Squeezing the life out of the economy
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- Date published:
7:13 am, June 20th, 2011 - 41 comments
Categories: capitalism, class war, economy, national -
Tags: cuts, expansionary austerity, family support
Are we “roaring out of recession”? No. Is there an “aggressive recovery”? No. What’s going wrong? The problem is that the Nats are squeezing the life out of the economy.
I’ve written on one aspect of this before. The Nats believe that the correct response to these hard economic times is to cut cut cut. Cut a billion dollars out of public spending. Cut funding for adult and community education, cut support for early childhood education, cut support for community groups. Cut jobs. Cut Working for Families. Cut incentives to save. There is an economic theory – expansionary austerity – which claims that cutbacks in government spending can stimulate economic growth. The trouble with this theory is that it’s complete nonsense. National’s cuts aren’t helping, they’re making things worse.
In the weekend Stuff carried a piece which explains another piece of the puzzle:
Frozen family support blamed for economy
Reducing support to lower and middle income families worsens the impact of recession and contributes to the widening gap with Australia, Auckland University’s retirement think tank says.
The Retirement Policy and Research Centre investigated whether New Zealand and Australia’s economies have grown further apart since the global financial crisis.
The New Zealand Government, originally committed to closing the 35 per cent or so income gap with Australia by 2025, now says the target is aspirational.
Aspirational is fast becoming my new least-favourite-word.
… A fellow of the Australian Centre for Policy Development at Sydney’s Macquarie University, he said growing out of recessionary times is more of a challenge in New Zealand … “If the lower and middle income families don’t have much money to spend, you can’t support growth in the retail and construction industry, and it makes you more susceptible to the worst effects of the recession.”
The absence of this shock absorber tends to exaggerate the recessionary cycle in New Zealand and inhibits consistent growth.
Dr Spies-Butcher said that even without the mining boom, Australia’s family payment system is “more robust in terms of it being a shock absorber”. “Here you are freezing Working for Families support at $35,000. “Australia is freezing it at A$150,000 (NZ$196,000).”
And there you have it. The ordinary people, the vast majority, the middle and low income earners, are the ones who determine the health of the economy. National is squeezing them, with reduced support, by holding wages down, and with a GST / tax swindle that enriched the well off at the expense of the majority. All this while costs are rising fast.
The rich get richer, which is always National’s goal, but it’s all so short sighted and self defeating. Without an economically healthy majority, you can’t have a healthy economy, and ultimately everyone is less well off.
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The Green Party is paying tribute to the Māori King, Kiingi Tuuheitia Pootatau Te Wherowhero XVII, after he passed away earlier this morning. ...2 weeks ago
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Today’s Whakaata Māori announcement is yet another colossal failure from Minister Potaka, who has turned his back on te reo Māori, forcing a channel offline, putting whānau out of jobs, and cutting Māori content, says Te Pāti Māori. “A Senior Māori Minister has turned his back on Te Reo Māori. ...2 weeks ago
- Release: National restricts access to disability care homes
With disability communities still reeling from the diminishing of Whaikaha, a leaked document now reveals another blow with National restricting access to residential care homes. ...2 weeks ago
- Release: Govt must help save 230 manufacturing jobs
Labour is calling on the Government and Mercury Energy to find a solution to the proposed Winstone Pulp mill closure and save 230 manufacturing jobs. ...2 weeks ago
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The failure of the Prime Minister to condemn his Minister for personally attacking the judiciary is another example of this Government riding roughshod over important constitutional rules. ...2 weeks ago
- Waititi urges Rotorua Lakes Council to immediately stop works at Lake Rotokākahi
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- Release: Patient care at risk from redundancies
Patient care could suffer as a result of further cuts to the health system, which could lose thousands of staff who keep our hospitals and clinics running. ...2 weeks ago
- Greens call on Govt to wake up on child poverty
The Green Party says the latest statistics on child poverty in this country highlight the callous approach that the Government is taking on this issue of national shame. ...2 weeks ago
- Release: Police are off the beat under National
Foot patrols around the country have decreased 15 percent since National took office, despite National’s Mark Mitchell claiming otherwise. ...2 weeks ago
- Release: Climate denial is an insult to Pacific leaders
Winston Peters’ climate denialism at the Pacific Islands’ Forum is an embarrassing new low. ...2 weeks ago
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The Green Party is urging the Government to end the use of solitary confinement within our prisons after new research revealed some prisoners have been held in confinement for more than 900 days. ...2 weeks ago
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The Government’s moves to enable the import of Liquefied Natural Gas is another step away from the sustainable and affordable energy network that this country needs. ...2 weeks ago
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Today’s court ruling upholding the rights of Uber drivers is a message to the Government that it must not tamper with employment protections. ...2 weeks ago
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The Court of Appeal decision that Uber drivers are entitled to employee rights such as minimum wage, sick leave, holiday pay and collective bargaining is welcome news for the drivers involved and their unions. ...2 weeks ago
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The Labour Party is calling on the Government to tell the two major wealth funds, the NZ Super Fund and ACC, to withdraw investments from companies listed by the United Nations as complicit in Israel’s illegal settlements in the Occupied Palestinian Territories. ...2 weeks ago
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Labour welcomes news that the National Government is backing down on its reckless proposal to give Ministers final sign-off on significant projects, but it’s still not enough. ...2 weeks ago
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Science, Innovation and Technology Minister Judith Collins today announced a programme to drive Artificial Intelligence (AI) uptake among New Zealand businesses. “The AI Activator will unlock the potential of AI for New Zealand businesses through a range of support, including access to AI research experts, technical assistance, AI tools and resources, ...3 hours ago
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The independent rapid review into the Wairoa flooding event on 26 June 2024 has been released, Environment Minister Penny Simmonds, Local Government Minister Simeon Brown and Emergency Management and Recovery Minister Mark Mitchell announced today. “We welcome the review’s findings and recommendations to strengthen Wairoa's resilience against future events,” Ms ...3 hours ago
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- Acknowledgement to Kīngi Tuheitia speech
E te māngai o te Whare Pāremata, kua riro māku te whakaputa i te waka ki waho moana. E te Pirimia tēnā koe.Mr Speaker, it is my privilege to take this adjournment kōrero forward. Prime Minister – thank you for your leadership. Taupiri te maunga Waikato te awa Te Wherowhero ...21 hours ago
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Inland Revenue can begin processing GST returns for businesses affected by a historic legislative drafting error, Revenue Minister Simon Watts says. “Inland Revenue has become aware of a legislative drafting error in the GST adjustment rules after changes were made in 2023 which were meant to simplify the process. This ...24 hours ago
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More than 80 per cent of New Zealand women being tested have opted for a world-leading self-test for cervical screening since it became available a year ago. Minister of Health Dr Shane Reti and Associate Minister Casey Costello, in her responsibility for Women’s Health, say it’s fantastic to have such ...1 day ago
- Ministry for Regulation’s first Strategic Intentions document sets ambitious direction
Regulation Minister David Seymour welcomes the Ministry for Regulation’s first Strategic Intentions document, which sets out how the Ministry will carry out its work and deliver on its purpose. “I have set up the Ministry for Regulation with three tasks. One, to cut existing red tape with sector reviews. Two, ...1 day ago
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The Education Minister has established a Māori Education Ministerial Advisory Group made up of experienced practitioners to help improve outcomes for Māori learners. “This group will provide independent advice on all matters related to Māori education in both English medium and Māori medium settings. It will focus on the most impactful ways we can lift ...1 day ago
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Defence Minister Judith Collins today welcomed the first of five new C-130J-30 Hercules to arrive in New Zealand at a ceremony at the Royal New Zealand Air Force’s Base Auckland, Whenuapai. “This is an historic day for our New Zealand Defence Force (NZDF) and our nation. The new Hercules fleet ...1 day ago
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- Action to grow the rural health workforce
Scholarships awarded to 27 health care students is another positive step forward to boost the future rural health workforce, Associate Health Minister Matt Doocey says. “All New Zealanders deserve timely access to quality health care and this Government is committed to improving health outcomes, particularly for the one in five ...2 days ago
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Associate Health Minister with responsibility for Pharmac David Seymour has welcomed the increased availability of medicines for Kiwis resulting from the Government’s increased investment in Pharmac. “Pharmac operates independently, but it must work within the budget constraints set by the Government,” says Mr Seymour. “When our Government assumed office, New ...2 days ago
- Sport Minister congratulates NZ’s Paralympians
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- Government progresses response to Abuse in Care recommendations
A Crown Response Office is being established within the Public Service Commission to drive the Government’s response to the Royal Commission into Abuse in Care. “The creation of an Office within a central Government agency was a key recommendation by the Royal Commission’s final report. “It will have the mandate ...5 days ago
- Passport wait times back on-track
Minister of Internal Affairs Brooke van Velden says passport processing has returned to normal, and the Department of Internal Affairs [Department] is now advising customers to allow up to two weeks to receive their passport. “I am pleased that passport processing is back at target service levels and the Department ...5 days ago
- New appointments to the FMA board
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- District Court judges appointed
Attorney-General Hon Judith Collins today announced the appointment of two new District Court judges. The appointees, who will take up their roles at the Manukau Court and the Auckland Court in the Accident Compensation Appeal Jurisdiction, are: Jacqui Clark Judge Clark was admitted to the bar in 1988 after graduating ...5 days ago
- Government makes it faster and easier to invest in New Zealand
Associate Minister of Finance David Seymour is encouraged by significant improvements to overseas investment decision timeframes, and the enhanced interest from investors as the Government continues to reform overseas investment. “There were about as many foreign direct investment applications in July and August as there was across the six months ...5 days ago
- New Zealand to join Operation Olympic Defender
New Zealand has accepted an invitation to join US-led multi-national space initiative Operation Olympic Defender, Defence Minister Judith Collins announced today. Operation Olympic Defender is designed to coordinate the space capabilities of member nations, enhance the resilience of space-based systems, deter hostile actions in space and reduce the spread of ...6 days ago
- Government commits to ‘stamping out’ foot and mouth disease
Biosecurity Minister Andrew Hoggard says that a new economic impact analysis report reinforces this government’s commitment to ‘stamp out’ any New Zealand foot and mouth disease incursion. “The new analysis, produced by the New Zealand Institute of Economic Research, shows an incursion of the disease in New Zealand would have ...6 days ago
- Improving access to finance for Kiwis
5 September 2024 The Government is progressing further reforms to financial services to make it easier for Kiwis to access finance when they need it, Commerce and Consumer Affairs Minister Andrew Bayly says. “Financial services are foundational for economic success and are woven throughout our lives. Without access to finance our ...6 days ago
- Prime Minister pays tribute to Kiingi Tuheitia
As Kiingi Tuheitia Pootatau Te Wherowhero VII is laid to rest today, Prime Minister Christopher Luxon has paid tribute to a leader whose commitment to Kotahitanga will have a lasting impact on our country. “Kiingi Tuheitia was a humble leader who served his people with wisdom, mana and an unwavering ...6 days ago
- Resource Management reform to make forestry rules clearer
Forestry Minister Todd McClay today announced proposals to reform the resource management system that will provide greater certainty for the forestry sector and help them meet environmental obligations. “The Government has committed to restoring confidence and certainty across the sector by removing unworkable regulatory burden created by the previous ...6 days ago
- More choice and competition in building products
A major shake-up of building products which will make it easier and more affordable to build is on the way, Building and Construction Minister Chris Penk says. “Today we have introduced legislation that will improve access to a wider variety of quality building products from overseas, giving Kiwis more choice and ...6 days ago
- Joint Statement between the Republic of Korea and New Zealand 4 September 2024, Seoul
On the occasion of the official visit by the Right Honourable Prime Minister Christopher Luxon of New Zealand to the Republic of Korea from 4 to 5 September 2024, a summit meeting was held between His Excellency President Yoon Suk Yeol of the Republic of Korea (hereinafter referred to as ...7 days ago
- Comprehensive Strategic Partnership the goal for New Zealand and Korea
Prime Minister Christopher Luxon held a bilateral meeting today with the President of the Republic of Korea, Yoon Suk Yeol. “Korea and New Zealand are likeminded democracies and natural partners in the Indo Pacific. As such, we have decided to advance discussions on elevating the bilateral relationship to a Comprehensive ...7 days ago
- International tourism continuing to bounce back
Results released today from the International Visitor Survey (IVS) confirm international tourism is continuing to bounce back, Tourism and Hospitality Minister Matt Doocey says. The IVS results show that in the June quarter, international tourism contributed $2.6 billion to New Zealand’s economy, an increase of 17 per cent on last ...7 days ago
- Government confirms RMA reforms to drive primary sector efficiency
The Government is moving to review and update national level policy directives that impact the primary sector, as part of its work to get Wellington out of farming. “The primary sector has been weighed down by unworkable and costly regulation for too long,” Agriculture Minister Todd McClay says. “That is ...1 week ago
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The first annual grocery report underscores the need for reforms to cut red tape and promote competition, Commerce and Consumer Affairs Minister Andrew Bayly says. “The report paints a concerning picture of the $25 billion grocery sector and reinforces the need for stronger regulatory action, coupled with an ambitious, economy-wide ...1 week ago
- Government moves to lessen burden of reliever costs on ECE services
Associate Education Minister David Seymour says the Government has listened to the early childhood education sector’s calls to simplify paying ECE relief teachers. Today two simple changes that will reduce red tape for ECEs are being announced, in the run-up to larger changes that will come in time from the ...1 week ago
- Over 2,320 people engage with first sector regulatory review
Regulation Minister David Seymour says there has been a strong response to the Ministry for Regulation’s public consultation on the early childhood education regulatory review, affirming the need for action in reducing regulatory burden. “Over 2,320 submissions have been received from parents, teachers, centre owners, child advocacy groups, unions, research ...1 week ago
- Government backs women in horticulture
“The Government is empowering women in the horticulture industry by funding an initiative that will support networking and career progression,” Associate Minister of Agriculture, Nicola Grigg says. “Women currently make up around half of the horticulture workforce, but only 20 per cent of leadership roles which is why initiatives like this ...1 week ago
- Government to pause freshwater farm plan rollout
The Government will pause the rollout of freshwater farm plans until system improvements are finalised, Agriculture Minister Todd McClay, Environment Minister Penny Simmonds and Associate Environment Minister Andrew Hoggard announced today. “Improving the freshwater farm plan system to make it more cost-effective and practical for farmers is a priority for this ...1 week ago
- Milestone reached for fixing the Holidays Act 2003
Minister for Workplace Relations and Safety Brooke van Velden says yesterday Cabinet reached another milestone on fixing the Holidays Act with approval of the consultation exposure draft of the Bill ready for release next week to participants. “This Government will improve the Holidays Act with the help of businesses, workers, and ...1 week ago
- New priorities to protect future of conservation
Toitū te marae a Tāne Mahuta me Hineahuone, toitū te marae a Tangaroa me Hinemoana, toitū te taiao, toitū te tangata. The Government has introduced clear priorities to modernise Te Papa Atawhai - The Department of Conservation’s protection of our natural taonga. “Te Papa Atawhai manages nearly a third of our ...1 week ago
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A new 110km/h speed limit for the Kāpiti Expressway Road of National Significance (RoNS) has been approved to reduce travel times for Kiwis travelling in and out of Wellington, Transport Minister Simeon Brown says. “Boosting economic growth and productivity is a key part of the Government’s plan to rebuild the economy. ...1 week ago
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Loading…(function(i,s,o,g,r,a,m){var ql=document.querySelectorAll('A,DIV,A[data-quiz],DIV[data-quiz]'); if(ql){if(ql.length){for(var k=0;k<ql.length;k++){ql[k].id='quiz-embed-'+k;ql[k].href="javascript:var i=document.getElementById('quiz-embed-"+k+"');try{qz.startQuiz(i)}catch(e){i.start=1;i.style.cursor='wait';i.style.opacity='0.5'};void(0);"}}};i['QP']=r;i[r]=i[r]||function(){(i[r].q=i[r].q||[]).push(arguments)},i[r].l=1*new Date();a=s.createElement(o),m=s.getElementsByTagName(o)[0];a.async=1;a.src=g;m.parentNode.insertBefore(a,m)})(window,document,'script','https://take.quiz-maker.com/3012/CDN/quiz-embed-v1.js','qp');Got a good quiz question? Send Newsroom your questions.The post Newsroom daily quiz, Wednesday 11 September appeared first on Newsroom. ...8 hours ago
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Are we “roaring out of recession”? No. Is there an “aggressive recovery”? No. What’s going wrong?
To this should be added “Are we catching up with Australia?” The answer again is “no”. We may be catching up with Afghanistan though although as you note the wealthy aint complaining.
Indeed.
Nats are taking us down the path of the economic talibanisation of New Zealand.
The interests of the many comprising the middle and lower income folks are being gutted by the super rich warlords.
For clarification 🙂
Come on now, that is a bit extreme. Pretty much an insult to the nation. Not sure you can really justify such hyperbole.
Afghanistan has a very good reason for their performance: they have been invaded and blown up repeatedly and are currently occupied.
NZ on the other hand….
Well NZ has been subject to continuous Bankster Occupation and held hostage by financial terrorists.
“Are we catching up with Australia?”
But John Key is going there this week! Surely we’ve caught up? Or at least, he has.
Maybe he is going to check out his job prospects for next year?
i wonder, let’s see who else is meeting in ozziland this week ?
now which of these two conferences is he most likely to touch base with? mmm
http://www.gemsevents.com.au/ieca2011/
http://www.rareearthsandstrategicmetals.com.au/Event.aspx?id=478548
Good post r0b, something that needs attention drawing to. Shows some of the fundamental difference between Labour and National views on the economy.
National believes if you look after business and the rich, it’ll somehow work out for the economy and the rest of the population. Labour knows that you look after the rest of the population, and it’ll be good for business, and the rich will continue to be fine regardless… That’s why, whether you look at the last 20 years, or the last 75 (since we started the Labour/National dichotomy), the economy has grown faster on average under Labour.
Nats rule the country for their cronies and foreign interests, and plunder our kitty and transfer our wealth to them.
Thats weird, I’m a Nat voter and all my wealth is a result of me working my ass off. (all my income comes from exporting my IT skills to the Euro market).
How can this be when you say that it is your wealth that is being plundered?
Are you not a tax-payer?\
Wrong, all your wealth is the direct result of the society supporting you through education, supply of roads, electricity, telecommunications etc etc. None of which we’d have if society hadn’t put them in place. You working your arse off has very little to do with it.
I would like to work my ass off but somehow I just cant find any opportunities to do so ….
I have a dim recollection from the history books that when the first Labour Government came to power, instead of increasing the cuts, they gave 5 pounds to every worker(?). 5 pounds in today’s money is huge. The effect was to stimulate the economy and the Depression eased.
According to the Infaltion Calculator £5 in Q3, 1936 is worth ~$485.51 today.
Which is the basis for Labour’s Tax Policy:
http://blog.labour.org.nz/index.php/2011/01/25/philosophy-principles-behind-labours-tax-policy-announcements/
I actually think that people, especially those that back the National and ACT parties, have a vested interest in having this economic downturn go on as long as possible, as it provides an excuse to hold down wages and conditions.
So, having the economy in a recession is actually good for businesses? How do you come to that conclusion?
Read my post again – but I will repeat:
It allows business to hold down wages and conditions — ie drive down labour costs.
I would think that businesses make less money in a recession?
But if they get to keep more of it, they’re better off. Their employees and the taxpayers are worse off, though.
Let’s say turnover is 10% down on what it would normally be. If tax is 5% lower and wages/infrastructure are 7% lower, the business profits would still go up. Sucks for everyone else, though, including most small businesses.
Remember that most small businesses suffer badly in recessions.
Individuals who own significant wealth can then swoop in and purchase those struggling businesses for pennies on the pound.
On the economic upturn, the wealthy proceed to benefit from their cheap as chips investments.
more billionaires have been created in the last three years than the previous ten so how does your theory work?
The billionaire class have returned to roughly the same levels of wealth as in 2007, pre GFC.
Of course, huge numbers of workers are still unemployed and entire countries about to fall over due to sovereign debt default.
But the billionaires are doing just fine for themselves.
in case it wasn’t clear, it was the increasing numbers of Billionaires not their individual wealth i was bringing attention to,
in case it wasn’t clear, it was the increasing numbers of Billionaires not their individual wealth i was bringing attention to,
It just reflects your inability to distinguish between general improvement and the improvement for only a few.
National are baddies! rabble, rabble, rabble (another South Park quote, in case TVOR is around).
National are not baddies if you happen to be in the top 5% of wealth owners and income earners and do not have an interest in the long term development of an ecoomically sovereign NZ.
What a dumb ill informed comment
[lprent: But you didn’t say why. One would have to presume that you don’t know? In which case that makes this a comment by an ignorant person. Don’t make pointless statements. If you do it too often then I start classing you as a troll. And you know how I love trolls. ]
A continued recession allows owners of wealth and capital to pick up hard assets for pennies on the pound; it also forces down the price of labour.
Seems like quite a good money making rationale.
Changing the tax/gst base and raising the minimum wage may help the retail and property sectors but you need to look a bit wider than that IMO.
1. Australia has compulsary private superannuation. NZ loads all the future obligations on the government. No offence to Kiwisaver but it needs to be beefed up.
2. Australia has a CGT and most states levy land taxes (on top of council rates) for commercial businesses.
3. Australia has a lot tougher rules re: trusts. hence they are used as a vehicle for hiding assets anywhere near as much as in NZ.
4. In Australia health insurance premiums are balanced so that premiums do not increase as you get older. This allows a lot more elderly people to stay insured- which takes a lot of stress off your financial planning. Not to mention the public health system. Middle class elderly at least ahve achoice which health system to use (most use a combination of both).
Re 4: You do understand that private health insurance is more expensive don’t you?
The point is that private health insurance is affordable for the middle classes in Oz as they age whereas in NZ is becomes more unaffordable as you get older. Result- more financial insecurity and the need to self insure for future medical problems.
It also means the Nz government needs to spend a higher proportion of its taxation on health vis-a-vis the State Governments. This coupled with the Super debt (which makes the rest of the welfare spend look inconsequential) meas big financial problems for future NZ taxpayers (well those that can’t dodge tax through trusts and creative accounting).
Referring to point 4 Zaphod, I actually sell insurance in Australia and as a result of them not having anything like ACC most people need at least three to four policies to cover them, Injury, Income Protection, Trauma plus the Super which can be seen as some sort of coverage. Recent surveys show most Australians don’t have enough cover as covering 3 or four policies becomes very costly, an individual will normally be paying anywhere between $40 and in some cases $80 weekly if they want to be completely covered. Of course the pricing doubles if you want joint cover and if we factor in car insurance you could see how un-affordable being completely covered may be. If there’s one thing we don’t want to emulate from Australia is their privatized health insurance.
A couple of other things I thought i should mention is that whilst premiums may not increase with age, the benefit is normally cut in half, ie, if your covered for up to 100,000 then you reach the age of 75 the premium would stay the same, however your cover would become up to 50,000. Also premiums being balanced and affordable is not technically true, an underwritten policy may be less after all risk factors had been assessed; however, if the risks are high then so are the premiums. A policy that isn’t an underwritten policy tends to inflate the premiums as no risks or past history are allowed to be taken into account.
Have a look at this graph. Shows exactly why NACT are pushing their agenda.
http://kjt-kt.blogspot.com/2011/06/kia-ora-who-really-benefits-from-neo.html
Yes, NAct are using their position in government to shift more of our wealth to the few, yes NAct are destroying the economy but…
Using up more of our limited resources isn’t exactly the way to a sustainable economy.
The greedy are nothing if not brazen. Some are willing to hold out their greed for all to see. The free market at its finest. Preying on the most desperate and selling it as a social service that will help people. ggrrrrrrrrr!!!
http://www.stuff.co.nz/business/money/5166566/Text-a-loan-rings-alarm-bells
This does not help an economy, this only helps the bankers, and the bankers do not care about the economy as long as they get theirs
And yet there are STLL NO LAWS banning this sort of financial predation.
From the report:
“….Country Manager Richard Yoon says is ‘hugely beneficial’, allowing consumers to complete purchases, which may have otherwise been declined, on the spot in a ‘couple of minutes’…..
Instead of being hit with over $400 dollars from taking a $100 dollar loan, it would be far easier and less costly, to get an overdraft from your bank (my bank has an OD function, so far I have managed it quite well — saved me at the checkout quite a few times – and ensures everything that needs to be paid is paid.)
Now if only someone would start mucking round with paying for things via txt message from phone credit. That would be a winner. 🙂