Right headings, wrong policies

Written By: - Date published: 4:12 pm, July 15th, 2009 - 12 comments
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John Key’s speech on the economy, billed as the way to close the 30% wage gap with Australia, had six policy headings – regulatory reform, infrastructure investment, better public services, education and skills, innovation and business assistance, and a world-class tax system.

On regulatory reform, the recipe was more deregulation, particularly of job security with the 90-day law, and less environmental protection. No mention of the need for regulation in the financial sector. Once a cowboy always a cowboy, I suppose.

On infrastructure investment, he offered more state highways, the Kopu bridge, and a start on broadband that doesn’t go to homes. Oh and an Advisory Board so the private sector gets to have a say in how to spend the money.

Better public services? Its all about cuts, with more and bigger ones to come next year. Ideology trumps effectiveness.

Education and skills? National standards in primary schools for ideological reasons, proven not to work, and rehashed Labour policies for school alternatives. Adult and second-chance education goes down the gurgler, and apprenticeship funding is cut while Australia is increasing it.

Innovation and business assistance? A bit of bureaucratic reform, more travel for Tim Groser, and $70million for R&D instead of Labour’s $700 million for Fast Forward and R&D tax credits. Hardly an advance.

A world-class tax system? The wealthiest 3% of taxpayers got 30% of the cuts! Don’t hold your breath about yet another review. The Australian Labor government put their stimulus at the bottom end, where it produced a result.

Not a single new idea there. None of that will improve productivity or increase export earnings. Close the wage gap? More like Key’s earlier line – “We would love to see wages drop”.

For a better approach, check out some of David Cunliffe’s ideas at yesterday’s Mood of the Boardroom meeting.

12 comments on “Right headings, wrong policies ”

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  1. BLiP 1
    15 July 2009 at 4:36 pm

    And not a word about the cause of the lack of productivity . . .

    Perhaps if the foreign owned corporations had invested in their infrastructure instead of shipping container loads of New Zealand currency off shore the productivity might have increased. Instead, it seems, business is to be given a greater role in forming government policy and assisting in the expenditure of our taxes. John Key, instead, rewards this business malfeasance with corporate welfare by the bucketload.

    Yippeee !!

  2. jarbury 2
    15 July 2009 at 4:43 pm

    Good post John A. I agree that Key has the right idea when it comes to the “broad concepts”, however when you get down to the detail it all falls apart. National don’t have a plan, because the only obvious plan to have at a time like this is the Keynesian economic stimulus plan that we see Australia and other countries rolling out.

    That kind of plan is not palateable to National, but they can’t really do anything else so they’re left in a quandry.

    1) Do they go against all their ideological beliefs and actually try to do something about the recession (the Australia approach)?

    2) Do they go with their ideological beliefs and embark on a slash & burn approach to government spending that will obviously have horrific short-term consequences?

    3) Do they make it sound like they’re doing the former, do a little bit of the latter but try to hide it, while all up doing bugger all and just hoping like hell the country comes of the recession anyway?

    Seems like they’re picking option 3.

  3. ghostwhowalks 3
    15 July 2009 at 6:29 pm

    Kopu Bridge !!
    That has been on the ready to go list for about five years, however the local council has been delaying it in Court from 2003 because they want Transit to pay to maintain the old bridge

    THAT Hauraki District Council appeals to the Environment Court against the decision of Transit New Zealand to retain the existing Kopu Bridge structure upon completion of the new bridge.
    http://www.hauraki-dc.govt.nz/documents/minutes/Council/2003/December/kopu_bridge.htm

  4. burt 4
    15 July 2009 at 8:24 pm

    John A.

    A world-class tax system? The wealthiest 3% of taxpayers got 30% of the cuts! Don’t hold your breath about yet another review.

    Can you explain this a bit more clearly, perhaps back it up with some numbers. It sounds like policies of envy distortions to me.

    The Australian Labor government put their stimulus at the bottom end, where it produced a result.

    Yes, zero rated thresholds & genuine wealth tax thresholds. I have supported a zero rated bottom tax bracket long and hard on this blog. Cullen’s ideology of taxing people from the first dollar they earn illustrated his perspective that tax is about plucking the goose with the least amount of hissing – and who cares when it’s rich pricks hissing!

    • So Bored 4.1
      15 July 2009 at 8:37 pm

      Burt, I applaud your support and sentiment on zero rated tax thresholds.

      I will however disagree with anybody who tells me that the rich have not benefitted from their much reduced tax burden since the advent of neo liberalism. Check the empirical record. It clearly shows that the rich have severely outstripped the ability of the rest of the populace to keep pace in relative terms.

    • burt 4.2
      15 July 2009 at 8:45 pm

      Numbers So Bored. Can 3% be explained? Can 30% be explained. I’m not disputing that when top thresholds are reduced that top bracket payers get bigger tax cuts than people paying little or no tax. However this is a consequence of having a progressive tax system and wage inflation. Adjustments must be made and calling them wrong is pretty head up ass stuff really. Call the ideology of a progressive tax system broken if you like, I won’t argue very strongly against you on that one.

      Yes, for 9 years Labour didn’t entertain a zero rated threshold. National have not either but hopefully ACT party tax policy or Green party tax policy will influence the major party dinosaurs and the people will be better off because of it.

      • felix 4.2.1
        15 July 2009 at 9:08 pm

        What the hell’s going on, burt? I keep agreeing with you this week.

        Have you switched meds or something?

      • So Bored 4.2.2
        15 July 2009 at 9:15 pm

        Burt, Ii am not disputing minutae, if you back well off and have a gink you cannot dispute how much richer the neo liberal revolution made the wealthy, primarily by the removal of tax. What we now have is a disparity that is so glaring that relativity has gone out the window. If we want an economy that provides the necessary services for all we might:
        * tax the very wealthy a lot more AND / OR
        * force the wealthy to pay much higher wages.
        All depends on what people are prepared to put up with, contrary to popular myth wealth and property are not sacrosanct. They exist only at the behest of the society they serve and can be taken away.

  5. Pete 5
    16 July 2009 at 9:30 am

    Did anyone else hear Key on Morning Report this morning?

    He was asked about recent criticism of the government on rising unemployment and what they are doing about it – and he replied with the same old dismissive PR crap about “rough edges”, Australian and UK unemployment levels, “we can’t magic it away” and “it’s a global recession”. Nothing at all to address the question or describe a way forward – and sadly he wasn’t pulled up on it (I think they had the wrong person interviewing – where’s Sean Plunket these days?).

    Sorry I don’t have a link – can’t find it online – but it should be available later today.

  6. Robert Winter 6
    16 July 2009 at 12:51 pm

    If you were depressed by the lack of initiative and direction in the government’s stsatement on the economy yesterday, don’t look at Business New Zealand’s “Setting New Zealand Apart” report, released today. Predictable, unimaginative and so utterly self-serving that one wonders why it was done. The Herald suggests that it is about BNZ trying to “corral” the government, that is, to put BNZ back in the frame from which the government has pretty much dumped it.

  7. randal 7
    17 July 2009 at 11:46 am

    its all waffle.
    the primary barrier to increases in productivity is the structural issue of scale and not far behind that is the psychological propensity of new zealand employers to intimidate their staff.
    thats what they like most.