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The battle and the war

Written By: - Date published: 11:00 am, May 29th, 2009 - 28 comments
Categories: budget 2009, workers' rights - Tags:

It’s a bleak budget alright. No jobs package. That’s scandalous dereliction of duty. The 70,000-100,000 people who will loss their jobs this year and their families will remember that the Tories sat on its hands when it mattered.

Boy, they know how to manage the journos though. People whose major mathematical skill is having the right change at Bellamy’s nod wisely that the budget has avoided a credit downgrade that was never going to happen. 

No mention that superannuation is now stuffed for anyone intending to live beyond about 2030.

Just after they passed their iron-cast tax cuts, they started softening up the journos for cancelling them. So the journos told us “we had no expectations of getting anything from this Budget” (Sometimes I wonder why we have polls and surveys at all. We have Armstrong to divine the public will).

Did you hear one journo mention the lack of action on jobs?

The other clever piece of management is making lots of little, deep cuts. Better to hurt a few people a lot then a lot of people a bit. They probably don’t vote National anyway. If the media can be arsed, we’ll learn more about what those cuts mean to people in coming days.

If only the Tories were as good as policy as they are at politics. But enough whining.

Underlying the crap is a meta-victory.

Key was at pains to make sure we knew no benefits had been cut. Not because he thinks benefits are necessary in a civilised country. He once said mums on the DPB were “breeding for a business”. No. Because he didn’t have a choice. 9 years of Left-ish government forced the Tories to adopt major planks of Leftwing politics. Only way to get elected.

Look at the top three policies in the budget – no tax cuts, no super funding, home insulation. 2 of 3 are Left policies. One is directly from the most Leftwing party in Parliament.

If we had a decent government we wouldn’t have needed all the little cuts and we could have had a jobs package. We could have afforded it. No April 1 tax cuts for the rich paid for on the credit card.

Still the Tories couldn’t do what they did in 1991. They didn’t dare attack the foundations of the social wage. Health, education, housing, welfare they get (minimal) increases. They have sentenced superannuation to death by starvation but didn’t dare attack it directly. That’s the legacy of the Fifth Labour government. A culture shift to the Left the Tories had to follow.

English and Key’s budget was bleak. Especially bleak for the newly jobless. The victory of the Left is that it wasn’t as bleak as they would have liked.

28 comments on “The battle and the war ”

  1. Boy, they know how to manage the journos though. People whose major mathematical skill is having the right change at Bellamy’s nod wisely that the budget has avoided a credit downgrade that was never going to happen.

    No mention that superannuation is now stuffed for anyone intending to live beyond about 2030.

    Without going into details, National did several things to pointlessly antagonise the press gallery leading up to the budget. And every political journalist I’ve read so far has commented on the problems caused by halting payments to the super fund.

  2. r0b 2

    Underlying the crap is a meta-victory.

    Is there? I’m not so sure.

    Consider. If National had done the hard stuff now (deep spending cuts) the momentum of their honeymoon and the excuse of the crisis might well have carried them through it (much as it mostly has for the broken tax cut promises). Then they could have made their next two budgets more generous.

    As it is they’ve delayed the hard decisions, hoping that things will magically turn around by themselves and growth will solve all their problems. When that doesn’t happen, their next two budgets will have to be even sterner. At that point the honeymoon is long gone, and these budgets may well loose them the 2011 election.

    In short, I think you can make the case that National have blown it. They should have gone for stimulation, growth, and jobs. They didn’t. But they didn’t take the other path either, deep cuts to spending. They just punted the problems to the future. Closer to the next election. Hmmmm.

    • Mr Magoo 2.1

      Nice theory.

      Unfortunately Billy-Boy just admitted the next budgets would be even more grim.

      Is there even a plan behind any of this?

      I bet he is loving his job right about now…

      The interesting point about all this is their ability to avoid the “9 year hospital pass” they have been giving. 9 years of great!(TM) and they get the 3 years of Oh Sh*t!(TM).

      Will they be able to dodge it? Wont they? If the next two are going to be even more grim then god help them.

      Or perhaps their plan is to just lie their way through the next election like last time? Worked for Bush, but he had a war…wait a minute!?

      (just kidding)

      • gobsmacked 2.1.1


        I agree. The government’s (i.e. Key’s) addiction to short-term happy headlines seems to have won out over longer term, hard-headed strategy.

        Let’s look at income tax cuts.

        It’s now Official Pundit Wisdom (although it’s certainly debatable) that the public will forgive National for cancelling the tax cuts, and Labour can’t make much mileage anyway, because they’d have done the same.

        But the spin-speak is “delay” and “defer”. So the obvious question is: until when?

        If English clearly said: “I do not expect to deliver tax cuts before the next election”, then they’d deliver all the bad news in one go. Maybe take a hit in the polls, but get it out the way. (And if he’s wrong, and things turn so rosy that they can deliver after all, that’s hardly a problem!).

        Instead, they have left the public expecting tax cuts as soon as the economy picks up. Which could mean next year’s budget.

        But English is going to have to stand up again in 2010, and very probably 2011, and say “Sorry, deferred again”. And by that time, the political capital will be running low. Pundits can pronounce (on our behalf, without evidence) that the public don’t mind. Unfortunately, the public get to decide that for themselves.

        It looks like National will be be going into the next election with nothing but a promise to cut taxes, having broken the last one. I don’t think that’s smart politics at all.

  3. Ed 3

    I am confused. Yes National put through cast-iron tax cuts, but now we hear from Phil Goff and the article above that they are cancelling them. I haven’t heard a roar of outrage from the defenders of the wealthy at the top tax rate going back up – are you sure they are cancelling all the tax cuts? Or is it only the tax cuts that haven’t been given yet? I suspect National knew back in December that they would only have one time when they could get the tax cuts through for themselves and other wealthy backers without media condemnation, so they went for it in the first set of cuts – they must have known that by April more tax cuts would not be possible. If they have retained the tax cuts for the rich we need to be careful what we say – after all if it was that easy to cut back the future tax cuts, why not also adjust the December ones – they have only been in force for 2 months. That may have given some money to spend on saving jobs, but ‘trickle down’ was obviously more important than jobs.

    In saying that they would not make any payments to the NZ Superannuation Fund for so long they are in effect saying that they do not believe that it will ever be worth saving, and also if you don’t believe that, and have any hope at all for the future, and if you want the promises that both Labour and National have made to be achievable, vote Labour at the next election. Is it possible that it is all getting too hard for English and Key and they would like to hand government over?

    • Wayne 3.1

      They’ve cancelled the next two years of tax cuts. The cuts that have already come in in April this year and October last year remain.

  4. If National had done it all now then they’d be getting kicked out in 2011. The worry is that over time they’ll drag political sentiment back to the far-right and then be able to get away with 1990s crap again.

  5. tsmithfield 5

    I think the criticism that there is nothing for jobs is misguided.

    Firstly, there are initiatives such as the home insulation package that will be very positive for jobs.

    Secondly, by avoiding a credit downgrade, it means that businesses will not have to borrow at as higher rate as they might otherwise have had to. This means they will have more money available for investing in the growth of their businesses, thus creating more jobs.

    • Wayne 5.1

      That’s some pretty woeful spin smithy.

      • infused 5.1.1

        As a business owner myself, it’s not far from the truth. More than %50 of my profit goes in to reinvestment in my business.

        • Draco T Bastard

          With so much profit why are you borrowing?

          If you built your business on what you had rather than what you may have you would be in a far stronger position.

          And, and even better question, why are you trying to grow when such continued growth is a cancer on the world?

          Another point, if you weren’t trying to grow then you wouldn’t need the extra income to cover the interest and go nowhere.

          Captcha: managed loyalties – yeah, it kinda gets spooky

    • Zaphod Beeblebrox 5.2

      In that case why aren’t they doing something about businesses getting ripped off by the Australian banks who are charging 10-11% for business loans?
      Why aren’t they doing anything about credit card rates and bank fees?
      If the banks want the govt to back them and give credit guarantees, surely the govt could ask them not to screw the struggling business owner.

  6. bobo 6

    Why do we get so much media budget comment feedback from the Westpac bank economists ,the same kind of people responsible for causing the property bubble in the first place with their predatory lending practices on their show me the money mantra that property would increase forever . So now bank economists job is to say the retirement age should be raised…. No wonder banks are despised all over the world.

    • infused 6.1

      Bobo, they didn’t cause the problem. Jesus. Govt banks with Westpac so go figure eh?

      • Draco T Bastard 6.1.1

        Actually, the banks in general did cause the problem and it was most likely due to the economists leading people to the wrong conclusion. Our economic system is a failure but you won’t find many economists employed by the banks saying that.

    • montyburns 6.2

      Bobo is that you ?

  7. tsmithfield 7

    Wayne “That’s some pretty woeful spin smithy.”

    Not spin. If the cost of borrowing was going up two percent due to a downgrade as had been forecast, for every 1 billion dollars cumutively borrowed by businesses I think approx 10-15 million extra would have been paid in interest costs.

    Not sure how much is borrowed by businesses in total in NZ each year, but I imagine it would be quite a few billion. So, could be quite a lot in savings that is available to be invested in businesses thus creating jobs.

    • Mr Magoo 7.1

      Wait a minute there. You are getting confused between govt. borrowing and private borrowing.

      The two are not related 1:1.

    • Zaphod Beeblebrox 7.2

      How does the govt S and P rating affect private borrowing by 2%!!!!? Surely the best way to improve business borrowing would be to discourage borrowing for property which is what the rating agencies are really concerned about.

    • Akldnut 7.3

      Yep invested in jobs at the bank because they’ll need someone to manage their overflowing piggy banks.

  8. aj 8

    Good question for a poll:

    Would you rather keep the October tax cuts, or roll them back and continue funding the Super Fund.

  9. infused 9

    Neither, because the accounts would still be in deficit.

    • RedLogix 9.1


      If you are not going to contribute to the Super Fund unless the govt books are in surplus, then given the present forecasts of no surplus’s for a decade or so… that means one of two things at some point in the future:

      1. National Super entitlements will have to be reduced;

      2. Or taxes will have to be increased.

      (Or some combination of both.)

      Not a lot of wriggle room here.

      • richprick 9.1.1

        25 November 2004Media Statement
        Cullen on National’s support for NZ Super Fund

        “The greater the political consensus around the New Zealand Superannuation Fund, the safer New Zealanders’ long term security in retirement,’ Finance Minister Michael Cullen said today.

        He was commenting on the decision this week of the National Party caucus to support the Fund’s continuance.

        “National campaigned for the abolition of the Fund in the last elections so this represents a step forward,’ Dr Cullen said.

        “I will need to see evidence that National understands that contributions to the Fund are made out of the budget surplus and that the money that is paid into the Fund is money that is not available for spending elsewhere.

        “In the last election campaign National was promising to spend every dollar three times: to cut taxes, on new spending initiatives and in faster debt repayment.

        “This time, I will be insisting on a higher level of fiscal honesty,’ Dr Cullen said.

  10. Grant 10

    Radio NZ kicked up on the jobs front this morning.

    And despite concerns from some parts of the Press Gallery, they didn’t get a head start on anything – simply read the material and did the analysis.

  11. millsy 11

    National could have chopped the whole social safety net into itty bitty little pieces, to pay for the tax cuts. Indeed, Roger is whining that they didnt. This budget is a typical right wing budget, in that it signals what right wing governments do. Chop public services, spend big on prisons/cops and leave everything up to ‘the market’. That is what being a right-winger is. If you Standandistas wanted anything else, then you will have to wait till Labour gets back in power. I didnt expect anything from this budget except right wing stuff, and it looks like we got it in bucket loads. But, it wasant a neo-liberal slash and burn excersise like Ruth Richardson’s 1991 budget was. There was no privatisation of any state owned enterprises, no hikes in tuition fees, no reintroduction of interest on student loans, no benefit cuts, no axe to WFF, no market rents for state houses, no charges for public hospitals or slashing of GP consultation funding, and no privatisation of social services. Hell, there was even funding for KiwiRail in there. No slash, no burn, and belive me, they could have. National had been banging on for years about tax cuts, and they could have still let them go ahead, with deep, deep cuts in public spending, and the destruction of the social wage. But they didnt. And you guys should be thanking your lucky stars.

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