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Some are more equal than others

Written By: - Date published: 10:32 am, May 16th, 2011 - 42 comments
Categories: cost of living, Economy, gst, poverty, wages - Tags:

[Sorry to Michael Bott for taking so long to publish this, and to other whose guest posts we may have missed in recent weeks. Trouble with the email system]

I spent a weekend with a team of Labour volunteers listening to the concerns of the people of Masterton. A repeated remark was, ‘‘ no matter how hard I try, I just can’t get ahead’’. One hardworking mum from Colombo Rd has not bought a block of cheese for her children for months and a leg of lamb is a long remembered luxury. Pensioners told me how they get two hours home help a week and are struggling to get by. These people are not alone. For the majority of people it seems again and again that those at the top of our economy are creaming it while the rest of us are taking the biggest hits.

Hearing these people I remembered back to May last year when the Government, with much fanfare, announced a tax reform package to ‘‘stimulate the economy and take us out of recession’’. The theory was that by cutting the top income tax rate from 39 per cent to 33 per cent, middle income earners would pull themselves up by their boot straps and achieve higher incomes as they would keep more of what they made.
And those at the top of our economy could afford to save their extra income, thus kick-starting our economy with the hoped for increase in our New Zealand savings rate. These cuts were to be balanced by an increase in GST – effectively making the tax cuts self-funding. This increase was supposed to discourage consumption and encourage saving.

Company tax was to be cut. This was all meant to act as a draw card for companies to invest and employ more workers. Labour warned at the time that these tax cuts were not affordable and any increase in GST would hit middle and lower income Kiwis and chew up any tax cuts. The ability to save for most Kiwis would remain a fantasy.

Twelve months on, Labour’s warnings have been proven, unfortunately, right. On top of rising food and petrol prices, the shock of GST has meant that average Kiwis have even less money in their pockets, and any tax cut is spent on just getting by. Pensioners and lower income Kiwis have been hit hardest. Business after business closing down or cutting staff. The tax cuts for those on higher salaries has not been saved and invested in job creation. Instead, it is being geared up with yet more foreign-supplied debt. The latest March figures released by Barfoot and Thompson for property sales in Auckland show those on higher salaries are grabbing expensive properties with sales of properties worth more than $800,000 rising by 40 percent from March last year. Lower-priced houses barely rose in price.

Meanwhile, the Government is pushing ahead with its plans for asset sales. Hocking off our assets to foreign buyers and slashing spending is a return to the failed right-wing policies of the past. Middle and lower New Zealand are being ignored by this Government and they will be the ones to suffer even more if our nation’s assets are sold off. We are facing cuts to health and education and now if this Government gets a second term we’ll be paying even more to heat out homes and drink water as power companies and public utilities are sold off to wealthy foreign investors. Selling state assets to foreign corporations, will drive up the current account deficit, send profits overseas and drive up costs for Kiwis.

In 2008 this Government campaigned on closing the wage gap with Australia. Now the gap has widened and Bill English is in the embarrassing position of trying to say that this is a good thing as we can make goods cheaper here than in Australia. It appears that Bill English wants us to become the Mexico of the South Pacific.

The Government constantly tells us that the cupboard is bare and we must all tighten out belts. Yet they can: borrow $ 120 million monthly to fund tax cuts two thirds of which go to the top 10 percent of the population; provide Mediaworks – a company previously owned by the Minister of Broadcasting – with $43 million loan at a rate they couldn’t obtain on the open market; find $1.2 billion dollars to bail out private speculators in SCF; find $2 million dollars to build and gift a plastic boat to the Government’s political friends; find $6.8 million to buy themselves a fleet of BMWs to be chauffeured around in.

These things sit awkwardly with me. At a time when ordinary people are struggling to pay grocery bills and face daily the question of paying the power bill or feeding the family healthy food, life under National is very comfortable for those at the top.

42 comments on “Some are more equal than others ”

  1. It is really this simple: How can a person empathise with a hungry person, struggling to pay the rent and electric bill, who cannot afford to visit the doctor after hours, when they are not hungry, can pay the rent and electric bill and can afford to visit a doctor after hours?

    Unless people experience hardship first hand they are oblivious to it. Oblivion (state of being forgotton or being oblivious) is how the government respond to the plight of the poor.

  2. PeteG 2

    if this Government gets a second term we’ll be paying even more to heat out homes and drink water as power companies and public utilities are sold off to wealthy foreign investors.

    What facts are this statement based on? I’ve seen nothing that suggests this claim is anything like probability. For all we know the National policy will be to sell our rain to poor foreign investors (as unlikely as the claim made in the post).

    Is the point of the post “some political statements are more equal than others”?

    Many people seem to be expecting the impossible – economic growth at the same time as we reduce spending too much on crap and save more.

    • lprent 2.1

      It is pretty clear that National wants to sell down natural monopoly assets owned by the public to private investors who’d want to make a natural monopoly profit out of it.

      To date from my perspective, EVERY asset sale of a natural or near natural monopoly has proven to cost end consumers more in total over the decades than if it was still in public ownership.

      The National party and Act parties has signaled over the last couple of parliamentary terms that they think that public stakes in power and water natural monopolies should be sold off. That the operations and building of roads, prisons, and public school – which are all effective natural monopolies should be moved to the private sector.

      Now for your part – show me a natural monopoly that has been sold by the state that is more efficient for the end users over a decade period compared to something comparable run by the state. I bet that the only ones you can find have been regulated back to the state of being controlled by the state.

      But since you’re a bit of a blowhard (from the rear), I don’t expect that you will even try.

      • PeteG 2.1.1

        For your part, show me where the current National caucus have said they want to sell power or water resources to rich foreign investors.

        Blow away…

        • Armchair Critic

          It would be better to seek evidence of National’s intentions in their actions, rather than their words. And their actions point strongly towards privatisation.

          • PeteG

            And their actions point strongly towards privatisation.

            No they don’t, unless I’ve missed some privatising actions over the past two and a half years. What actions are you referring to?

            • Zorr

              Privatised prisons for one…

            • ianmac

              The talk constantly from Key, English, Brash, Smith has been about privatisation or by another name Public/private ownership. They will, if reelected, be able to say that they warned us and they will say, that after the election they have a mandate. You Pete will be nowhere to be seen.

            • Armchair Critic

              The reorganisation of local government in Auckland.
              The disbanding of ECan
              The proposed partial privatisation of some SOEs, including electricity generators.
              The reports of the Land and Water Forum, and their endorsement by Nick Smith as Minister for the Environment.
              Perhaps the words they used were too big for you? Or perhaps you can’t read between the lines? Either way, you have missed something and whether that is accidental or deliberate makes no difference – National still plan to privatise.

              • PeteG

                How much from that is owned by wealthy foreign investors?

                How many people are there who are totally against foreign ownership but who mortgage their property to wealthy foreign investors?

                • Colonial Viper

                  That’s what KiwiBank is there for, and we need to take back ownership of more of our financial system

                  People still do think that the Auckland Savings Bank is owned in Auckland and that the Bank of New Zealand is owned in New Zealand.

                  And frankly, people who have been paying off their mortgages for the last 10-20 years probably did take them out when those banks were largely NZ owned.

                  But that’s irrelevant.

                  The only worthwhile foreign investment is one which brings new technologies and facilities to NZ that we could not have otherwise accessed. Anything else should be banned.

                  • Draco T Bastard

                    The only worthwhile foreign investment is one which brings new technologies and facilities to NZ that we could not have otherwise accessed.

                    And there’s no foreign investment that does that. In fact, they usually offshore tech that’s been developed here making us pay even more for it.

                    • terryg

                      yep. I once worked for a Boston, MA co. that quite literally bought the entire fuel cell research department from Waikato University and took it offshore – people and all.

                • Armchair Critic

                  Why are you asking questions about what has been done, when the post and comment thread is about what is planned? We were talking about what we think will happen, and suddenly, when some supporting evidence is provided, you move to asking about the past.
                  My point is that National have taken a number of steps to facilitate the privatisation of water and power.
                  Your response that “they haven’t done it yet” is pretty poor.
                  So, back to the subject, National plan to privatise water and power. Whether privatisation is a good thing, whether the privatisation is partial or complete, whether Labour did it too, whether National haven’t said they will privatise are all secondary to the main point, which is, in case you missed it, National plan to privatise water and power.

            • fraser

              “No they don’t, unless I’ve missed some privatising actions over the past two and a half years. What actions are you referring to?”

              i think you would learn more pete if you looked at their actions over a span of at least 10 – 20 years.

              and look at things from a global perspective.

              simply going “well they havent done anything that bad recently” means diddly squat when the people involved (both those who front and those who fund) hasnt changed.

        • lprent

          It isn’t hard to find that they want to sell off assets, either directly or as very long-term leases or on the lease payment plan that is PPP’s.

          Just look at the candid statements by Bill English prior to and after the election. In fact he wants to sell up to 49% of the state owned power companies.

          Rodney Hide put in legislation for this government that allows for 35 year leases of water infrastructure.

          Not to mention the statements by John Key. And the lunatic fringe statements by Don Brash supporting the same things.

          As for the second part of your question – selling to overseas investors. There is no effective way to prevent private investors from on-selling their investments to whomever they choose to – including overseas investors. Any attempt to put restrictive clauses in will almost certainly result in it getting overturned by the courts. Not to mention that is against the stock exchange rules. And finally it is against several treaties that we have signed – including this one that is going through the house now.

          It doesn’t matter to whom you sell the shares to in the short term. The government cannot prevent them being sold to offshore investors over the long term.

          Now let us have a look at you. Perhaps you’d like to do some actual debating rather than posturing around with an erect small drooping dick saying “look at me”. This took minutes to google.

          So how about coming up with an example where handing a natural monopoly to private investors does not cost more over the long term than a comparable organisation held as a state asset.That is significantly more difficult to find – I’ve never found one in the last 20 odd years. I just see theoretical studies not backed by any actual evidence and statements by dense wankers like yourself.

          • PeteG

            You sound a bit tetchy today.

            I’m very wary of privatisation and think it should be carefully scrutinised, I just don’t think it should be automatically ideologically ruled out. Keeping everything public is not the best solution.

            And I find it odd that people get so emotional about some forms of privatisation and ignore others. We seem to happily support wealthy foreign investors, even when things like water are involved. How many people buy and drink H2GO and Pump bottles without caring who’s making money from stupidness? Why is it best to publicly control water, sell it to foreign companies cheaply and then accept getting charged exhorbitant amounts to buy it back?

            The way we deal with public water is nuts in other ways too. It’s cheaper for me to divert all my rainwater into council drains that are costing us a fortune in rates to upgrade, and then I go to the tap and hose to use water that has been piped 40km and gone through expensive storage, treatment and reticulation. If I had to pay for tap water I’d buy a tank and be much more efficient – and it would be much cheaper in the long run.

            • vto

              You assessments are too shallow. Take this for example “If I had to pay for tap water I’d buy a tank and be much more efficient ”

              There was a comment on here a few days ago linking to news articles in the USA whereby residents are prohibited from keeping the rain that fell on their roofs because it was the property of the water monopolies. Rain harvesting they call it.

              Did you get that? Does it sink in?

              And also this of your PeteG “I’m very wary of privatisation and think it should be carefully scrutinised, I just don’t think it should be automatically ideologically ruled out.”

              If you bothered to read the commenters who you were commenting with, not one of them took an ideological stand and instead each took a firmly pragmatic approach by referring to costs and advantages for end-users and the nation as a whole. They gave examples backing up their assertions. You on the other hand provide not a single example. In fact it is you who has proven yourself to be the only non-evidence providing ideologue.

              Wake up Pete before people stop listening to you.

              • McFlock

                “I’m very wary of privatisation and think it should be carefully scrutinised, I just don’t think it should be automatically ideologically ruled out.”

                Let’s see: agree with audience, then slide the position… right up there with those folk who claim to be undecided, or to have voted Labour previously (circa 1987, no doubt), but then slide it by damning Goff with faint praise.

                As for the bottled water argument, it misses the point that a public water supply ensures that everyone (where available) has enough water for hygiene and food, and giving excessive amounts of money to corporates is an option.

                We all need water to live (except astroturfers and NACT, who feed on the tears of orphans and the blood of puppies respectively).

              • Armchair Critic

                Tell it like it is vto. Water is part of the commons. National’s latest announcements on the subject of water and its management are the theft of the commons. It’s that simple.

            • Draco T Bastard

              If I had to pay for tap water I’d buy a tank and be much more efficient – and it would be much cheaper in the long run.

              And yet we don’t see a lot of such tanks in Auckland. Is it because people don’t know that water storage tanks are quite cheap or that they figure it would cost more to actually install and maintain the tank, fittings and pump?

              • Armchair Critic

                North Shore City had some fairly good documentation on tanks. I can still find it on their website, but I don’t know how long the website will be around for. Strangely, none of these documents show up in a search of the new Auckland Council website.
                Point is, there is a fair bit of bureaucracy around the installation and use of tanks. Mostly it is for public health reasons, and to reduce flooding. Also, tanks are unusual and we are not, as a a society, used to seeing them around. That lack of familiarity discourages people from installing them.
                Regarding the costs, I have a tank only supply and it is cheaper than rates on average. Last year, when the pump blew up, was quite expensive. Living out in the country I have no choice.
                The changes in Auckland referred to above are interesting, in terms of privatisation. It takes a bit of explaining (I doubt PeteG will understand), but bear with me.
                Watercare are the water supplier and wastewater service provider for Auckland.
                They bill for water on the volume of water that passes through the water meter. The cost is $1.30/m3 for water and the same document is very vague (deliberately? where’s my tinfoil hat?) on the price for wastewater, but IIRC it’s about $4/m3.
                The volume of wastewater is estimated as a percentage of the volume of water that passes through the meter. Usually it’s 70% to 100%, depending on the land use.
                When a property has a water tank and uses it to supplement their water supply, less water passes through the water meter, because some of the demand for water is met by the tank.
                Approximately the same volume of water is returned to the wastewater system, especially if the water from the tank is used through the toilet or washing machine. But as the water has not passed through the meter, it can’t be billed for.
                Water tanks reduce the total income Watercare receives.
                Lower turn-over makes the company less “valuable” (if you take a narrow view of what constitutes value) and thereby less attractive to investors.
                Watercare and Auckland Council tanks should not be encouraging water tanks, if they intend to privatise Watercare.
                And as noted above, the references to water tanks are now difficult to find on Auckland Council’s website. Coincidentally, of course.

            • KJT

              If private business managers are so good then why can they not start and run their own entrepreneurial businesses instead of trying to steal ours.

              We have a whole generation of managers now who only know how to cost cut, speculate, asset strip and destroy value. We even elect them to lead us??

              I am not philosophically opposed to PPP’s. If, for example, a revamped DFC had put the needed capital into a company like Tait electronics (instead of it going to offshore capital owners) imagine the benefits of retaining those dividends and intellectual property here.

              It has been shown that every time the private sector is allowed into State enterprises it results in increased costs for consumers and increased costs to new Zealand as a whole as profits go offshore. They are even more costly when it has to be bought back or rebuilt after essential infrastructure is stripped by private owners.

              • PeteG

                We have to get a lot smarter with supply and use of water and power. There doesn’t seem to be enough incentive for public bodies to do that.

                We’re going to come to a major power crunch in the not too distant future (this is a wet year so that defers it a bit). There is not a lot of new capacity going in, and consumption keeps increasing. We have two major issues:
                – a lack of new public initiatives
                – too many publicly imposed restrictions

                We’re going to have to find more ways of producing, soon, or new ways (and/or motivation) to use less. Neither government nor local bodies are showing much sign of getting on top of the problem.

                • Colonial Viper

                  If we sell our power generation and the private owners pump the prices up, power use will go down.

                  • PeteG

                    Are you suggesting that as a solution? Or should we flood a few more valleys and drill for more oil?

                • Armchair Critic

                  We have to get a lot smarter with supply and use of water and power. There doesn’t seem to be enough incentive for public bodies to do that.
                  There is no incentive for private companies to get smarter with the supply and use of water and power. They make money by the volume they sell. Sell more, make more profits. Increased profits, increased value of company, increased remuneration for the senior executives.
                  How does privatising help us with this crunch you tell us is coming?

    • Draco T Bastard 2.2

      What facts are this statement based on?

      The price of telecommunications in this country are now far higher than they would be if we hadn’t sold Telecom. Deregulation, adding competition and allowing billions of dollars in profit to be off-shored has added to this.

      I’ve seen nothing that suggests this claim is anything like probability.

      Really, what cave have you been living in during the last 20 years that you’ve failed to note the extreme hikes of prices in telecommunications and electricity?

      • terryg 2.2.1

        surely Telescum havent made a single cent in profit since privatisation and sale.
        and surely that billions-per-annum profit wouldn’t have been taken offshore, as opposed to, say, re-investing it in the telecoms network.

        In much the same way as the privatised electrickery supply and transmission companies would never have made sizeable annual profits whilst simultaneously neglecting infrastructure maintenance and upgrades, leading to the major embarassment of the auckland power failure (which I can attest repeatedly made us a laughing stock on the front page of the Boston Globe among other US papers)

  3. Craig Glen Eden 3

    Peter G believes the shares will go to Mum and Dad investors and wait for it John Key is a nice guy!

    • PeteG 3.1

      We’ll know before the election how they propose to do it – I trust Key as much as any politician (and more than many) to be up front and stick to his word. One of the biggest criticisms of him is that he doesn’t deviate from his commitments much.

      I don’t know if it’s feasible, but one way of ensuring continured local ownership would be to make shares available only to KiwiSaver funds, and they need more local investment opportunities.

      • vto 3.1.1

        Tell you what PeteG, instead of selling off the power companies (to anyone) and then investing the proceeds in farming businesses (irrigation andshit removal), how about the farming businesses simply invest in their own businesses.

        After all they are the National Party supporters with their philosophies of free market forces. If their businesses are so shit hot then they can find the funds privately, rather than having to take it from poor people paying PAYE and GST.

        The whole thing is bullshit.

      • Draco T Bastard 3.1.2

        I trust Key as much as any politician (and more than many)

        He’s a proven liar and you trust him? Wow, that I think proves that you’ve got your nose up Keys arse.

        Take on Key

      • MrSmith 3.1.3

        PM’s lies. 


        Billy Goat English’s lies.

        Keep whacking the moles. 


        • Deadly_NZ

          And as everyone has been going on about power generation having 49% (yeah Right) sold. No one has mentioned that Kiwibank will be sold to the fat cats and then more money will pour off shore. Remember Blinglish has had a hard on for selling Kiwibank to his mates for some years.

  4. vto 4

    Natural monopolies necessary for daily necessities (such as water and power) should be owned by the users in a form of co-operative.

    Similar to Fonterra. Ask Bill English about that.

    Or similar to Ravensdown Fertiliser. Ask Bill English about that.

    And similar to many many many many other enterprises in similar circumstances. Ask any farmer about co-operatives. They work well.

    • Luxated 4.1

      And yet if you suggest to a lot of farmers that the state should own something they’ll try and spit you out for being a ‘pinko commie’, the contradiction is rather amusing to my mind.

    • Colonial Viper 4.2

      Tory farmers love their co-operative enterprises and collective joint ventures.

      Everyone helps everyone else make more money.

      What’s there not to like? Socialism for the wealthy 🙂

    • Draco T Bastard 4.3

      Natural monopolies necessary for daily necessities (such as water and power) should be owned by the users in a form of co-operative.

      Which effectively means either local government (water) or the state (Power, telecommunications).

  5. Draco T Bastard 5

    Yet they can: borrow $ 120 million monthly


  6. infused 6

    Well the mistake living in Masterton. It’s always been a hole.

  7. randal 7

    that is not a nice thing to say infused. where do you live?

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