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Treasury fudge

Written By: - Date published: 5:28 pm, September 6th, 2011 - 19 comments
Categories: gst, making shit up, tax - Tags:

Treasury has now adopted their masters’ political line on income statistics. The latest Treasury MEI uses average after-tax wages to argue that an average worker is better off by 2% since October 2010.

The Quarterly Employment Survey showed gross average weekly earnings rose 4.3% (including a 1.2% increase in average hours worked) over the year to June; taking into account the fall in income tax rates from 1 October 2010, after-tax average weekly wages are estimated to have lifted around 7.5%. With the CPI rising 5.3% over the same period (an estimated 2% of this due to the increase in GST to 15%), someone on the average wage is around 2% better off in June 2011 compared to June 2010.

There are two problems with this – in real terms the average worker’s gross wage less inflation is 1% worse off. Also the average used by the Quarterly Employment survey is just over $1,000 a week, around $50,000 a year. This is a long way above the median wage as shown by the latest IRD distribution figures from 2009.

The truth is that a few are hugely better off, some are ok, and most are still losing. Treasury could have told us that the 90th percentile is 20% better off after the tax cuts – that would have been more honest.


19 comments on “Treasury fudge ”

  1. ghostwhowalksnz 1

    Why on earth do they use the WTI oil price?
    WTI stands for West Texas Intermediate. Neither does the Brent price ( North Sea) the other reference price they use.

    Most useful for NZ is the Tapis index price out of Singapore

    Obviously lazy toffs at Treasury, still following the cultural cringe

    • Colonial Viper 1.1

      The disconnect between the WTI and the Brent prices really set in at the beginning of QE2.

      It is assumed by some that WTI is being manipulated downwards to help suppress US pump prices and assist with American morale.

      Note that the majority of crude oil volumes are now traded on ‘dark exchanges’ at prices not visible to the public.

      • Lanthanide 1.1.1

        Brent went up because of Libyan production which is almost exclusively exported to Europe being taken off the market.

  2. randal 2

    Anybody who knows about the treasury knows that they recruit their personnel from the universities using a very narrow set of criteria so they end up with people like “Bill Englsih”.

  3. Herodotus 3

    Mike – you complain about the means that Tresury uses, anyone with any knowledge with the stats that come out of Treasury, Min of Finance, Min Economic Development etc are only a portion of the story. Unfortunately few are aware of what is in/excluded from inflation and other data that is released. Funny how in 07 inflation was around 3% BUT that excluded the dramatic rise of mortgages that for a floating was around 10.4%, that ate into household incomes.
    Bit off track – but IMO most if not all 1st World govts are extremely fortunate that interest rates are at the current extreme low levels. Then we “would” all be experiencing the fall of the current economic system.
    From another post today

    NRT: The effects of NeoLiberalism

    – So the wage earner is being screwed – we all know that – it is only recently that there has been comment and data to confirm what we all really knew.
    To save us what do we need? Perhaps a Castro type figure that gives the bird to the multinats and banks of the world, not a Goff/Key paint by numbers figure.

    • KJT 3.1

      Mortgage rates have been excluded from the CPI since they were at 28% in the early 80’s.

      They were left off after that, because it would show the absurdity of fighting inflation by inflating mortgage interest costs.

      It must be obvious to everyone by now that the headline CPI only tells half the story.

      The price rises in everyday goods that everyone buys, such as food, have risen at a much greater rate than the CPI. This is masked by the inclusion of goods such as new cars. What ordinary person has ever owned a new car.

  4. If Treasury are going to use after tax figures on wages, then what they should also include in their analysis is the cuts to government services, etc. that have resulted from tax cuts and that have led to real cost increases (e.g., daycare costs, loss of community education, etc.). Some calculation of the impact of those cuts on the average/median taxpayer should be factored in.

    As those on the right are fond of pointing out, most New Zealanders are nett gainers from what remains of our progressive taxation system (via the public services they access) and so, logically, it is the majority who will be the ones hit most by cuts to those services. 

  5. Macro 5

    What else can we expect from these useful “idiots”, other than lies, damned lies, and “statistics”. They know of course, well enough, that they are presenting a false picture of reality, but they could not care less. After all – their income is well above the “average”, and even more above the median.

  6. Peter 6

    Don’t forget these are the same guys who make a virtue of inflation by claiming that “Nominal GDP is recovering” – how embarrassing!


  7. mik e 7

    treasury is populated by business round table ideologues Chicago school propagandists

  8. Colonial Viper 8

    I love Treasury / TPTB shit like this; it makes more and more NZers feel that they are struggling and falling further and further behind their neighbours.

  9. Another reason to rehabilitate Karl Marx, all of this reflects the rise in the rate of exploitation i.e. s/v or surplus value over the value of the wage.

  10. KJT 10

    Not to forget the average wage has also been pushed up by big job loses for those on lower wages.

    This year. Wage rise 2%. Grocery bill up 25%.

    The normal experience for the bulk of wage earners.

  11. KJT 11

    The Government could have saved millions by replacing treasury, 30 years ago, with a Don Brash talking doll saying, sell everything, cut taxes, cut spending, cut wages!

  12. Herodotus 12

    This may help to understand how inflation is calculated.
    Please take note of the difference and definition of tradables and non tradables. See how households cannot escape the higher Non Tradables as there can be no substitution of products/services and that these are everyday costs e.g. power, rent, rates. So this is one trap whilst reported inflation/cpi can appear low yet personel experiences tell us that the cost of living is increasing at a quicker rate. But I am sure many are already aware of this 🙂

  13. Anybody who knows about the treasury knows that they recruit their personnel from the universities ……What else can we expect from these useful “idiots”, other than lies, damned lies, and “statistics”.

  14. Peter nickle 14

    Cry me a river. I don’t feel guilty on being $100K+car+super+medical.
    I am afraid one of the few and I am happy, John Key rocks.
    BTW, my mortgage will be gone by next Friday as well, tax cuts and low interest rates helped me a lot. I will be a rich prick with $6K in my hand per month.
    But I bet I pay more tax than loads of you sad arses on this site as well.

    • McFlock 14.1

      bit much chardonnay tonight, Peter?
      With supporters like you and Alisdair Thompson, no wonder Key is looking a bit frayed around the edges. New Zealanders might figure out they’ve been conned.

    • ghostwhowalksnz 14.2

      And in 15 years you will be selling your strawberries at the local farmers market to eke out an income from the expensive lifestyle block you live on.
      That high paying job ? Of course you were replaced by a cardboard cutout 15 years your junior just because they can.
      Look around you and learn, instead of spouting hubris

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