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There is no surplus

Written By: - Date published: 12:30 pm, October 14th, 2016 - 125 comments
Categories: bill english, budget 2016, Economy, national - Tags: , , , ,

Originally posted at Boots Theory.

Radio NZ reports:

Tax cuts could soon be on the way with the Government opening up its books today revealing Crown accounts are tracking along nicely.

“We’ve always said, if economic and fiscal conditions allow, we will begin to reduce income taxes,” Finance Minister Bill English said.

In Year Eight of this National government, the idea of a budget surplus is a joke (and not just because it’s been completely engineered by the catastrophic Auckland housing bubble). They’ve promised it for nearly a decade. They’ve fiddled the books to make the numbers come out OK. They even declared a surplus in the middle of the financial year – that’s how desperate Bill English has been to pretend that everything’s going along just fine in New Zealand.

The truth is, there is no surplus.

When Housing New Zealand says it simply cannot build the houses we need for families who are living on the street and in their cars, how can we have a surplus?

When District Health Boards insist that they cannot afford to deliver safer rosters for junior doctors, or new equipment, or decent pay rises for support staff, how can we have a surplus?

When public schools, built on the promise of free education for every Kiwi kid, have to demand “voluntary donations” from parents in order to keep operating, how can we have a surplus?

When sick people have to run public campaigns ask for donations to fund the medicine they need, because Pharmac has to prioritise which life-saving treatments it subsidises, how can we have a surplus?

When the people who clean the ministerial toilets in the Beehive aren’t paid a living wage, how can we have a surplus?

If you aren’t providing the services you are contracted to do – in this case, maintaining the public services and promoting the welfare of New Zealanders – and declaring a profit, you’re not running a successful business. You’re running a Ponzi scheme.

This surplus isn’t a success for our government. It is a sign of their failure. It shows they do not understand what their job is: to look after the people of this country. To govern us – not bean-count. It shows they do not understand what success looks like, because success should never be measured on a spreadsheet while children are dying of preventable diseases in mold-ridden houses.

There is no surplus – not if you care about people more than money.

125 comments on “There is no surplus ”

  1. Guerilla Surgeon 1

    The problem with the school donation thing is, that the schools that need them most are those least likely to get them. Because their parents just can’t afford it. Whereas places like Auckland Grammar can afford to pay their teachers way over the scale because they have rich parents. But on the whole, MPs kids go to schools like this rather than your average school. So they don’t care until it becomes a public disgrace. I think Fraser Coleman was probably the last MP to send his kids to the local high school.:)

    • Siobhan 1.1

      I think Fraser Coleman was probably the last MP to send his kids to the local high school.:)…. I wouldn’t want to get all hysterically Daily Mail about it, but there should be a register for Politicians stating if they use Public or Private Health Care, Public or Private Schooling for their children and, as we move forward, did they benefit from Free University, Govt Subsidised Housing Loans etc.

      Infact, if relevant to their portfolio, this information should absolutely be on Public record.

      • Red 1.1.1

        I send one kid private the other state, not really that much different, private make sense if academically or sports gifted, if not waste of money

        • Muttonbird 1.1.1.1

          Which one’s your favourite?

        • Siobhan 1.1.1.2

          From my own family and friends I’d say Private School is about connections with the ‘Right’ people. It means when you grow up you see your old school chum is the Chief Executive Officer of Commonwealth Bank, or something. You’re connected. You can name drop.
          Plus the teachers seem better at getting the best marks out of some of the crappiest students…..even if it means basically doing the work for them.
          Even just the name of the school looks good on your CV.

          It’s a great definer of social Class, in a society increasingly divided.

          • Psycho Milt 1.1.1.2.1

            Exactly. It’s for this reason that people are willing to pay so much for houses in the Auckland Grammar zone, not because there’s something special about the education you get there. It’s just that the people sending their kids to private schools find admitting it embarrassing (my God – admit that and next thing you’ll have to admit there is such a thing as social class in NZ), so they pretend there actually is a superior education to be had there.

        • Gabby 1.1.1.3

          You could put that state kid to work, get the value of bed and board back.

  2. Olwyn 2

    In a nutshell Stephanie. An excellent, true, straight-to-the-point post. Thank you.

    • Colonial Viper 2.1

      Is there a reason that the neoliberal left still thinks that having a Government budget surplus during a time of sluggish economic activity is somehow a mark of pride?

      Governments only get budget surpluses by taking more from businesses and households than they provide back in social goods and services.

      Is this what we really want out governments to do. Take more from the country than they give back to the people of the country.

      • Olwyn 2.1.1

        One reason, I would think, is that debt was used in the Western countries to establish neoliberalism, and is still seen as a goad for driving out governments that don’t toe the line, with screams of “irresponsible” and “living beyond our means.”

        • Colonial Viper 2.1.1.1

          Absolutely – the orthodox economic and monetary system strongly limits government actions to those acceptable within a neoliberal framework.

          Which is why I don’t care much for any left wing party which refuses to break with the current orthodoxy. Because it means that no matter how well meaning their policies or their people, the end result is going to be predictably the same as the status quo.

      • Olwyn 2.1.2

        I should have added, this is not what we want governments to do at all – I have only suggested a possible reason why they aim for surpluses.

      • Is there a reason that the neoliberal left still thinks that having a Government budget surplus during a time of sluggish economic activity is somehow a mark of pride?

        I certainly don’t, CV. It might help the conversation if you discussed what people actually say in their posts instead of treating them as opportunities to sneer about how you’re The Best Leftie In The World.

  3. b waghorn 3

    There needs to be a 30 years concerted effort to rebrand tax(social contribution) as a public good, teach people what we could have if there was more money , and how we should be proud to contribute to a first class society , dreaming i know ?

    • UncookedSelachimorpha 3.1

      Absolutely agree and I hope you aren’t dreaming. The right have dominated public discourse on the role of tax. Their lies and soundbites have become the unquestioned mainstream view – i.e. tax is bad and tax is theft.

      The two main lies:

      – Higher tax of any sort is invariably bad for me and bad for society

      – Reducing tax will invariably benefit the economy and society

      I have a German friend who tells me that if you discuss cutting tax there, you are immediately looked at with some doubt and suspicion – “hang on, if tax is cut, what services will be cut – what will the costs be?” etc. You won’t immediately get that type of reaction here in NZ.

      How can the left improve the public dialog on tax here in NZ? b waghorn’s renaming as a “social contribution” seems a start.

      • tc 3.1.1

        maturity v immaturity
        Informed v uninformed
        Intelligence v dog whislted ignorance
        Aware of the bigger picture v feed memes by msm shills

        Scandanavia is similar, happy to pay taxes as they know it provides schools, healthcare, infrastructure, civic amenities, aged care etc.

        The average kiwi voter is nowhere near informed or engaged enough so gets conned by the shonky driven themes, dirty politics etc

      • b waghorn 3.1.2

        Cool ,although as long as we have morons like paul henry banging on like every tax dollar is out of their pocket it,s along row to hoe.

    • Colonial Viper 3.2

      There needs to be a 30 years concerted effort to rebrand tax(social contribution) as a public good

      It would be good if some lefties understood the principles of the old Social Credit Party and especially understood that taxes are not always needed to fund the operations of government.

      At this rate it will take another 30 years for todays orthodox neoliberal economics lefties to figure out what the original Social Credit lefties knew 30 years ago.

    • Nic the NZer 3.3

      Tax is never a public good, this is fundamentally undesirable. Public goods are what the government buys with its spending. This is exactly the problem Stephanie highlights here, this government has prioratised running an accounting surplus over buying public goods for public purpose (health, housing, education).

      It has done this by collecting tax which reduces demand in the economy (by reducing the non government sectors income) and by also refusing to purchase the resulting idle resources for public purpose following this.

      The net result is that parts of the economy (especially the un and under employed) can’t afford goods like health care, education and housing (where they have resorted to credit and a borrowing contest called the housing bubble) and the government is not buying it on their behalf.

      There is no way out of this for the unemployed as the economy is not creating sufficient jobs (further due to insufficient total spending). There is therefore no way for them to fund their social needs for themselves by finding work, either.

    • I don’t think you’re dreaming at all! This is something which Anat Shenker-Osorio and others have been looking at, the way the very language we use to discuss key political issues works against us – i.e. “tax relief”, “tax burden”, things that frame tax as inherently terrible.

      I’m obliged at this point to link to my review of ASO’s book and heartily recommend it to you:
      https://bootstheory.wordpress.com/2016/08/07/lefty-book-reviews-dont-buy-it/

      • b waghorn 3.4.1

        cheers but my poor old brain isn’t cut out for taking in large dumps of material, vibes and gut instinct i understand.

  4. ropata 4

    Great piece Stephanie… repeating my comment from earlier

    Housing Corp is running out of money

    The Gnats are cheating taxpayers and stealing from the future of NZ. They are fucking over the whole public service and social fabric of NZ to keep their middle class fan base happy with inflated Auckland houses, lower taxes, and flash private schools subsidised by others.

    In IT there’s a thing called “technical debt” incurred when you take shortcuts in projects and leave messy code/bugs for others to clean up. Managers do not care about tech debt, their goal is to deliver a project on time. But the users and maintainers of the code have to put up with a buggy mess that makes their job harder. The manager has effectively shifted the cost of code maintenance & QA onto another team.

    The Gnats are past masters at offloading government “debt” (i.e. their obligation to govern responsibly) to households and social services and beneficiaries. There is a huge social cost that will be paid one way or another. The quality of life for most Kiwis is being destroyed so that Bill English can put some nice numbers on a fucking spreadsheet

    • Michelle 4.1

      Agree Ropata and the timing of releasing this budget surplus is dubious to say the least. Did you hear Billy Boy on the radio he sounded like a fool to me unable to say anything substantial. I think they are panicking because the internal polls they have been conducting are saying many NZers are sick and f..n tired of these rip of bastards flogging of our assets at the same time cutting our welfare state and other state agencies like ACC is hurting many NZers and they (tories) have shown there true colours as they really don’t care and they never will because it is all about money with them not people .

    • miravox 4.2

      Nice IT analogy there ropata.

      English is creating a services debt for his technical surplus.

      Excellent post Stephanie.

    • Yep, National ape economic success by cost-shifting. It’s a traditional practice of the business elite really, of which the National Party is really an extension.

    • Takere 4.4

      Agree.
      With the new Blue Green Blinglish Accounting Software programme called “Recyclables” enables the user to magic up positives only on the balance sheet.

      Savings made by Ministers not spending their budgeted appropriations year on year and some tricky accounting practices such as NZ Post buying Kiwi Bank pre-budget & hey presto! You’ve got a $414m surplus 2015/2016. Moving $450m, the purchase price from one side of the ledger to the other, which is also counted twice as far as GDP goes, so that becomes a $900m transaction!
      Its a bit like everyone believing that the Household Balance as of the End June makes us “All” rich. $1.3 trillion Wealthier??

  5. dukeofurl 5

    It does seem to be year end statement ( to 30 June 2016) which takes about 3 months to compile
    Financial Statements of the Government of New Zealand for the Year Ended 30 June 2016
    http://www.treasury.govt.nz/government/financialstatements/yearend/jun16

    Statement of cash flows is as allways the real story about the money flow

    Issue of Government bonds 8,029 mill Repay 1779
    Issue of foreign currency borrowings 2,480 repay 270
    Issue of circulating currency 378
    Issue of other New Zealand dollar borrowings 8,708 reay 14699
    Total 19,595 mill

    Last year the Crown received proceeds of $2.3 billion from the Government’s share offer programme (compared with this year’s proceeds of $0.6 billion, reflecting the Meridian Energy final instalment).

  6. Observer Tokoroa 6

    .To: Stephanie Rodgers. A Great piece.

    .
    The Parliament of the past 8 yrs has failed. It has failed to take care of the people of New Zealand. Whilst giving wealth to the Rich and to countless aliens.

    Every aspect of life for New Zealanders – excluding the Rich and the Immigrants – has become a daily tight rope walk.

    Failing your people is grievous. The nationals, the maori party, united future and Act are guilty of serious NEGLECT.

    They have taken their fat pay fortnight by fortnight under false pretences.

    .

  7. UncookedSelachimorpha 7

    Krugman’s excellent discussion of the fallacy of austerity and the foolishness of assuming a government surplus is always a good thing, seems relevant again:

    https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion

    • RedLogix 7.1

      But read what Krugman really says:

      It is impossible for countries such as the US and the UK, which borrow in their own currencies, to experience Greek-style crises, because they cannot run out of money – they can always print more.

      The point is … only SOME countries are allowed to print money. The rest must borrow from them.

      • Colonial Viper 7.1.1

        Correct – there is a very strict hierarchy of central banks and currency issuer/manipulators in today’s world order. Countries like US, Japan, UK are permitted to print money with essentially no limit. Countries like China, Canada and Australia are given some grudging leeway to print some currency at times, but often in circuitous and less than obvious ways.

        Western alliance players lower down the totem pole like NZ get good, easy, preferential access to financial markets: but we don’t get to print new NZ dollars out of thin air independent of borrowing from these financial markets.

        Step out of line – like Gaddafi announcing a gold backed African currency which would have crashed the value of the US Dollar – and you are history.

  8. Siobhan 8

    There actually should have been an extra $490 million dollar in “surplus”.
    If corporations paid their taxes with any level of honesty.
    And that’s just a starting figure.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11607336

    • tc 8.1

      +1000 also tax havens and subsidies to business like that aluminium smelter which just gets more uneconomic each cycle.

  9. Bearded Git 9

    How can we have a surplus:

    -When we are selling off state houses when we should be building more
    -When we can’t afford to roll out a bowel cancer screening programme nation wide
    -When RNZ funding has been frozen for 8 years
    -When DOC’s budget has been slashed so that it cannot maintain its tracks and huts
    -When we can’t contribute to a superannuation scheme treasury says is desperately needed
    -When we can’t afford a decent public transport system in Auckland

    …and so on and on

    There are times when I despise smug Bill English even more than Key.

  10. The Real Matthew 10

    “This surplus isn’t a success for our government. It is a sign of their failure”

    On this basis there are a lot of very successful countries in the world at the moment

  11. Bob 11

    The truth is, there was no surplus
    “When Housing New Zealand says it simply cannot build the houses we need for families who are living on the street and in their cars, how can we have a surplus?”
    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10500928

    “When District Health Boards insist that they cannot afford to deliver safer rosters for junior doctors, or new equipment, or decent pay rises for support staff, how can we have a surplus?”
    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10386659

    “When public schools, built on the promise of free education for every Kiwi kid, have to demand “voluntary donations” from parents in order to keep operating, how can we have a surplus?”
    http://www.enz.org/forum/showthread.php?t=3220

    “When sick people have to run public campaigns ask for donations to fund the medicine they need, because Pharmac has to prioritise which life-saving treatments it subsidises, how can we have a surplus?”
    http://www.stuff.co.nz/national/herceptin-debate/456083/Cancer-survivors-are-busting-with-life

    “When the people who clean the ministerial toilets in the Beehive aren’t paid a living wage, how can we have a surplus?”
    Can you please point to a time when they have ever been paid the living wage?

    So you are willing to admit Labour never ran a surplus either then?

    • Stuart Munro 11.1

      Although Labour certainly needed to do more, they did not run up $114 billion in debt on top of a set of cruel and ineffectual austerity policies. Whatever savings Labour made at the expense of our poorest and most vulnerable were at least realised.

      The incompetent Bill English however, has achieved the worst of both worlds – viciously slashing service quality across the board, cranking up GST to absurd levels, bringing in uncle Tom Cobbly and all to evade taxes here. And the outcome of this furious activity is persistent underfunding and staff shedding, erosion of core services and declining per capita productivity.

      The man is a genius.

      At destroying our economy.

    • One Anonymous Bloke 11.2

      Did “he did it too!” work for you when you were twelve? I thought you clay-foot types were big on “personal” responsibility.

    • Guerilla Surgeon 11.3

      Tu quoque is not an argument, it’s a fallacy.

      • Bob 11.3.1

        I just gave direct examples that fit Stephanie’s statements, how is that possibly a fallacy?

        • One Anonymous Bloke 11.3.1.1

          Guerilla Surgeon simply gave my criticism its Latin name.

          Do you believe the author is the Labour Party? If she were the Labour Party, what would that say about the National Party’s governance failure?

          • Bob 11.3.1.1.1

            “Do you believe the author is the Labour Party? If she were the Labour Party, what would that say about the National Party’s governance failure?”
            Did I say she was the Labour Party? I simply asked if she was willing to admit that the Labour Party never ran a surplus either based on the fact they ticked every box she stated above, asking an opinion is not stating a position. Or perhaps I could just reply to you, tu quoque is not an argument, it’s a fallacy.

            • One Anonymous Bloke 11.3.1.1.1.1

              Did I say you thought she was the Labour Party? I simply asked if you were willing to admit that you thought she was the Labour Party.

        • ropata 11.3.1.2

          Labour managed to run a surplus without regressive tax policies, illegal backroom deals with big business, or slashing spending on vital services.

          But I agree with the general point made by others here (OAB or DTB probably) that in principle a government should NOT run a surplus, it means they are either a) taking too much in tax or b) spending too little into the economy.

          This surplus shows Bill English doesn’t understand the purpose of government, it helps NOBODY except the uber wealthy.

          Also Bill’s scrooge-like behaviour is totally unChristian

          Here is a sampling of Biblical prophets just to remind you what they sound like:

          “Hear this, you who trample the needy and destroy the poor of the land!”
          Amos the prophet (Amos 8:4)

          “Seek justice, correct oppression; bring justice to the fatherless, plead the widow’s cause.”
          Isaiah the prophet (Isaiah 1:17)

          “Woe to him who builds his house by unrighteousness, and his upper rooms by injustice”
          Jeremiah the prophet (Jeremiah 22:13)

          “Behold, this was the guilt of your sister Sodom: she and her daughters had pride, excess of food, and prosperous ease, but did not aid the poor and needy.”
          Ezekiel the prophet (16:49)

          “He has told you, O man, what is good; and what does the Lord require of you but to do justice, and to love kindness, and to walk humbly with your God.”
          Micah the prophet (Micah 6:8)

          “Thus says the Lord of hosts… do not oppress the widow, the fatherless, the immigrant, or the poor…”
          Zechariah the prophet (Zechariah 7:9-10)

          Got it? It’s pretty clear to anyone who has immersed themselves in these scriptures.

          The teachings of many modern day evangelical church leaders just do not resonate with God’s heart for justice, the way the Biblical prophets did.

          • Colonial Viper 11.3.1.2.1

            Labour managed to run a surplus without regressive tax policies, illegal backroom deals with big business, or slashing spending on vital services.

            Labour managed to run this surplus by allowing the private sector to run up massive levels of debt which pushed cash into the economy.

            The Labour Govt then taxed this debt sourced cash back into its own pockets, in order to make the Crown budgets look good.

            In other words, Cullen ran a debt swap. He lowered Crown debt with skyrocketing private (household, farm, business) debt.

            • ropata 11.3.1.2.1.1

              Maybe they should have taxed housing speculation MORE, this housing bubble is deeply immoral, benefiting only the wealthy few.

            • Matthew Whitehead 11.3.1.2.1.2

              Well, sure. But that’s not a criticism of surpluses in general, just that particular way to get to one.

              I maintain that surpluses are a tool that should be used to deal with economies that are in general overheated and are generating speculative (as opposed to real) growth, the same way deficits are a tool to deal with economies that are overcooled into recession. (and more specifically revenue should be drawn preferentially from sectors of the economy that are overheated in comparison to the rest of the economy)

          • weka 11.3.1.2.2

            Labour managed to run a surplus without regressive tax policies, illegal backroom deals with big business, or slashing spending on vital services.

            Labour cut welfare. I’d guess they were keeping a tight reign on Health too. There are other ways to reduce spending than big flashy slashes that make the front page.

            • pat 11.3.1.2.2.1

              “Labour cut welfare. I’d guess they were keeping a tight reign on Health too.”

              This is the Clark government you are referring to??

                • Karen

                  Labour did not cut welfare. The welfare cuts were made in the 1990s by the Bolger government.

                  • One Anonymous Bloke

                    National did it too? Don’t they have copyright on that feeble excuse?

                  • pat

                    thats why I asked….if anything Clark increased welfare through FS

                  • weka

                    @Karen,

                    The Clark govt cut benefits in 2004 effective 2006,

                    https://blog.greens.org.nz/2006/03/31/not-so-special-benefits/

                    Wellington People’s Centre,

                    “WORKING FOR FAMILIES
                    THE BIGGEST BENEFIT CUT SINCE 1991”

                    “Perversely, the benefit cuts are “targeted” so that those families in the most financial hardship will have the biggest benefit cuts.”

                    http://www.cpag.org.nz/assets/Wgtn%20People‘s%20Centre.pdf

                    It’s shocking to me that this has to be spelled out again and again.

                    • That’s also in addition to the real cuts for other benefits. (that is, that they allowed inflation to whittle away the spending power of people on benefits) Labour were in fact so hard on beneficiaries that they’ve gotten a better deal in dollar terms under the current Government. (although a much worse deal in terms of ease of qualifying for a benefit and remaining on one)

                    • pat

                      “It’s shocking to me that this has to be spelled out again and again.”

                      its shocking to me that it is painted as a cut when in fact more was paid in TAS than Special Benefits even on the back of falling unemployment.
                      Table 4.31 Trends in combined annual expenditure on Temporary Additional Support and Special Benefits

                      Year ended June Expenditure on Temporary Additional Support and Special Benefits1,2,3 ($m)
                      1995/1996 87
                      1996/1997 74
                      1997/1998 59
                      1998/1999 44
                      1999/2000 34
                      2000/2001 39
                      2001/2002 48
                      2002/2003 79
                      2003/2004 137
                      2004/2005 174
                      2005/2006 160
                      2006/2007 132
                      2007/2008 123
                      Notes

                    • weka

                      @Pat,

                      Good to know that you think individual beneficiaries getting paid less is not a cut so long at more beneficiaries get the lesser payment. Because that is what underlies those MSD stats (and please, post links to your sources).

                      Work and Income, in its earlier incarnation, had been told by the High Court that instead of hiding entitlements from beneficiaries, they had to tell them what those entitlements were i.e special benefit. That was in the 90s and WINZ did some jiggery pokery there in terms of forcing existing Special Benefit recipients to be re-assessed ostensibly to make sure they were getting their entitlements, but as you can see the payments actually dropped for a while. When Labour came in, there was a change in the culture at WINZ and people started asking for more.

                      I don’t think the rise in amounts being paid and the cutting of the benefit are coincidences. Huge numbers of beneficiaries didn’t know about their entitlements in the 90s, and I’m pretty sure Labour could see what was going to happen as people became aware they could get more income.

                      Labour fucked over beneficiaries, I don’t know why that is so hard to accept. Don’t believe me, read my links, and follow ts commenter Chris, because he posts on this periodically and knows the details better than I do.

                      (not sure about the relevance of falling unemployment, you’d have to look at the numbers of people moving off UB and onto Sickness and Invalids).

                    • pat

                      have read your links and first question the accuracy of the quoted figures as the rates don’t match published records AND assume zero entitlement for hardship assistance as opposed to maximum entitlement previously AND ignore the increase in accommodation supplement….the two links are selective in the information they provide to make a point….the disparity in support for those in work and those not….but that doesn’t justify a misrepresentation.

                      You should place things in context…5th labour gov assistance to low paid/ beneficiaries…..
                      A Parental Tax Credit was introduced (2000).[9]
                      A Child Tax Credit (which replaced the independent Family Tax Credit) was introduced (2000).[9]
                      A Family Tax Credit (which was formerly the Guaranteed Minimum Family income) was introduced (2000).[9]
                      A Modern Apprentices initiative was introduced to develop technological skills (2000).[9]
                      The Family Start programme was expanded (2000).[9]
                      Annual inflation to benefits was introduced (2000).[9]
                      The Social Security Amendment Act of 2001 introduced various changes such as “disestablishment of the Community Wage, re-establishment of an unemployment benefit and non-work-tested sickness benefit, and the abolition of the work capacity assessment process”.[9]
                      The Social Security Amendment Act (2006) established three streams for reintegrating beneficiaries into the larger community. These included a work support stream for the unemployed, a work support development stream for most other beneficiaries, and a community support stream for a small group to be exempted from work, training or planning requirements.[10]
                      Income-related rents for state-owned housing were restored (2000).[9]
                      A social allocation system was introduced and implemented with the income-related rents scheme(2000).[9]
                      Vacant sales were frozen and the Home Buy programme was ended (2000).
                      Bulk funding for schools was ended (2000).[9]
                      Expenditure was increased, or newly allocated, for the reduction of attrition of students from school, tertiary education subsidies, Maori and Pacific peoples’ teacher recruitment, and Homework Centres (2000).[9]
                      Interest on student loans while students are studying was abolished, while the decision of the Fourth National Government to increase the student loan repayment rate was reversed (2000).[9]
                      Expenditure for early childhood education was increased (200

                      https://en.wikipedia.org/wiki/Fifth_Labour_Government_of_New_Zealand

                      As even Sue Bradford acknowledged in response to the 2004 budget…”Overall, however, I should like to conclude by reiterating that the Budget does take a major step in the right direction in terms of redistributing at least a little of our country’s wealth to some of those who need it most. Tax cuts as proposed by National and ACT are not the answer — all they would do is make the rich richer and the poor poorer.”

                      http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/statistics/statistical-report/statistical-report-2008/hardship-assistance/additional-support.html

                      http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/statistics/statistical-report/statistical-report-2008/main-benefits/payment-rates.html

                    • weka


                      have read your links and first question the accuracy of the quoted figures as the rates don’t match published records AND assume zero entitlement for hardship assistance as opposed to maximum entitlement previously AND ignore the increase in accommodation supplement….the two links are selective in the information they provide to make a point….the disparity in support for those in work and those not….but that doesn’t justify a misrepresentation.

                      Sorry, can’t make sense of that without you being more explicit. But bear in mind that the Wellington Peoples’ Centre were experts in the field and I think were involved in the High Court action.

                      Follow Chris if you want more analysis.

                      “You should place things in context”

                      Only if I were arguing that Labour did nothing good. Which patently I’m not (and you can check my record on ts about that historically). I’m saying that Labour cut benefits. They did. Many of us where there at the time.

                      If you want to argue that because they were doing these other things, the benefit cuts wouldn’t have impacted on Labour’s ability to run a surplus, go ahead, but it still begs the question of why if they had a surplus they wouldn’t give relief to some of the poorest people in the country. Much of what Labour offered was for the working poor or those with kids, but even there there is a huge problem when you talk to actual beneficiaries from the time.

                      As even Sue Bradford acknowledged in response to the 2004 budget…”Overall, however, I should like to conclude by reiterating that the Budget does take a major step in the right direction in terms of redistributing at least a little of our country’s wealth to some of those who need it most. Tax cuts as proposed by National and ACT are not the answer — all they would do is make the rich richer and the poor poorer.”

                      And two years later when the cuts were about to take effect the Greens said,

                      The next phase of the Government’s Working For Families assistance package kicks in tomorrow. Sue Bradford has praised a report (offline) by the Wellington People’s Centre showing the negative impact that some of its measures could ultimately have on up to 50,000 of the country’s poorest families and children.
                      While the Green Party supports the extension of WFF to families in paid work, Sue B has also slammed the way that some of its measures discriminate against beneficiaries. The People’s Centre report shows for instance, how the package will scrap the Special Benefit, confront new applicants with a meaner, less flexible alternative, and expose those already receiving the Special Benefit to the risk of being kicked down onto this less Temporary Assistance Support benefit if they happen – during any one week – to do a few hours work, or receive a dividend in the mail from their local energy company.

                      Sue has called on the Government to act urgently to either keep the Special Benefit for the meantime – or create a new backup benefit to make sure no one gets made worse off by the Working For Families package.

                      (linked above)

                      That’s a cut.

                    • pat

                      “The next phase of the Government’s Working For Families assistance package kicks in tomorrow. Sue Bradford has praised a report (offline) by the Wellington People’s Centre showing the negative impact that some of its measures COULD ultimately have on up to 50,000 of the country’s poorest families and children.
                      While the Green Party supports the extension of WFF to families in paid work, Sue B has also slammed the way that some of its measures discriminate against beneficiaries. The People’s Centre report shows for instance, how the package will scrap the Special Benefit, confront new applicants with a meaner, less flexible alternative, and expose those already receiving the Special Benefit to the RISK of being kicked down onto this less Temporary Assistance Support benefit if they happen – during any one week – to do a few hours work, or receive a dividend in the mail from their local energy company.”….(my caps)

                      however as we saw from the previous table payments under the transitional regime in fact substantially increased…..that is NOT a cut.

                      “Only if I were arguing that Labour did nothing good. Which patently I’m not (and you can check my record on ts about that historically). I’m saying that Labour cut benefits. They did. Many of us where there at the time.”

                      Patronising sort of statement….oddly enough your original statement didn’t ring true to me because as it happens i was one of those there at the time….and doesn’t really gell with your previous….”Labour fucked over beneficiaries, I don’t know why that is so hard to accept.”

                    • weka

                      however as we saw from the previous table payments under the transitional regime in fact substantially increased…..that is NOT a cut.

                      It is if you are the beneficiaries that no longer can access that support. Do you understand the differences between Special Benefit, Temporary Additional Support that replaced it, and that the other things that Labour brought in were targeted and not universal? It was a cut.

                      We’re just going round in circles now.

                    • pat

                      upon further reading I concede you are correct…it appears the 2004 changes did in fact result in cuts to some beneficiaries income…..disturbing.

                    • ropata

                      Having fun re-litigating the past? It doesn’t make National’s nasty Budget any better. Just shows that Kiwis have been brutalised by neoliberalism and desentitised to the cries of the poor and 200,000 children growing up without the basics. Shameful

                    • weka

                      @pat, thanks

                      @ropata, I thought the Clark benefit cut might have been part of how they ran a surplus, which seemed relevant to the subthread.

    • As others have pointed out, “Labour did it too!!!” is a terribly weak argument, as is “cleaners have never been paid well so your point is invalid!”

      And your “gotcha” game is pretty weak given that I am quite happy to be critical of the previous Labour government. They simply did not do enough to restore state housing stock, lift benefits, reduce the cost of tertiary education, raise taxes on the rich etc.

      The sole advantage of Labour’s surpluses in the last government is it made us more resilient to the shock of the 2008 global financial crisis. Even Bill English admitted it.

      Now do you have anything to contribute which is actually constructive?

      • Bob 11.4.1

        “The sole advantage of Labour’s surpluses in the last government is it made us more resilient to the shock of the 2008 global financial crisis. Even Bill English admitted it.”
        So your argument is that even though National have gotten us to a surplus the same way Labour did, it’s a bad thing because no global financial crisis has occurred yet, but you will praise them if it were to occur in the near future.
        Is that about right?

        “Now do you have anything to contribute which is actually constructive?”
        My thoughts exactly when I read this post. How about a post on neo-lib politics and how the same slash and burn political decisions keep getting made no matter whether it is National or Labour in power. How about a post on how it is time for a radical shift in New Zealand politics. Otherwise it just comes across like this post, an anti-National puff piece that anyone who can remember back to the Helen Clark years knows is just business as usual no matter which of our two major parties is in power.

        [Stephanie: Please note the site Policy, which states:
        A partial list of these self-martyrdom offenses include … Abusing the sysop or post writers on their own site – including telling us how to run our site or what we should write.

        You are either deliberately misinterpreting the post to push your own barrow, or need to read them more carefully to ensure you don’t make yourself look like a time-wasting troll with comments like these.]

  12. One Anonymous Bloke 12

    Not just well written, well argued too.

    Starvation is not budgeting.

  13. left_forward 13

    Kia ora Stephanie.

  14. One Two 14

    The assumption is that English knows he is being misleading when talking about the budgetary position

    It could be called lying given the years of involvement and the level of information/advice he gets

    The questions are, why does he continue to do it, and how long will the charade regarding fiscal policy hold up in NZ?

  15. fisiani 15

    Wages are rising, employment is rising, 200,000 people a year are clamouring to live in NZ and 90,000 arrive here gratefully. Houses are being built at record pace and thousands of Homestart recipients are already enjoying their first home.
    Labour come up with a plan, promise, pledge, piffle to employ 1,000 more police officers. Wow. That’s gonna be a vote catcher. Yesterday’s chip paper.
    It is like a parallel universe here where the phenomenal progress is ignored and the pimples are pricked.
    A rising surplus, a rare thing in the OECD, should be a cause for celebration. The 2,143 homeless people are being daily found warm comfortable houses.
    National want to raise their Party Vote (47%) and are likely to do so (perhaps 49%)

    [Stephanie: this post has literally nothing to do with Labour’s police policy nor National’s party vote. I am tired of your blatant attempts to derail the conversation. Make some effort to stay on topic or sod off.]

    • Bob 15.1

      A surplus should never be a cause for celebration, and at current tax rates it should be cause for more spending. Otherwise, I agree with most of what you are saying

    • ropata 15.2

      Provide evidence to support your outlandish claims or kindly stick your lies where the sun doesn’t shine

    • s y d 15.3

      we have always been at war with eastasia

    • halfcrown 15.4

      TAKE COVER Another flock of pigs coming. Hey fisiani the Zealot, we all know you are bedazzled and blinded by the sun shining out of the fucking spivs arse, but do you really think people take notice or believe the crap you write.

    • smokes kreen 15.5

      What eutopia are you living in fisiani? It’s certainly not New Zealand or anywhere else on earth.

      • One Anonymous Bloke 15.5.1

        The Utopia where the average is used as an excuse for the outcome. Where personal responsibility means paying expecting someone else to do the job.

    • Wages are not going up in proportion to other sources of income, so what you’re basically saying there is “at least they’re not getting worse.” National has done nothing substantial to address income inequality or poverty, and is tinkering around the edges on the housing crisis when bold measures are needed to end property speculation.

      Fact check on record house building- I suspect you will find that Labour has done better in the past than the current government, and what they’re doing is consenting a record amount of house projects, many of which are then being shelved in favour of land banking.

      Basically, stop treating everything the government says as facts. They’re not, most of it is spin at best.

    • reason 15.7

      The Nacts have some of the most sub prime rubbish and accounting tricks used that our books have that merrill Lynch rotten flavor

      “‘the government forked over $45 billion in aid to Bank of America – $20 billion as an incentive to bring its cross-eyed bride Merrill Lynch to the altar, and another $25 billion as part of the overall TARP bailout. In addition, the government agreed to guarantee $118 billion in Bank of America debt.””

      And speaking of Keys old firm ….There is a world wide move against Tax havens where the richest on the planet steal from the poor…….

      Key is on the side of tax havens and corruption ….. and also believes poor people should bailout Millionaires like himself ………. who got rich selling ‘tax arrangements’ ( ( use of tax havens ) ……. so the richest could steal from the poor.

      Its like key has slapped his bailout providers on both sides of their face ….. getting them on his way in ….. and again when they bailed him out …. “Merrill Lynch was sold to Bank of America for 0.8595 shares of Bank of America common stock for each Merrill Lynch common share,” ….

      He was named by the Panama papers whistle blower because of his clear and documented actions as he turned us into a little bag man of a country …. and helping corporate tax cheats ….

      If consumer and EU pressure can get some bad apples like Apple to pay their fair share …… then a Domino of good effect could force all the other thievery corps to stop letting their dirty accountants engage them in stealing from the societys where they make their money and do trade in ……

      Key will be fighting hard for the side spreading injustice and inequality ….. enabling things like money laundering and foreign speculation on our Houses ….. which hurts honest New Zealanders

      His main problems are ……the vast majority of New Zealands people do not use tax havens or launder dirty money …… and his very high dishonesty ratings…..

      He support could crash and burn Merrill / Northland style on issues which voters feel directly effects them ….

  16. Wayne 16

    Seriously, what on earth is this post about?

    The surplus is measured on the same accounting rules as applied with the last Labour government. In fact governments don’t get to determine the accounting rules for rather obvious reasons.

    So no-one is going to believe you when you say there is no surplus.

    A much more sensible debate is how to apply the surplus (or if you are more left wing to increase taxes and spend say an extra $10 billion per year).

    On this point, govt spending is currently around 30% of GDP, about the same level as in 2006. Why is it the same? Fundamentally because of economic growth and lower benefit rolls, just as in 2006.

    However, 30% is unusual for Labour, normally it is over 32 or 33%, sometimes as high as 35%. At 35% that would mean an extra $10 billion spending per year, but also would require the overall taxes to go up by 15%. No tax cuts for anyone, and a top rate of at least 40%. But at least a clear political choice.

    In 2006 when Labour saw govt spending at 30% of GDP they started spending in a big way, since 30% is too low for Labour psychology. National will be more restrained, but clearly Bill English’s recent housing announcements were made because he knew the surplus was significant.

    • Stuart Munro 16.1

      Yes, yes – Bill is a rockstar.

      No wage parity with Oz.

      No 170 000 jobs.

      No wage increases.

      But Bill is a fucking miracle, for reasons only Treasury’s spurious math can explain.

      And our debt, and our balance of payments deficit continue to mount.

      Because the Gnats will take a bright and shining lie over the truth every time.

      • Draco T Bastard 16.1.1

        Because the Gnats will take a bright and shining lie over the truth every time.

        QFT

      • ropata 16.1.2

        Not to mention

        Least affordable housing in the OECD
        Massive environmental neglect
        Chronic overwork/understaffing in health/education/police
        HNZ is broke
        People living in cars
        No action on child poverty

        The government is morally bankrupt

    • Draco T Bastard 16.2

      In 2006 when Labour saw govt spending at 30% of GDP they started spending in a big way, since 30% is too low for Labour psychology.

      What a load of bollocks. Labour and the Left in general spend what’s needed to maintain society.

      National cuts that spending so as to give more wealth to the already rich and destroy society in the process.

      National will be more restrained, but clearly Bill English’s recent housing announcements were made because he knew the surplus was significant.

      No, he made them because the polls show that National is losing on housing and they’re determined to hold on to power.

    • One Two 16.3

      Did you deliberately miss the point of the post, Wayne?

      Arthur Anderson accounting methods were shown up for what that industry represents. Only dupes and those benefitting from statistical fraud would uphold any form of ‘accounting’

      Just another arm of the fraudulant and rigged financial sector

    • pat 16.4

      lol…the difference between the surplus and spending in 2006 and 2016 is the means of achieving it and the quality of the use of the surplus….tax cuts anyone while you carry record debt at record low interest rates that will only move in one direction….brilliant.

      • Pasupial 16.4.1

        Plus as one consequence of that; “record debt at record low interest rates”,

        No contributions to the NZS Fund are assumed in the forecast in line with the Government’s stated intentions to commence contributions once net core Crown debt falls below 20.0% of GDP

        http://www.treasury.govt.nz/budget/forecasts/befu2016/015.htm

        There have been no government contributions to the fund since 2008, and won’t be until Key’s National are kicked out of office (2017 hopefully, but contributions are not projected to resume till after 2020). Whereas the Clark Government managed to contribute $14.88b and consistently run a surplus without the fire-sale of assets we’ve seen with this government.

    • One Anonymous Bloke 16.5

      From memory, Lab5 inherited ~34% govt spending to gdp. They left office at the same level.

      30% or 34%, whichever; still equates to the single most powerful market force in the country. The difference is that the Left has a sword which the Right pretends doesn’t exist, even when you’re wielding it.

    • Please, we know Bill English pays no attention to fiscal restraint in deciding spending projects. If he did, we would never have had that first round of disastrous tax cuts.

      There is a technical surplus. The issue is that this surplus has been achieved by basically cutting and slashing services, so we are now instead suffering a deficit of public sector investment, as we usually do under National governments, because they insist on setting public sector spending on ideological bases rather than simply on measuring what spending is more effective than tax cuts. (to which the answer is, basically everything National likes to cut, and none of the stuff it likes to spend on, like wasteful roads)

      It doesn’t matter what percentage of GDP government spending is on. If we’re providing services effectively enough, or the private sector is stimulated enough to grow larger, I’m happy for that percentage to go down. But we do need to be providing adequate levels of services and not essentially shifting the deficit onto public services rather than the budget.

      And that’s without getting into the moronic Herbert Hoover-style economics of Mr. English, who seems to think that it makes sense to slash public spending during a recession, and then to stimulate an economy during a boom, when every bit of economic evidence we have suggests that government economics functions off Keynesian theories.

    • Nic the NZer 16.7

      “The surplus is measured on the same accounting rules as applied with the last Labour government. In fact governments don’t get to determine the accounting rules for rather obvious reasons.”

      Well put Wayne. This post should be about ‘why on earth is the government screwing pretty much everyone over to try to run an accounting surplus.’? You can probably polish that argument up a bit and have a post ready for Monday on here?

    • Seriously, what on earth is this post about?

      I didn’t write it in Esperanto, Wayne. Everyone else except for the blatant rightwing trolls has managed to figure it out.

      If you were running a household and still hadn’t paid half your bills for the week, people would find it a little odd if you declared the $180 left in your bank account as a surplus.

      Your party has deliberately run down core public services and stood by while people end up living in cars and begging for donations for healthcare, and yet it declares a budget surplus. The accountants might be happy with that logic – those of us who care about people see right through it.

      • Chuck 16.8.1

        “Everyone else except for the blatant rightwing trolls has managed to figure it out.”

        In a round about way you have nailed it Stephanie. I think most people understand what you are trying to say.

        Problem is a good portion of those people (non political activists) don’t agree with you.

        For example; can you link to a DHB press release that has said this? –

        “When District Health Boards insist that they cannot afford to deliver safer rosters for junior doctors”

        Or HNZ is “broke” do you understand how a balance sheet works?

        • adam 16.8.1.1

          Oh Chucky you dirty little distraction troll. How your ego must hurt, a women no less – making you and yours look like the selfish, self indulgent, self obsessed mob you are.

          Must be hard being a wingnut conspiracy theorist these days…

          • Chuck 16.8.1.1.1

            Yes of course adam, in order to care for people one must be a far left activist…

            Everyone else is a “wingnut conspiracy theorist”

            Maybe that could be the slogan for your Green or Mana party election banners?

            Could be a vote winner for ya!! 🙂

            • One Anonymous Bloke 16.8.1.1.1.1

              I know a few tories who genuinely care about people – they’re flat out wrong about how to turn that into good lawmaking.

              The whole subculture is infested with gibberish – Judith Collins’ recent meanderings are a great example. Your arguments make no sense – you blame poverty on the poor, for example, then when it’s pointed out that it’s increased under National you blame the previous government or the GFC instead.

              Like climate deniers, you lack a coherent narrative and you betray your self-proclaimed principles. My impression is that the few smart righties drag you lot around like a ball and chain.

        • Groundhog 16.8.1.2

          We all understand what Stephanie is trying to say, we simply know she’s wrong. Your point about HNZ is a perfect case in point. Other writers here have made this claim and no one from the left has the wit to challenge it.

  17. Tamati Tautuhi 17

    By underfunding the Health System, Police and other organisations you are creating a surplus, I think they need to start paying down debt before tax cuts, debt has grown from $15 Billion to $120 Billion in under 8 years, a safe pair of hands?

    • One Anonymous Bloke 17.1

      I created a surplus in my household budget by cancelling the maintenance and insurance payments. My financial adviser refuses to acknowledge my superior wisdom.

      When I sue her I’m calling Bill English as a witness.

  18. Tory 18

    I don’t need or want a tax cut, I would prefer to see the surplus pay down debt of go into Kiwi Saver.

    • Muttonbird 18.1

      Hmm. The public debt that the National government has tripled in 8 years? The Kiwi Saver that the National government removed the very successful incentives from and which first home buyers are pillaging right now?

      I think there are a few people like you – comfortable with where they are at but uncomfortable with the underfunding of public services which has been the hall-mark of this government. After all Kiwis are fair and compassionate, right?

      There are a few people like you who don’t want or need tax-cuts and in fact could pay a bit more if the result was the required funding of essential public services and socially beneficial infrastructure.

    • Macro 18.2

      I would prefer to see it go into extra health services (DHBs have been underfunded for years). Extra policing, (our town of 8000 – the community centre for the Coromandel – has a police station but no police – first time in 150 years). Reduced pupil:staff ratios in schools, houses for those who have no accommodation, A living wage for all government employees, school lunches and breakfasts for the 100,000 kids who go to school hungry each day, better assistance for those at the bottom of society e.g. the solo parents struggling to make ends meet, those who are sick and cannot work, those who are unable to work because they have special needs, and a thousand other requirements for social justice that this government has over looked and neglected for far too long.

  19. Thinkerr 19

    1. Now would be a good time to hold Bill English to account for declaring the extra parental leave bill unaffordable, back in June. If he had to use his power of veto then, how can he talk about affordable tax cuts now?

    Or did this surplus suddenly appear from nowhere at the end of the financial year, taking even the Finance Minister by surprise?

    2. HSBC economist thinks our economy is far from rosy. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11728936

    3. We only made a surplus if we didn’t borrow anything, surely? I doubt thats the case.

    • Wensleydale 19.1

      If he had to use his power of veto then, how can he talk about affordable tax cuts now?

      He just asked Uncle John how he managed it during the flag debacle. He couldn’t find tuppence for child poverty, affordable housing, or other pressing social concerns, but he could gleefully piss away $26 million on a referendum nobody fucking cared about.

      I believe it was Doug Meyers who once said, and I’m paraphrasing here, “the money’s always there… for the right sorts of things”. Paid parental leave is simply not ‘the right sort of thing’.

      In other news, I’ve recently become a grandfather, and I plan to teach my precocious grandchild that politicians, generally speaking, are a bit like paedophiles, or real estate agents — almost universally awful people who should be treated in the same manner you would a rabid dog or a knife-wielding lunatic.

  20. NZJester 20

    The other thing that makes any budget surplus by National a big lie is due to the fact this country owes a lot of overseas debt. If you have large amounts of outstanding debt your books are in the red, not in surplus.
    The last Labour government managed to balance to books and pay off that debt, there was also a nice stream of cash from taxes and SOEs that could have kept the books in balance. National on coming into power immediately borrowed money to pay their tax-lowering bribe to those that voted for them. If you have to borrow money to afford a tax cut then it is obviously something the country can not afford. They also started to sell off pieces of our assets for a quick money boost to try and make their books look healthy. In real terms, the money they would have received to date or saved from the sold assets if still owned by the government would have exceeded the amount they sold for.
    They had housing New Zealand sell housing stock they claimed was excess to needs in some areas and instead of using it to reinvest in new housing in high demand areas, took money away from them as a dividend. They then spent lots of money in paying to put people in privately owned accommodation that basically would have cost them far more than if new houses had been built with that cash!

    • To be fair, the incoming Nat government in 2008 borrowed money so it could continue Labour’s policies (Working for Families, interest-free student loans etc) at a time when recession was causing the government’s income to fall. That was actually a good thing, not something they should be criticised for. Dishing out tax cuts for the rich while borrowing money certainly was self-centred and just plain stupid, but that’s a separate thing.

  21. Rae 21

    We should all take a leaf out of National’s book and we too can have surpluses in all of our bank accounts, here is how it is done.

    You bank all of your earnings but you don’t pay any bills.

    There, I fixed it for all of us.

  22. UpandComer 22

    There is no surplus.

    The public service has no money.

    HNZ is broke – the $20plus billion on it’s balance sheet, is not.

    If govt debt > govt surplus there is no surplus, only debt. How can one have a surplus if one has debt?

    Therefore no government with debt > ‘surplus’ has ever had ‘surplus’. Therefore, no surplus has ever existed in history.

    If someone in NZ wants more money for something, there can be no surplus.

    The NZ economy is crisis.

    Manufacturing is in crisis.

    Every public sector is in crisis.

    100,000 homes despite a track record of wiping book value from one third of 25k odd state houses with no interference from the private sector is simply a matter of the triumph of the social democratic will.

    Spending = stimulus, so how can spending ever be bad? The answer to every question? Spend. Spending = growth. Spending = services. Spend.

    Spending decreases always mean worse services.

    The Chinese own all the houses.

    Bill English cut spending far too much, he is heartless and spendthrift. Bill English has spent far too much, he is careless and profligate. Labour would have incurred far less debt, whilst spending much much more.

    There is no surplus.

    • One Anonymous Bloke 22.1

      Still can’t resist the juvenile jab, I see.

    • Wayne 22.2

      “The NZ economy is in crisis, Manufacturing is in crisis”

      Are you completely unaware of what is actually happening in the economy?

      Growth rate of 3.6%, employment up, median wages up by around 3%, debt reducing. Does not look like a crisis to me.

      Even Andrew Little has dropped the language of crisis. He knows it would sound ridiculous.

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