The cupboard is bare, says Dear Leader

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The latest on Budget 2015;

Prime Minister John Key is lowering expectations about measures to combat child poverty in this week’s budget.

Mr Key says there’ll be “some support” for those suffering material deprivation.

“But you’d appreciate that there’s a limited amount of resources that we’ve got in very tight financial conditions,” he told reporters on Monday.

Key has driven home the lack of “resources” (ie; money) in this year’s budget. On the Paul Henry show – that great bastion of critical thinking –

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–  Key was his usual relaxed self as he casually informed his host;

“We don’t have a lot of money. But again what I’d say to you is that we already do a lot, but there could be more we could do.”

And just to drive home the point, again casually;

“When you go to a Budget, you don’t have a lot of cash – and we haven’t, because we’ve been wanting to get the books in order.”

Of course National doesn’t “have a lot of money“.

Remember the tax cuts that Key promised during the 2008 general election? That was the  money National gave away in 2009 and 2010.

2008 was election year, and National’s aspiring leader, John Key, was pulling out all stops to win. His promises of tax cuts were the lynch-pin of National’s campaign strategy.

On  2 August 2008, National announced;

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.

On  26 September 2008, the Herald reported;

GDP shrank 0.2 per cent in the June quarter, confirming what everyone already knew – that the country is in recession. The smaller than expected June quarter decline followed a fall of 0.3 per cent in the three months to March, so the country now meets the common definition of recession: two consecutive quarters of economic contraction.

Undeterred by the country entering into recession, on  6 October 2008, Key promised;

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.

With a looming election only a month away, on 14 October 2008, National maintained it’s commitment to tax-cuts;

National will not slash spending at a time when people are looking to the government for a sense of security. In developing our economic management plan, we have concentrated on the fundamentals of the economy, and particularly on laying the foundations for a future increase in productivity.

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

Over the next term of government the total cost of National’s personal tax cuts is balanced by the revenue savings from:
• Changes to KiwiSaver.
• Discontinuing the R&D tax credit.
• Replacing Labour’s proposed tax cuts.

Overall, our fiscal policy does not result in any requirement for additional borrowing over the medium term.

National won the election on 8 November 2008.

By 6 March 2009, the Global Financial Crisis had crashed New Zealand’s economy;

Budget deficit worse than forecast; debt blows out by NZ$15.4 bln

The New Zealand government’s operating balance before gains and losses (OBEGAL) for the seven months ended January 31 was NZ$600 million, which was NZ$800 million below the pre-election update and NZ$300 million below December forecasts, Treasury said. Tax revenue and receipts during the period were NZ$500 million lower than the pre-election forecast. Meanwhile, Treasury also disclosed a NZ$15.4 billion rise in Gross Sovereign Issued Debt to NZ$45.4 billion (25.3% of GDP) from the pre-election forecast. This included fresh Reserve Bank bill issuance to mop up the liquidity from lending to the banks against securitised mortgages.

Despite falling tax revenue, and increased borrowing by the government,  the tax cuts went ahead regardless. First, on 1 April 2009. The second trance on 1 October 2010.

The cost of these tax cuts was in the billions.

According to Key, the 2009 tax cuts cost the government $1 billion;

“…The tax cuts we have delivered today will inject an extra $1 billion into the economy over the coming year, thereby helping to stimulate the economy during this recession. More important, over the longer term these tax cuts will reward hard work and help to encourage people to invest in their own skills, in order to earn and keep more money.”

And according to information obtained from Parliamentary Library, and released by the Greens, the 2010 tax cuts cost the country an additional $2 billion;

The Green Party has today revealed that the National Government has so far had to borrow an additional $2 billion dollars to fund their 2010 tax cut package for upper income earners.

New information prepared for the Green Party by the Parliamentary Library show that the estimated lost tax revenues from National’s 2010 tax cut package are between $1.6–$2.2 billion. The lost revenue calculation includes company and personal income tax revenues offset by increases in GST.

All up, National gave away an estimated $3 billion – per year – in tax cuts.

That is why John Key has reneged on his promise – made on 22 September 2014, on TV3’s ‘Campbell Live‘ – that his third term would be spent combating child poverty.

No money.

Not only will National abandon any serious work to alleviate growing child poverty in this Country of Plenty, but it seems that the viability of  community organisations doing invaluable work  are threatened by chronic under-funding.

These community groups are often the ones on the front-line, picking up the pieces after government programmes are cut back or cancelled entirely. Even as our Brave New Free-Market World widens the wealth-gap even further, year after year.

Since National came to office in 2008, their cuts to community organisations has been systematic and dire.

From Women’s Refuge;

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Then it was the turn of  Rape Crisis;

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To medical clinics serving our most vulnerable, in-need youth;

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A Radio NZ report on 19 May revealed that yet another community organisation has become the latest victim of National’s mania to starving community organisations of funding;

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Relationships Aotearoa is facing closure as Radio NZ outlined on 19 May;

Relationships Aotearoa, New Zealand’s largest provider of counselling services, says its funding has been cut by $4.8 million since 2012 and the situation is increasingly dire with no assurance of more government funding.

The organisation posted a $271,000 deficit for the year ended 30 June 2014.

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Relationships Aotearoa spokesman John Hamilton said since 2012 its funding from government agency contracts had fallen by $4.8 million – a fall of about 37 percent from $13.1m to a forecast $8.2m.

“There’s been no grants or injections to the bottom line … there’s been no CPI increase for MSD services for seven years but there has been increasingly complex demands in reporting requirements.”

Mr Hamilton said the situation was increasingly dire and more than 120 staff and 60 contractors would potentially lose their jobs if went goes under.

A funding cut of $4.8 million…

A deficit last year of $271,000…

Staff cuts of  46…

When interviewed on Radio NZ’s Morning Report, Minister Anne Tolley’s outright denial of any cuts to Relationship Aotearoa’s funding – despite evidence presented to her –  left seasoned journalist and interviewer, Guyon Espiner, frustrated with her moronic semantics game-playing;

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Tolley’s exercise in word-games beggars belief and if she thinks any intelligent person listening to her comments gave  credence to her obvious avoidance-tactics, then she is delusional. There is a world of difference between Radio NZ’s critical audience – and those who stare stupified and lobotimised at ‘X Factor‘/’My Kitchen Rules‘/’The Block‘.

As Key lamented,

“We don’t have a lot of money. But again what I’d say to you is that we already do a lot, but there could be more we could do.”

“When you go to a Budget, you don’t have a lot of cash – and we haven’t, because we’ve been wanting to get the books in order.”

Though there is always cash for really important things that “matter to New Zealanders”.

Things like corporate welfare;

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Or like a flag referendum – $26 – $27 million;

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And even spending $6 million of taxpayer’s money to build a sheep farm for a Saudi millionaire;

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Key will always find money for things that matter to his government.

Child poverty just doesn’t happen to be one of them.

 

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References

NZCity News:  PM lowering expectations on child poverty

NZCity News: Child poverty targeted in budget

TV3 News: Child poverty targeted in Budget – John Key

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

NZ Herald: Recession confirmed – GDP falls

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

Jo Goodhew MP for Rangitata: Newsletter #41

Interest.co.nz: Budget deficit worse than forecast; debt blows out by NZ$15.4 bln

Parliament: Hansards – Tax Cuts – Implementation

Scoop media: Govt’s 2010 tax cuts costing $2 billion and counting

Dominion Post: Women’s Refuge cuts may lead to waiting lists

NZ Herald: Govt funding cuts reduce rape crisis support hours

NZ Doctor: Christchurch’s 198 Youth Health Centre to close its doors as management fails to implement directives from CDHB

TV1 News: ‘Devastating news for vulnerable Kiwis’ – Relationships Aotearoa struggling to stay afloat

Fairfax media: Government may let Relationships Aotearoa fold

TV1 News: Relationships Aotearoa hanging on at ‘awful’ 11th hour

Radio NZ: Counselling service rejects claim it’s badly run

Radio NZ – Morning Report: Min. Tolley responds to potential collapse of counselling (alt. link) (audio)

NZ Herald: PM defends $30m payout to Rio Tinto

NZ Herald: John Key defends cost of flag referendums

TV1 News: NZ Government gifts $6m to offended Saudi businessman

Other blogs

Local Bodies: Government Kills Relationships Aotearoa

Previous related blogposts

That was Then, this is Now #6

Budget 2013: petrol taxes

“It’s fundamentally a fairness issue”- Peter Dunne

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This blogpost was first published on The Daily Blog on 20 May 2015.

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