and then they got a widow’s allowance

                    • Draco T Bastard

                      Then there were unofficial work for the dole schemes…

                      LOL

                      You really are an idiot. Those works built our entire nation and if we’d left it to the capitalists we’d still be living in the 19th century.

                      Phones and power would only go to rich neighbourhoods and cost several times more. Poverty would be rampant with the middle class taking up maybe 10% of the population.

                      This is what capitalism does. Poverty and deprivation are systemic to it.

                    • John

                      In 1970 only 31,000 working age adults were on benefits.

                      Yet there were around 800,000 working age adults who were not working – two thirds as many as those who did have jobs.

                      And it was called full employment – yeah right.

                    • Rodel

                      “Leaning on a shovel”?
                      This kind of comment is usually made by someone who has never had a manual job in their life. Probably coasting on Daddy’s money.
                      Guarantee those who criticize road workers have never worked on road works…never had to.

                    • Ha! Reminded me of the local bodies candidate a couple of elections ago who put out a leaflet saying he was going to sort out all the council staff he saw leaning on their shovels every day all over the town. He looked a total prat when it was pointed out that the council hadn’t employed labourers for twenty years.

                    • John

                      Rodel – making grand assumptions when you are totally ignorant about a situation, does just one thing – displays how totally ignorant you are.

                    • Draco T Bastard

                      I was working a while back installing the new computers in the new ASB tower at the Viaduct. At the end of the day we’d all gathered at a single location with one person doing the finishing work for the day and the project manager observed, jokingly, that it was just like public works where only one person worked.

                      Thing is, that’s actually what happened and still happens. At the beginning of a day and at the end there may only be enough work for one or two people to do and the others are waiting on them to finish that before they can start their work. And this is what people saw on their way to and from work. They only saw the beginning and end of the day and nothing in between and so assumed that was all that happened with, of course, the help of the lies that the RWNJs spread.

                      Lies that you, John , in your ignorance, still believe.

                • tracey

                  You don’t seem to understand the figures and labels you are relying upon.

                • Wynston

                  Given that it was not common for married mothers to work then, it is not at all surprising that raw figures like you use do not tally!

              • dukeofurl

                Yes full employment, in every sense of the word, and not just Auckland was bi partisan government policy.
                People like Michael Lhaws parents could easily find jobs in Whanganui, and he didnt face high student loans on graduation.
                Not that he has ever see the advantages he got!
                House prices didnt rise too rapidly as the banks werent allowed to borrow overseas and rationed loans based on your lending history and a considerable deposit.

          • weka 2.1.1.1.2

            great link joe, thanks. I was looking for historical benefit rates the other day and couldn’t find them.

      • Grant 2.1.2

        I can’t speak to the amounts involved, but both sets of my very working class grandparents retired in the very early 1960’s at age 60, both lots owning their own homes outright and running reasonably good cars for the times. This despite the fact that they had plenty to say about how hard it was to survive the depression and war years. As I recall they lived simple restrained lifestyles but were short of nothing and always looked to be leading good lives. It wasn’t until their later old age in the late 70’s- early 80’s that inflation etc made them really start to feel the pinch and you could see things going down hill. Of course some of that may also have been a reduced ability to manage as they got towards the end of their lives.

      • Rjay 2.1.3

        It would have been those old days when women had to stay home and not allowed to work and there was no dpb.

    • SMILIN 2.2

      Nz political climatology explained should be the founding article going with the new flag least we forget
      Well said thanks

  3. Ad 3

    To me this has been the most perplexing thing about the response from the collective Opposition.

    They failed to portray any sense of looming crisis. Little’s throwaway line about “…more to New Zealand than milk and housing” was really the missed theme.
    By that I mean that Little went to business audiences, when I would have preferred him to preach to haybarns full of disillusioned and indebted farmers, or suburban halls full of the permanently renting. He needed to land on where the hurt is, and show it.

    I want to hear an alternative economic vision from Labour. It was great to hear Little give a few thoughts – and I appreciate they have to be a little sketchy at this time.
    But overall the opposition can surely see that Key is choking their remaining oxygen.

    Oram shows that there is still plenty of space to do this. Could someone from Labour give him a call?

  4. whateva next? 4

    Thankyou to Rod Oram for not letting reality slip by, under these master illusionists. My worry is that the majority of people and professionals I work alongside everyday seem to be enjoying John Key’s show, despite all the warnings and a few good men keeping their heads above the parapet.
    I wonder if Campbell had to go as those “sleepyheads” were actually hearing/responding to him.

  5. Steve Withers 5

    National, as a conservative party, is psychologically incapable of delivering what Oram wants it to deliver.

    National drives boldly into the future based on a mixture of discredited neo-liberal economic presumptions and an idealised view of past successes.

    Never mind the world doesn’t work the way they hope…and never worked as they imagine it.

    • Clean_power 5.1

      “Never mind the world doesn’t work the way they hope…and never worked as they imagine it” …. I’m sure you know what you are talking about, Mr Whiters.

    • Draco T Bastard 5.2

      National drives boldly into the future based on a mixture of discredited neo-liberal economic presumptions and an idealised view of past successes.

      National still believes in the aristocracy and are putting in place policies that will resurrect them and will turn the rest of us into serfs.

      • Clean_power 5.2.1

        “National still believes in the aristocracy and are putting in place policies that will resurrect them and will turn the rest of us into serfs.”

        Wow. Draco’s fantasies are even more unbelievable than Oram’s.

        • Draco T Bastard 5.2.1.1

          It’s not a fantasy – it’s what’s actually happening. That’s what privatisation is.

          • Clean_power 5.2.1.1.1

            Are you proposing the joy of socialism for NZ? Are you proposing we embrace such wonderful and successful system?

            • Stuart Munro 5.2.1.1.1.1

              We need only reverse the horrific and unsuccessful economic reforms that allowed a generation of unqualified ‘managers’ to enrich themselves at the public expense. NZ ran on Fabian socialism and was the envy of the world – now our young people travel – not for an OE, but to escape our shrinking economy and declining living standards.

            • Draco T Bastard 5.2.1.1.1.2

              Capitalism has presided over a decline in living standards in NZ over the last 30 years.

              In fact, when we look at our history it has been socialism pushing capitalism in the right direction that has built up the living standards that we have. In the 1970s that system was failing, no doubt about that, but we went in the wrong direction. Instead of focusing more on developing our economy and becoming more egalitarian we did the opposite by enriching the already rich and dismantling our economy.

              This resulted in the inevitable declining living standards that we have today and the increasing corruption that we see in our business people and politicians.

              • Clean_power

                You should tell that not-so-white lie to many Russians and Eastern Europeans, free now from the tyranny of communism and socialism. Wake up and smell the roses.

                • One Anonymous Bloke

                  Which lie? Living standards have most certainly declined over the last thirty years. In New Zealand, you know, that place that everyone except you is happy to discuss.

                  Just as everyone knows that the reason you’d rather talk shit about Eastern Europe instead is that you’re ideologically handicapped.

                • Draco T Bastard

                  The USSR was neither socialist nor communist the same way that, despite it’s name, the DPRK isn’t democratic.

                  A label doesn’t mean that the thing so labelled is what it says it is. You have to look to the actions and the actions of the USSR, China and the DPRK are capitalist. A few people at the top calling the shots and controlling everyone else through fear.

                  • Facetious

                    Socialism is a tragedy, a sad and terrible event for the people of the country concerned. God help NZ from getting the fatal disease.

                    • McFlock

                      lol nice one, facetious

                    • Colonial Rawshark

                      Socialism is a tragedy, a sad and terrible event for the people of the country concerned. God help NZ from getting the fatal disease.

                      NZ remains a socialist country at its core. If you don’t like it, you are free to move to the USA where things are so much “better.”

                    • Draco T Bastard

                      Yeah, that fatal disease that built NZ up and almost got round to eliminating poverty…

                      oh, wait…

                    • ropata

                      By your logic, Facetious and clean_power, Capitalism must equal Fascism? Because a social philosophy should always be taken to its most radical and egregious extreme?

                      I call this kind of argument “lying”

                    • One Anonymous Bloke

                      Ropata hits the nail on the head. These dishonest gimps can’t handle the truth.

                    • ropata

                      Facetious, by “socialist” do you mean those kind of countries that had

                      ~an economic theory that demands human sacrifice
                      ~impoverished masses and an untouchable elite
                      ~a police state with total surveillance capability
                      ~no independent media or dissidence
                      ~political propaganda saturation

                      because that is exactly where FJK is taking us

                • Mike S

                  You don’t seem to understand what socialism is. We live in a social democracy. Socialism doesn’t mean communism.

                • ropata

                  You mean Russia that is now ruled by oligarchs and a military dictator?
                  Or Ukraine that is on the verge of civil war?
                  Or Ceaucescu’s Romania?

                  Check your facts before spouting ignorant slogans.

                • ropata

                  Some history for cleanpower

            • Lloyd 5.2.1.1.1.3

              So you want neo-liberal success like Iraq or Russia – both places where the short, sharp , shock of selling off everything the state owned was applied more thoroughly than he Gnats have so far managed with New Zealand’s economy?
              Mixed economies where the state owns a significant part of the economy have been generally healthier for their citizens since the global financial melt-down.

  6. Tracey 6

    “The government has mastered the skill of switching small sums around to give the illusion of progress.”

    And when political journalists have no training or understanding of economics, maths or other related stuff, they can get away with it.

    Come Budget time SURELY the reporting needs to be done by journalists who understand the numbers, the economics etc?

    Audrey Young, John Armstrong etc are not, to my knowledge expert in the stuff required to critique.

    Fran O’Sullivan on the other hand spent her column helping people forget that Banks made a declaration that everything in the form was true and correct to the best of his belief BUT HAD NEVER READ IT, and so by her reasoning is entitled to taxayer funded compensation for the agregious wrongs done him with no part played it in by one Mr Banks.

    • ianmac 6.1

      Let alone the strange fact of 2 X $25,000 and another 3 X $25,000. Or that Mr Banks refuses to comment on those facts.
      It is probable that the Opposition has to be cautious about condemning the economy or just become another Opposition moan. Later in the year the reality of our economy will become clear. Of course English/Key will claim it is outside their control and we are doing so much better than World.

      • Tracey 6.1.1

        yes, but what about the media? Isn’t it their job to read the budget, read/listen to the things said about it by our politicians, analyse it and tell us what stands scrutiny or doesn’t.

        • tc 6.1.1.1

          Media in nz is there to prop up the bs and deception the NACT trot out regularly and keep the steeple dumbed down with celebrity home menu model makeover reality content.

          You only have to to look at the diversions they ran hard with during the recent northland by election and Campbell’s axing to see what their job really is.

    • Colonial Rawshark 6.2

      Come Budget time SURELY the reporting needs to be done by journalists who understand the numbers, the economics etc?

      It probably won’t help – they’ve all been taught a false framework of financialised economics. Like most of our politicians.

      Economics about the infrastructure, capability, capacity and direction of a nation – no one discusses that nowadays. I believe that is what Oram infers when he talks about the wider world that we actually live in and the things which are happening within it.

      Instead “economics” as it is understood by our political class and MSM has been reduced to book keeping and managing numbers.

      • Draco T Bastard 6.2.1

        Instead “economics” as it is understood by our political class and MSM has been reduced to book keeping and managing numbers.

        And profit. Can’t forget the profit. It can’t be economical if one of the new aristocracy isn’t making a profit.

        • Colonial Rawshark 6.2.1.1

          Yeah, and especially profit from ticket clipping on the essentials needed by society. That’s what capitalism has reduced itself to now.

      • dukeofurl 6.2.2

        We saw yesterday on the Standard, Hooton pontificate about Bill Englishes borrowing only being the ‘amount of the budget deficit- $500 or so mill, when the actual deficit on a cash basis is between $6.5 and $7 biilion, as shown by their loan program.

        All along the public is mislead about the government ‘household budget’ being near surplus when its nothing of the sort. The accrual accounting being a piece of smoke and mirrors.

        • Stuart Munro 6.2.2.1

          And Treasury – which Hooton praises extravagantly – are complicit in the lie.

      • Tracey 6.2.3

        it would help them to expose the lies being told about what is actually being done or not. Economic theory aside

  7. Sable 7

    And when the economic miracle National promises doesn’t occur it will all be someone else’s fault. Either the political left or space aliens….I’m sure the MSM can make something up as per usual…

  8. linda 8

    national will need to be forced to take responsibility for there mismanagement and there supporters will need to be made to pay

    • One Anonymous Bloke 8.1

      That sounds like something a National Party supporter would say. They’re all about getting “tough” on crime, which is one of the reasons we have close to the highest recidivism rate in the developed world.

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