John Key advocates theft by banks?

15 May 2013 Frank Macskasy 2 comments

Recent events in Cyprus have once again brought the global financial sector into sharp public consciousness. This time, as well as a bailout, there was a serious – and ominous - demand from the EU that Cyprus make a “one off” levy (or tax) on the savings of Cypriots and others living in that country.

Acknowledgement: NZ Herald – Hard EU bailout terms anger Cypriot savers

Deposits up to and over €100,000 ($158,000) would be levied with a 9.9% tax whilst below that threshold would be pay a ‘lower’ portion of 6.75%.

Unsurprisingly, the proposed tax resulted in a run on cash withdrawals at ATMS (see: Cypriots asked to surrender up to 10 percent of bank balances in return for EU bailout); banks closed their doors (see: Fury as banks closed to avert run); global sharemarkets were affected (see: Stock Markets Fall Amid Fears Of New Eurozone Crisis); and the British government was forced to fly in one million euros to pay military personnel (see: One Million Euros Heading To Island For British Military Personnel ).

Pressure on the Cypriot government was such that in the last 48 hours, the Savings Tax was dumped (see: Rejection of Deposit Tax Scuttles Deal on Bailout for Cyprus). The Cypriot Parliament voted thirtysix against, with nineteen abstaining. It is noteworthy that not one politician risked his/her life by voting for the proposal.

Europeans. They know how to put pressure on their elected representatives.

Meanwhile, back home, in the Land of the Long White Cloud and several million sheep…

Acknowledgement: Radio NZ – NZ bank bailout scheme is last resort, says PM

Key’s statement here is chilling,

“At the end of the day we’re talking about emergency provisions. These banks are heavily regulated, they have significant oversight and lender of last resort facilities at the Reserve Bank.

This is really in the event that a bank got itself in such a terrible mess that it fell over and had to restart again.”

Acknowledgement: IBID

If that is supposed to be reassuring – it is not. In fact, if anything, this is a clear warning to every single New Zealander that if a bank gets into trouble – or if there is even a hint of trouble – to get in quickly and withdraw every cent that a depositor might have.

If a bank gets in trouble, and has a crippling run on deposits, it will be as a direct consequence to Key’s plan to dip into people’s savings to bail out that institution,

The Reserve Bank’s Open Bank Resolution (OBR) plan, due to come into effect at the end of June, would mean a partial loss on all deposits if a bank failed in New Zealand, in order to fund the bank’s bailout.

Acknowledgement: Fairfax media – Reserve Bank scheme news knocks kiwi

Ironically, this is where Libertarians – who consider all taxation as theft – may have a point.

Taxation is one thing. We pay it so we can enjoy the benefits of a modern society and economy. Roads, bridges, schools, hospitals, police, etc, do not materialise out of thin air.

Dipping into people’s savings accounts – which has already been taxed one way or another – is not a tax. It is expropriation.

Expropriatiion – that dreaded word which National and it’s supporters levy against the Left when we talk about re-nationalising State assets. But which evidently is ok if a bank goes bust and has to be bailed out?

If this principal is to be applied across all sectors of society and the economy, then one could imagine that employees and sub-contractors of Mainzeal should have been taxed to bail out that company. Why should a bank be different to a construction company? Is there a difference?

If this expropriation of deposits was ever to happen, do the depositors gain any benefit? Do they gain shares in the Bank as compensation? Or, if not, does that mean that shareholders gain the benefit of other people’s money being used to prop up their investments?

One could imagine an invalid on a WINZ benefit having his/her meagre savings “taxed” to bail out a bank – to preserve an investor’s shareholding that may be worth millions of dollars. This isn’t justice or common sense, this is nasty, medieval, “robber Baron” stuff.

The biggest irony here is that, according to the principals of the free market, this is a kind of subsidy to a business – a subsidy enforced by the State, against the will of people who are not even shareholders in a particular bank.

Even marxists would balk at such extreme State power to seize people’s money. They’d simply nationalise the bank and be done with it. Depositors would still have their modest savings left intact and untouched.

Key’s proposal is not just crazy from almost every perspective – it is an insult to our intelligence. Especially when banks are doing very well with their profits,

When profits for New Zealand’s four largest banks are at a staggering $3.5 billion (for 2011/12) – an increase of 22% – then that must raise serious questions why Dear Leader is even considering making depositors pay for any potential future bailout.

Shouldn’t the banks be looking at a deposit insurance scheme of some sort? You’d think so, wouldn’t you?

Perhaps, though, an event like this is what might be required to jolt New Zealanders out of their collective complacency. It’s only when the middle classes are hit hard in their wallets, that they stop being passive consumers and start to reassert themselves as active citizens.

Because, my fellow Kiwis, you can bet your last dollar (before the banks seize it) that John Key’s $50 million will be somewhere else – probably safe in some Swiss Bank account.

The people of Cyprus (and Iceland) have shown us the way.

Addendum

Remember the so-called “Light Bulb” and “Shower Heads” affairs, in 2008, where National slammed the then-Labour Government as engaging in “Nanny State” politics? (see: Showers latest target of Labour’s nanny state ) National’s Nick Smith said,

“People should be free to use as much water as they like when showering, provided they don’t expect others to pay for their profligacy. User-pays is a far better approach than nanny state.”

So using eco lightbulbs and smaller shower flows, to conserve electricity and water is nasty “Nanny Statism”.

But going into people’s savings accounts; stealing their money; and handing it over to banks – is all hunky dory? Well, I’m glad that’s settled.

(Cue theme music to ‘Monty Python’s Flying Circus’.)

This blogpost was first published on The Daily Blog on 22 March 2013.

*

References

Banking profits up 13.6 percent

ASB Bank cash profit rises 7pc

ANZ profits up 17pc to $1.26b

BNZ first-half profit jumps 36pc

$3.5b profits for big four banks

Westpac profit increases 22pc

Outcry at big banks’ mega-profits

Additional

Reserve Bank scheme news knocks kiwi

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Categories: Dollars & Sense, The Body Politic Tags: bank bailouts, bank profits, Cyprus, Dear Leader, Open Bank Resolution

Nats, Lies, and Videotape

3 May 2013 Frank Macskasy 17 comments

National MP, Mark Mitchell, was a guest on Prime TV’s “Backbenches” on 1 May, along with Damien O’Connor (Labour Party); Jan Logie (Green Party), and Peter Dunne (Peter Dunne Party).

Mark Mitchell

Usual political rah-rah, blah blah, from the Tory politician, until he came up with this throwaway remark,

“We inherited ten years of deficits from the previous Labour Government...”

Now, quite simply, anyone with a passing knowledge of Labour’s fiscal record during their term in office from 2000 to 2008 will know that is a blatantly untrue comment.

In fact, it’s bullshit.

Under Labour, Government Debt to GDP dropped from 31.4% of GDP to 17.4%.

Government debt did indeed rise – under National, as the graph below amply demonstrates;

Acknowledge: Trading Economics/NZ Treasury

National’s government debt is now twice as high as when Labour left office in 2008.

Some will even recall that Labour Finance Minister, Michael Cullen, posted several surpluses during his tenure as Finance Minister – reaching $7.9 billion by 2007;

$2,300,000,000: Dr Cullen’s finest hour (29 May 2002)

Cullen prepares to trumpet high surplus (21 Feb 2003)

Cullen Unwilling To Share Fiscal Surplus Through Tax Cuts (18 Oct 2004)

Hide attacks Cullen for hiding huge surplus (16 March 2005)

Record surplus, but Cullen ‘won’t know about tax cuts until December’ (11 Oct 2006)

Cullen confirms huge surplus (10 Oct 2007)

Cullen quick to emphasise volatility after surplus hit (19 Feb 2008)

Just as well that Cullen resisted strident calls for massive tax cuts. Instead, perhaps being the wisest man in the decade, realised that common sense demanded that we pay down our sovereign debt, rather than splurge out on an almighty cash-lolly scramble.

Mitchell should know all this. He probably does. In which case we can only wonder if he was perpetuating a right wing lie about Labour’s track record.

If Mitchell isn’t aware of the reality of Labour record whilst in government, then he is woefully ignorant.

And, as pointed out above, is Mitchell aware the govenment debt under National watch has doubled from 17.4% in 2008 (left by Labour) to 37% (generated by National)? Having to borrow billions to pay for two unaffordable tax cuts in 2009 and 2010 certainly did not help (see: Govt borrowing $380m a week ).

Let’s ask Mr Mitchell, shall we?

Date: Fri 3 May 2013, at 12.09pm
From: Frank Macskasy <fmacskasy@yahoo.com>
Subject: Budget surpluses and deficits
To: Mark Mitchel <mark.mitchell@parliament.govt.nz>
Cc: Dominion Post <editor@dompost.co.nz>, NZ Herald <editor@herald.co.nz>,
    Otago Daily Times <odt.editor@alliedpress.co.nz>,
    Morning Report <morningreport@radionz.co.nz>,
    Nine To Noon RNZ <ninetonoon@radionz.co.nz>,
    Kim Hill <saturday@radionz.co.nz>,
    Chris Laidlaw RNZ <sunday@radionz.co.nz>

.

Kia ora Mr Mitchell,

Recently, on 1 May, you made a statement on Prime TV’s “Backbenches” to the effect,

“We inherited ten years of deficits from the previous Labour Government…”

I was surprised that you would make such a comment.

Are you aware that under Labour, Government Debt to GDP dropped from 31.4% of GDP to 17.4%?

http://fmacskasy.files.wordpress.com/2013/05/new-zealand-government-debt-to-gdp.png

Government debt rose thereafter, from 17.4% in 2008 to 37% – generated by your government.

Labour’s surpluses were well publicised in media reports, reaching $7.9 billion by 2007,

.

$2,300,000,000: Dr Cullen’s finest hour (29 May 2002)

.

Cullen prepares to trumpet high surplus (21 Feb 2003)

.

Cullen Unwilling To Share Fiscal Surplus Through Tax Cuts (18 Oct 2004)

.

Hide attacks Cullen for hiding huge surplus (16 March 2005)

.

Record surplus, but Cullen ‘won’t know about tax cuts until December’ (11 Oct 2006)

.

Cullen confirms huge surplus (10 Oct 2007)

.

Cullen quick to emphasise volatility after surplus hit (19 Feb 2008)

.

Can you explain how you’ve managed to turn a near-decade of surpluses, and paying down sovereign debt, into “ten years of deficits from the previous Labour Government”?

It is obvious that your statement on Labour’s fiscal track record was somewhat in error.

Will you be issuing a media correction on this issue? If not, why not?

Please note that any statement you provide may be published in a blog.

Regards,
-Frank Macskasy

This blogpost will be updated upon Mr Mitchell’s response.

= fs =

Categories: Dollars & Sense, The Body Politic Tags: budget deficits, budget surpluses, Labour, Mark Mitchell, Michael Cullen

Blogger lays complaint with Commerce Commission

1 April 2013 Frank Macskasy 21 comments

As of today, 1 April 2013, this blogger has laid a complaint with the Commerce Commission regarding National minister’s questionable dealings with Rio Tinto and proposed subsidies for electricity prices,

.

contact@comcom.govt.nz

2:20 PM

to me

Your details

First Name: Frank

Last Name: Macskasy

Email: fmacskasy@gmail.com

Your address

Your complaint

Business you are complaining about: New Zealand Government

Street: Molesworth St

Suburb: Thorndon

City/Region: Wellington

Post code: 6160

Business Contact Number/ Mobile number: (4) 817 9999

Description of complaint

What happened?
Tony Ryall has recently announced that the NZ Government is intervening directly in negotiations between Meridian Energy and Rio Tinto (which is 80% owner of Tiwai Aluminium Smelter).

Mr Ryall has said,

“With this in mind, the Government has been in contact with Pacific Aluminium’s international parent company Rio Tinto this week to discuss helping to bridge the gap in their positions over the short to medium term, if this could be of assistance in concluding an agreement.

“In the meantime, we understand Meridian’s existing contract with Pacific Aluminium remains in place at least until 1 January 2016 with significant financial and other obligations beyond that.”

Ryall added that “all relevant information – including about the smelter electricity contract – will be reflected in the Mighty River Power offer document which is currently being finalised”.

Source: NZ Herald, Govt steps in to sort out stalled Tiwai power deal ( http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10874174)

I therefore submit the following;

(1) This appears to be a prima facie case of the NZ Government manipulating the future stock price of Mighty River Power (and other state owned powercos), by offering a subsidy to Rio Tinto.

(2) This subsidy is not available to any other company nor individual.

(3) As such, I submit that the NZ Government’s intention to subsidise electricity that is provided to Rio Tinto is done with a view to reduce competition in the market.

Specifically, I draw the Commission’s attention to the Commerce Act 1986; sections 27, 30, and related clauses.

(4) Furthermore, I submit that if any other corporation, company, institution, or individual attempted such an act, that they would be deemed to be guilty of price fixing and manipulation of the market.

I await your response and thank you for your consideration of my complaint.

-Frank Macskasy

I will keep readers posted as to what, if anything results from this complaint.

*

Relevant sections

Section 27: Restrictive trade practices

Source

Section 30: Price fixing

Source

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Categories: Dollars & Sense, The Body Politic Tags: commerce commission, Meridian energy, Rio Tinto, state asset sales, tony ryall

What’ve you been smoking, Mr Roughan?

1 April 2013 Frank Macskasy 2 comments

Acknowledgement: NZ Herald – Perfect chance to can Tiwai

There’s nothing quite like a threat to the New Right economic theory to bring the apologists slip-sliding out of the wood-work.

Case in point: John Roughan’s column in the NZ Herald on 30 March. According to Mr Roughan, the ‘blame’ for this latest fiasco can be sheeted home to John Maynard Keynes and our post-War desire for full employment.

Because, as we (except for neo-liberals) all know, full employment is a good thing for society.

First of all, read Mr Roughan’s article. Then come back to this blogpost, and scroll down…

Ok, read it?

Now who spotted the outrageous piece of delusional rubbish that Mr Roughan wrote in his column?

Let me quote;

“The price of most things at that time was controlled or subsidised and nobody knew or cared that prices didn’t align the item’s cost of production to its value in a competitive market. The economy was a job-creation scheme that ended with double-digit unemployment in the 1970s.”

Acknowledgement: IBID

Either Mr Roughan doesn’t know his history – or he is being wilfully mendacious to promote his rather obvious neo-liberal views.

Let’s have a look at unemployment in the 1970s though to the 1990s,

Acknowledgement: Ministry of Business, Innovation and Employment – How bad is the Current Recession? Labour Market Downturns since the 1960s

And to put that graph into actual stats,

Date	Unemployment rate
Mar-56	0.6
Jun-56	0.6
Sep-56	0.6
Dec-56	0.6
Mar-57	0.6
Jun-57	0.6
Sep-57	0.6
Dec-57	0.6
Mar-58	0.6
Jun-58	0.6
Sep-58	0.6
Dec-58	0.6
Mar-59	0.6
Jun-59	0.6
Sep-59	0.6
Dec-59	0.6
Mar-60	0.6
Jun-60	0.5
Sep-60	0.5
Dec-60	0.5
Mar-61	0.5
Jun-61	0.5
Sep-61	0.5
Dec-61	0.5
Mar-62	0.5
Jun-62	0.5
Sep-62	0.5
Dec-62	0.6
Mar-63	0.5
Jun-63	0.5
Sep-63	0.5
Dec-63	0.5
Mar-64	0.5
Jun-64	0.5
Sep-64	0.5
Dec-64	0.5
Mar-65	0.5
Jun-65	0.5
Sep-65	0.5
Dec-65	0.5
Mar-66	0.5
Jun-66	0.5
Sep-66	0.5
Dec-66	0.5
Mar-67	0.6
Jun-67	0.7
Sep-67	1.0
Dec-67	1.2
Mar-68	1.3
Jun-68	1.2
Sep-68	1.1
Dec-68	1.1
Mar-69	1.0
Jun-69	0.9
Sep-69	0.8
Dec-69	0.8
Mar-70	0.8
Jun-70	0.8
Sep-70	0.8
Dec-70	0.8
Mar-71	0.8
Jun-71	0.9
Sep-71	1.0
Dec-71	1.2
Mar-72	1.3
Jun-72	1.3
Sep-72	1.3
Dec-72	1.3
Mar-73	1.2
Jun-73	1.1
Sep-73	1.1
Dec-73	1.0
Mar-74	1.0
Jun-74	1.0
Sep-74	1.0
Dec-74	1.0
Mar-75	1.1
Jun-75	1.2
Sep-75	1.2
Dec-75	1.2
Mar-76	1.2
Jun-76	1.1
Sep-76	1.0
Dec-76	0.9
Mar-77	0.8
Jun-77	0.8
Sep-77	0.8
Dec-77	1.2
Mar-78	1.5
Jun-78	1.7
Sep-78	1.7
Dec-78	1.4
Mar-79	1.4
Jun-79	1.5
Sep-79	1.4
Dec-79	1.3
Mar-80	1.4
Jun-80	1.6
Sep-80	2.2
Dec-80	2.5
Mar-81	2.6
Jun-81	2.6
Sep-81	2.6
Dec-81	2.7
Mar-82	2.6
Jun-82	2.7
Sep-82	3.0
Dec-82	3.6
Mar-83	4.4
Jun-83	5.0
Sep-83	5.1
Dec-83	4.8
Mar-84	4.7
Jun-84	4.4
Sep-84	4.3
Dec-84	3.9
Mar-85	3.7
Jun-85	3.6
Sep-85	3.6
Dec-85	3.9
Mar-86	4.2
Jun-86	4.1
Sep-86	4.1
Dec-86	4.2
Mar-87	4.0
Jun-87	4.2
Sep-87	4.2
Dec-87	4.4
Mar-88	4.9
Jun-88	5.4
Sep-88	6.4
Dec-88	6.3
Mar-89	7.1
Jun-89	7.5
Sep-89	7.4
Dec-89	7.3
Mar-90	7.2
Jun-90	7.7
Sep-90	8.1
Dec-90	8.9
Mar-91	9.8
Jun-91	10.5
Sep-91	11.2
Dec-91	11.0
Mar-92	10.9
Jun-92	10.4
Sep-92	10.6
Dec-92	10.6
Mar-93	10.1
Jun-93	10.1
Sep-93	9.5
Dec-93	9.4
Mar-94	9.3
Jun-94	8.5
Sep-94	8.0
Dec-94	7.6
Mar-95	6.8
Jun-95	6.4
Sep-95	6.2
Dec-95	6.4
Mar-96	6.4
Jun-96	6.2
Sep-96	6.4
Dec-96	6.2
Mar-97	6.7
Jun-97	6.8
Sep-97	7.0
Dec-97	7.0
Mar-98	7.4
Jun-98	7.9
Sep-98	7.7
Dec-98	7.9
Mar-99	7.5
Jun-99	7.3
Sep-99	7.0
Dec-99	6.4
Mar-00	6.5
Jun-00	6.3
Sep-00	6.0
Dec-00	5.8
Mar-01	5.5
Jun-01	5.4
Sep-01	5.4
Dec-01	5.6
Mar-02	5.3
Jun-02	5.3
Sep-02	5.5
Dec-02	5.1
Mar-03	5.0
Jun-03	4.8
Sep-03	4.5
Dec-03	4.7
Mar-04	4.3
Jun-04	4.2
Sep-04	3.9
Dec-04	3.8
Mar-05	3.9
Jun-05	3.8
Sep-05	3.8
Dec-05	3.8
Mar-06	4.0
Jun-06	3.7
Sep-06	3.9
Dec-06	3.8
Mar-07	3.8
Jun-07	3.7
Sep-07	3.6
Dec-07	3.5
Mar-08	3.8
Jun-08	4.0
Sep-08	4.3
Dec-08	4.7
Mar-09	5.0

Source: NZIER, Statistics NZ.

Acknowledgement: Ministry of Business, Innovation and Employment – How bad is the Current Recession? Labour Market Downturns since the 1960s – Data Table Figure 1: Unemployment Rate

At no point in the 1970s did unemployment ever rise above 1.7%. Hardly the “double-digit unemployment in the 1970s” that Mr Roughan presented as the unvarnished truth.

In fact, if we look at the actual stats, the only time unemployment rose into double-digit figures was from Jun-91 to Jun-93, when National implemented it’s infamous “Mother of all Budgets”. That Budget, written by arch-neo liberal Ruth Richardson, sent businesses to the wall as well as unemployment skyrocketing,

John Roughan then attempts to use his bogus “facts” to push the typical New Right line,

“Pacific Aluminium asked Meridian to renegotiate a price that was set just before the world economy went sour in 2007 and demand for aluminium dropped. Meridian agreed to a lower price until 2016 but would not commit to a lower price beyond that.

Last week the Government intervened. Some of your taxes and mine are going to be promised to a global mining conglomerate that wants to sell its New Zealand smelter but cannot find a buyer.

The Government could not have better demonstrated the pitfalls of public ownership if it had tried.”

Acknowledgement: NZ Herald – Perfect chance to can Tiwai

“The Government could not have better demonstrated the pitfalls of public ownership if it had tried”, wrote Roughan.

Based on – - – ?

Falsities?

Ideology?

Whimsy?

Or just plain bullshit.

The stoush between Rio Tinto and Meridian Energy does not “demonstrate[d] the pitfalls of public ownership” at all.

What it demonstrates is that Rio Tinto has seized the main chance to re-negotiate it’s contract. Does anyone who is not on hallucinogenic drugs not believe even for a moment that Rio Tinto wouldf not try it on with Meridian even if that powerco was 100% privately owned?

Does Mr Roughan honestly believe, with hand-on-heart, that Rio Tinto would behave differently if Meridian was a private company, like Contact Energy?

How f*****g naive can some commentators get, for gods-sakes?

John Roughan’s column is nothing less than neo-liberal propaganda. It is a blatant attempt to twist the current situation, and mis-represent the facts. It is a deflection. It is an acolyte of neo-liberalism trying to white-wash his failed dogma and blame everyone else except his own failed system for this total screw-up.

As if the 2007/08 Global Financial Crisis wasn’t enough to show us that neo-liberal capitalism is a failed ideology. (Who would Mr Roughan blame for that collapse, I wonder? Solo-mums in South Auckland?)

But then, we all know how well Right Wingers take responsibility, don’t we?

Not very well.

*

Hat-tip

Chris Trotter

References

NZ Herald: NZ Herald – Perfect chance to can Tiwai (30 March 2013)

The Daily Blog: Chris Trotter, Lying For The Revolution: John Roughan Defends Neoliberalism (1 April 2013)

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Categories: Dollars & Sense, The Body Politic Tags: John Roughan, Meridian energy, Rio Tinto, Tiwai Point, unemployment

Easter Trading – A “victimless crime”?

30 March 2013 Frank Macskasy 18 comments

Some years ago, on ANZAC Day, I was in a convenience store in downtown Wellington, chatting with a staffmember who also happened to be a friend.

It was before 1pm, and according to the law, whilst the convenience store was able to open, it was not able to sell alcohol.

A customer came in and wanted to buy a bottle of wine (who drinks booze in the morning?!). The staffmember advised him politely that, according to the law, they were not able to sell alcohol before 1pm.

The customer – a well-dressed pakeha male – threw what can only be called a tantrum and demanded his “rights” to buy whatever he wanted.

The shop assistant stood her ground. He continued ranting. And that’s when I said to him,

“Do you realise that if she sells you that alcohol, she is breaking the law, and if caught, would lose her job?”

His reply? He spat back with a fair degree of venom, “I don’t care. I don’t give a shit about her job. I just want what I came in for.”

To which I replied,

“Well, if you don’t care about her job, why should she care about your so-called rights? It cuts both ways, mate.”

His response was to swear and stormed out of the store.

Good riddance to an arsehole who, as a child, must have gotten everything he wanted by simply demanding it and stomping his feet.

I’ve never forgotten that incident. To me, it signified everything that is wrong with our society.

Since the mid/late 1980s, it seems to me that a “Me Culture” of individualism, has achieved a degree of dominance that, in the past, would not have been countenanced.

This “Me Culture” is one that demands consumer goods and services whenever we want it, without due regard for consequences or the rights and needs of others. The issue of easy availability of cheap alcohol is one such example.

We all know that cheap booze is causing millions of dollars worth of damage to our society and economy. BERL put the figure at over $4.5 billion in 2005/06. (See: Costs of harmful alcohol and other drug use) The demands placed on paramedic callouts, frontline hospital services, Police, Courts, Prisons, and loss to the economy due to ACC payouts, lost work days, family disruption and violence, etc, is costing our country hundreds of millions of dollars.

Yet, when community leaders and elected representatives want to control aspects of the booze industry, the shrill screams of outrage usually centre around one, selfish, argument,

“Why do you want to penalise me for the actions of others?”

Check out any messageboard, internet forum, letters to editor page, etc, on this issue – you’ll find that argument repeated ad nauseum. (And whinging like that it is nauseating.)

The perennial debate about retailers trading over the Easter weekend is another prime example of the “Me Culture”.

Companies such as Oderings flout the law every year; are fined a paltry $1,000, and are left to repeat the offence year after year,

2011

Acknowledgement: TVNZ – Garden centre defies Easter trading ban

2012

Acknowledgement: Fairfax Media – Nursery enjoys a good Friday

2013

Acknowledgement: Fairfax Media – Easter trading ‘a victimless crime’ – retailer

Meanwhile, in a quirky irony, larger corporate chain stores obeyed the law,

New Zealand Food and Grocery Council chief executive Katherine Rich said the corporate chains usually stuck to the rules, and would be closed today and Sunday.

Acknowledgement: IBID

The $1,000 fine paid by each store is outweighed by the big profits made by the law-breaking retailers.

So is it a “victimless crime”, as garden centre owner, Darryn Odering insists?

Or is this a a case of businesses manipulating ill-informed public opinion; selfish attitudes; and exploiting their advantage as a minority of law-defying businesses, trading when their competitors are closed?

There are other laws in this country – specifically drug related – where it could be reasonably argued that smoking cannabis; ingesting LSD; snorting cocaine; or injecting heroin, is a “victimless crime”.

Yet, our prisons are filled with people who’ve used cannabis, LSD, cocaine, or heroin.

And how, specifically is “victimless” defined?

Are retail assistants who are forced to work on public holidays “victims” of business owners whose only concerns are turning a profit?

There are a few numpties in this country who mistakenly think that retail assistants (along with fast-food workers, etc) have a “choice” in working on public holidays.

Let me disabuse these naive individuals if that illusion. Retail, fast-food, etc, workers have zero choice in working whatever days/nights they are rostered on. When employers interview staff one of their first questions will be,

“Can you work public holidays/evenings/nights/etc?” – despendent on what hours the business is operating.

If an employer needs staff on a Monday, regardless of a public holiday; and s/he has two candidates; all other things being roughly equal; one can work a public holiday; the other can’t – who do you think the employer will choose?

And if a staff member doesn’t like working on public holidays, and would rather spend time with a family; or has children to look after when schools are closed – do the Pro-Choice Muppets really believe that the employee has the power to change their rostered hours with repercussions?

I submit to the reader that with 170,000 unemployed in this country (and possibly higher according to some stats – see: New Zealand Real Unemployment at 9.1%), that no retail or fast food worker will jeopardise their job by refusing to work public holidays.

They are a victim of their powerlessness and high unemployment.

This is not a “victimless” crime. It is an exploitative crime, much like the pimp who forces his girlfriend/wife/relation out onto the streets at night, to have sex with strangers for money. It may be a legal activity, but it is not “victimless” (see: Girls pimped out by relatives – pastor )

Secondly; Louise Evans McDonald, of the Retailers Association government and advisory group manager stated that,

“Many retailers similarly deserve the right to decide whether they open or not.”

Acknowledgement: Fairfax Media – Easter trading ‘a victimless crime’ – retailer

And that, folks, is the crux of the matter.

Oderings is open during Easter because it is hugely profitable.

Why is is hugely profitable?

Because it’s a public holiday.

Would it be hugely profitable if every single business was open on Easter Friday? Including schools, government departments, etc? In fact, if Easter Friday and Easter Monday was no different to any other day of the week – how profitable would it be for law-breakers like Oderings?

The answer, of course, is that it wouldn’t. It would simply be another business day. Let’s be clear here;

Oderings relies on it’s profits because it’s competitors obey the law.

Oderings would not have those huge profits if it Easter Friday (and Monday) was another normal trading day.

So people like Rochelle Cook, with her children, at Oderings Nursery in Upper Hutt on Good Friday in 2012 (top image) would be at work and her children at day care.

So if the law is to be changed, let’s do it fairly and apply it across the board throughout the country: everything opens and everyone (with a job) works. Not just the captive retail assistants and fast food workers. Everyone.

And this is where the rubber hits the road. Do we, as a country, want to give up a holiday so we can all work like any other day?

And if we’re all working – how will that benefit us and retail outlets?

The answer is; it doesn’t benefit us. We get another day that shops are open and we’re all working. Oh whoopty f****n doo. What the hell did we just gain/lose?!?!

To all elected representatives, I offer this advice;

If we’re serious about keeping our holidays, then it’s time that the $1,000 fine was increased to a more meaningful amount. $25,000 seems a nice figure. The current penalty of $1,000 is meaningless. It’d be like sentencing a drug pusher to community service. Both are supposedly “victimless” crimes, after all.
If we’re going to allow Oderings to open on Easter – then make it a blanket law, across the country. Everyone opens; everyone works. That includes schools on Easter Friday and Easter Monday. No one takes time off.

Now let’s see which way the public jumps.

As for Mr Odering, in future I think our household will be shopping at Mitre10 for our gardening supplies.

*

References

TVNZ: Garden centre defies Easter trading ban (22 April 2011)

Fairfax Media: Nursery enjoys a good Friday (7 April 2012)

Fairfax Media: Easter trading ‘a victimless crime’ – retailer (29 March 2013)

Fairfax Media: Drought wilts Easter trade in plants (30 April 2013)

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Categories: Dollars & Sense, Social Issues, The Body Politic Tags: Mitre10, Oderings, shop trading hours

National caught out over Solid Energy – changes story on coal prices, debt, and other matters

13 March 2013 Frank Macskasy 17 comments

When Solid Energy’s financial crisis became public on 21 February 2013, Bill English, Tony Ryall, and John Key were quick to apportion blame. Their high-paid (by the taxpayer) media strategists had done their dirty work.

They blamed;

Solid Energy mis-reading trends in coal prices
The previous Labour government
The Board and management of Solid Energy
The Global Financial Crisis
Mrs Teagle, the tea-lady
Sunspots

Everyone was to blame. National’s hands were clean. The world is a bad place.

So, let’s go through the points above.

1. Solid Energy mis-reading trends in coal prices

One of National’s constant lines - in an attempt to smear Solid Energy’s Board as incompetant – was the SOE’s inability to “read trends in world prices for coal”.

As Dear Leader, John Key said on 25 February,

Asked at his post-cabinet press conference why Solid Energy was in such dire straits, he said its directors grossly over-estimated what they thought coal would be worth.

“They got it completely and utterly wrong, and up to the middle of 2012 they still rejected the international view of where coal was likely to go,” he said.

Source: Solid Energy got coal price wrong: Key

On 21 February, Little Leader, Bill English said,

“World coal prices have dropped significantly which has contributed to the deteriorating financial position that Solid Energy is in now.

“These discussions are required because the position of the state-owned enterprise has continued to deteriorate despite the restructuring that has already taken place,” Mr English says.

Source: Bill English & Tony Ryall – Statement on Solid Energy

And as Baby Leader, Tony Ryall also said on 21 February,

State-owned Enterprises Minister Tony Ryall said a number of factors had weighed against the company, in particular world coal prices dropping by 40 per cent.

“It is facing very serious financial challenges,” Ryall said.

Source: Debt-laden Solid Energy talking to banks

So the narrative being spread by senior National ministers was that Solid Energy was incompetant and couldn’t understand world coal price trends.

Which, for a company that lives, breathes, and farts coal seemed… unlikely.

#1 – Rebutted

But then, on 13 March, Bill English was reported on Radio New Zealand with this statement,

But Finance Minister Bill English says it wasn’t clear that coal prices were declining, and the Government can’t be held responsible for how much debt Solid Energy eventually took on.

Source: Labour says Govt forced Solid Energy to borrow more

Okay… so despite Key, English, and Ryall insisting that Solid Energy had mis-read trends in global coal prices, he is now saying that “it wasn’t clear that coal prices were declining”?!

Well, I’m glad that’s been cleared up.

After all, it’s not like National was initially claiming that world coal prices [were] dropping by 40 per cent to make Solid Energy’s board look bad – and then suggested it wasn’t clear that coal prices were declining for National to save their own arses.

That would be… contradictory.

2. The previous Labour government

National has blamed the previous Labour government for everything, from the decline of the British Empire, to the sinking of the Titanic. (And trying to pin both World Wars on Labour – but that’s a work-in-progress.)

On 26 February, Key said,

“They can’t wash their hands of the fact that from 2003 on, they were intimately involved with the plans that that company had,” Mr Key said.

Source: Govt, Labour squabble over Solid Energy

On 13 March, English said,

At the time, it was not clear that coal prices were declining. In fact, the best advice from the company—with which the Government ended up disagreeing—was that coal prices would continue to rise. But, as I said, that decision was made in the context of the mess that the previous Labour Government left with the State-owned enterprises.

Source: Parliament Questions and Answers – March 13

Ah, the inhumanity of it all… The dastardly tentacles of a previous government, from four years ago, reaches into the present day to thwart National’s good works. It’s amazing that with such power, that Labouir ever managed to lose two elections in succession, from 2008…

One has to wonder though… is National really so powerless? If so, why are they in government?

#2 – Rebutted

In a rather strange moment of open honesty, Tony Ryall had this to say about Labour’s administration of SOEs, on 27 February,

Hon TONY RYALL: No, I am not going to launch some sort of independent investigation into the governance of Solid Energy. The governance of Solid Energy, much of which was appointed under the previous Labour Government, was running that company and it was doing very well up until 2011. We had the scoping study. It identified a number of issues. And I agree with Trevor Mallard: the collapse of world coal prices is a most significant factor in this matter.

Source: Parliament Questions for oral answer: 5. Solid Energy—Former Chief Executive

And a few days later, on 2 March of this year, Key let slip,

”On the face of it, at least what it had was rising profits. It had a situation where its valuation was going up, it had bankers lending it money, and it had an investment stream that had been set in place by the previous Labour Government,” Mr Key told BusinessDay.

Source: Solid Energy bail-out cost likely to rise

Really?

A look at the profits and dividends paid during Labour’s administration bear out their prudent management of SOEs. And confirmed by Tony Ryall and John Key.

In Labour’s entire eight years, not one single SOE suffered a financial collapse of the magnitude of Solid Energy – and Cullen was still posting surpluses, year after year. And paying down government debt. And finding time to play with his grandkids.

The Nats are in office for four years – and they lose a SOE on their watch?

How does that work?

Especially when, as Adam Bennett reported in the Herald on 13 March,

Mr Shearer later said Solid Energy had responded to the Government’s call, “returning $130 million over four years, including $30 million in late 2011 by which time coal prices had further declined and the company was in financial distress“.

He also pointed to the company’s increase in borrowing over that period, rising from $13 million in 2009 to $191 million the following year and $313 million by 2012.

See: Govt accused of milking Solid Energy for dividends

By contrast, the previous Labour government, took only $64.4 million as a dividend to the to the Crown – over an eight year period. (See: Government defends Solid Energy payouts)

Which still baffles me as to why New Zealanders still have this misconception that National are “prudent fiscal managers” of the economy.

Personally, I wouldn’t let the buggers run a sausage sizzle outside Pak’n'Save.

3. The Board and management of Solid Energy

National’s culture of blaming others for their own mistakes is slowly but surely building in the public consciousness. (See previous blogposts: Taking responsibility, National-style, Dear Leader Key blames everyone else for Solid Energy’s financial crisis) It has become de rigueur for National to immediately seek out, and blame others, for one of their cock-ups.

And when one minister – Kate Wilkinson – resigned immediatly upon the release of the report from the Royal Commission on the Pike River Coal Mine Tragedy, it was seen for what it was; tokenism. And a strategic attempt to close down (or minimise) media scrutiny of National’s de-regulation in the 1990s, which led inevitably to a culture of poor safety in our mining industry.

Practically every public comment by National has directly, indirectly, or in a covert fashion, attempted to sheet blame for Solid Energy’s financial crash on it’s Board and CEO, Don Elder.

Key even suggested – po-faced – that the SOE was practically out of control. On 25 February, Dear Leader stated,

While the New Zealand government was unwilling to back Solid Energy in that role, it appears to have been powerless to prevent the company from taking what Key described as “baby steps” towards such a future.

Source: Govt blocked grandiose Solid Energy plans in 2009

“The company did have the right to draw down debt and make investments without shareholder authority” up to a certain level, Mr Key says.

Source: Govt blocked grandiose Solid Energy plans in 2009

So, can someone remind me again – what, precisely, is the role of the Minister for State Owned Enterprises?

#3 – Rebutted

The above was nothing less than an attempt at total abdication of responsibility by Key and his Ministers. As an incredibly insightful Dominion Post editorial of 2 March stated,

There are always excuses when a company starts to fail. John Key’s explanation for the trouble at Solid Energy, however – he blamed the Labour government – was pitiful.

It was Trevor Mallard’s fault, apparently, for encouraging SOEs to spread their wings and fly. That was in 2007 or 2008.

This won’t do, and not just because Mr Key’s Government has been in power for more than four years. His argument also contradicts itself. A Labour government was seemingly omnipotent and could have its way with the state-owned coal company. But National had no such power.

The Government certainly said no when Solid Energy asked for a billion dollars to turn itself into a super-company along the lines of Petrobras, the Brazilian giant. Mr Key says it had grave doubts about the company’s expansion plans. His political opponents point out that he and Bill English had publicly backed Solid Energy’s big plans for lignite conversion and briquetting.

So what was really going on? Mr Key says the company didn’t require the Government’s approval for the investments. Nor did the Government have a good reason to sack the board, as it could have done under the SOE legislation. So: nothing to see here, apparently.

If all these excuses were valid, it would be hard to know how any government could be held to account for what its state-owned companies were doing. Mr Key’s Government cannot get off so lightly. Nor can his officials. It is unclear just what kind of “monitoring” Treasury was doing, but it obviously wasn’t effective.

Source: Editorial: Solid Energy excuses fuel anger

And then, on 13 March – the bombshell,

Source

So now we’re getting at the answers.

Now we’re starting to build up a clearer picture as to not how Solid Energy got into debt – but why.

As with most things, the anwer is simple.

National needed cash to balance it’s books by 2014/15. Not content to flog off state assets to raise x-billion dollars, it used Solid Energy as as cash cow, to extract maximum dividends.

Just as Brierleys extracted maximum dividends from Air New Zealand in 2001, stripping the airline of it’s cash reserves in the process and bankrupting it. (see previous blogpost: A Clear Warning to Investors in SOEs)

More importantly, it used Solid Energy as a front to borrow.

If a government borrows cash, it shows up on their balance books as a liability.

If a SOE borrows cash; then pays it to a government as a “dividend”, it shows up on the books as a profit.

That was why National was forcing Solid Energy to borrow hundreds of millions of dollars and then demanding it to be paid into government coffers as a “dividend”.

My immediate thoughts on this are,

All three ministers – Key, English, and Ryall – should appear before the Commerce Select Committee to answer questions. To this blogger, there appears to be serious implications of questionable behaviour by National Ministers and their dealings with Solid Energy.
There is more to come out on this isssue, such as why Solid Energy’s Board allowed this cash-stripping by National Ministers to be carried out.
And this is the most important: I think every New Zealander who is considering investing in Mighty River Power – and other SOE shares – should look very carefully at their books. The question has to be asked; have National Ministers done the same thing to other SOES? Are they also heavily “geared” (borrowed against assets) and highly vulnerable to market downturns?
The auditor-general, or some other forensic accounting firm, should immediatly be called in to to assess the books of all SOES.

At this point in time, I wouldn’t touch a single share of any SOE, with bio-hazard gloves.

They may be financially toxic.

*

References

Fairfax media: Debt-laden Solid Energy talking to banks (21 Feb 2013)

Building a Brighter Future: Bill English & Tony Ryall – Statement on Solid Energy (21 Feb 2013)

Scoop: Govt blocked grandiose Solid Energy plans in 2009 (25 February 2013)

MSN News: Solid Energy got coal price wrong: Key (25 February 2013)

TV3: Govt, Labour squabble over Solid Energy (26 Feb 2013)

Otago Daily Times: Solid Energy bail-out cost likely to rise (2 March 2013)

Dominion Post: Editorial: Solid Energy excuses fuel anger (2 March 2013)

Southland Times: Government defends Solid Energy payouts (12 March 2013)

Radio NZ: Labour says Govt forced Solid Energy to borrow more (13 March 2013)

NZ Herald: Govt accused of milking Solid Energy for dividends (13 March 2013)

Parliament: Questions for oral answer: Ministers—Confidence (13 March 2013)

Parliament: Parliament Questions and Answers (13 March 2013)

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Categories: A Little Blue Marble Called Earth, Dollars & Sense, The Body Politic Tags: SOE, Solid Energy, state owned enterprises

392,000 New Zealanders send a clear message to John Key – Part Rua

12 March 2013 Frank Macskasy 2 comments

Continued from: 392,000 New Zealanders send a clear message to John Key – Part Tahi

NZ, Wellington, 12 March 2013 – Ms Maniapoto Jackson introduced the first speaker, Greypower’s President, Roy Reid,

“So please welcome up the man who initiated this historical moment for us – the biggest citizens initiated referendum in [New Zealand's] history!”

Frank Macskasy Frankly Speaking blog fmacskasy.wordpress.com 12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

Roy Reid

“As President of Greypower, I wish to inform you that Greypower has been opposed to the sale of state owned assets for a number of years. And this was reconfirmed at our annual general meeting two years ago. We advised all the political parties in this House that we were opposed to them selling any of our assets.

Our generation worked hard. We paid the taxes, to build our existing assets. They’re not for sale. They belong to all New Zealanders.

I sincerely thank all those who worked from one end of New Zealand to the other, to collect those 394,000 signatures just behind us. It’s the biggest petition ever presented to this House.
I pay tribute to our co-supporters, the New Zealand students association. For being involved with us, because it shows the country that we are united from the elderly to the younger generations…

…I’m sure that we’ve got enough valid signatures in those boxes to force the referendum. And [despite] no respect for what this government today says, the people of New Zealand will have their say.”

It as perhaps fitting that Mr Reid was given first opportunity to address the crowd. It was indeed his generation, and others before him, who sacrificed so much to build what we have in New Zealand today. And which a few greedy, short-sighted number of our fellow New Zealanders seem unable to comprehend that these assets do, indeed, belong to us all.

Not just to those with the cash to buy shares.

Our elected representatives certainly did not hesitate to show their agreement with Mr Reid’s comments,

Ms Maniapoto Jackson then invited the next speaker; ex-Vice President of the Auckland Students Association and Ngai Tahu; Arena Williams,

Arena Williams

Ms Williams greeted the crowd in Te Reo and her following message was short, blunt, and to the point,

“There’s one message that the government needs to take home from such an over-whelming support of this petition, and that’s Stop the asset sales and give New Zealanders a chance to have a say on this really important issue!”

The next invited guest-speaker was economist, Peter Conway, from the Council of Trade Unions,

Peter Conway

Mr Conway said,

“The Union movement is really proud to be here today at this amazing event and I just want to say, fantastic effort. Well done everybody! It’s awesome.

Now it might have been a little bit easier if for me to have the backing of a one million dollar advertising campaign, and maybe if we we’d been able to do it all on line. But I actually think that the fact that we went out there into communities where people work, live, and play and debated the issues; talked to people about it and got such a fantastic response, is really a testament to our democracy…

… So this is part of our democracy. And what we’re saying to the government; respect democracy… Let’s get this referendum up, and the Council of Trade Unions, on behalf of the union movement, is calling on the government to halt all asset sales and listen to the people.

Kia kaha, and thanks very much.”

Ms Maniapoto Jackson then welcomed the Leader of the Labour Party and MP for Mt Albert, David Shearer,

David Shearer

After expressing his welcome, Mr Shearer gave a brief thanks to the people, followed by a similarly brief message,

“Look, I just wanted to start by saying ‘thank you’, ‘thank you’ for all of those people who went out day after day, weekend after weekend, who stood on cold corners in the middle of winter and got people to sign this petition. Thank you to the hundreds of thousands of New Zealanders who care about this country so much that they put their signature to this petition.

This is about the transfer of an asset that we all own into the hands of a very few. That’s what it’s about, it’s about fairness. It [asset sales] is not fair.

This referendum will make the government listen to New Zealanders.

The fight will go on. It’s not finishing today. It will go on and we in the Labour Party will continue to fight this until 2014.

I wanted to say, as the boxes were being put up there, I was thinking that “Another Brick in the Wall” tune came into my mind, and I was thinking “We Don’t Want your Asset Sales Programme John Key”…

… Once again thank you for your effort, thank you for being here today. Kia Kaha, let’s take it to the government.”

Before Ms Maniapoto Jackson introduced the next speaker, Green Party co-leader Russell Norman, she briefly pointed out that the Parties behind her were unified, “with only the odd absence, which was duly noted“.

Mr Norman then addressed the people,

Russell Norman

Mr Norman then addressed the people,

“Today we stand here here on behalf of the millions of New Zealanders who are opposed to the sale of their assets. Today we stand here on behalf of the hundreds of thousands von New Zealanders who have signed this petition, behind us. Today we stand here on behalf of future generations who are relying on us to stand up for our country.

And that is why we have done this massive piece of work that you see behind us.

It has been incredibly hard work on behalf of thousands and thousands of people to go out and collect these signatures. It is despicable that the Prime Minister then says that the people who signed this petition were children and tourists! Prime Minister you do not know New Zealanders!

If the Prime Minister of New Zealand thinks that the people who signed this petition, the 400,000 people who signed this petitition, are not real New Zealanders, then he is in the wrong country…

… Real New Zealanders are the ones who worked and laboured to build those assets up so that we could inherit them. Real New Zealanders are the ones who will look after them so that we can pass them on to those who come after us…

… We have a mandate to keep our assets. The Prime Minister has no mandate to sell them.”

Ms Maniapoto Jackson then introduced Mr Peters, saying “if there’s anyone who can talk about justice and fairness, it’s Winston Peters“,

Winston Peters

“…Mr Key does does not have a mandate to make these sales. We all know the last election result and he relies upon the vote of Peter Dunne, who you know, with your money, at the last election had TV adverts saying that he would not do that. So there is no mandate.

We come now to the referendum, which is a chance for Mr Key to see whether he’s got the public backing and he doesn’t have even have the backing of one third of the National Party vote by every survey that you and I have seen.

Ladies and gentlemen, it’s going to be difficult over the next few months on this issue, but I want to make something very, very, clear. Unless we make it clear to everyone who’s buying, that after the next election, whenever they fly the white flag, we intend to take back those shares at no greater price than they bought it for, then we will not be making the message very clear for Mr Key who governs for the few and very few.

Now your problem is, you don’t own a casino. Otherwise he’d be listening to you.

And you’re you’re not a Hobbit or some wide-boy from Hollywood, otherwise, he’d be listening to you.

No wonder he fell upon the defence of tourists, because that’s what Mr Key is; a CV Prime Minister, who will soon go, on issues like that…

… this is just the beginning. It is not the end.”

Next up, Ms Maniapoto Jackson introduced “the wonderful leader of the Mana Party, and MP for Te Tai Tokerau, Hone Harawira“,

Hone Harawira

Mr Harawira injected a note of humour into the afternoon, and the crowd enjoyed his off-beat way of giving a speech,

“Look I’m going to do most of my korero in Maori, so the best way for you to support it is, every time I stop to take a breath, clap like crazy!”

The crowd obliged with enthusiasm, clapping and cheering each time he paused during his korero.

Ending his speech in Te Reo, he added,

“Now just for a short chant, a short chant, eh? Because Moana get’s all the the recording rights for this little gig, so mine is going to be a short little chant. So just follow after me. You ready?

“Aotearoa is not for sale!”

The crowd responded, “Aotearoa is not for sale“.

“C’mon, c’mon, now you can do better than that,” he ‘admonished the crowd with a smile.He repeated, “Aotearoa is not for sale!”

The responded boomed back, “AOTEAROA IS NOT FOR SALE!”

“Tell John Key to Go to hell!”

“TELL JOHN KEY TO GO TO HELL!”

And with that, Hone Harawira finished with a cheerful “Kia ora tatou!”.

As far as political speeches went, it was one of the shortest and more entertaining that this blogger has heard for a while. He certainly injects a bit of fun into a political event.

As an intriguing aside, this blogger managed to capture this picture of two Davids and a Damian. Their body language seemed to belie any suggestion of tension or ‘struggle between Messrs Cunliffe and Shearer.

(L-R) David Shearer, David Cunliffe, Damien O’Connor

Hmmmm… One has to wonder…

On a closing note, Ms Maniapoto Jackson ‘encouraged’ (dragged!) Hone Harawira back to the microphone to sing a duet – an old song from their protest days together,

And final posed-pics from Ms Maniapoto Jackson and Hone Harawira, after their singing-duet finale,

It’s interesting to compare the persona of Hone Harawira in the media, especially in his early days in Parliament – with the man who presents to the people, at public gatherings. There is a warmth and sincerity to the man that is almost wholly lacking in his MSM appearances – but a warmth and humour that is obvious when seeing him in person.

And from the Green Party caucus, this lovely snapshot. They deserve thepride they were feeling in being part of a movement to collect nearly 400,000 signatures,

In conclusion…

John Key’s casual dismissal of the petition, and the nearly 400,000 New Zealanders who signed it, was not a “good look”. It spoke volumes of Key’s persona; his arrogance; and his pettiness.

He could just as easily have accepted the petition as part of the democratic process and congratulated New Zealanders for participating. It would have made him look statesmanlike; stand above petty politics; and increased his mana.

Being derisive; suggesting that the signatures were from “children and tourists”; was offensive.

It was unnecessary and uncalled for.

It was childish.

It publicly revealed John Key’s innermost insecurities – as he knows that the people are not with him on this issue. It must be a debilitating, depressing feeling, knowing that three million New Zealanders are angrily opposed to what Key and his cronies are up to.

“Where is the love”, he may well ask?

“Where is the respect”, we ask him.

An open message to John Key…

The Prime Minister insists he has a “mandate” to part-privatise our state assets.

I disagree. More people voted for Parties opposing state asset sales than voted for Parties endorsing said sales.

John Key has a one seat “majority”, due in part to manipulations during the 2011 election, and MMP rules that prevented some Parties from gaining representation in the House. For example, the Conservative Party won twice as many votes as ACT – but gained no seats. (see: Mandates & Majorities)

That’s not a mandate, Mr Prime Minister – that’s an accident of circumstances.

Mr Key – if you truly insist that you have a mandate, then put it to the test. Hold off on the sharefloat for Mighty River Power. Let the people have their say in a referendum.

I, for one, will accept the verdict of a referendum, whatever the outcome. If the majority – even the slimmest margin over 50% – support your asset sale programme, you’ll not hear one more word from me on this issue ever again.

Are you willing to put your “mandate” to the test, Mr Prime Minister?

Are you willing to listen to, and abide by, the will of the People?

I am.

*

Additional

Radio NZ: Petitioners confident of asset sale referendum

Dominion Post: Government to ignore asset sales referendum

NZ Herald: Asset sales petition arrives at Parliament

TV3: PHOTOS: Asset sales petition presented

TVNZ: Petition against SOE sales delivered to Parliament

Newstalk ZB: Opposition MPs greet anti-asset sales petition

Copyright (c) Notice

All images are freely available to be used, with following provisos,

Use must be for non-commercial purposes.

Where purpose of use is commercial, a donation to Child Poverty Action Group is requested.

At all times, images must be used only in context, and not to denigrate individuals.

Acknowledgement of source is requested.

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Categories: Dollars & Sense, Social Issues, The Body Politic Tags: Air New Zealand, Genesis, Greypower, Meridian, Mighty River Power, NZUSA, Petition, referendum, Solid Energy, state asset sales

392,000 New Zealanders send a clear message to John Key – Part Tahi

12 March 2013 Frank Macskasy 2 comments

NZ, Wellington, 12 March 2013 – Another beautiful sunny day with blue skies (apologies to farmers) was a perfect setting this afternoon in Wellington, when a couple of hundred marchers arrived on Parliament’s grounds, bearing 68 boxes, containing 392,000 signatures.

The referendum requires 304,000 valid signatures to precipitate a nationwide referendum. The 392,000 signatures gives a 22% ‘buffer’ against invalid signatures; people not on the electoral roll; duplicate signatures; and malicious attempts to undermine the petition.

There was a small number of people on Parliament’s grounds awaiting the march, amongst them tino rangatiratanga activists, Brenda and Fran,

At about 1pm, marchers arrived, bearing the boxes that contained a priceless treasure – signatures of 392,000 New Zealanders. Media flocked around them. This was an historical event,

They walked onto Parliament’s grounds to cheers and applause of those waiting,

On the steps to Parliament, more media and elected representatives from Opposition Parties were waiting. (Curiously, none from National, ACT, or United Future were in attendance. Their ‘invites’ must’ve been lost in the post?)

Politicians clapped as the marchers approached. Men, women, young, old, Maori, Pakeha, these were New Zealanders who believed that the People’s Assets were not to be stripped and flogged off by a handful of politicians,

Sixty eight marchers proudly carried a prized box each,

The boxes were carefully passed over a security barricade, to be stacked on the Parliamentary forecourt,

Meanwwhile, the crowd watched, as the stacking of boxes progressed,

The leadership of the Green and Labour Parties, with Brendan Horan (far left, standing beside Metiria Turei); former AUSA President, Arena Williams (standing beside David Shearer); Grey Power National President, Mr Roy Reid; Annette King; and (far right – no slur intended, Mr Conway) CTU Economist and Director of Policy, Peter Conway .

Mana Party leader, Hone Harawira, joined the Party leaders shortly afterward (NZ First lreader, Winston Peters was standing off-camera, to the left),

NZ First leader, Winston Peters, being interviewed by a MSM journalist,

A panoramic view of part of the assembled crowd,

Green MP, Jan Logie; NZ First leader, Winston Peters, and NZ First MP, Andrew Williams, at the stacked petition boxes. At this point, the invited guest-speakers were preparing themselves – and their notes – to address the crowd and media,

With a unique style and flair she has become reknowned for, Moana Maniapoto Jackson welcomed people to today’s presentation of the petition,

“We are celebrating people power…”

Coaching the crowd, to chime in with “Ohhhh yeahhhh” as the chorus, Ms Maniapoto Jackson launched into a short protest-style song. Her powerful voice belted out the words, making her microphone and speakers practically redundant, as she filled Parliament with her lyrical sounds,

“Hey, hey Mr John Key,
…
You say you’ve the mandate
We’re here to help,
it’s not too late,
People here are standing strong
a hundred thousand – can’t be wrong
We’re here to help you get back on track,
Let’s stop the sales,
Let’s pull it back.

Crowd’s chorus, Ohhhhh Yeahhhhh!

All together now!

OHHHHH YEAHHHH!”

Ms Maniapoto Jackson then welcomed the first of “a long line of luminaries, that are positively glowing with energy and excitement as we deliver to the government a very strong call from New Zealanders.”

To be continued at: 392,000 New Zealanders send a clear message to John Key – Part Rua

*

Additional

Radio NZ: Petitioners confident of asset sale referendum

Dominion Post: Government to ignore asset sales referendum

NZ Herald: Asset sales petition arrives at Parliament

TV3: PHOTOS: Asset sales petition presented

TVNZ: Petition against SOE sales delivered to Parliament

Newstalk ZB: Opposition MPs greet anti-asset sales petition

Copyright (c) Notice

All images are freely available to be used, with following provisos,

Use must be for non-commercial purposes.

Where purpose of use is commercial, a donation to Child Poverty Action Group is requested.

At all times, images must be used only in context, and not to denigrate individuals.

Acknowledgement of source is requested.

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Categories: Dollars & Sense, Social Issues, The Body Politic Tags: Air New Zealand, Genesis, Greypower, Meridian, Mighty River Power, NZUSA, Petition, referendum, Solid Energy, state asset sales, Tino Rangatiratanga

A Clear Warning to Investors in SOEs…

11 March 2013 Frank Macskasy 12 comments

The recent financial crisis and near-collapse of Solid Energy – one of the five, state owned enterprises planned for partial-privatisation – should serve as a warning for those investor-vultures circling to buy shares in any of the SOEs.

In fact, recent history regarding Air New Zealand, Kiwiwail, and (non-privatised) BNZ in 1991, are indicators that privatisation of state assets is not a guaranteed roadmap to wealth,

Source

It is noteworthy that one of the cause of Air New Zealand’s collapse was it’s foolhardy buy-out of Australian airline, Ansett,

First, the decision by Air New Zealand to pay dividends and second, the decision to buy the second half of Ansett. Both moves turned out to be considerably more beneficial to the interests of Brierleys than those of Air New Zealand.

Take the Ansett purchase. In early 1999, Cushing announced that Air New Zealand was vetoing Singapore Airline’s bid to buy News Corp’s 50% of Ansett Holdings (Air New Zealand had held the other 50% of Ansett since September 1996). Instead, it decided to pay News Corp $A580 million and get 100% control.

It’s most likely true that Air New Zealand paid too much for the stake and that directors had too little information about Ansett’s financial and engineering state. These are well-aired opinions, but are secondary to the main question that should be asked: Why did Air New Zealand buy the second half of Ansett at all? It’s not just that it was hopelessly out of its depth buying an airline twice its size. It’s just hard to see any benefits – to Air New Zealand, that is.

Source: IBID

On top of that were big dividend demands from one of Air Zealand’s major shareholders, Brierley’s,

The at times cash-strapped investment company held between 30% and 47% of shares over the period so, based on the total dividend of $765 million, Brierley reaped an estimated $250 million to $380 million from the airline. And Air New Zealand’s decision to buy the second half of Ansett, cutting Singapore Airlines out of the deal, contributed to Brierleys being able to do its own deal with Singapore.

In April last year, two months after Air New Zealand bought Ansett, Brierleys sold Singapore Airlines all its Air New Zealand “B” shares for $285 million, or $3 a share. It was arguably the last exit option for Brierleys from these shares, and, apart from a spike at the end of last year, Air New Zealand shares have largely tracked downwards ever since – they were trading around 30 cents as Unlimited went to press.

Source: IBID

In other words, Air New Zealand had over-extended in unwise investments (as has Solid Energy), and was bled dry by rapacious demands for dividends (as did Faye Richwhite in NZ Rail in the early 1990s).

How does this relate to the upcoming partial-sale of Mighty River Power?

Recent revelations that Mighty River Power has shaky investments on Chile, should cause potential investors to pause for thought,

Source

According to the TV3 story above, “Mighty River Power has spent $250 million at the geothermal plant in southern Chile, but has just written off $89 million as the investments struggle“.

To which Key responded casually,

“There is always risk.”

Dear Leader seems somewhat blase about investors’ risks? Of course he is. It’s not his money.

The Crown Ownership Monitoring Unit (COMU) reported,

Impairments

During the period, the Company recognised $91.4 million of impairments principally reflecting its investment in the GeoGlobal Partners I Fund (GGE Fund), and its greenfield explorations for potential developments in Chile and Germany.

This impairment followed higher than expected costs at the Tolhuaca project in Chile due to the worst winter in 40 years adversely affecting drilling performance and only one of the two wells having proven production capacity. The value of GGE’s investment at Weiheim in Germany, has been impacted by increased costs due to required changes in the drilling location following the 3D seismic surveys and delays from environmental court challenges which have been resolved post balance date.

The GGE Fund had not raised capital from other investors by the end of the 2012 and Mighty River Power made the decision not to invest further capital into the existing structure. Overall, the impairment charge of $88.9 million for the German and Tolhuaca assets and the management company of GGE LLC leaves a residual book value of $91.8 million.

Source: Mighty River Power LtdResults for Announcement to the Market

On top of Mighty River Power’s dodgy investment in Chile, New Zealand is now experiencing what is being called the worst drought in seven decades (see: North Island’s worst drought in 70 years). As Climate scientist Jim Salinger said about New Zealand’s current weather patterns continuing, and becoming similar to the Mediterranean,

“What it means is that if it just doesn’t rain for at least four months of the year, it means you have to bring in your water from elsewhere.”

Source: IBID

As all investors should bear in mind; most of our power generation is generated from hydro stations. Mighty River Power, especially, derives most of its electricity from eight hydro-electric stations on the Waikato River.

Mighty River Power CEO, Doug Heffernan has given a clear warning,

“Following the lower than average inflows into the Waikato catchment during the last quarter [to December 31], Mighty River ended the half year at just 69 per cent of historical average [hydro storage].”

And Equity analyst Phillip Anderson of Devon Funds stated,

“The same period last year they got really strong inflows, and this is the exact opposite . . .

In the second half of this reporting year they’re going to have to buy a lot more electricity to feed their customers, either on the spot market at a lot higher cost or use their [Southdown] gas plant.

We expect the second half of this year is going to be a lot tougher for them, they should get their margins squeezed if that all plays out.”

Source: Parched Waikato could hit Mighty River Power

The equation is blindingly simple,

Less rain = less water = less electricity generation

The question that begs to be asked is; where does the risk of investing in SOEs fall – private investors, or the State?

The answer I submit to the reader is, that like Air New Zealand, it will be private investors who bear the brunt of all risk. The State will simply pick up the pieces, buying up shares at bargain basement prices, should anything go wrong.

Electricity generators like Mighty River Power will simply never be allowed to fail. Had the Labour government in 2001 allowed Air New Zealand to collapse, the fall-out to the rest of the reconomy would have been too horrendous to contemplate, and flow-on effects to other businesses (eg; exporters and tourism) and the economy would have been worse than any bail-out.

But any bailout will involve a massive loss for investors, as their share-value plummets. Again, Air New Zealand was an example to us all.

As the impact of climate change creates more uncertainly for our state power companies, investors need to think carefully before committing one single dollar toward buying shares,

“Do I really want to bear all the risk?”

Those who lost out on their investments in Air New Zealand in the 1990s will probably answer,

“No.”

*

References

The Air New Zealand crash (1 November 2001)

A history of bailouts (7 April 2011)

Foreigners important for SOE sell-downs: Treasury (30 June 2011)

No law stopping foreign investors (16 Dec 2011)

Parched Waikato could hit Mighty River Power (22 Feb 2013)

Mighty River Power shares float mid-May (4 March 2013)

Taking the plunge in Mighty River (9 March 2013)

Key struggles to push Chilean investments (9 March 2013)

North Island’s worst drought in 70 years (10 March 2013)

Other blogs

Seemorerocks: An Appeal for a New Zealand Risk Assessment

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Categories: Dollars & Sense, The Body Politic Tags: Air New Zealand, Bill English, BNZ, Chile, COMU, Crown Ownership Monitoring Unit, Genesis, Kiwirail, Meridian energy, Mighty River Power, Solid Energy, state asset sales

Dear Leader Key blames everyone else for Solid Energy’s financial crisis

28 February 2013 Frank Macskasy 10 comments

Continued from: That was Then, This is Now #18 (Solid Energy)

A bit of very recent history,

Solid Energy starts work at Mataura Briquette Plant

Friday, 9 September 2011, 2:57 pm
Press Release: Solid Energy NZ

9 September 2011

Solid Energy marks the start of work at its Mataura Briquette Plant

The Hon Bill English, MP for Clutha-Southland and Minister of Finance, today marked the official start of work at Solid Energy’s Mataura Briquette Plant, by “turning the first sod” at a small event on site with neighbours, local authorities, and other guests.

The $25 million Mataura briquette plant is planned to start production by June 2012. It will produce up to 90,000 tonnes a year of low-moisture and higher-energy briquettes from about 150,000 tonnes of lignite mined from Solid Energy’s New Vale Opencast Mine and trucked to the Craig Road site. The plant will use technology developed in the USA by GTL Energy.

Source

Eighteen months later, on 19 February, the SOE Shareholders Bill English and Tony Ryall, made this shock announcement to the public (see: Statement on Solid Energy).

The media were quick to report the crisis,

Source

National’s response?

Default to Deflection #1 (see previous blogpost: National under attack – defaults to Deflection #2 )

As described in my previous blogpost (see: Taking responsibility, National-style), National does not do Taking Responsibility very well. Their automatic instinct is to blame someone else – anyone – for problems of their making,

And true-to-form, National and Dear Leader are once again playing the Blame Game over Solid Energy’s woes,

Source

“They can’t wash their hands of the fact that from 2003 on, they were intimately involved with the plans that that company had,” sez Key?!

Really? 2003 ???

Why stop at 2003?

Personally, if I was John Key, I’d be asking serious questions on Labour’s role in the sinking of the Titanic. The Cuban Missile Crisis. And don’t forget the 2007/08 Global Financial Meltdown – that has Labour’s fingerprints all over it, surely???

Getting serious again…

National is supposedly Very Big on responsibility issues. Their website is constantly referring to responsibility,

“The National Party is built on age-tested principles that reflect what is best about New Zealand. We are a party of enterprise; a party of personal freedom and individual responsibility; a party of family; an inclusive party; a party of ambition.” – John Key, 27 May 2007

“We also need to remember the enduring principles on which the National Party is based – individual responsibility, support for families and communities, and a belief that the State can’t and shouldn’t do everything.” – John Key, 30 January 2007

It seems that their constant refusals to accept responsibility is also one of those things that “the State can’t and shouldn’t do”, according to Dear Leader.

A few questions spring to mind,

How far back will Key go to blame others for his failures?
How many terms in office will National have to win, before blaming Labour or Uncle Tom Cobbly is no longer tenable?
If John Key and his cronies are unable to ‘man-up’ and take a hit for any one of their balls-ups, and constantly feel the need to sheet responsibility back to Labour – then why is National in government? Why not just resign and put Labour back in office? After all, what would be the difference?

We wouldn’t accept finger-pointing and blame-gaming from our children (or, at least I hope we wouldn’t). So why is the public and media letting Key get away with it?

I look forward to National’s next major cock-up.

Who will they blame next? Australia?

Meanwhile, back to 9 September 2011…

Doesn’t Bill seem a happy chappy in this photo-op?

Source

Bill English, poses with ex-Solid Energy CEO, Don Elder, as the ‘first sod is turned’ at a new Briquette Plant in Mataura, Southland.

The same plant that was “Labour’s fault”.

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Categories: Dollars & Sense, The Body Politic Tags: Bill English, blame game, Labour, National government, no responsibility, personal responsibility, social responsibility, Solid Energy

That was Then, This is Now #18 (Solid Energy)

24 February 2013 Frank Macskasy 3 comments

That was then…

September 2011,

Source

Solid Energy starts work at Mataura Briquette Plant

Friday, 9 September 2011, 2:57 pm
Press Release: Solid Energy NZ

9 September 2011

Solid Energy marks the start of work at its Mataura Briquette Plant

The Hon Bill English, MP for Clutha-Southland and Minister of Finance, today marked the official start of work at Solid Energy’s Mataura Briquette Plant, by “turning the first sod” at a small event on site with neighbours, local authorities, and other guests.

The $25 million Mataura briquette plant is planned to start production by June 2012. It will produce up to 90,000 tonnes a year of low-moisture and higher-energy briquettes from about 150,000 tonnes of lignite mined from Solid Energy’s New Vale Opencast Mine and trucked to the Craig Road site. The plant will use technology developed in the USA by GTL Energy.

Source

This is now…

February, 2013…

Source

A year and a half later, neither Dear Leader Key nor Little Leader Bill English seemed terribly keen to be associated with any more photo-ops with Don Elder.

In fact, the much vaunted sod-turning in September 2011, to build a brand-new $25 million briquette plant at Mataura, was no longer quite so glamous. Despite probably still having Southland dirt on his shoes, both Bill English and John Key were at pains to distance themselves from Solid Energy’s highly publicised energy projects,

“Four or five years ago they set out on a big programme of expenditure on alternative energy, including researching into lignite down south to coal gasification and other research-based speculation, and that hasn’t turned out the way they thought.” – Bill English, 22 Feb 2013

“The second thing is that they made a number of investments which have proved not to be very valuable and the Government has been working on that process for the last couple of years.” - John Key, 23 Feb 2013

It’s amazing how politicians seem to have this ability – verging on a preternatural super power – to distance themselves from something they had only recently embraced and supported with whole-hearted gusto.

Interesting to note that as well as the $23.5 million in bonuses paid over the past two years to 950 employees, Solid Energy also paid out considerable dividends to the government;

30 June 2009 – $59.9 million (source)

30 June 2010 – $54 million (source)

30 June 2011 – $20 million (source)

30 June 2012 (paid at 30 Sept 2011) – $30 million (source)

Total: $163.9 million

Plus millions more paid in company tax.

With the data above, I have some questions;

It seems remarkable that National only discovered a couple of days ago that Solid Energy’s financial position was not sound. What was Bill English doing last year?
How could Solid Energy’s financial position go from a pre-tax profit of $127.5 million (see: Solid Energy shines despite earthquakes) in August 2011 – to a massive $389 million debt this year? Did National gouge one of our cash-state-cows?
With Solid Energy’s expansion projects (which Bill English must’ve known about, as he turned a sod of earth in Southland on 9 September 2011), were the dividends paid since 2009 realistic?
With National’s track record of constantly shifting responsibility away from themselves, who are pointing the finger at? With all the highly paid Ministers, board members, and executives – will the office cleaner be held to account?
Is the corporate model, with big salaries and bonuses paid to executives and an evident lack of transparency, appropriate for state owned enterprises?
Will workers be made to suffer job lossses and subsequent economic hardship, because of the actions of Solid Energy’s executives and Crown Ministers? Why aren’t the workers offered the same ‘golden parachute’ that ex-CEO Don Elder most likely received?

No doubt neo-liberals will point to the failure of ‘Solid Energy’ as proof-positive that governments cannot run state-owned businesses.

Not true.

This is proof positive that National (or other right wing) governments cannot run state-owned businesses.

*

Acknowledgement

Tim Jones, Coal Action Network Aotearoa

Previous Blog Post

That was Then, This is Now #17

Other Blogs

Robert Guyton: Comments on Solid Energy

The Standard: Nats’ fossil fuel bet & culture of excess bankrupted Solid Energy

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Categories: Dollars & Sense, The Body Politic Tags: Don Elder, Finance Minister Bill English, Mataura Briquette Plant, Solid Energy

To intervene or not to intervene, that is the question…

8 February 2013 Frank Macskasy 8 comments

To intervene, or not to intervene, that is the question:

Whether ’tis nobler in this government’s mind to suffer The slings and arrows of outrageous recessionary fortune,

Or to take arms against a global sea of economic troubles,

And by opposing end them? To be hands on, and interventionist…

(With apologies to The Bard…)

Farmers get it…

Full story

Rich families get it…

Full story

Kids from rich families get it…

Full story

Insurance companies get it…

Full story

Even cute, furry-footed Hobbits get it…

Full story

And more for the Precious…

Full story

Hell, practically everyone can get it…

Source

Subsidies for everything and everyone…

But not, it seems, to assist struggling construction companies until the Christchurch re-build kicks in, in earnest, and they can trade their way out of difficulties,

Full story

In a brutally frank analysis of the industry, NZ Herald journalist Anne Gibson wrote this piece about other failed construction companies and the effect it was having throughout the country – see: Recession hammered building firms, say chiefs

Greg O’Sullivan, of Takapuna-based building consultants Prendos, said,

“The recession has hammered the industry to the ground. It becomes a very acrimonious environment. Builders are having to watch every penny to survive.”

Source: IBID

And it was all so unnecessary.

No government could not have prevented the recessionary effects of the Global Finance Crisis. But a more proactive government could have mitigated the harshest effects of the international recession with careful stimulation of the economy.

And by “stimulation” I do not refer to the wasteful, blunt-instrument-style tax cuts of 2009 and 2010. Those tax cuts added nothing to economic growth and only served to cut government revenue (see: Outlook slashes tax-take by $8b).

Thousands of jobs could have been saved. Thousands more jobs created.

A proactive government, with Ministers able to look ahead, would have immediatly implemented strategies to counter damaging recessionary effects;

a dynamic building programme post-2009′s “Job Summit” (and I don’t mean Key’s wretched cycleway idea – see: Cycleway jobs fall short)
increased investment, incentives, and subsidies for apprenticeships and other training/education for young people and other unemployed New Zealanders
reform of tax laws which see inefficient investment in speculative house-buying/selling less attractive, and re-direct investment into productive industry

National should never have allowed our economy to get where it is now.

This is a government that is derelict in it’s duty, and for Steven Joyce and his cronies to carp on about “overseas investment” is a moronic cargo-cult mentality that simply defies understanding.

If New Zealand businesses leaders and Captains of Commerce still believe that National is a “prudent manager of the economy” – then going by the last four years and events in the 1990s – I promise you that you will get what you richly deserve if they are re-elected in 2014 (or earlier).

This isn’t governance. This is economic decline by a thousand cuts.

Expect things to get worse.

*

Other Blogs

Keys bald-faced lies

Additional

NZ Herald: Collapse ‘gut wrenching’ for roofing business (9 Feb 2013)

NZ Herald: Rise and fall of a very modern businessman (9 Feb 2013)

NZ Herald: Brian Gaynor: Mainzeal collapse needs investigation (9 Feb 2013)

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Categories: Dollars & Sense, Social Issues, The Body Politic Tags: AMI, cycleway 4000 jobs, Global Finance Crisis, Government subsidies, Lord of the Rings, Mainzeal, Steven Joyce, The Hobbit

Building National’s Brighter Future…

6 February 2013 Frank Macskasy 12 comments

At a time when this country’s construction companies should be laughing all the way to the bank, re-building Christchurch…

At a time when we need 100,000 new houses for our young folk…

At a time when we have 175,000 unemployed (and rising) people, desperate for jobs…

At a time when we have a serious shortage of skilled tradespeople…

This is what we get instead,

Source

Seriously now. If any National Party voters are reading this – is this what you had in mind when you voted for Key and his “Brighter Future” rhetoric and empty promises?

Because, really, this is what a hands-off, neo-liberal government does. It does nothing. Instead, like some kind of cargo-cult, it places it’s faith in the “Market”. And the result is an economy stagnating and people losing their jobs.

These people are your fellow New Zealanders. Do National supporters feel ok about this?

I’m hoping not. I’m hoping that a number of National voters are starting to come to the realisation that things are terribly wrong, and John Key and his mates haven’t a clue.

But in case some National voters think this is acceptable and are comfortable with companies falling over and unemployment sky-rocketing – then a pox on your heads. May your children be the next to depart this country and never return.

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Categories: Dollars & Sense, The Body Politic Tags: Brighter Future, Mainzeal

The Prime Minister, Pastoral property, and Parata…

5 February 2013 Frank Macskasy 9 comments

Point 1: The Prime Minister

Key’s appearance at Waitangi’s Te Tii Marae was marked by the usual “theatre” (as Labour’s Shane Jones refers to it – see: Titewhai Harawira wins over escorting PM at Waitangi) and the media were only too happy to focus their attention and cameras on the drama of the day.

Someone, though, profitted enormously from today’s (5 February) events,

Source

Unfortunately for the Left, Key’s mana was only enhanced by the public spectacle of his calm, stately, demeanour and will have raised his popularity as Prime Minister by several percentage points. Middle Class Pakeha will have lapped up Dear Leader’s performance – especially his vow to “keep returning”.

Shades of Douglas MacArthur’s famous quote during World War 2, “I came through and I shall return“.

Not in 2014, I hope.

National governments are too costly for our economy and social cohesion. Just ask any of the 175,000 unemployed or 250,000 children living in poverty or 40,000 jobs lost in the manufacturing sector in the last four years.

Point 2: Pastoral property

The Great Sell-Off of our country continues unabated, as news came out today that Chinese company, Yashili New Zealand Dairy Company has announced that it has applied for Overseas Investment Office approval to build a $210 million milk processing plant at Pokeno in Waikato, and a Swedish company, Southern Pastures Partnership, has been approved by the OIO to purchase eight Waikato dairy farms, totalling over 3,000 hectares.

Source

Once again, we are seeing the most productive and profitable parts of our primary industries being sold off to foreign investors.

Those naive enough to believe that this will benefit us – need to look again.

What the Swedes and Chinese have done is make an immediate investment for long-term gains. The dairy industry is profitable now – when the human population on Earth reaches 9 billion, it will create incredible wealth…

… wealth for those who own the means of production.

In this case, the profits made by Yashili New Zealand Dairy Company and Southern Pastures Partnership will be ‘exported’ back to the home-nations of the investors (Sweden and China), along with the goods that they produce.

We will end up with some taxes paid by employees (us) and the companies.

But most of the dairy pay-out from Southern Pastures Partnership and profits from exports by Yashili New Zealand Dairy Company will be remitted overseas.

The consequences, if it needs to be spelled out will be;

lost profits to us, as a country
lost foreign revenue, through exports,
a worsening Current Account deficit.

In years to come our descendents (most of whom will be living in Australia by then) will look back at us and wonder at our lack of foresight and economic naiveté.

In short – how dumb were we?

Point 3: Parata

Further to my blogpost on 18 January, our very own Invisible Woman – Hekia Parata – our so-called “Minister of Education”, was still shying away from appearing in the media. (See previous blogpost: Parata, Bennett, and Collins – what have they been up to?)

Campbell did another story on the Novopay fiasco today (5 February), and invited Ms Parata to an interview.

She was nowhere to be seen. (And as I speculated twelve days in my blogpost - Karma for Key? – the reason may be that she’s been told; “stay away from the media and keep your mouth firmly zipped, sweetie“.)

Source

Which is just as well, as Campbell had some further remarkable instances of cock-ups made by Novopay. Like, school cleaners getting paid $20,000 for working 24 hours a fortnight?

Maybe John Key’s promise in 2008 to raise the wages of New Zealanders has finally come true?

Nah. No such luck – just more Novopay cock-ups.

Meanwhile some teachers were being paid $0.00.

Never mind paying $100 million for Novopay’s lemon – perhaps National should’ve just left it to Lotto? The results would’ve been about the same.

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Categories: Dollars & Sense, Social Issues, The Body Politic Tags: 175000 unemployed, Campbell Live, dairy farms, Douglas MacArthur, Hekia Parata, Lotto, Novopay, Shane Jones, Southern Pastures Partnership, Te Tii Marae, Titewhai Harawira, Waitangi Day, Yashili New Zealand Dairy Company

Did National knowingly commit economic sabotage post-2008?

24 January 2013 Frank Macskasy 16 comments

By now, it has become fairly well known that National’s tax cuts in 2009 and 2010 were unaffordable and impacted disastrously on government revenue (and subsequent spending) in following years.

In 2008, National tempted voters with promises of “self funding” tax-cuts. (Though “self funding” was never very clearly explained.)

National’s rebalancing of the tax system is self-funding and requires no cuts to public services or additional borrowing.

[...]

This makes it absolutely clear that to fund National’s tax package there is no requirement for additional borrowing and there is no requirement to cut public services.

Source: Economy – Tax Policy 2008

The pledge of “no requirement to cut public services ” was also one that was made (and subsequently broken in dramatic fashion).

In May 2008, Key was making bold statements of “meaningful“ tax cuts, “north of $50“,

John Key… said National would be looking at economic figures and what other promises Dr Cullen made in the budget on Thursday… But he was “very confident” National could deliver an ongoing programme of tax cuts, like that promised in 2005”.

See: National’s 2005 tax cut plans still credible – Key

Despite the growing black clouds of a global downturn, Key was still optimistic. When questioned by Sue Eden of the NZ Herald whether National’s tax cuts programme of 2005 were still credible given uncertain economic circumstances, Dear Leader replied,

“Well, I think it is.”

See: IBID

By early August 2008, as United States mortgage-institutions Fannie Mae and Freddie Mac were sinking into a credit crisis, Key remained defiant in the face of looming recessionary forces,

National will fast track a second round of tax cuts and is likely to increase borrowing to pay for some of its spending promises, the party’s leader John Key says.

But Mr Key said the borrowing would be for new infrastructure projects rather than National’s quicker and larger tax cuts which would be “hermetically sealed” from the debt programme.

The admission on borrowing comes as National faces growing calls to explain how it will pay for its promises, which include the larger faster tax cuts, a $1.5 billion broadband plan and a new prison in its first term.

It has also promised to keep many of Labour’s big spending policies including Working for Families and interest free student loans.

Mr Key today said there would be “modest changes” to KiwiSaver.

See: Nats to borrow for other spending – but not tax cuts

How does one ” “hermetically seal” tax cuts from the debt programme ” ?!

The ‘crunch’ came on 6 October 2008, when Treasury released a document known as the “PREFU” (Pre-Election Economic and Fiscal Update). This Treasury report analyses and discloses the fiscal and economic state of the nation, with short and medium-term outlooks, based on international and local trends.

The 2008 PREFU started with this dire warning,

The economic and fiscal outlook has deteriorated since the Budget Update

In the five months since the Budget Update was finalised, we have witnessed a number of significant domestic and international developments: in particular, the deepening of the international financial crisis, the slowing housing market, and growing pressure on households and businesses. These developments are key factors in our updated view of the economy and the government’s finances set out in this Pre-election Update.

We are now expecting weaker economic growth over the next few years, resulting in slower growth in tax revenue and higher government expenditure. Combined with increases in the costs of some existing policies, these factors lead to sustained operating balance deficits and higher debt-to-GDP ratios.

The economic outlook is weaker …

Imbalances have built up during nearly a decade of sustained growth, including inflation pressures, an overvalued housing market, high household debt and a large current account deficit, with implications for interest rates and the exchange rate. With the economy slowing, these imbalances are starting to unwind – as are imbalances in the global economy – but there is a long way to go.

See: PREFU 2008 – Executive Summary

The opening statement went on to state with unequivocal frankness,

The international financial crisis has deepened and is having an adverse impact on global economic growth. New Zealand is expected to feel the effects of the financial crisis principally through the tighter availability and increased costs of credit, but also through a fall in business and consumer confidence, falling asset values and lower demand and prices for our exports.

[...]

The weaker economic growth that we are forecasting is reflected in reductions in our tax revenue forecasts. Compared with the Budget Update, we expect tax revenue to be on average around $900 million lower for each of the next three years.

The weak outlook for the household sector will have a direct impact through GST, which is forecast to grow by around 4% per annum over the next five years, compared with 7.5% over the six years to 2007.

With firms’ margins under pressure and profitability low, underlying corporate income tax is forecast to decline by 3% in the 2009 June year, and growth is expected to be negligible in 2010 as accumulated tax losses offset profits.

A relatively robust forecast for wages over the next few years helps to keep underlying growth in PAYE up at around 5% per annum.

The largest single change in government spending in the Pre-election Update is an increase in the expected costs of benefits. Compared with the Budget Update, benefit expenses are around $500 million per annum higher, reflecting both an increase in numbers of beneficiaries as a result of the slowing economy, and the impact of higher inflation on the costs of indexing benefits.

[...]

As a result of the various factors set out above, the government’s debt outlook deteriorates. This leads to higher debt servicing costs, which are forecast to be around $500 million per annum higher

See: IBID

Treasury continued – in considerable detail – to outline the gloomy prospects for New Zealand’s fiscal and economic short-term and medium-term outlooks (see: Fiscal Outlook),

In Risks and Scenarios, Treasury wrote,

Since the Budget Update, global developments have been more in line with the alternative scenario than the Budget forecast and global financial and economic conditions have worsened significantly. On the domestic front, finance companies have continued to face reduced debenture funding and more finance companies went into receivership or moratorium in the past three months. The speed and magnitude of the slowing in domestic demand has been more abrupt and greater than forecast in the Budget Update.

Reflecting these recent international and domestic developments, we have made significant downward revisions to our growth forecasts in this Update. However, the financial turmoil has intensified since the finalisation of our economic forecasts. As a result, we have seen the downside risks to our growth forecasts increase markedly, particularly in the years to March 2010 and 2011.

See: 2008 PREFU – Risks and Scenarios

Unlike his “lack of knowledge” over the GCSB monitoring of Kim Dotcom, or the Police report on John Banks, John Key cannot feign ignorance over the 2008 PREFU report,

“John Key has defended his party’s planned program of tax cuts, after Treasury numbers released today showed the economic outlook has deteriorated badly since the May budget. The numbers have seen Treasury reducing its revenue forecasts and increasing its predictions of costs such as benefits. Cash deficits – the bottom line after all infrastructure funding and payments to the New Zealand Superannuation Fund are made – is predicted to blow out from around $3 billion a year to around $6 billion a year.”

See: Key – $30b deficit won’t stop Nats tax cuts

Especially when Bill English admitted his knowledge of the PREFU,

“The figures outlined in the Prefu are a bit worse than we expected, and we are currently digesting them. However, National is not content to run a decade of deficits.”

See: IBID

In an example of black-humoured irony, English went on to say,

“New Zealand can no longer afford Michael Cullen and Labour’s big-spending low-growth policies.”

See: IBID

But evidently New Zealand could afford National’s “ big-tax-cutting low-growth policies“?

On 6 October 2008, Key reacted to the PREFU (proving he had full knowledge of it’s contents, and made this astounding comment when questioned about National’s planned tax cuts, at 0:40,

“REPORTER: What is your growth programme, does it include tax cuts?.”

“JOHN KEY: It certainly does include tax cuts. We have a programme of tax cuts.”

See: Key reacts to [2008] PREFU figures

Key’s comments following 0:40 seem equally bizarre, and at 2:28 admits that “… we can’t deliver anything other than, ‘yknow, a legacy of deficits for New Zealand…” – and still continues to warble on about cutting taxes, including trying to justify “debt for future growth“.

The consequences were a $2 billion hole in government tax revenue (see: Outlook slashes tax-take by $8b; Govt’s 2010 tax cuts ‘costing $2 billion and counting’); budget deficits (see: Budget deficit $1.3b worse); increased borrowings (see: Govt borrowing $380m a week); cuts to the State sector in terms of services and jobs (see: Early childhood education subsidies cut; 10 August: Unhealthy Health Cuts, 2500 jobs cut, but only $20m saved); and surreptitious increases in government charges and taxation elsewhere (see: Petrol price rises to balance books; Student loan repayments hiked, allowances restricted; Prescription charges on the rise); and asset sales (see: Govt says asset sales will cut debt).

The point of this blogpost is simple.

It’s not to look back, at the past…

… it is to look forward to the future.

When National makes Big Promises, be wary of the nature of said promises, and the underlying , invisible “hooks” contained within them.

Quite simply when the Nats offer you a “tax cut”, the first question that should pop into your head is not, “Oh goody, I wonder how much I’ll get!”

The first thought should instead be, “Uh oh, I wonder how much that’s going to cost me!”.

Because as sure as evolution made little green apples and the sun will rise tomorrow, the Nats care very little about your pay packet.

They care only about “rewarding hard work” [translation: more income for the rich] and “making the veconomy more competitive” [translation: implementing their neo-liberal agenda for their ideological crusade to turn this country into a Market-driven economy, away from an egalitarian society].

In the process, if they have to turn our country into a slow-rolling, economic train-wreck, then so be it.

They can always blame someone else,

See video: Key blames Labour for his Govt’s wage gap failings

Key even blames Labour for the global recession !? (see @ 0:48)

In the meantime, did National recklessly damage the New Zealand economy with unaffordable tax cuts, despite Key & Co being given ample warning by Treasury – simply to get elected in 2008?

Draw your own conclusions.

The evidence speaks for itself.

*

Additional reading

The Atlantic: Tax Cuts Don’t Lead to Economic Growth, a New 65-Year Study Finds (16 Sept 2012)

References

National Party: Economy – Tax Policy 2008

NZ Herald: National’s 2005 tax cut plans still credible – Key (20 May 2008)

NZ Herald: Nats to borrow for other spending – but not tax cuts (2 Aug 2008)

The Treasury: Pre-election Economic and Fiscal Update 2008 (6 Oct 2008)

NZ Herald: $30b deficit won’t stop Nats tax cuts (6 Oct 2008)

BBC News: Bank shares fall despite bail-out (13 Oct 2008)

Bay of Plenty Times: John Key: We cannot afford KiwiSaver (11 May 2011)

= fs =

Categories: Dollars & Sense, The Body Politic Tags: 2009 tax cut, 2010 tax cut, GCSB, global financial crisis, Kim Dotcom, Pre-Election Economic and Fiscal Update, PREFU, tax cuts, Treasury

Regret at dumping compulsory super – only 37 years too late

21 January 2013 Frank Macskasy 18 comments

It started with the 1975 election campaign,

It’s consequences, 37 years later were,

Source: Private-sector debt and factors affecting it

Private debt shot up like an unguided missile, into stratospheric heights. There were no limitations on our private borrowings.

By comparison, up until 2008 (Global Financial Crisis), Crown debt has been falling,

Source: NZ Economic Chart Pack – April 2012

In the 1975 general elections, 763,136 voters decided the course of New Zealand’s social and economic history.

By electing Muldoon, under the manifestly unpredictable and unfair First Past the Post electoral system, Labour’s compulsory superannuation scheme was ditched the following year.

As a young lad in his first job, this blogger vividly recalls receiving a cheque from my then-employer, as a reimbursement of my previous super-contributions. I recall looking at the cheque and the pitifully tiny amount it was made out for.

I recall a feeling of disquiet…

Even as a teenager, barely politically conscious, I was uneasy that the scheme was being canned by Muldoon and wondering how we were going to pay for superannuation in the future. I was also aware that bank mortgages were extremely hard to come by, as New Zealand had a low savings record. Businesses and industries competed with people seeking home-mortgages from banks.

A year later, I bought my first house and the experience was one I shan’t forget. By 1978 mortgages were nigh-on impossible to obtain; vendors’ Second Mortgages were a necessity (where the house seller left part of the sale price as a Second Mortgage to the Purchaser); and interest rates were high.

New Zealanders simply weren’t saving enough.

Which is why, when the incoming (secretly right-wing Rogernomics-controlled) Labour government was elected into power, they de-regulated New Zealand’s exchange rate and allowed overseas investment to flood into the country.

As a temporary, short-term “fix”, home ownership became easier. Second mortgages all but vanished. Interest rates dropped, as availability of finance met local demand.

On a long-term basis, the consequences created a rod for our economic backs.

Private borrowings from overseas skyrocketed, leading to ever spiralling-upward housing prices,

3.1 Trends in household liabilities
Total household liabilities have increased in both real and nominal terms. However, until 1990 the growth was moderate (Figure 1). Following the deregulation of financial markets, the growth of liabilities accelerated, and in the past five years has been driven by lower real interest rates and rising house prices.

Source: Debt in the aggregate balance sheet of households

With no limit on the amount we could borrow from offshore lenders, there was no natural ‘cap’ on prices. That meant we could demand more for our properties and the banks would happily comply, and borrow more from China, Japan, America, or where-ever. The banks “clipped the ticket along the way, amassing billions in profits in the process (see: ANZ profits up 17pc to $1.26b).

As the National Business Review reported in August 2010,

Last Wednesday Mr English bemoaned New Zealand’s debt problem, saying that in 2000 the country’s debt to the rest of the world was about $100 billion but now it was close to $180b, and forecast to hit $250b by 2014.

See: Key cautious over compulsory super

Essentially, we’re now chasing our own tails, borrowing more to buy more expensive houses; then on-selling at a “profit”; and borrowing more to buy higher-priced housing.

Gareth Morgan pointed out in May 2012, when he criticised the futility and destructiveness of property speculation,

“ So lubricated with the credit availability we all pile into the asset in unison and drive up its price. Hardly rocket science.”

See: House prices a cancer for the economy

Which led to the inevitable,

Full story

And,

Full story

It’s interesting to note that the above Herald story had an associated poll that yielded a rather telling result,

See: IBID

The 39% who responded with ‘No’ corresponds roughly with National’s core support.

The 15% who responded with “Yes, as long as it’s not too high” are those who will vote for whichever political Party best meets the needs of their wallets – and the long-term repercussions for the country be damned. They still want to profit from property speculation, so long as said speculation doesn’t push property prices beyond their own reach.

Those 44% who voted “Yes” indicate a growing maturity and understanding that everything has a consequence – including property speculation. These voters perhaps understand that,

The money has to come from somewhere – and it is coming from overseas lenders,
High levels of borrowing are ultimately damaging to our sovereign credit rating
Housing speculation is not just a giant legal pyramid scheme – but is harming the future of our own children, who then have to escape to Australia to be able to afford a home of their own

See: IBID

Again, as Gareth Morgan said last year,

“This is the legacy of the last 30 years. And it has become so entrenched in our psyche that our ability to build businesses and create wealth and employment has been numbed.

A bit like growing your own veges or preserving the summer harvest, it’s a lost craft. The cost to incomes is high, the consequence being our GDP per capita continues to slip down the OECD charts.

As we contemplate economic recovery some thought at least should be given to the quality of the recovery we’d prefer – do we want it to be a housing-led one again where we all seek riches through a speculative race for property; do we want it to be a business-led type where jobs and incomes take priority; or do we really not care? Is it all too much to think about?

The sense one gets is that politicians at least couldn’t care less, just bring recovery on, any recovery.”

See: House prices a cancer for the economy

A further comparison; Australia’s superannuation scheme (also referred to as the Superannuation Guarantee) - made compulsory in 1992 – has amassed savings of over $1 trillion dollars. In September 2010,

“After more than a decade of compulsory contributions, Australian workers have over $1.28 trillion in superannuation assets. Australians now have more money invested in managed funds per capita than any other economy.”- Source

Two years later, by September 2012,

“Total estimated superannuation assets increased to $1.46 trillion in the September 2012 quarter. Over the 12 months to September 2012 there was a 13.0 per cent increase in total estimated superannuation assets.” – Source

No talk of “nanny statism” here. Our Aussie cuzzies knuckled down; made hard decisions; and did the hard work. In 2006, the Sydney Morning Herald proudly proclaimed,

Full story

The Aussies have earned the benefits.

By comparison the NZ superannuation Fund – begun in 2003 – made this announcement in October 2012,

New Zealand Super Fund breaks $20 billion mark; releases 2011/12 Annual Report

Posted On: Wednesday, 17 October 2012

The New Zealand Superannuation Fund reached an end-of-month record high of $20.08 billion in September.
The Fund, which commenced investing in 2003, was set up by the New Zealand Government to help pay for the increasing cost of universal superannuation. It is managed by the Guardians of New Zealand Superannuation.

See: New Zealand Super Fund breaks $20 billion mark; releases 2011/12 Annual Report

As for Kiwisaver, in the five years to June 2012, Kiwisaver has amassed $12.9 billion in contributions.

See: IRD – KiwiSaver Annual Report 5

That’s around NZ$33 billion saved here in New Zealand – compared to A$1.46 trillion saved by our Aussie cuzzies.

By contrast, investment strategist and analyst, Brian Gaynor estimates that had New Zealand kept the Labour superannuation schemem it would be world approximately $240 billion dollars (See: Brian Gaynor: How Muldoon threw away NZ’s wealth). As Gaynor explain,

Without this decision we would now be called “The Antipodean Tiger” and be the envy of the rest of the world. We would have a current account surplus, one of the lowest interest-rate structures in the world and would probably rank as one of the top five OECD economies.

We would still own ASB Bank, Bank of New Zealand and most of the other major companies now overseas-owned. Our entrepreneurs would have a plentiful supply of risk capital and would probably own a large number of Australian companies.

Most New Zealanders would face a comfortable retirement and would be the envy of their Australian peers. The Government would have a substantial Budget surplus and we would have one of the best educational and healthcare systems in the world.

See: IBID’

Never underestimate the capacity for some people to vote stupidly.

Meanwhile, here in New Zealand, we are only just waking up to the mistakes we made 37 years ago,

Full story

Oh well, 37 years… rather late than never.

Which rather paints this current ‘government’ as a thing of the past; unwilling to learn from our historic mistakes; unwilling to learn from the Australian experience; but willing to take the easy road; and playing Muldoon-style politics with our country’s future economic stability,

Full story
.

The question now is – have New Zealanders learnt enough history from 1975 to get rid of this inept, inward-looking government? Or will it be John Key – Muldoonism v.2 ?

As always, the choice is ours; a future of debt and under foreign ownership or “Antipodean Tiger” ?

National Party supporters – take note.

*

Previous related blogposts

Nanny State, Daddy State, poor state?

References

Horizon Poll: Strong support for universal KiwiSaver

Fairfax: Compulsory Super regret for most Kiwis

NZ Herald: Foreign ownership shortchanging locals

Reserve Bank: Dealing with debt

Treasury: NZ Economic Chart Pack – April 2012

Treasury: Private-sector debt and factors affecting it

Wikipedia: 1975 General Election

NZ Herald: Govt eyes blind to housing crisis

NZ Herald: House prices a cancer for the economy

National Business Review: Key cautious over compulsory super

Bay of Plenty Times: John Key: We cannot afford KiwiSaver

NZ Herald: Brian Gaynor: How Muldoon threw away NZ’s wealth

Update

Radio NZ: NZ housing ‘seriously unaffordable’

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Categories: Dollars & Sense, Social Issues, The Body Politic Tags: 1975 super scheme, Australian compulsory super fund, kiwisaver, NZ Superannuation Fund, Rob Muldoon, superannuation scheme

Johnny’s Report Card – National Standards Assessment y/e 2012 – inequality & poverty

9 January 2013 Frank Macskasy 1 comment

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Whilst it is acknowledged that the Global Financial Crisis impacted harshly on our society and economy, it is also fair to say that National has had the benefits of starting out with a sound economy (surpluses, low unemployment, etc) in 2008 and four years in office to make good on it’s election promises..

Inequality & Poverty

The rhetoric:

“You can measure a society by how it looks after its most vunerable, once I was one of them. I will never turn my back on that.

[...]

Yet, also, you can measure a society by how many vulnerable people it creates – people who are able to work, and able to take responsibility for their own lives and their children’s lives, yet end up depending long-term on the State.” – John Key, 28 November 2006

See: Speech to North Shore National Party luncheon

“My father died when I was young. My mother was, for a time, on the Widow’s Benefit, and also worked as a cleaner. But the State ensured that I had a roof over my head and money for my mother to put food on the table. It also gave me the opportunity to have a good education. My mother made sure I took that opportunity, and the rest was up to me.” – John Key, 30 Jan 2007

See: The Kiwi Way: A Fair Go For All

“I have said before that I believe in the welfare state and that I will never turn my back on it. We should be proud to be a country that looks after its most vulnerable citizens. We should be proud to be a country that supports people when they can’t find work, are ill, or aren’t able to work. ”- John Key, 30 Jan 2007

See: IBID

“When Sir Ed climbed Mt Everest back in 1953, he wasn’t the only New Zealander on top of the world. We all were. We were among the five wealthiest countries on earth. Not any more.

Fifty-five years on, we are no longer an Everest nation. We are among the foothill nations at the base of the OECD wealth mountain. Number 22 for income per person, and falling.

But what does a wealth ranking matter, you might ask? Why does it matter if we’re number 22 or number four?

It matters because at number 22 your income is lower, you have to work harder, and you can save less. You face more uncertainty when things go wrong, when you or your family get sick or lose a job. No New Zealand sports team would be happy to be number 22. Why is the Government?

This is a great country. But it could be so much greater. It has been so much greater.

So the question I’m asking Kiwi voters is this: Do you really believe this is as good as it gets for New Zealand? Or are you prepared to back yourselves and this country to be greater still? National certainly is.

[...]

So, make no mistake: this election won’t be fought only on Labour’s economic legacy. National will be asking Labour to front up on their social legacy, too. Many of the social problems the Government said it would solve have only got worse.

This time a year ago, I talked about the underclass that has been allowed to develop in New Zealand. Labour said the problem didn’t exist. They said there was no underclass in New Zealand.

But who now could deny it? 2007 showed us its bitter fruits. The dramatic drive-by shooting of two-year-old Jhia Te Tua, caught in a battle between two gangs in Wanganui. The incidence of typhoid, a Third World disease, reaching a 20-year high. The horrific torture and eventual death of three-year-old Nia Glassie. The staggering discovery of a lost tribe of 6,000 children who are not enrolled at any school.

The list goes on and on. The fact is, that under Labour, there has been no let-up in the drift to social and economic separatism.

We don’t need more of their hand-wringing, their strategies, and their interdepartmental working groups. What’s needed is the courage to make the tough calls to fix these problems.” – John Key, 29 January 2008

See: A Fresh Start for New Zealand

“I’m a product of the welfare state – there hasn’t been any great secret about that.” – John Key, 27 Aug 2011

See: ‘Socialist streak’ just means we have a heart, says Key

The results:

Interestingly, whilst Key’s 2008 speech (A Fresh Start for New Zealand) started off describing New Zealand’s growing underclass, National’s Dear Leader went on to describe a series of punitive actions that his Administration would undertake, if elected to power.

The following sub-headings in Key’s speech are illuminating,

Youth Plan (education, youth crime)
Youth Guarantee (education, training, universal educational entitlement, threat of benefit sanctions)
Youth Justice (extending Youth Court; tougher sentences for youth offenders; new Youth Court orders)
New powers for the Youth Court
First, the power to issue parenting orders.
Secondly, the power to refer young offenders to mentoring programmes.
Thirdly, the power to refer young offenders to compulsory drug or alcohol rehabilitation programmes.
Tougher sentences
The first is longer residential sentences.
In addition, National will fund a new type of programme for teenagers who aren’t bad enough to be put in a youth justice facility but who need a serious dose of intervention.
National will fund a new range of revolutionary ‘Fresh Start Programmes’. (boot camps)
Finally, we think the Youth Court needs better teeth for following up serious youth offenders when they are released back into the community.

This was John Key’s “vision” of a “Fresh Start for New Zealand”; more punitive action against youth offenders – but precious little to address the root causes of youth crime; poverty, lack of jobs, poor housing, worsening health, lack of training and apprenticeships, etc, etc, etc.

Key’s “solution” was to treat the symptoms of this country’s growing underclass.

So it should be hardly any surprise that those symptoms worsened, and the underclass; prison population; domestic violence; hungry children; poor housing – all grew.

The truly unbelievable aspect to Key’s shonkey speech in 2008 was how comprehensively New Zealand voters sucked it up, en masse. (We seriously need to introduce comprehensive Civics courses in our schools, to teach young New Zealanders how to recognise and deconstruct political BS.)

Tax cuts:

Whichever way we look at it, New Zealand in the last four years has become a more unequal society, and with growing poverty.

The first causal factor was the 2009 and 2010 tax cuts, which gave the most to the highest income earners and most wealthy New Zealanders,

Source

Additional info

When, on 1 April 2009, then-Maori Party MP, Rahui Katene asked John Key in Parliament,

“How do low-income New Zealanders benefit from the tax changes introduced today?”

Dear Leader replied,

“They benefit because 630,000 New Zealanders—the New Zealanders who do not have children and who have been relatively low-income New Zealanders, and who got absolutely nothing under the previous Labour Government for 9 years—get $10 a week, or $500 a year. It is a small start, and it will be welcomed.”

See: TheyWorkForYou Blog – Tax Cuts—Implementation

At least Key wasn’t bullshitting us this time; for those on minimum wage up to it was indeed small. Someone on $100,000 would receive two and a half times more than someone on minimum wage.

The following year’s October tax cuts were hardly better – but this time the rate of GST was increased from 12.5% to 15%,

Source

The impact on low-income families – along with increased costs for medicines (see: Prescription charges to increase), and other user-pays government fees – would be harsh.

Contrary to the NZ Herald’s claim above, the average earner would not be “better off”. The $15 a week “extra” would be quickly swallowed up in rising government charges; medicine prescriptions; increased petrol taxes; and the flow-on inflationary effects throughout the economy.

This was not a “tax switch” – it was a tax-swindle – with the richest making the biggest gains.

Interestingly, ACT’s Roger Douglas – commenting on the 2009 tax cuts – realised that National was having to borrow heavily to finance said tax-cuts,

“Does the Prime Minister agree with Professor Eric Leeper’s statement in the latest Reserve Bank Bulletin that counter-cyclical fiscal policy could actually be counter-productive; if not, why not; if yes, why, then, is he borrowing $1 billion plus interest a year in order to give tax relief of $1 billion?” – Roger Douglas, 1 April 2009

So much for National’s promises in 2008,

“National’s rebalancing of the tax system is self-funding and requires no cuts to public services or additional borrowing.

[...]

This makes it absolutely clear that to fund National’s tax package there is no requirement for additional borrowing and there is no requirement to cut public services.”

See: National – Tax Policy

Salvation Army Report: The Growing Divide – A state of the Nation Report 2012

This document by the Salvation Army is one of the most insightful and far-reaching analyses of current economic stagnation; political factors; and related social problems. It pulls no punches.

This blogger encourages people to read the Report (it’s written in plain english; very little jargon; and contains excellent data, with references). It should be put into the letterboxes of every home in this country. Click here to link to the report.

[NB: The report was written at a time when unemployment was at 6.3%. Since then it has increased three consecutive Quarters to the current 7.3% (see: Unemployment January 2012 to November 2012.]

Amongst the Report’s findings,

1. Inflation, higher prices, increased GST, raised indirect taxes (eg, fuel taxes), and government charges, have off-set the tax cuts of October 2010.

2. If New Zealand is to return to the historically low rate of unemployment of 3.8% in December 2006, (from the then-figure of 6.3%), we would require 90,000 jobs, in on top of 25,000 to 30,000 jobs required each and every year just to keep up with the growth of the labour force. The figure of 90,000 will have increased as unemployment now stands at 7.3%.

3. The rapid growth in the labour force participation rate of people aged 65+ (from 14.1% in December 2006, to 19.5% in December 2011) has been at the expense of falling employment participation of young people in the 15 – 19 year old age group.

Those in the 15 – 19 year old age group, the Report states, have “borne the brunt of the recession and tightening of the job market”. Unemployment for this group rose from 14.3% in December 2006, to 24.2% in December 2011.

It is also this group targetted by National’s harsh “welfare reforms”, which attempts to blame young people as “work shy” – a ‘double whammy’ from the Global Financial Crisis and a right wing government keen to shift blame for rising unemployment onto powerless victims of the Recession.

4. The numbers of welfare recipients receiving the Domestic Purposes Benefit has also been affected by the Global Financial Crisis and resultant Great Recession. DPB recipients dropped from a peak of approximately 111,000 in late 2003, to 96,000 in mid 2008. Since 2008, and as redundancies increased; unemployment rose; and jobs disappeared, the number reversed. DPB recipients skyrocketed to an all time record of 114,230 benefits by December 2011.

Far from being “bene bludgers” opting for the DPB as a “lifestyle choice” (which is constantly parrotted by ill-informed conservatives and low information voters), solo-parents are as vulnerable to recessionary forces as other workers.

5. In the year to December 2011, average weekly earnings rose a only 2.6% from $991.05 to $1016.95. Taking annual inflation of 1.8% into account, weekly earnings rose by a fractional 0.8%. With increases in rent, fuel tax, and other government charges, that increase will have vanished altogether.

6. The Report gave as an example of unequal wage increases the difference between hourly earnings in the finance sector increasing by $1.01 per hour, from $36.63 per hour in June 2011 to $37.64 in December 2011.

By contrast, the average wage in the traditionally poorly paid accommodation sector increased by only 3 cents an hour from $16.40 to $16.43 per hour.This was a clear illustration of the average hourly earnings of the highest paid sector increasing 2.3 times more than those for lower paid workers.

7. Most of the increase in State benefit payments over the past five years was made as higher spending on New Zealand Superannuation (43% of the increase) and Working for Families (37% of the increase). Approximately 568,000 people were receiving superannuation by June 2011.

This compared to 319,000 of other welfare recipents as at December 2011 – up from 264,500 from December 2006. Welfare numbers were dependent on the economy and increased only because of the impact by the GFC-caused Recession.

8. Food parcels issued to families and people in need doubled from 24,250 in 2006, to 53,360 in 2011. Again, this was in accordance with the advent of the GFC in 2007/08; skyrocketting unemployment; and a lack of job-creation policies by National, once it won the election in late 2008. (John Key admitted to this on 18 October 2011. See: Key admits underclass still growing)

9. Inflation of living costs for 2011 was fractionally higher for Low-Income Household CPI at 2.1% than it was for the All Groups CPIs, at 1.8%. Low-Income Households were more vulnerable to increasing costs such as rent, government charges, and gst increases.

10. The Report correctly predicted that levels of unemployment would rise during 2012, and would negatively impact on growth in wages and salaries of poorest paid workers.

For a full understanding the the Report, it is recommended that people read the document in it’s entirety, as I have abridged and condensed much of the information contained therein.

The Report reinforces anecdotal evidence, facts, and stats, that are already in wide circulation and confirms that jobs, incomes, and those receiving social welfare assistance are all affected by the global downturn over the last four to five years.

After all, John Key uses that very excuse to explain away National’s poor economic performance,

“We did inherit a pretty bad situation with the global financial crisis... ” – John Key, 11 Sept 2011

See: View from the top

Ministry of Social Development: The widening gap: perceptions of poverty and income inequalities and implications for health and social outcomes

In New Zealand, income inequalities have increased since the neo-liberal reforms and benefit cuts of the late 1980s and 1990s, although the rate has slowed this decade (Blakely et al. 2007, Ministry of Social Development 2006, Ministry of Social Development 2007). The New Zealand Living Standards 2004 report showed a million New Zealanders living in some degree of hardship, with a quarter of these in severe hardship. Despite the buoyant economy and falls in unemployment levels, not only was there a slight increase in the overall percentage of those living in poverty between 2000 and 2004, but those with the most restricted living standards had slipped deeper into poverty (poverty defined as exclusion from the minimum acceptable way of life in one’s own society because of inadequate resources) (Ministry of Social Development 2006, 2007).

[...]

This greater income inequality has seen New Zealand move into 18th place out of 25 in the OECD in terms of income inequality from 1982 to 2004 (Ministry of Social Development 2007). Over the preceding two decades New Zealand experienced the largest growth in inequalities in the OECD (2000 figures), moving from two Gini coefficient points below the OECD average to three Gini points above (Ministry of Social Development 2007:45-46). One indication of the impact of these inequalities has been that relative poverty rates, including child poverty rates, have increased.

Source: MSD

OECD: Growing Income Inequality in OECD Countries: What Drives it and How Can Policy Tackle it ?

Over the two decades to the onset of the global economic crisis, real disposable household incomes increased in all OECD countries, by 1.7% a year, on average. In a large majority of OECD countries, household incomes of the top 10% grew faster than those of the poorest 10%, leading to widening income inequality. Differences in the pace of income growth across household groups were particularly pronounced in some of the English-speaking countries, some of the Nordic countries and Israel. In Israel and Japan, real incomes of people at the bottom of the income ladder actually have fallen since the mid-1980s.

Source: OECD

At present, across OECD countries, the average income of the richest 10% of the population is about nine times that of the poorest 10%. While this ratio is much lower in the Nordic countries and in many continental European countries, it rises to around 14 to 1 in Israel, Turkey and the United States, to a high of 27 to 1 in Chile and Mexico. The Gini coefficient, a standard measure of income inequality that ranges from zero (when everybody has identical incomes) to 1 (when all income goes to only one person), stood at 0.28 in the mid-1980s on average in OECD countries; by the late 2000s, it had increased by some 10%, to 0.31. On this measure, income inequality increased in 17 out of the 22 OECD countries for which data are available (Figure 1, left-hand panel). In Finland, Germany, Israel, New Zealand, Sweden and the United States, the Gini coefficient increased by more than 4 percentage points: and only five countries recorded drops, albeit small ones .

Source: IBID

[See also Addendum 2 below.]

So it’s official – the Great Experiment in free market reforms from the mid 1980s to the late 2000s, has produced growing inequality here in New Zealand. Indeed, the trend has been global,

Income inequality followed different patterns across OECD countries and there are signs that levels may be converging at a common and higher average. Inequality first began to rise in the late 1970s and early 1980s in some Anglophone countries, notably in the United Kingdom and the United States, followed by a more widespread increase from the late 1980s on. The most recent trends show a widening gap between poor and rich in some of the already high-inequality countries, such as Israel and the United States. But countries such as Denmark, Germany and Sweden, which have traditionally had low inequality, are no longer spared from the rising inequality trend: in fact, inequality grew more in these three countries than anywhere else during the past decade. However, some countries recorded declining income inequality recently, often from high levels (Chile, Mexico and Turkey).

Source: IBID

It is no coincidence that the trends “first began to rise in the late 1970s and early 1980s in some Anglophone countries, notably in the United Kingdom and the United States” – that is the precise period when Margaret Thatcher won office in May 1979 and Ronald Reagan became US president in January 1981.

Our turn came three years later with the Lange/Douglas government that ushered in “Rogernomnics“.

The OECD report above is simply being ‘coy’ by not connecting-the-dots.

What is more telling? Any person reading this would not be surprised. We have become innured to an unfair economic system which produces unequal outcomes and great disparities in incomes and wealth. As the OECD report states with alarmingly candour,

Increases in household income inequality have been largely driven by changes in the distribution of wages and salaries which account for 75% of household incomes of working-age adults. With very few exceptions (France, Japan and Spain), wages of the 10% best-paid workers have risen relative to those of the 10% least-paid workers. This was due both to growing earnings’ shares at the top and declining shares at the bottom, but top earners saw their incomes rising particularly sharply (Atkinson, 2009). The highest 10% of earners have been leaving the middle earners behind more rapidly than the lowest earners have been drifting away from the middle.

Source: IBID

Furthermore, as the OECD report points out, “…more working hours were lost among low-wage than among high-wage earners, again contributing to increasing earnings inequality“.

The OECD report is backed up by Statistics New Zealand,

As with total employment, the drop in full-time employment mainly reflected a decrease in male
full-time employment, which was down 12,000 (down 1.2 percent).
Usual hours worked decreased 0.4 percent – down to 79.6 million hours over the quarter. The
changes in full and part-time employment reflect the fall in the number of hours people usually
work during a week. Over the quarter, the number of hours people actually worked decreased
0.8 percent, down to 73.2 million hours.

See: Household Labour Force Survey: September 2012 quarter

Ministry of Social Development - Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

Whilst New Zealand has no formal or official measure of poverty or material hardship/deprivation, there are studies and conclusions leading to reports that offer a disquieting insight into the state of income inequality, poverty, and child poverty in our country.

One such report was conducted by Bryan Perry for the Ministry of Social Development in August 2012, entitled the “Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011″ – a 195 page study.

The full report is available here: MSD - Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

A much-condensed precis of the Report;

2012 MSD Household Incomes Report – ‘Summary’

Household incomes BHC (before deducting housing costs) rose in real terms for all income groups from 2007 to 2009, continuing the steady growth that began in 1994,
Income inequality increased significantly between 1988 to 2004, then fell from 2004 to 2007 as a result of the WFF package, and was still around the same level in 2009 as in 2007,
Income inequality grew very rapidly from 1988 to 1992, followed by a slower but steady rise through to 2004,
From 2004 to 2007 inequality fell mainly as a result of the WFF package,
Median Household incomes fell 3% in real terms after little change (+1%) from HES 2009 to HES 2010,
This fall followed a long and strong rise in the median from the mid 1990s to 2008-09 averaging 3% pa in real terms. GDP per capita increased at 2.5% pa over this period on averagwe,
Incomes fell for deciles 3-6, but rose for the top decile especially,
At the very bottom (P15 down), incomes were flat from HES 2010 to HES 2011 (protected by benefit rates being CPI adjusted and NZS being wage related),
Inequality decreased significantly from HES 2009 to HES 2010 then rose from HES 2010 to HES 2011 to its highest level ever. This volatility reflects the impact of the GFC,
On the AHC (HouseHold income after deducting housing costs) moving line measure, the child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of households with children with high ‘outgoings-to-income’ (OTIs),
The 2009 child poverty rate is almost double the rate that prevailed in the early 1980s,
In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 230,000 children (22%) below the low-income threshold (ie ‘in poverty’), down from 380,000 (37%) in 2001,
Hardship rates for children rose from 15% in the 2007 HES to 21% in HES 2011 using the ELSI measure. In part, this reflects the falling incomes of those in deciles 3-6, some of whom may already have been in a precarious financial position – the loss of income has been enough to tip them into hardship even though their incomes are still above the poverty threshold,
Chronic poverty (as defined in the Incomes Report) is about having an average household income over seven years that is below the poverty threshold over those years. Looking at children in poverty in a HES survey (cross-sectional), 60% of them are in chronic poverty in any survey and 40% in temporary poverty. In addition there are others who are in chronic poverty but not in current poverty in that one year – this group is about 20% of the number in current poverty.
In 2009, between 460,000 and 780,000 people were in households with incomes below the low-income thresholds (ie ‘in poverty’),
In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 650,000 (15%) below the low-income threshold (ie ‘in poverty’, down from 930,000 (25%) in 2001,
In 2009, just over one in three poor children were from households where at least one adult was in full-time employment, down from around one in two before Working for Families (2004),
Income poverty rates for single person working-age households trebled from the 1980s to 2007 (10% to 30%) and were 35% in 2011. One in 9 poor people and 1 in 4 poor households are from this group. The rates are higher for the older group living on their own (45-64 years) than for the younger group,
In 2001, 42% of households in the lowest income quintile had high ‘outgoings-to-income’, but this fell to 34% by 2004 reflecting the introduction of income-related rents, and has remained steady since then (33% in 2009),
In 2009, 37% of children lived in households with high ‘outgoings-to-income’, a rise from 32% in 2007, and 26% in 2004 – the 2004 figure was the lowest proportion for some time, following the introduction of income-related rents in 2001 (when the proportion with high ‘outgoings-to-income’ was 32%),
In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 650,000 (15%) below the low-income threshold (ie ‘in poverty’, down from 930,000 (25%) in 2001,
The child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of households with children with high ‘outgoings-to-income’,
The 2009 child poverty rate is almost double the rate that prevailed in the early 1980s,
Just over two of every three two parent families were dual earner families in 2009, up from one in two in the early 1980s, but down from nearly three in four in 2004,
Children in sole parent families have a higher risk of hardship (46%) than those in two parent families (14%). This reflects the relatively low full-time employment rate for sole parents (35% in 2009) - 73% of sole parents were in receipt of a main benefit in 2009,
The value of New Zealand Superannuation (NZS) fell further below the median household income from 2007 to 2009,
People living in sole parent households are a relatively small subgroup, making up only 8% of the population. Only 3% of those in sole parent households are found in the top income quintile. On the other hand, a high proportion have incomes in the lower end of the income distribution.
High housing costs relative to income are often associated with financial stress for low to middle income households. Low-income households especially can be left with insufficient income to meet other basic needs such as food, clothing, transport, medical care and education,
For the bottom quintile, the proportion with high ‘outgoings-to-income’ reduced from 2001 to 2004 with the introduction of income related rents, then remained steady in 2007 and 2009 at the 2004 level.1 For all but the bottom quintile, the proportion with high housing costs rose strongly from 2004 to 2007. From 2007 to 2009, the situation for the second quintile continued to worsen, such that by 2009, each of the two lower quintiles had one in three households with high ‘outgoings-to-income’,
From 2007 to 2009, median household incomes (BHC – HH income before deducting housing costs) rose by 4.3% pa in real terms (8.6% in total). This continues the steady growth in the median from the low point in 1994. The AHC (HH income after deducting housing costs) median rose less rapidly (3.2% pa), reflecting the relatively rapid rise in average accommodationcosts,
The increasing dispersion of household incomes from the 1980s through to 2009 is clear. For the period as a whole, incomes for households above the median increased proportionately much more than did the incomes of households in the lower three deciles, .
In 2009 the incomes of the bottom 30% of the population were on average only a little better in real terms than those of their counterparts two decades earlier in 1988. On the other hand there were more substantial gains in the period for the top half of the distribution. The income distribution is therefore much more dispersed in 2009 than in 1988^{, .}
^{The most significant structural change to the income distribution over the two decades from 1984 to 2004 is a significant hollowing out of the middle parts of the distribution from $12,000 to $30,000 (equivalised) and a corresponding increase in the proportion of the population in higher income households. There was also a small increase in the proportion of the population in low-income households in this period. From 2004 to 2007, the impact of the Working for Families package in that period is very clear for low to middle income households.}The income distribution was more dispersed in 2004 than in 1984. From 2004 to 2007 income inequality decreased.
The significant change in shape of the income distribution from 2004 to 2007 reflects two main factors: (A) the impact of the WFF package on low to middle income households and (B) the reduction in the number of people in households whose main source of income is an income-tested benefit (100,000 fewer in 2007 than in 2004)
As recently as 1996, the government of the time in New Zealand was openly disapproving of any poverty discourse. However, in 2002, in the context of the Agenda for Children, the government made a commitment to eliminate child poverty, and in the Speech from the Throne in November 2005, the Governor-General described the Working for Families package as “the biggest offensive on child poverty New Zealand has seen for decades”. The current National-led government, like the previous Labour-led government, espouses the principle that ‘paid work is the best way to reduce child poverty’. New Zealand does not however have an official poverty measure.
The rise in moving line child poverty rates from 1990 to 1992 was driven by two factors: the rise in unemployment, and the 1991 benefit rate cuts which decreased real incomes for beneficiaries by a greater amount than the median fell in the period,
From 1992 to 1998 the 60% of median moving line poverty rate for children fell as unemployment rates fell and incomes for those around the poverty line rose more quickly than the median in the period,
From 1998 the median continued to grow in real terms, but the incomes of many low-income households with children remained fairly static through to 2004. This meant that the moving line child poverty rate rose to 2004, indicating that low-income households with children were on average further from the median in 2004 than in 1998,
On the After Housing Costs (AHC) moving line measure, the child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of HouseHolds with children with high OTIs (‘outgoings-to-income’ ratio),
From 2004 to 2007, the poverty rate fell strongly … for the working poor than for the beneficiary poor. There were no further policy changes to housing assistance from 2007 to 2009 – the maximum rates of assistance remained fixed and did not move in line with movements in housing costs, and net housing expenditure rose for low-income households with children. This is reflected in the rise in child poverty rates from 2007 to 2009 using the moving line AHC approach.

.(Report Note: when a household spends more than 30% of its income on accommodation it is said to have a high “OTI” - ‘outgoings-to-income’ ratio)

The above is a heavily condensed version of Bryan Perry’s report. For a full report, please refer to: Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

It is fairly clear that income inequality is not only still prevalent – but increasing. The ‘Gini’ does not lie – and the Inequality Factor has risen from 30.2 to 33.5 (the higher the figure, the more inequality).

Child poverty is still with us, and remains New Zealand’s most critical problem (I refuse to call it an “issue”).

Despite John Key’s fine words and stirring rhetoric, National has failed to change it’s core “values” and adheres to a dogmatic faith in the Market to deliver solutions to poverty in our country.

Yet, John Key should know precisely what needs to be done. As he told the nation five years ago,

“My father died when I was young. My mother was, for a time, on the Widow’s Benefit, and also worked as a cleaner. But the State ensured that I had a roof over my head and money for my mother to put food on the table. It also gave me the opportunity to have a good education. My mother made sure I took that opportunity, and the rest was up to me.” – John Key, 30 Jan 2007

See: The Kiwi Way: A Fair Go For All

The State invested heavily in Mr Key – as it did with many other people prior to the Rogernomics roll-backs of the late 1980s – and New Zealand benefitted accordingly from that social investment.

The social welfare system is designed as a safety net for citizens in time of need. Whether through job losses or injury or raising children single-handed, our society – through the State – demands that no one suffers. (Never mind the deranged ravings of the ill-informed on talkback radio.)

However, there is another role for our welfare society; to guarantee that the young from impoverished and vulnerable families are accorded the same opportunities that other, luckier parents can provide for their own children.

This is a country of plenty. There is no reason why we cannot eradicate poverty; poor housing; disease; lack of adequate, nourishing food for all children; and low schooling/training outcomes.

The only reasons that this blogger can see for the perpetuation of poverty is a double curse on our country, namely,

An irrational prejudice against the poor
A debilitating lack of will

Until we resolve both of these collective “disabilities” to our vision for a better society, we will continue to reap the rotten fruits of our inaction.

On 28 November 2006, John Key said,

“You can measure a society by how it looks after its most vunerable, once I was one of them. I will never turn my back on that.”

I see no evidence of that.

Indeed, six years later, Key admitted that the underclass he spoke of has not diminished,

Full story

Addendum 1

It is interesting and worthwhile to compare the rhetoric of John Key’s speech, A Fresh Start for New Zealand, with the data contained in the Salvation Army report, “The Growing Divide“. Both are worth reading. It rapidly becomes clear how Key cynically mis-represented facts to suit his Party’s election agenda.

Addendum 2

It is worth noting that the GINI Coefficient – which is one method by which to measure income inequality – shows interesting figures for New Zealand,

Source: OECD Income distribution – Inequality (GINI co-efficient)

A high GINI factor (close to 1 or 100, expressed as a percentage) indicates maximum inequality. A figure at zero indicates absolute income equality.

New Zealand’s GINI Coefficient rose (income became more unequal) from the mid-1980s to around 2000. At the mid-2000s, the GINI Coefficient began to reduce – indicating incomes are becoming less unequal. (Though has not addressed growing poverty in this country.)

What factor intervened in the mid-2000s to stem the rising inequality of incomes?

The same policy introduced by the preceding Labour Government, which Dear Leader, John Key, once described as “communism by stealth” (see: National accuses Government of communism by stealth) – but by 2008 had decided that he liked “Working for Families” after all (see: National to keep Working for Families unchanged).

After 2010, the GINI coefficient begins to rise again, as effects from our stagnating economy and National’s policies begin to over-take the positive income-redistribution aspects of ‘Working for Families’.

Income inequality in New Zealand is once again on the rise,

Gini scores (x100) for market and disposable household income, 1986 to 2011 (18-64 yrs)

HES year	Before taxes and transfers (market income)	After taxes and transfers (disposable income)	Reduction (%)
1986	36.4	26.4	27
1991	42.4	31.3	26
1996	43.1	32.9	24
2001	43.1	33.1	23
2004	41.7	32.9	21
2009	40.3	32.3	20
2010	38.3	30.2	21
2011	42.2	33.5	21

Source: MSD - Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

Additional

Dominion Post: Children need changes now – commissioner

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Categories: A Little Blue Marble Called Earth, Dollars & Sense, Social Issues, The Body Politic Tags: Agenda for Children, child poverty, Gini, GINI Coefficient, Margaret Thatcher, Ministry of Social Development, OECD, Roger Douglas, Rogernomnics, Ronald Reagan, Working for Families

Johnny’s Report Card – National Standards Assessment – Sunrise, Sunset, and Outlooks

9 January 2013 Frank Macskasy 3 comments

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Sunrise, Sunset, and Outlook for 2013

“We need businesses producing high-value products for overseas markets and businesses using R&D to develop those products which drives other benefits, like better production processes and marketing. Basically it’s about using innovation to drive our economy.

We have some of these companies already – the likes of Fisher and Paykel, Tait and Rakon. Our world-leading dairy industry also owes much of its success to innovation.” – Jonathan Coleman, Associate Minister of Finance, 1 July 2011

See: EDANZ National Economic Development Forum – Speech Notes

It’s a funny old world we live in…

Sunrise Industries…

Full story

Sex, gambling, tobacco, alcohol – the new profitable industries of the 1st century? We seem to have left out other “growth” industries, the modern sex-slave trade in women and children, and arms manufacturing.

Oh. Wait. Maybe not,

Full story

Oh well, National and it’s free-market fellow-travellers will be delirious with joy. If there’s a buck to be made from vices and weapons, they’ll be happy as a pig in mud.

Now if only they can find the price of a soul, and a market for it…

And the Sun sets on…

Full story

Meanwhile…

“ Basically it’s about using innovation to drive our economy. We have some of these companies already – the likes of Fisher and Paykel, Tait and Rakon. ” - Jonathan Coleman, Associate Minister of Finance, 1 July 2011

Source

Full story

Oh well, one (Tait) out of three still seems a ‘goer’. How long for, I wonder?

Meanwhile, how are our export and related sectors doing?

Full story

And the stats back up the ODT story above,

Source: New Zealand in Profile: 2012 – Economy

Not too good it seems. The red-highlighted sectors all declined from 2006 to 2011.

National’s “hands off” doctrine, in deference of the ‘Invisible Hand of the Market’, is certainly achieving one result; giving advantage to our exporting competitors from other nations. The Nats seem resigned (hellbent?) to more job losses; more exporters going under; more skilled tradespeople leaving for Australia; and a further decline ineconomic growth,

Full story

What the hell!? The export sector is a “declining industry“?!?!

When even National’s allies – the Manufacturers and Exporters Association – are calling for government intervention about the high New Zealand dollar, it really drives home the seriousness of the crisis. An economic crisis that this time had it’s origins on Molesworth Street – not Wall Street.

For National to persist in it’s “hands off” and obedience to Free Market dogma will have nasty consequences for our economy.

For 2013, expect,

unemployment to rise
the export sector to worsen
growth to remain low, under 1%
an early election this coming year, as Dunne and the Maori Party desert the National-led coalition.

It’s easy to predict – we’ve seen it all before.

Previous related blogposts

New Zealand’s OTHER secret shame

New Zealand’s OTHER secret shame – *Update*

NZ’s 21st Century Growth Industries – Drugs, Gambling, & Prostitution

Drugs & Gambling – NZ’s 21st Century Growth Industries?

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Categories: A Little Blue Marble Called Earth, Dollars & Sense, Social Issues, The Body Politic Tags: unemployment, free market, Jonathan Coleman, alcohol, tobacco, brothel, prostitution, job losses, Sky City, New Zealand Manufacturers and Exporters Association, cluster bombs, Fisher & Paykel, Rakon, Tait, liquor outlets

Johnny’s Report Card – National Standards Assessment y/e 2012: trade

9 January 2013 Frank Macskasy 2 comments

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Trade

The rhetoric:

The reality:

In simple terms, we, as a country, have continued to import more than we exported,

2008/09

The trade balance for December 2008/January 2009 was a deficit of $341 million. This compared with a surplus of $38.5 million in December 2007/January 2008. (See: Tradingeconomics – Balance of Trade)

2012

The trade balance for September/October 2012 was a deficit of $718 million. This compared with a deficit of $226 million for September/October 2011. (See: Tradingeconomics – Balance of Trade)

As reported in the NZ Herald on 27 November 2012, the annual deficit increased to $1.37 billion. (See: Trade deficit widens as dairy values fall)

In graph form,

Source: Tradingeconomics – Balance of Trade

On top of that, what we did export earned us less with the increasingly high value of the New Zealand dollar,

Source: Tradingeconomics – New Zealand Dollar

As Bloomberg wrote in October,

New Zealand’s annual trade deficit swelled to the widest since 2009 as exports fell to a 20-month low amid a decline in dairy shipments and a rising currency.

See: New Zealand’s Annual Trade Deficit Swells to Widest Since 2009 – Bloomberg

The high NZ Dollar not only affects the value of our exports (and thus helps to pay for imports) but has a direct, inescapable impact on our employment,

Full story

Whilst governments around the world were – and still are – manipulating their currencies downward, with several techniques (including “quantitative easing”) National remains wedded to a hands-off policy of allowing the “market” to determine the value of our dollar.

So while we are playing by purist, Market rules – other countries have thrown the rulebook away and doing whatever it takes to boost their economy and create jobs.

The “reward” for National’s obedience to dogma? Massive job losses,

Fears high dollar pushes some firms close to edge

Seafood industry warns of job losses from high dollar

Rakon blames job cuts on high dollar

High dollar blamed for job losses at wool plant

The outlook? Not good,

Currency outlook tough for 2013

National’s response? Abject surrender,

Job losses inevitable in declining industries, say ministers

If ever a lesson was needed to illustrate the sheer futility of single-minded perseverance with a failed economic ideology, it is National’s committment to it’s hands-off policy on the New Zealand Dollar.

And yet, when it comes to “sexy” industries, National will climb over broken glass to throw tax-payer subsidies at the likes of “Lord of the Rings“, “The Hobbit“, Rugby World Cup, et al.

Whilst Key will crow about “3,000 people have been employed because of the Hobbit” (see: John Key pushes Hobbit benefit) – meanwhile 40,000 manufacturing jobs have been lost since this Government took office in 2008 (see: Loss of work hits hard).

If, by now you are feeling anxious and upset, don’t panic. It simply confirms you are still sane.

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Categories: A Little Blue Marble Called Earth, Dollars & Sense, Social Issues, The Body Politic Tags: balance of payments, trade deficit

Johnny’s Report Card – National Standards Assessment – the social welfare safety net

9 January 2013 Frank Macskasy 3 comments

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Social welfare safety net

The rhetoric:

It started well… National’s bad old image as a “bene-bashing Party, pandering to the ill-educated; the mis-informed; and the downright ignorant, appeared to be a thing of the past.

John Key was a product of a civilised society where social welfare could give kids from the most disadvantaged households a chance to better themselves.

“You can measure a society by how it looks after its most vunerable, once I was one of them. I will never turn my back on that.” – John Key, 28 November 2006

See: Speech to North Shore National Party luncheon

” I have said before that I believe in the welfare state and that I will never turn my back on it. We should be proud to be a country that looks after its most vulnerable citizens. We should be proud to be a country that supports people when they can’t find work, are ill, or aren’t able to work.

[...]

My father died when I was young. My mother was, for a time, on the Widow’s Benefit, and also worked as a cleaner. But the State ensured that I had a roof over my head and money for my mother to put food on the table. It also gave me the opportunity to have a good education. My mother made sure I took that opportunity, and the rest was up to me. ” – John Key, 30 Jan 2007

See: The Kiwi Way: A Fair Go For All

Key even seemed to “steal” policies from the centre-left Labour Party,

Full story

Perhaps National, under Key’s leadership, had learnt from it’s mistakes in the 1990s?

No such luck.

The Reality:

As the Global Financial Crisis plunged most of world’s nations (China and Australia being the two lucky exceptions) into recession, the ranks of the unemployted swelled.

As Brian Gaynor, executive director of Milford Asset Management, wrote in the NZ Herald on 18 August 2012,

” At the end of May, the 34-country Organisation for Economic Co-operation and Development (OECD) had an unemployment rate of 7.9 per cent.

Nearly 48 million were out of work, 15 million more than when the financial crisis began in 2007.

The unemployment rate continues to rise in the eurozone and is now 11.1 per cent. “

See: Baby boomers clogging the job market

Here in New Zealand, unemployment skyrocketted from 78,000 in late 2007/early 2008, to the current 175,000 – over a doubling in only four years.

That’s 97,000 who had jobs prior to the Global Financial Crisis who are now out of work.

See: tradingeconomics.com – Unemployment numbers

If it weren’t for the 114,200 who have migrated to Australia in the same four year period, soaking up thousands of potential jobless New Zealanders, one shudders at the unemployment rate we would now have (see related blogpost: Johnny’s Report Card – National Standards Assessment y/e 2012: migration ). Thank the mercies for our more affluent, and clever, neighbour.

It’s fairly obvious to all but the most entrenched, bene-bashing, Talkback Radio moron that New Zealand has not escaped the effects of the Global Financial Crisis.

National’s devotion to market-forces has caught Key, English, and Joyce in a trap of their own making. Their dogma dictates that the State “cannot create jobs” – only the Market can do that, as Key stated on several occassions,

“Nothing creates jobs and boosts incomes better than business growth. For New Zealand to build a more productive and competitive economy, we need more innovative companies out there selling their products on the world stage.” – John Key, 24 August 2012

See: Key Notes: Honouring our fallen soldiers

When the “Market” fails to behave as neo-liberal doctrine demands – then there is a problem. National cannot admit that it’s free market policies have failed. (It took the Russians seventy years to finally concede that their centralised market policy had failed them.)

For the National politburo, who cannot concede Market failure, there must be another reason why jobless numbers are increasing – not decreasing. It must be the fault of those on welfare. The unemployed must be to blame, as the Market is never, ever wrong.

Accordingly, from early-2011 onward, National began a concerted campaign against those receiving welfare assistance. It was a vicious, de-humanising, de-moralising campaign against those whose only “crime” was,

having lost their jobs,
had little access to training or apprenticeship,
raising children on their own,
were sick, injured, or disabled

From 2011, we started seeing headlines like these in our media,

Food parcel families made poor choices, says Key (17 Feb 2011)

Baby turns one, so get to work mum (6 June 2011)

Revealed: $100k-plus beneficiary homes (13 June 2011)

Single mum on DPB for decades (20 Sept 2011)

Minister spells out $43,000 ‘salary’ claim for solo mum (21.2.2012)

Beneficiary contraception plan ‘intrusive’ (8 May 2012)

Benefits may be linked to kids’ jabs (12 May 2012)

And if local bene-bashing stories weren’t sufficient to drive home the agenda of demonising this sector of society, National and it’s media corporate-whores could always rely on some excellent shock-value stories from overseas,

Man who fathered 30 kids says he needs a break – on child support (21 May 2012)

This next one was very popular at Federated Farmers – that well-known bastion of liberal sensibilities. The way that Bill English played his audience of cow-cockies and sheep-herders, with a barely-disguised smirk on his face, spoke volumes…

Drug tests for more beneficiaries mooted (28 June 2012)

Benefit cuts for drug users defended by PM (2 July 2012)

Said Paula Bennett,

“There’s two words we don’t use often enough in this country and that’s self-responsibility. The size of someone’s family is their business, so long as they don’t expect someone else to pay for it.”

So saith the woman who was on the DPB; had free taxpayer funded tertiary education; gave up her part-time job at the time because it was “too hard”; and had WINZ assistance to buy her own home…

Big families mean big welfare dollars (15 July 2012)

Bennett increases pursuit of welfare ‘rorts’ (23 July 2012)

Beneficiaries on warrants face cash cut (6 Sept 2012)

Kidnappers among targets in benefit plan (7 Sept 2012)

And to really, really make sure we’ve been paying attention to this Nazi-style demonisation propaganda,

Beneficiaries cost $130,000 over lifetime (12 Sept 2012)

And in case we missed it first time, Fairfax gave the political dagger-in-beneficiaries-backs another good, hard, twist,

Beneficiaries’ bill $78 billion (12 Sept 2012)

Though Bill English promised, hand-on-heart, that this was not an exercise in “bene bashing,

Benefit tally ‘not an excuse for hard line’ (13 Sept 2012)

Then the Nats came up with the idea of a law change of “one strike and you’re out” for welfare beneficiaries who turned down any “suitable” job offer from July 2013. Which would be laughable, because both Key and Bennett have conceded that there simply aren’t enough jobs for everyone.

So what would be the point of a “one strike and you’re out” for the unemployed, except to paint them as “work shy” and “lazy”?

Propaganda. Nasty stuff.

‘One strike’ rule for beneficiaries (18 Sept 2012)

Funny thing… the media never compared welfare beneficiaries entitlements with that of politicians. How many beneficiaries get free air-travel for the rest of their lives for themselves and their spouses? Or a gold-plated superannuation scheme none of us are entitled to?

Those were just some of the media stories and headlines that assaulted our sensibilities and attempted to paint the unemployed – the victims of the GFC – as “bene bludgers”.

All because National could not cope with the growing numbers of Kiwis losing their jobs, and had no plan to address growing unemployment.

So default to Setting ‘B’: Blame the Benes.

When Key stated that the most recent jobless stats – 7.3% unemployed - had “come as a bit of a surprise” (see: Unemployment surges to 13-year high ), he obviously had not been paying attention to yearly figures from New Zealand Statistics.

Jobless numbers had ‘only’ been rising since the beginning of 2012,

.’

Source: Trading Economics – Unemployment

The scary headlines above were only partially offset by other media stories of New Zealand’s increasingly visible ‘underbelly’. Poverty was no longer staying behind closed doors, away from “polite society”,

Hungry kids scavenge pig slops (11 May 2012)

Welfare rejig carries whiff of hypocrisy (12 May 2012)

Stuck for ideas, Govt preys on powerless (13 May 2012)

The same hate-campaign was being conducted overseas,

Hatred of those on benefits is dangerously out of control (18 May 2012)

No food, no shoes and kids kept home (23 May 2012)

Government Policy Impacting Child Poverty Levels (30 May 2012)

And then we came to the attention of the United Nations. Quasi-nazism – not exactly the “cool look” we want for New Zealand and it’s tourism industry,

Struggling families borrow to buy food (21 July 2012)

UN urges Govt reforms to not target beneficiaries (2 Aug 2012)

Principal wants taxpayers to fund breakfast scheme (12 Aug 2012)

Ministry memo critical of plan to drug test beneficiaries (17 Aug 2012)

Govt has caused ‘incredible shift of wealth’ – CTU (24 Aug 2012)

Playing politics is not helping kids (26 Aug 2012)

Even multi-millionaire, Gareth Morgan, had to state the bloody obvious for those voters who were still less-than-fully-brain-functional,

Bennett accused of dehumanising beneficiaries (6 Sept 2012)

Precious little sense on Planet Paula (17 Sept 2012)

Belt tightening won’t reduce unemployment (23 Sept 2012)

Experts lament state of NZ child poverty (24 Sept 2012)

And when the Nats did try to address a social problem, the result would have been comical – had the issue of murdered children reminded us what was at stake,

Child-abuse funds ‘blown on hype’ (1 Dec 2012)

Social welfare – the stats:

From the Ministry of Social Development’s website;

Numbers of working-age clients¹receiving main benefits at the end of September, 2002 – 2012

End of quarter	Unemployment Benefits ²	Domestic Purposes Benefits ³	Sickness Benefits ⁴	Invalid’s Benefits	Other main benefits ⁵	All main benefits
September 2002	112,147	109,078	37,275	64,596	21,613	344,709
September 2003	94,527	109,366	40,802	68,361	19,366	332,422
September 2004	65,764	109,021	44,110	4,067	17,624	308,158
September 2005	50,153	105,692	46,067	73,813	16,440	292,165
September 2006	41,027	100,579	47,527	75,988	17,026	282,147
September 2007	23,158	96,673	48,995	78,268	16,140	263,234
September 2008	23,273	98,473	48,208	83,618	16,036	269,608
September 2009	60,660	107,658	56,384	85,015	17,094	326,811
September 2010	65,281	112,765	58,661	85,305	16,200	338,212
September 2011	55,661	114,147	58,651	84,524	15,513	328,496
September 2012	50,390	110,738	59,595	83,570	16,649	320,942

Notes:

1 This report defines working-age clients as aged 18 – 64 years, to reflect the minimum age of entitlement of most benefits and the age of eligibility for New Zealand Superannuation.

2 Comprises Unemployment Benefits and Unemployment Benefits – Hardship.

3 Comprises Domestic Purposes Benefits – Sole Parent, Domestic Purposes Benefits – Care of Sick or Infirm, Domestic Purposes Benefits – Women Alone, and Emergency Maintenance Allowances.

4 Comprises Sickness Benefits and Sickness Benefits – Hardship.

5 Comprises Emergency Benefits, Independent Youth Benefits, Youth Payments, Young Parent Payments, Unemployment

Benefits – Training, Unemployment Benefits – Hardship – Training, Unemployment Benefits – Student Hardship, Widow’s Benefits, and (until April 2004) Transitional Retirement Benefits. Youth Payments and Young Parent Payments replaced Independent Youth Benefits from August 2012.

Source: MSD – September 2012

Graph shows the rise in the total number of people receiving a main benefit through to 1994, the further rise through to 1999, the steady decline to June 2008, and the rise through to June 2009 reflecting the recession and the international financial crisis. Numbers in receipt of the unemployment benefit follow a trend that is a rough mirror image of the employment rate. The rising red line, signifying Sickness/Invalid beneficiaries is linked to ACC discharging it’s clients onto welfare, to make their own books “look good”.

Source: Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2011

Correlation between Global Financial Crisis, leading to NZ recession, leading to higher unemployment. (For the benefit of low-information National Party voters.)

Source: IBID

The above data yields three interesting observations;

#1 Beneficiary numbers mirror Global Financial Crisis

Unsurprisingly, the numbers receiving social welfare benefits shot up just after the Global Financial Crisis hit New Zealand’s economy, impacting on employment. The effects of the GFC continue to this day to create redundancies and unemployment throughout the country.

Low-information voters and the lunatic right-wing fringe element in our society maintain the fantasy that welfare is a “lifestyle choice”, where beneficiaries are attracted by “big money” paid out in benefits.

Not only are welfare payments usually abysmally low (just barely sufficient to survive on) – but the stats above clearly show the correlation between the GFC and rising beneficiary recipients.

There were 51,334 more people receiving welfare benefits in September 2012 than there were in September 2008. This increase can be sheeted home to,

the Global Financial Crisis destroying jobs,
National’s lack of proactive job creation policies helping to push up unemployed numbers,
ACC’s policies with regards to to injured and sick (see below).

Such is the folly of relying on the “Market” to deliver jobs.

Such is the hypocrisy of Bennett, Key, English, Joyce, et al, who blame welfare beneficiaries for being out of work – and threatening them with all manner of sanctions.

#2 Overall beneficiaries are down

Surprisingly, those receiving welfare benefits up to September 2012 still number 23,767 fewer than September 2002. Overall beneficiary numbers are not increasing anywhere as much as what Paula Bennett, John Key, and their right wing fellow-travellers are insisting.

There are two possible reasons for this.

Firstly, 114,200 (net) New Zealanders left our shores for Australia from 2009 to 2012 (see previous blogpost: Johnny’s Report Card – National Standards Assessment y/e 2012: migration). Many left to find work overseas. These migrants might have added to unemployed and solo-parent welfare recipient numbers, had they stuck around here in New Zealand.

Secondly, see #3 below.

#3 Unemployment Benefits vs Household Labourforce Survey Unemployed

It is a ‘quirk’ of New Zealand’s welfare system that married or de facto couples cannot receive welfare assistance if one should loose his/her job, but the other remains in paid work.

On the other hand, two people not in a relationship (eg; flatting in the same house), are eligible for welfare should one become unemployed and the other remains in-work.

There seems no logic to this contradictory situation and is even more unfair when one considers that the married/de facto couple both paid taxes, prior to one losing his/her job. That’s New Zealand’s bizarre welfare rules for you.

Which may explain why those receiving Unemployment Benefits from WINZ numbered 50,390 in September 2012 – whilst the Household Labour Force Survey (HLFS) recorded 175,000 unemployed people (see: Household Labour Force Survey: September 2012 quarter).

WINZ records only those paid an Unemployment Benefit.

The HLFS records everyone, within a more inclusive criteria, irrespective of whether they receive a benefit or not.

Addendum 1:

Interestingly, the figures above for Invalid and Sickness Beneficiaries rose significantly from 2009. This ties in with a NZ Herald report, dated 23 June 2012,

The proportion of long-term ACC clients moving on to benefits has surged since the corporation adopted a tough new stance, which has fuelled allegations that they are being forced off compensation before they are rehabilitated.

Figures supplied by the corporation yesterday also show it has slashed the number of long-term claimants on its books by a quarter since mid-2009.

[...]

But yesterday’s figures show that the proportion of long-term claimants leaving ACC and going on to health-related, unemployment or domestic purposes benefits rose sharply from early 2009.

In the five years to 2008, the proportion going on to benefits was 12.1 per cent, but during 2009 that rose to 16.4. In the first five months of 2010, the most recent data held by ACC, the proportion rose to 19.4 per cent.

ACC figures also showed the corporation had reduced the number of long-term claimants on its books by 3644 or 25 per cent to 10773 in the three years since June 2009. That reduction is well ahead of ACC’s targets.

See: More ACC clients going on to welfare

Throughout all these events which are beyond the influence and control of the unemployed, solo-parents, widows, invalids, sick, etc, National’s demonisation of those on welfare has been a shocking indictment of John Key’s leadership.

What is it in the mental make-up of politicians like Paula Bennett, John Key, Steven Joyce, and Bill English, that treating those who have lost their jobs, or looking after children, as “bludgers” is morally acceptable?

Especially when they must have access to precisely the same information that I, as a blogger, have.

Addendum 2:

National’s response to unemployment is the introduction of “reforms” to social welfare legislation,

Social Development Minister Paula Bennett yesterday introduced the second round of reform legislation.

The Social Security (Benefit Categories and Work Focus) Amendment Bill replaces the current benefits with three new categories: Jobseeker Support, Sole Parent Support and the Supported Living Payment.

It also includes provisions allowing payments to be cut if beneficiaries fail a drug test, have an outstanding arrest warrant, or if parents who do not meet “social obligations” for getting their children into health and education programmes.

See: Bennett expects welfare reform to save $1.6b

As Bennett admitted on TVNZ’s Q+A, on 29 April 2012,

“There’s not a job for everyone that would want one right now, or else we wouldn’t have the unemployment figures that we do. “

See: TVNZ Q+A: Transcript of Paula Bennett interview

The question that begs to be asked: how many new jobs will this create?

Addendum 3:

So what did happen to National Food In Schools programme, that it launched with such fanfare in February 2007?

Not surprisingly, Key’s attitude seems to have gone through a Reverse Road to Damascus Experience,

Full story

But then, going from Opposition to Government will do that to politicians.

= fs =

Categories: A Little Blue Marble Called Earth, Dollars & Sense, Social Issues, The Body Politic Tags: child poverty, global financial crisis, poverty, unemployment

Johnny’s Report Card – National Standards Assessment y/e 2012: migration

9 January 2013 Frank Macskasy 3 comments

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Migration

The rhetoric:

One of National’s biggest election issues was that of migration. Key and his mates practically crucified the incumbent Labour government in 2008 over the continuing loss of New Zealanders to Australia.

Even one of their election hoardings (see above) made the migration issue a prominent feature of National’s attack-advertising.

And Key poured it on in thick layers of election rhetoric,

“When the going gets this tough, is it any wonder that Kiwis look longingly at our Aussie cousins? Our Aussie cousins, who get paid a third more than us for doing the same job. Our Aussie cousins, who have been given a tax cut in every Budget for the past five years and who will continue to have their taxes cut for Budgets to come.

Too many Kiwis are looking at those stats and choosing to join their cousins across the ditch. We have to give them better reasons to stay .” – John Key, 29 January 2008

See: 2008: A Fresh Start for New Zealand

“We want to make New Zealand an attractive place for our children and grandchildren to live – including those who are currently living in Australia, the UK, or elsewhere. To stem that flow so we must ensure Kiwis can receive competitive after-tax wages in New Zealand.” – John Key, 6 September 2008

See: Environment Policy Launch

“Over the last three years I believe we’ve made some progress, so much that we have been closing that after-tax wage gap, we are building an economy that is now growing at a faster rate than Australia, but it will take us some time to turn that around.” – John Key, 23 November 2011

See: Kiwi exodus to Australia nears record levels

In effect, National – led by our Smile & Wave Dear Leader – was promising New Zealand voters that they, alone, knew the secret to stemming emigration and the loss of New Zealanders to Australia and beyond. It was a bold committment to make to the electorate.

Short of erecting a new Berlin-style wall; with armed guards; and patrolling gunboats to detain Kiwi boatpeople attempting to flee to Australia, how could National perform such a feat?

The reality:

Despite National’s rhetoric and attacks on Labour, their own track record in persuading New Zealanders to remain here and not leave for greener (or browner, in Australia) pastures was utterly abysmal.

In fact,quite the contrary, Statistics NZ revealed that the Great Escape to Oz has accelerated,

Permanent and Long Term (PLT ) Net Migration of NZ Citizens/Residents To/From Australia
Year to November	Departures	Arrivals	Net Loss/Gain(linked to source)
2005	34,730	13,430	-21,300
2006	33,873	13,371	- 20,502
2007	40,786	13,621	- 27,165
2008	48,500	13,200	- 35,300
Sub-Total	157,889	53,622	- 104,267
2009	34,100	14,600	- 19,500
2010	35,800	15,800	- 20,100
2011	50,100	14,400	- 35,800
2012	53,500	14,600	- 38,800
Sub-Total	173,500	59,400	- 114,200

Sources: Statistics NZ International Travel and Migration – information releases

After four years of National, net migration to Australia (excluding other countries such as the UK, etc) has increased by ten thousand people more than under Labour.

To be fair, migration involves factors that are often beyond the control of governments from either end of the political spectrums.

The true issue here is not whether Labour or National or Uncle Tom Cobbly can stem migration. The real issue here is that National cynically exploited migration for purely selfish, political ends. They manipulated the public debate and exploited people’s concerns.

This is why the public view politicians with such odium and distrust.

Little surprise then, that politicians consistantly rank at the bottom of ‘Reader’s Digest ‘ list of respected professions, usually below Used Car Salespeople and just above tele-marketers. See previous blogpost: League Tables that really count! )

Another issue here is that despite National’s right-wing reforms, tax cuts, and partial-asset sales/share floats – New Zealanders are continuing to vote with their feet. An increasing number of families and young people are departing our shores in a vote of no-confidence in John Key and his administration.

It also suggests that the neo-liberal concept of the atomisation of “society” – replaced by the Individual and families – has reached it’s inevitable consequence. If all that matters is the Individual and their own needs, then concepts such as national identity and cultural heritage are hopelessly out-dated concepts. In which case, people will simply follow the money and nothing else matters.

If we are ever to attract New Zealanders back to our country, and to persuade those already here that it is worthwhile being part of this society, then we have to move away from raw Individualism and self-interest. To encourage people to be a part of a society, that society has to be vibrant, strong, and offer more than just cash incentives.

This is why National will never be able to reverse the outward flow of people and loss of talent overseas; the Nats are part of the neo-liberal paradigm for whom society will always take a back seat to the rights and primacy of the Individual. Key and his mob will always be trapped by their own neo-liberal dogma, and can offer us nothing except much hand-wringing; more excuses; and well-worn election rhetoric.

The last word goes to this chap, who no doubt sums up the feelings of many New Zealanders who have departed our shores,

A Victorian-based Kiwi with a student loan debt, who did not want to be named because he did not want to be found by the Government, said he did not intend to pay back any of his student loan.

The 37-year-old’s loan was about $18,000 when he left New Zealand in 1997. He expected it was now in the order of $50,000. The man was not worried about being caught as the Government did not have his details and he did not want to return to New Zealand.

“I would never live there anyway, I feel just like my whole generation were basically sold down the river by the government. I don’t feel connected at all, I don’t even care if the All Blacks win.

“I just realised it was futile living [in New Zealand] trying to pay student loans and not having any life, so I left. My missus had a student loan and she had quite a good degree and she had paid 99c off the principal of her loan after working three years.”

See: Student loan avoiders told to pay up

= fs =

Categories: A Little Blue Marble Called Earth, Dollars & Sense, Social Issues, The Body Politic Tags: migration to australia, neo-liberalism, Reader's Digest, Statistics NZ

Johnny’s Report Card – National Standards Assessment – Growth

9 January 2013 Frank Macskasy 3 comments

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Growth

Recent history:

In the past, whenever National (or the right wing “Labour-ACT” government of the 1980s) came to power, the result was never very good,

Source: Dunedin Star

Source: Otago Daily Times

The rhetoric:

“The National Party has an economic plan that will build the foundations for a better future.

* We will focus on lifting medium-term economic performance and managing taxpayers’ money effectively.

* We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.

* We will cut taxes, not just in election year, but in a regular programme of ongoing tax cuts.

* We will invest in the infrastructure this country needs for productivity growth.

* We will be more careful with how we spend the cash in the public purse, monitoring not just the quantity but also the quality of government spending.

* We will concentrate on equipping young New Zealanders with the education they need for a 21st century global economy.

* We will reduce the burden of compliance and bureaucracy, and we will say goodbye to the blind ideology that locks the private sector out of too many parts of our economy.

And we will do all of this while improving the public services that Kiwis have a right to expect. ” – John Key, 29 July 2008

See: 2008: A Fresh Start for New Zealand

” Growing the economy is the Government’s number one priority, and science and innovation have a key part to play in that growth.

Indeed, this Government has made science and innovation one of the six cornerstones of its economic growth agenda. We’ve done this because New Zealand needs an economic jolt. Our productivity and economic growth have been sluggish for decades and as a result we have slipped down the OECD’s ranking of national wealth per capita.

Our performance compared to other smaller advanced economies has been uninspiring at best. For example, in 1976 our per capita income was slightly ahead of Australia. It was nearly 20 percent greater than the OECD average.

We are now 20 percent behind the OECD average. Australia, by contrast, is still about 20 percent ahead.

Finland is another example of our relative decline. In 1979 our per capita income lines crossed – New Zealand going down and Finland going up. The Finns are now about 20 percent ahead of us.

So, how do we turn the situation around? ” – John Key, 1 July 2011

See: National Economic Development Forum

Present reality:

Full story

Two things would be fair to say,

National inherited an economy with low unemployment and net government debt at an all time low of 5.6% of New Zealand’s GDP, net. (Far from being fiscally profligate as National claims, Labour actually behaved more responsibly than National has done, as the information below clearly illustrates.)
The Global Financial Crisis was not an event of National’s making. (Though the ideology of corporate greed, profiteering, and minimal government oversight which contributed to the Crisis is most certainly one that National shares.)

As Treasury data shows, New Zealand’s net government debt situation worsened from 2008 to June of 2012,

Source: Treasury – Financial Statemement of the Government of New Zealand

Source: IBID

Table 16 above opened with a net government debt of 5.6% – left by the outgoing Labour government.

It closed with 25% net government debt – a fourfold increase – courtesy of National’s “prudent fiscal management”.

As the Treasury document explained,

Net debt increases as a result of cash deficits and
declines as a result of cash surpluses. It also
fluctuates in line with valuation movements in the
underlying financial assets and liabilities of the Crown
and movements in the amounts of currency issued to
New Zealand banks.

Net debt increased this year, continuing the steady
increase since the global financial crisis (figure 11).
Net debt increased from last year primarily due to
additional borrowings over the year to meet the
residual cash deficit (refer table 17).

Source: IBID

In other words, National took in lower revenue – taxes – which inevitably resulted in increased borrowings; slashing of State services and funding; increasing user pays for other state services; mass redundancies of state sector workers, and impending partial state asset sales.

The Treasury document goes on to show how much revenue was lost between 2008 and 2012,

Source: IBID

A recent NZ Herald report has updated Treasury’s expections. The tax-take, GDP growth, and unemployment outlooks are not good,

A weaker economic outlook over the next four years has taken a bite of nearly $8 billion out of the Government’s forecast tax revenues for that period.

Nevertheless the Treasury is still forecasting a return to surplus, though only just, on schedule by 2015.

The forecasts in yesterday’s half-year economic and fiscal update are in line with the latest consensus forecasts, which means they are significantly weaker than in the Budget.

The growth track is lower by around 0.5 percentage points a year.

It reflects downwards revisions to expected growth among New Zealand’s trading partners, and a kiwi dollar expected to remain around present levels until the first half of 2014, so that net exports subtract from growth for the next couple of years.

Unemployment has been revised higher; it is 7.3 per cent now and still expected to be 5.6 per cent by March 2016.

See: Outlook slashes tax-take by $8b

The forecast rate of tepid growth is on top of low to negative growth in the last four years,

Source: tradingeconomics.com

So what caused the drop in government tax revenue? And why did the lower tax revenue impact on higher unemployment and lower domestic growth?

The answer, in part, is not hard to uncover, and the following reports tell the story of how National undermined (sabotaged?) our nation’s government accounts.

First, we were offered The Bribe,

Full story

Then we got the warning signs,

Full story

We were not exempt from the looming storm that was the coming Global Financial Crisis ,

Full story

National’s response?

The prudent step to take would have been to cancel the tax cuts as simply unaffordable. (Labour’s Phil Goff generously promised to support National had it taken such a prudent measure. See: Labour would support deferral of tax cuts)

As a nation, we would then maintain social services (education, housing, healthcare, justice system, early childhood education, superannuation, etc) – or cut taxes. We could not have both. Not without even further massive borrowings from overseas.

National’s decision to persevere with their taxcuts beggered belief for those who understood the seriousness of the GFC and the recession we had fallen into,

Full story

The consequences of National’s irresponsible cutting of taxation revenue was utterly predictable,

Full story

Writing for the NZ Herald, Brian Fallow put the cost of taxcuts at $8 billion. (See: Outlook slashes tax-take by $8b)

Only a fool (or devoted National supporter – the two are not mutually exclusive) could believe that we could give away billions in tax cuts without resorting to massive borrowings to cover the shortfall.

The result was a government deficit rising fourfold from 2008 to 2012, as the above Treasury stats clearly show.

National then desperately needed to balance the books. It scrimped and scrapped by cutting the state sector; raising taxes (gst, fuel tax, ACC levies, government charges, etc) elsewhere; closing tax exemptions for property investors; and cutting back on services (see: Student allowances a thing of the past for post-graduate students ).

Even paper delivery kids were not exempt from the grasp of this Scrooge-like ‘government’. See: Budget 2012: ‘Paper boy tax’ on small earnings stuns Labour)

It also desperately needed to proceed with it’s state asset sales.

A cynic with a conspiratorial ‘bent’ might suspect that National deliberately manufactured it’s own debt crisis so that it could justify the partial privatisation of Meridian, Genesis, Might River Power, Solid Energy, and Air New Zealand, to it’s corporate/investor/aspirationist constituent-base.

In doing so, not only was the door left open for their privatisation agenda – but the side-effects of tax cuts left National with few options and manouvering room for job creation policies.

With net government debt quadrupling in four years from $10.2 billion (2008) to $50.6 billion (2012), and taxation revenue falling from $56.7 billion (2008) to $55 billion (2012), their hands were seemingly “tied”.

Compounding matters, National cut back state services and fired thousands of state sector workers, resulting in a further drop in expenditure, all of which impacted harshly on the economy.

Whether Free Marketeers like it or not, the state is the #1 business generator in our economy and society. When it cuts spending, the flow-on effects on other, down-stream businesses, is inescapable.

Full story

With higher income earners either saving their tax cuts or paying down debt, tax cuts failed to “fire” the economy as Little Leader said in 2009 and Dear Leader adamantly predicted in 2010,

“By taking firm, early and decisive action, the Government is managing the downturn to cushion the immediate impact on New Zealanders and to enhance future growth.” – Bill English, 28 May 2009

See: Budget 2009 – House goes into urgency

“We’ve cut all personal income tax rates, GST has increased to 15%, and we’ve boosted NZ Super, Working For Families, and benefit payments by 2.02% to compensate for the rise in GST.

Today’s changes are just one part of our comprehensive plan to grow the economy, create jobs, boost incomes, and raise living standards for all New Zealanders. The tax package improves incentives to work, and tilts the economy towards savings, investment, and exports.” – John Key, 1 Oct 2010

See: Tax cuts today

In May 2010, Key had even used the migration issue as justification to cut taxes for higher income earners, professionals, and others in top brackets,

“We can be envious about these things but without those people in our economy all the rest of us will either have less people paying tax or fundamentally less services that they provide.

They include doctors, entrepreneurs often, scientists, engineers, lawyers, accountants, school principals and nurses.

On Thursday you will see a deliberate attempt to make sure those people stay and put their skills to work here in our economy.” – John Key, 18 May 2010

See: Key again defends tax cuts

BS. All of it is, BS.

None of it worked, of course. The economy not only failed to grow – it stagnated or contracted (see: Economic recovery stagnates – NZIER). And despite two tax cuts, migration to Australia skyrocketed – ten thousand higher than under the previous Labour government’s last four years. (see related blogpost: Johnny’s Report Card – National Standards Assessment y/e 2012: migration)

Up until 2011, two of our most important industries – manufacturing and construction – contracted, at a time when the Christchurch re-build should have been growing their turn-over and profitability. The downturn in manufacturing and construction had a flow-on effect on the Wholesale Trade sector,

Source: New Zealand in Profile: 2012 – Economy

Other measures of the economy show no sign of improvement,

Bank profits back over $3 billion while economy stagnates (24 April 2012)

then “good news”,

Pickup in economic growth predicted (29 Aug 2012)

followed two months later by bad news,

Businesses gloomy about economic growth (9 Oct 2012)

Current Account Deficit Widens (19 Sept 2012)

Trade deficit widens as dairy values fall (27 Nov 2012)

Terms of trade continue to drop (4 Dec 2012)

Govt deficit up as tax take dips (5 Dec 2012)

Deficit $169m wider than predictions (6 Dec 2012)

Growth forecast cut, debt seen higher (18 Dec 2012)

Current account gap narrows as trade balance shrinks (19 Dec 2012)

Outlook slashes tax-take by $8b (19 Dec2012)

Whichever way one looks at it, it’s a mess.

And it’s simply a bad joke for Key to reassure us,

“While I think we have to acknowledge that the last three years have been pretty tough with the Global Financial Crisis, on a relative basisNew Zealand’s been doing a better than a lot of other countries.” – John Key, 17 Nov 2011

See: Key and Goff Q&A: Creating jobs

Trying to suggest that we are nowhere as bad off as other nations such as the US, Spain, Greece, etc – so our current stagnating economy is somehow acceptable – is sheer rubbish.

One might as well justify National’s poor performance and reckless decision-making by stating we are better off than Zimbabwe, Haiti, or Bangladesh,

We should not be “worse off” than those nations – we headed into the Global Financial Crisis with relatively good economic indicators!

There is Always An Alternative!

A responsible government would have abandoned any prospect of taxcuts and prepared policies to keep people in work; off the unemployment queues; paying taxes; and contributing to the economy.

Policies such as,

Government procurement favouring local providers over imports from other nations. This would have kept companies such as Kiwirail from closing their Dunedin Hillside workshops, with the loss of over 150 jobs (see: Dunedin workshop sale will see job losses – Kiwirail)
Government intervention in the value of the New Zealand dollar. The high dollar has destroyed some 40,000 manufacturing/exporting jobs in this country – swelling the ranks of the unemployed to 175,000 (see: Unemployment up to 7.3pc – a 13 year high, Job losses blamed on high NZ dollar: more forecast, Rakon a victim of high dollar – union, etc). Other OECD nations have thrown away the mopnetarist rule book and engaged in quantitative easing to preserve their manufacturing base. The choice is either that – or losing more jobs and increasing expenditure on unproductive social welfare.
Government implementating a mass construction programme of 10,000 new state houses. (see previous blogpost: Can we do it? Bloody oath we can!)

With Option #3, National appears to have missed the obvious.

Injecting several billion into a crash-programme to build ten thousand homes for New Zealanders, who are currently struggling to buy their own houses, makes sense.

The Christchurch re-build has proven this to be the case, as the NZ Herald reported on 20 December 2012,

The economy grew at an annual pace of 2.5 per cent, and was 2 per cent higher than the same quarter a year earlier. Revisions to previous quarters showed New Zealand dipped back into recession in the second half of 2010, with two 0.3 per cent contractions in each quarter.

The New Zealand dollar dropped to 83.33 US cents after the figures were released, from 83.60 cents immediately before.

Construction kept the economy ticking over with a 4.5 per cent expansion, contributing 0.2 of percentage point to overall GDP. Electricity, gas, water and waste services grew 4.4 per cent in the quarter, contributing 0.1 of a percentage point in growth to GDP, underpinned by an increase in hydroelectric generation.

“Residential and non-residential building activities were both up strongly this quarter, and both were boosted by Canterbury,” Statistics NZ said in its report. “The upper North Island also contributed to the growth in residential building activity.”

The Canterbury rebuild, which is expected to top $30 billion, is widely seen as the saving grace for an economy that has struggled to recover from its deepest recession in two decades, and has been getting some help from a resurgent property market in Auckland in recent months.

See: Economy grows 0.2pc – saved by construction

Statistics NZ national accounts manager Rachael Milicich didn’t split hairs. She bluntly stated,

”The growth in the latest quarter was driven by construction.”

See: Economic activity up 0.2 percent

As for the tax cuts stimulating the economy with extra spending – you can forget that pipedream. According to Statistics NZ,

Household consumption expenditure, which measures the volume of spending by New Zealand households, was flat this quarter (0.0 percent).

See: IBID

National not only bought the 2008 election with promises of unsustainable, unaffordable tax cuts – Key, English, Joyce, et al, squandered an opportunity to keep 70,000 New Zealanders in paid employment (see: Employment graph, 2008-2012).

It was all so unnecessary.

Addendum

In March 2008, the then Finance Minister, Michael Cullen said,

“Even before these challenges hit home John Key wants to increase our debt to at least 25 per cent of GDP. But he does not pretend he wants to borrow more to pay for more services and he does not really believe he needs to borrow more to pay for roads. He only wants to outspend Labour on tax cuts.”

See: [Labour]Government will not borrow for tax cuts

According to Treasury, the current net government debt as at 30 June 2012 stands at… 24.8% of GDP – just shy of 25%,

Source: Treasury – Financial Statemement of the Government of New Zealand

Cullen called it 100%.

It’s a shame that 1,053,398 voters couldn’t look past their own selfishness, and the lure of cash dangled before them, by a Party that was hell-bent on it’s own agenda to win power at any cost.

For New Zealand, that cost measured $50 billion and 175,000 unemployed.

= fs =

Categories: A Little Blue Marble Called Earth, Dollars & Sense, Social Issues, The Body Politic Tags: 10000 State Houses, 170000 new jobs, 2009 tax cut, 2010 tax cut, economic stagnation, Finland, GDP, gdp growth rate 2000 to 2008, global financial crisis, Michael Cullen, NZ Treasury, OECD, recession, tax cuts, unemployment

Johnny’s Report Card – National Standards Assessment y/e 2012 – environment

9 January 2013 Frank Macskasy 3 comments

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Environment

The rhetoric:

“What global Leaders know, and what the National Party knows, is that environmentalism and a commitment to economic growth must go hand in hand. We should be wary of anyone who claims that one can or should come without the other. And we should always measure a Government’s environmental rhetoric against its environmental record.

In the years ahead it will be increasingly important that New Zealand marries its economic and environmental policies. Global climate change awareness, resource shortages, and increasing intolerance of environmental degradation will give environmental policy renewed relevance on the world stage…

… And, in seeking the balance between environmental and economic goals, National will never forget that New Zealand’s outstanding physical environment is a key part of what makes our country special. Kiwis proudly value our forests, mountains, rivers, lakes, and oceans. They are part of our history and they must continue to define our future.”

see: John Key, Speech: Environment Policy Launch

“National will also ensure New Zealand works on the world stage to support international efforts to reduce global greenhouse gas emissions. We are committed to honouring our Kyoto Protocol obligations and we will work to achieve further global alliances that build on the goals agreed to at Kyoto.”

See: Ibid

The reality:

National’s track record in environmental conservation and protection has been as expected; bad. And getting worse with each policy release.

On the agenda are;

Fracking – a process that has been shown overseas to induce small earthquakes; contamination of underground water tables; risks to air quality; gases and hydraulic fracturing chemicals escaping to the surface; mishandling of toxic waste chemicals; and health effects on humans and animals.
Increased mining actitivity in sensitive ecological areas such as the Denniston Plateau.
Allowing deep sea drilling to go ahead despite New Zealand being woefully unprepared for a major oil spill such as happened in the Gulf of Mexico in April 2010, when the Deepwater Horizon drilling rig exploded. (see: Deepwater Horizon)
A watering down of a proposed fishery protection reserve in the Ross Sea.
New Zealand was the only country to vote against protection marine mammals at the International Union for Conservation of Nature conference.
And the abandonment of New Zealand’s participation in the Kyoto Protocol.

Perhaps the most scurrilous, dishonest act, was National’s gradual backtracking on the ETS (Emissions Trading Scheme).

On May 2008, John Key stated,

“National supports the principle of the ETS and is following the select committee process closely. National has had reservations about the timing of new taxes on motorists and households when there has been no personal tax relief for so long.”

See: ‘Carbon neutral’ policy added to scrap heap

On 8 April 2010, Key confirmed that the ETS would be preserved unchanged,

“I’d say it’s unlikely it would be amended.”

See: ETS changes ‘unlikely’ despite pleas

By 6 June 2010, the then-Climate Minister, Nick Smith announced that whether or not agriculture comes into the emissions trading scheme in 2015 would depend on technological advances and what other countries do.

See: ETS may exclude agriculture – Climate Change Minister

And on 9 November 2011, Nick Smith announced,

“ … It is not in New Zealand’s interests to include agricultural emissions in the ETS yet. The lack of any practical and real technologies to reduce agricultural emissions means it would only impose a cost or tax on our most important export industry. It would also have New Zealand too far ahead of our trading partners on climate change mitigation measures. National will review the position in 2014 and only include agriculture if new technologies are available and more progress is made internationally on reducing greenhouse gas emissions.”

See: National would phase in ETS obligations for transport, electricity, industrial sectors; Will review Agriculture in 2014, will only put it in if technology to help is there

By 3 July 2012, Key began to publicly vacillate,

“John Key says the Government will wait for other countries to follow suit before introducing agriculture into the Emissions Trading Scheme…”

See: Govt puts off including agriculture in ETS

And on 20 August 2012, National introduces the “Climate Change Response (Emissions Trading and Other Matters) Amendment Bill 2012″, which would remove agricultural emmissions indefinitely, and will,

“remove a specified entry date for surrender obligations on biological emissions from agriculture”.

See: Government announces ETS amendments

It took them four years to do it, with some cunning public manipulation (and outright lies) – but National achieved it’s real agenda,

Watering down the ETS until it was toothless,
Keeping agriculture (the worst emitter of greenhouse gases in NZ) out of the ETS
Abandoning the Kyoto protocol

See previous blogpost for further details: ETS – National continues to fart around

Perhaps New Zealanders don’t quite realise that when National talks of being “blue-green” – they are referring to the colour of money – not conservation.

The response:

National’s response to our growing environmental problems?

Shoot the messenger.

In November 2012, Environmental scientist, Dr Mike Joy, told the unvarnished truth to the world that our “100% Pure” and “Clean & Green” image was largely a myth. Dr Joy blew the cover on our dirty rivers; fouled lakes; high levels of greenhouse gas emissions from our agricultural sector.

He told the New York Times,

“There are almost two worlds in New Zealand. There is the picture-postcard world, and then there is the reality.”

See: New Zealand’s Green Tourism Push Clashes With Realities

National’s Tim Groser did not like that one little bit, and responded with condemnation of Dr Joy,

“It’s been used as a stick to beat New Zealand by environmental activists.”

See: Minister lashes out at environmentalists over 100% Pure

And Dear Leader added this confusingly disjointed bit, just to sheet home the message to all critics to ‘STFU’,

“It’s like saying ‘McDonald’s, I’m loving it’ – I’m not sure every moment that someone’s eating McDonald’s they’re loving it . . . it’s the same thing with 100% Pure. It’s got to be taken with a bit of a pinch of salt.”

See: IBID

See previous blogposts: When spin doctors go bad, John Key’s “pinch of salt” style of telling the truth

I wonder if Mr Groser or Dear Leader will be swimming or drinking water from any of these rivers,

Full story

The result:

Meanwhile, Yale University’s Environmental Performance Index highlighted one simple fact; New Zealand has slipped on international EPI rankings.

In 2008, New Zealand ranked seventh out of 149 nations.

(See: 2008 Environmental Performance Index)

In 2012, our ranking dropped seven placings to number fourteen.

(See: 2012 Environmental Performance Index)

On every indicator and policy, New Zealand is doing poorly in the field of conservation. We are going backwards.

New Zealanders need to get their collective heads around one simple fact; giving priority to environmental protection is not just a “good Greenie idea” (which it is, by the way) – but impacts on our $23 billion tourism industry and our $14.5 billion dairy and meat export industry.

Those who would damage or destroy our environment for short-term monetary gain, sheer selfishness, or pigheaded ignorance, are guilty of nothing less than economic treason against our country. (Put that in your pipe and smoke it, Mr Unsworth! See previous related blogpost: Lobbyist stands by ‘ego trip’ email)

Addendum:

The only reason that National has not merited a “F” is that at least they backed down from mining in Schedule 4 Conservation lands, after a public outcry and 50,000-strong protest in Auckland (see: Huge protest says no to mining on conservation land) in May 2010.

= fs =

Categories: A Little Blue Marble Called Earth, Dollars & Sense, Social Issues, The Body Politic Tags: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill 2012, CO2, deep sea oil drilling, Dr Mike Joy, Emissions Trading Scheme, environment, ETS, Fracking, Kyoto Protocol, Mark Unsworth, Mining in National Parks

Older Entries

For a better New Zealand…

~ Cleaner rivers

~ No deep-sea oil drilling

~ Less on Roads - more on Rail

~ Minimum wage @ $15 p/hr

~ Marriage equality

~ Strong, effective Unions

~ No secret free-trade deals

~ Breakfast/lunches in our schools

~ Introducing Civics into our school curriculum

~ Cut back on the liquor industry

~ A fairer, progressive tax system

~ Fully funded, free healthcare

~ Ditto for education, including Tertiary

~ Fund Pharmac for Pompe's Disease medication & other 'orphan' drugs

~ No state asset sales!

~ Rebuild public TV broadcasting!

~ Keeping farms in local ownership

~ Reduce poverty, like we reduced the toll for road-fatalities

~ Jobs, Jobs, Jobs!

~ Being nice to each other

May 2013
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Archive

This blogpost was first published on The Daily Blog on 22 March 2013.

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$2,300,000,000: Dr Cullen’s finest hour (29 May 2002)

Cullen prepares to trumpet high surplus (21 Feb 2003)

Cullen Unwilling To Share Fiscal Surplus Through Tax Cuts (18 Oct 2004)

Hide attacks Cullen for hiding huge surplus (16 March 2005)

Record surplus, but Cullen ‘won’t know about tax cuts until December’ (11 Oct 2006)

Cullen confirms huge surplus (10 Oct 2007)

Cullen quick to emphasise volatility after surplus hit (19 Feb 2008)

$2,300,000,000: Dr Cullen’s finest hour (29 May 2002)

Cullen prepares to trumpet high surplus (21 Feb 2003)

Cullen Unwilling To Share Fiscal Surplus Through Tax Cuts (18 Oct 2004)

Hide attacks Cullen for hiding huge surplus (16 March 2005)

Record surplus, but Cullen ‘won’t know about tax cuts until December’ (11 Oct 2006)

Cullen confirms huge surplus (10 Oct 2007)

Cullen quick to emphasise volatility after surplus hit (19 Feb 2008)

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Solid Energy starts work at Mataura Briquette Plant

That was then…

Solid Energy starts work at Mataura Briquette Plant

This is now…

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To intervene, or not to intervene, that is the question:

Whether ’tis nobler in this government’s mind to suffer The slings and arrows of outrageous recessionary fortune,

Or to take arms against a global sea of economic troubles,

And by opposing end them? To be hands on, and interventionist…

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