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Archive for June, 2015

Government Minister sees history repeat – responsible for death

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The last few weeks have produced some curious stories from the media, relating to the current government that, at first glance, have no common thread linking them.

Closer scrutiny yields a different perspective…

1 April 2009

National implements first round of tax cuts.

According to Dear Leader 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.”

1 October 2010

National carries out second round of tax cuts.

According to information obtained from Parliamentary Library in May 2012, 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.

Cost of both tax cuts, in terms of lost revenue: $2.6 billion – $3.2 billion, per annum.

8 May 2014

Then-Minister for Housing, Nick Smith confirms in Parliament that National has been demanding multi-million dollar dividends from Housing New Zealand;

“The average dividend under the 5 years so far of this Government has been $88 million. The dividend this year is $90 million.”

The dividend payable does not include taxes paid by Housing NZ.

24 September 2014

Fonterra cuts payout to farmers for dairy milk solids  by 70 cents to $5.30/kg milk solids.

6 October 2014

Dear Leader Key reveals that the international fall in dairy prices will affect the government’ tax revenue. Key states;

It can have some impact because if that’s the final payout, the impact would be as large as $5 billion for the economy overall, and you would expect that to flow through to the tax revenue, both for the 14/15 year and the 15/16 year...”

Reported by TV3’s Brook Sabin on the same day;

“A big state-house sell-off is on the way, and up to $5 billion-worth of homes could be put on the block.

The shake-up of the Government’s housing stock will be a key focus for the next three years, with Finance Minister Bill English to lead it.

On the block is everything from a tiny 75 square metre two-bedroom state house in Auckland’s Remuera, on the market for $740,000, to a three-bedroom home in Taumarunui for just $38,000. Thousands more properties will soon hit the market.”

10 December 2014

Fonterra announced that payouts to farmers would drop from $5.30/kg of milk solids to $4.70/kg. A Fairfax report states;

The predicted payout could hurt the national economy for a couple of years, including tax revenue.

28 January

Dear Leader Key announced the sale of 1,000 to 2,000 state houses within the year, and suggested there might be further sales later.

30 April

Fonterra announces further reduction of milk solid payout to farmers from $4.70/kg milk solids to $4.50/kg of milk solids.

6 May

National announced that it’s entire stock of 370 state houses in Invercargill, and 1,250 in Tauranga, would be put on the market to be sold off.

22 May

National’s 2015 Budget included;

  • Dumping the $1,000 Kiwisaver ‘kick-start’ government contribution
  • $684 million deficit for 2014/2015
  • a new travel tax on arriving/departing airport travellers
  • extension of a telecommunications tax to fund government’s rural broadband expansion programme

31 May

A story in the NZ Herald by Lynley Bilby reported that schools throughout the country were cutting back on their activities due to funding constraints;

Financially strapped secondary schools are cutting back on classroom activities, dropping field trips, ditching science experiments and even removing courses after a crackdown on parent donation rules.

[…]

In one case a secondary school had to abandon an NCEA Level 2 biology field trip to the beach because it could not afford to hire a bus.

The science teacher had to apply to the New Zealand Qualifications Authority to alter the data collection assessment so the students would not fail.

Another school was forced to alter its science curriculum by reducing experiments to trim costs.

One school said it had done away with activities outside the school gates, including a sea kayaking standard for year 12 physical education students.

Principals reported outdoor education programmes, food, hospitality and technology courses could be affected by the funding guidelines.

[…]

The recently released Budget saw the Government fund school operational grants to the tune of $1.32 billion for the 2015/16 financial year.

But the NZSPC  [New Zealand Secondary Principals’ Council] said that was not enough to meet costs, particularly for low decile schools.

It is apparent that state funding of education  is inadequate, and schools are either having to make drastic cuts to  “classroom activities, dropping field trips, ditching science experiments and even removing courses” – or raise “voluntary donations” from parents. Those “donations” and fundraising events by parents and teachers raised more than $357 million in  2012, an increase of  $16 million from 2011.

Nearly a third of a billion dollars – that is the shortfall of full funding of education in this country.

1 June

National announced the launch of so-called “social bonds“, where;

…the Government will pay a return to investors, determined by whether or not agreed social targets have been achieved.

The Government said social bonds were about the private and public sector organisations operating together to fund and deliver services.

This year’s Budget set aside $28.8 million to fund what is essentially contracting  out some mental-health services to private investors. As Health Minister, Dr Jonathan Coleman explained in Parliament the next day;

” One of the benefits of social bonds is that they protect service providers by shifting financial risk away from the providers and on to investors who provide the funding and who are better placed to absorb risk…

[…]

…social bonds are an exciting financial instrument with the potential to revitalise social policy delivery and inject private sector funding and innovation into the sector.”

Note the term used by Dr Coleman (quoting from a Dept of Internal Affairs report); “financial instruments”. According to investopedia.com, a “financial instrument is defined as;

A real or virtual document representing a legal agreement involving some sort of monetary value. In today’s financial marketplace, financial instruments can be classified generally as equity based, representing ownership of the asset, or debt based, representing a loan made by an investor to the owner of the asset.

[…]

Financial instruments can be thought of as easily tradeable packages of capital, each having their own unique characteristics and structure. The wide array of financial instruments in today’s marketplace allows for the efficient flow of capital amongst the world’s investors.

In effect, funding for mental health services is being transferred from the State – the traditional source – to private investors. Plainly put – National is seeking investment funding for mental health services.

These so-called “social bonds” appear to be a continuation of privatisation-by-stealth.

Interestingly, the right-wing think-tank, ‘New Zealand Initiative‘ (formerly the Business Roundtable and NZ Institute) published a report in March advocating the use of  social  bonds, and calling for the government to implement them. Three months later, National did precisely that.

As the government’s tax revenue was slashed by between $2.6 billion – $3.2 billion, per annum, after the 2009 and 2010 tax cuts, National’s tax-take and expenditure was further put under pressure by the 2007/08 Global Financial Crisis; the resulting Great Recession; rising unemployment; tumbling dairy pay-outs; and the Christchurch re-build.

National’s much heralded prediction of a  $372 million Budget surplus this year collapsed into a massive $684 million deficit – a turn-around of nearly a billion dollars.

A billion dollars – the cost of the 2009 tax cuts.

But added to the fiscal deficit is another deficit; the hidden social costs which New Zealanders are slowly, belatedly, waking up to.

Community organisations are winding back, or closing down completely;

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Relationships Aortearoa - funding cuts - Anne Tolley - budget 2015

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State assets such as housing and schools are suffering a lack of maintenance, the likes of which we have seen only in Third World nations. The recent case of Northland College in Kaikohe revealed a badly run-down facility that was so delapidated that police  asked to use them for training simulations because they represented the closest thing available to a “ghetto environment”, according to school principal, Jim Luders.

Luders’ description of his school is hard to believe in 21st century New Zealand;

“The conditions are appalling. They’re unsafe. There’s water leaks, mould, asbestos in parts. It’s without doubt the worst school stock in New Zealand.

I would challenge any school to send in photos that are worse.”

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Northland College students stuck with 'worst classrooms in New Zealand'

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Back in 2008, an ERO report highlighted the poor state of Northland College. Seven years later, the problem remains unchanged.

New Zealand’s State housing does not fare better. TVNZ’s Corin Dann wrote this piece on 24 March, which should have raised alarm bells throughout the nation (it did not);

The Finance Minister is signalling a deferred maintenance bill for the country’s state houses of $1.2 billion will have to be met by the government in future.

Community housing providers looking to buy state houses off the government say they believe Housing New Zealand has failed to carry around $1.2 billion in maintenance on state houses.

[…]

Mr English says the lack of maintenance on state houses is concerning and that in the long run the government will need to invest the $1.2 billion dollars in state houses to get them up to scratch.

[…]

When asked why Housing New Zealand had not spent as much money as it should have on maintenance, Mr English put the blame partly on the previous Labour government saying they had chosen to build new state houses rather than fix up old ones.

However, when pressed he conceded that “looking back everyone could have performed better”.

$1.2 billion dollars. Half the cost of the 2010 tax cuts.

Which, in part, explained why the Salvation Army assessed National’s offer to buy some State houses – and promptly ran a mile. As the SA’s spokesperson, Major Campbell Roberts stated, with crystal clarity;

“We would be faced with significant maintenance issues, houses which have got the wrong tenants … we would also need to do extensive development.

We would be putting so much resource into this that we could not actually put resource into anything else.

We can’t guarantee that we would be able to improve things for the state tenants, which is exactly what we would want to do by taking [the properties] over at this stage, on our own.”

Community Housing Aotearoa director, Scott Figenshow, was even more to the point;

“Our members are very concerned about the families they work with, and are only interested if they can do a better job than Housing New Zealand. At the moment the sums simply don’t stack up.

Last month the Government confirmed $1.2 billion of deferred maintenance on the state housing stock. Why would a provider want to purchase a liability?” 

Figenshow suggested, instead, that Government reinvest the $220 million it was forecast to receive in tax and dividends from Housing NZ, back into much needed maintenance and upgrades.

For two year old Emma-Lita Bourne, tenant of a State house in Otara, South Auckland, the situation is academic. She died last August living in an environment that was clearly not conducive for human health and well-being;

Two-year-old Emma-Lita Bourne died in Auckland’s Starship Hospital in August last year following a brain haemorrhage.

She had been taken to hospital with a fever, which turned out to be a form of pneumonia.

In his findings, released on Thursday, coroner Brandt Shortland said pneumonia played a part in Emma-Lita’s death and the Housing New Zealand home in Otara where her family lived may have been to blame for her ill-health.

Other children in the family also became sick while the family was living there, with one suffering from rheumatic fever.

[…]

In May 2014, Emma-Lita’s family had been fast-tracked up the waiting list to be transferred to a better state house, because of the rheumatic fever risk.

Although they’re now living in a different home, the move didn’t happen before Emma-Lita’s death.

Housing Minister Nick Smith said the government’s policy to fast-track those at risk of rheumatic fever into better homes has helped 270 families.

As Radio NZ reported Coroner Brandt Shortland’s findings;

“In my view, the house unfortunately was unhealthy for this family.

I am of the view the condition of the house at the time being cold and damp during the winter months was a contributing factor to Emma-Lita’s health status.”

Housing NZ’s general manager of tenancy services, Kay Read,  accepted the likelihood of a link;

“Our responsibility is to provide warm, safe and dry housing and, from the reports in this situation, it appears that we’ve failed.”

The above Radio NZ story features photos of another Housing NZ property also in a delapidated condition, with mould and condensation streaming down the walls. The property is tenanted.

Interviewed on Radio NZ’s ‘Morning Report‘, Minister for Housing, Bill English,  denied that money was the core problem of run-down Housing NZ properties;

“They’ve done a very large scale programme – insulated every house that it can, which is 48,000 houses over the last four or five years.

It’s got to deal with the same limitations of process as everybody else, it’s got to get consents, it’s got to find a workforce, but it’s not short of money to do the job.”

English’s assurance that Housing NZ “not short of money to do the job” appears to be contradicted by Housing NZ’s  2013/14 Annual Report;

The responsive repairs programme, which includes work on vacant properties, is dependent on demand, which was higher than expected in 2013/14. Consequently, the budget was overspent due to higher volumes of work orders. The average cost per work order was also higher as a result of more comprehensive repairs and upgrades being carried out on vacant properties. To mitigate this overspend, we deliberately reduced the planned maintenance programme, which decreased the percentage of maintenance spend on planned activity. [p28]

Furthermore, on page 36 of the 2013/14 Annual Report, Repairs and Maintenance is given as $220 million for the period.

This is $1 billion less than the $1.2 billion quoted by Bill English to TVNZ’s Corin Dann on 24 March, this year.

Whilst clouded in waffle, English admitted that “the system” (ie; government and Housing NZ) was responsible for this little girl’s death;

“Regardless of the cause it’s a tragedy for this family. It appears that while the system worked to some extent, we’ve got to test whether it was responsive enough quickly enough to the very real needs of this family.

They didn’t really have the option of ordering a higher grade of insulation for the house.

We’ve got a strong focus on organising the government services around vulnerable families – and this is a vulnerable family – rather than expecting those vulnerable families to find their way around various government departments.

This type of case should illustrate I think to the people making public policy, including us, that we’ve got some way to go yet to be as responsive as we should be when there’s serious issues going on in this family.”

. English responds to criticism of state houses - radio nz - morning report - audio.

Unfortunately, this is not the first time that New Zealanders have died for lack of adequate state funding of social services. For Minister Bill English, this is no doubt a matter of déjà vu, bringing back memories of late Northlander, Rau Williams, and late Southland farmer, Colin Morrison;

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Died waiting for by-pass - Otago Daily Times, 6 April  1998  (1)

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The 6 April 1998 ‘Otago Daily Times’ story stated;

Riverton dairy farmer Colin Morrison (42) has lost his race for a triple heart by-pass, dying of complications and leaving his widow, Christine, and his doctor blaming Health Minister Bill English and the health system for his death.

[…]

Mrs Morrison last night did not want to speak to Mr English, who is also her local MP. She said the minister and the health system had  failed her family and her husband.

“I don’t think I could cope. I know I can’t blame one person but I have got to have something or someone to blame. I wrote him a letter saying I blamed him [Mr English] but I blame the system as well”, she said.

His GP, Dr Russell Pridgeon, of Riverton, last night called on Mr English to resign, saying he held him morally responsible for Mr Morrison’s death.

A month later, then-Health Minister Bill English conceded that his government’s “booking system” was a failure – but not before others died on his watch as Health Minister;

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Bill English did not resign, though National were swept from office the following year by Helen Clark’s Labour-led coalition.

English is now Minister for Housing.

And once again, people are dying.

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Addendum1

The National government does not have money to spend on refurbishing state housing, but it does have money for other projects;

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Government accused of wasting $11.5 million on wealthy Saudi farmer

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Addendum2

The National government does not have money to spend on refurbishing state housing, but it does have money for other projects;

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Addendum3

The National government does not have money to spend on refurbishing state housing, but it does have money for other projects;

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References

Parliament: Hansards – Tax Cuts – Implementation

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

Parliament: Hansards – Housing, Affordable—Progress and Management of Housing New Zealand

Agrimoney.com: Dairy rout spurs $4bn cut to Fonterra milk payout

Hive News: Treasury re-crunching Budget numbers for low Fonterra payout

TV3 News: State housing sell-off worth $5B

Fairfax media: Slashed Fonterra payout will affect all NZers

Radio NZ: PM states housing intentions

Otago Daily Times: Fonterra cuts dairy payout forecast

Radio NZ: Tauranga, Invercargill state houses to be sold

Radio NZ: Budget 2015 – What you need to know

Fairfax media: International airfares will rise new departure tax

Radio NZ: Telecommunications tax will hit consumers

NZ Herald:  Secondary schools to slash spending

Radio NZ: Social bond system to target mental health

Parliament: Hansards – 5. Mental Health Services—Social Bonds

Investopedia.com:  Financial Instrument

NBR:  Roundtable and NZ Institute morph into new libertarian think tank

NZ Intiative: Social Impact Bonds

Government Economics Networks: The case for social bonds: A new way of financing and delivering social services

Fairfax media: Budget 2014 – The essential guide

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

NZ Herald: Govt funding cuts reduce rape crisis support hours

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

NZ Herald: Northland College students stuck with ‘worst classrooms in New Zealand’

Radio NZ: Northland ‘slum’ school fix-up very slow

TV1 News: English concerned by State House deferred maintenance bill

Radio NZ: Salvation Army won’t buy state houses

Fairfax media: Salvation Army says no to state houses

NZCity:  Girl’s death should spur action – Greens

Radio NZ: Damp state house linked to child death

Radio NZ: State housing criticism valid, says English

Housing NZ: 2013/14 Annual Report

Radio NZ: English responds to criticism of state houses (Alt. Link) (audio)

Dunedin Star: Death – the Northland Way

NZPA: English agrees system flawed

TV1 News:  Government accused of wasting $11.5 million on wealthy Saudi farmer

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

NZ Herald: John Key defends cost of flag referendums

Additional information

Mana News: Housing under neoliberalism

NBR: Matthew Hooton – Gulf games fail to deliver

NBR: Matthew Hooton – Flying sheep endanger McCully

NZ Herald: Bryce Edwards – Political roundup – The bizarre ‘bribery’ and flying sheep scandal

NZ Herald: Dita De Boni – Kiwis hoodwinked over state housing

Radio NZ: Demand increasing on schools to fund out classroom activities

Radio NZ: Government hikes up Housing NZ dividend almost 20 percent (audio)

Previous related blogposts

That was Then, this is Now #6

Budget 2013: petrol taxes

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

Housing; broken promises, families in cars, and ideological idiocy (Part Tahi)

Housing; broken promises, families in cars, and ideological idiocy (Part Rua)

Housing; broken promises, families in cars, and ideological idiocy (Part Toru)

The cupboard is bare, says Dear Leader

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This blogpost was first published on The Daily Blog on 6 June 2015.

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Nothing quite reinforces ‘Privilege’ than an ‘Us and Them’ Attitude

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When , drunk, dumb,  and ultimately doomed National backbencher, Aaron Gilmore, uttered his now-infamous words,  “Don’t you know who I am?“, it revealed to the public a glimpse of the attitude of those who – in their minds – are Born To Rule (over us).

For a certain type of persons who happens to be blessed with wealth, power, business acumen, and/or other talents, they consider themselves to have “earned” the right to be superior to those around them not-quite-as-fortunate. (Or even, gods-forbid, not particularly interested in wealth, power, business acumen, etc.)

It is this arrogance – born from success in their chosen field of endeavour – which results in attitudes such as the law (or social “niceties”) not applying to them.

Case in Point #1: In Aaron Gilmore’s case, he became angry that the waiter refused to serve him any more alcohol. The waiter’s decision was based on a simple law-of-the-land; that intoxicated persons shall not be sold/served any more liquor. Failure to comply can mean hefty fines; suspension (or full cancellation) of liquor license; and having employment terminated.

But Gilmore didn’t care. He just wanted more booze to flow down his gullet. When his demands were declined, he attempted to use his position of authority (an elected member of Parliament) to get his way. When that failed, he invoked the Office of the Prime Minister. That, too, failed.

But what was it about Gilmore’s position that he believed he had status sufficient to believe that the law did not apply to him?

Case in Point #2: When government minister, Gerry Brownlee walked through security doors at Christchurch airport, he obviously held a view that being late for his flight was just cause to ignore Civil Aviation rules;

Gerry Brownlee is standing by his version of how his airport security breach took place – after being contradicted by an airport staffer.

The Civil Aviation Authority’s released a heavily-redacted report into the July incident at Christchurch Airport.

Mr Brownlee said he knocked on a secure door and asked to be let through, because he was late for a flight.

But the airport employee told the inquiry that one of Mr Brownlee’s staff pulled the secure door open, and the trio walked past him without seeking permission.

Gerry Brownlee was later fined $2000.

Despite being fined for his rule-breaking, a spokesman for Brownlee said that the minister  “stands by his testimony“. So not only did Brownlee consider himself (a) above the law, (b) acted on that belief, but (c) when found guilty, and fined,  showed no acceptance of his wrong-doing.

What was it about Brownlee’s position that he believed he had status sufficient to believe that the law did not apply to him?

Case in Point #3: Multimillionaire property developer, Bob Jones, was recently thrown off an Air New Zealand flight for not following an on-board safety briefing, reported the  Civil Aviation Authority.

According to CAA spokesperson, Mike Richards;

“The passenger was basically ignoring what was going on and wearing headphones. The crew member complained to someone in command and said, ‘I don’t want passengers on the flight who aren’t following instructions of the crew’.”

So, basically, Bob Jones couldn’t be arsed following the rules and paying attention, despite being asked to? Did Jones believe that, in the event of an emergency, somehow his wealth would be sufficient to circumvent the laws of gravity, and he would descend gently to the ground?

What was it about Jones’ position that he believed he had status sufficient to believe that the law (both Parliamentary and gravitational) did not apply to him?

Is the answer to the question posed at the end of each case, simply because society allows status, based on political power and/or  wealth, to gain privileges which are not accorded to the rest of us (99% of us)?

If Air New Zealand’s “Elite Priority One” is any indication, then political power and wealth  invites special privilege that other paying customers for the airline’s service apparently do not deserve;

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Air New Zealand offers secret invite only Elite Priority One lounge

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New Zealand – the nation that once prided itself on it’s egalitarianism – now has an airline trading on our name, and offering services to the “elite” that the ordinary folk of this country were not even aware of.

That is real privilege accorded to the wealthy and powerful – when the masses aren’t even aware that Jack is no longer as good as his Master.

So when an MP expects that liquor laws can be flouted so he can get more inebriated; when a Minister expects that Civil Aviation laws apply to others, but not him; and when a millionaire thumbs his nose at critical safety information – let us be clear that they deeply believe they are entitled to hold those views.

They are, after all, better than us.

Air New Zealand says as much. They are, after all, Elite, Priority One.

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References

NZ Herald: ‘Rude’ MP tweets apology over drunken night out

Fairfax media: Sir Bob Jones escorted from Air NZ flight

NewstalkZB: Brownlee contradicted on airport security breach

Fairfax media:  Air New Zealand offers secret invite only Elite Priority One lounge

Previous related blogposts

And so it came to pass

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Glass half full.

This blogpost was first published on The Daily Blog on 1 June 2015.

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The Mendacities of Mr Key # 13: Kiwisaver – another broken promise

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In the past, when governments broke promises, they were clumsy, heavy-handed, and were punished at the polls.

Political parties and their strategists have learned from those mistakes. Now, when promises are broken, they are done gradually, by incremental steps.  So when the media picks up on it and reports, the public barely notices nor cares.

One such recent broken promise was National’s dumping of the Kiwisaver $1,000 kick-start government contribution, revealed in this year’s Budget.

On 9 July 2008, Key gave a hint as to National’s intentions toward Kiwisaver;

“There won’t be radical changes. There will be some modest changes to KiwiSaver. We will announce that pretty soon.”

On 8 October 2008 – precisely one month before the general election that year – Bill English outlined National’s policy toward Kiwisaver if they became government;

National is proposing three changes to KiwiSaver. These changes will make KiwiSaver fairer, more affordable for current and future members, and more enduring in the long-term.

The three changes National is planning are:

First, a reduction in the minimum contributions demanded of employees.

At the moment, most KiwiSaver members are required to contribute 4% of their income to KiwiSaver. In return, they receive a contribution from their employer equal to 1% of their income. As an interim measure, Labour has allowed some KiwiSaver members to make a more affordable contribution, of 2%. In return they receive an equal contribution from their employer.

National thinks this 2 +2 arrangement is fair and affordable. We disagree with Labour’s plans to ramp-up KiwiSaver over the next three years.

National will make KiwiSaver a 2+2 scheme. Once this is bedded down, however, we will consider offering an alternative 3+3 scheme option, as and when economic conditions permit.

Let me stress that those who want to contribute more than 2% of their wages to KiwiSaver will still have that option. And employers who want to match contributions beyond 2% will still have that option, too.

Second, National will remove the tax credit that is currently paid to employers whose staff are enrolled in KiwiSaver. This will have no effect on the amount of money that goes into New Zealanders’ KiwiSaver accounts.

This subsidy was a transitional tool but it creates a complex money-go-round. It simply doesn’t meet National’s test for effective, disciplined government spending.

I note that the net effect for employers will be small, once they take into account the lower minimum contribution rate.

Finally, National will repeal recent legislation which effectively discriminates against some employees who can’t afford to join KiwiSaver.

However, we will keep a safeguard in place, by amending the KiwiSaver Act to make it explicit that no employee can have their gross taxable pay reduced as a consequence of joining KiwiSaver.

National believes that these three changes to KiwiSaver will make it a fairer, more affordable and more enduring savings scheme.

No mention of cutting the $1,000 kickstart  contribution by government.

In fact, National made no mention whatsoever of removing the $,1000 kickstart contribution at the last election. Claire Trevett at the NZ Herald wrote this informative piece on the issue;

A broken promise is when someone reneges on something they promised to do or not do.

If you were silent, say, about axing the $1000 kickstart payment for new KiwiSaver members, it is not a broken promise, strictly speaking.

But it is an act of bad faith, especially when it happens in the first Budget following an election in which kickstart payments were not mentioned.

The amount of tinkering and tampering with the KiwiSaver scheme since it was announced in 2005 is incredible.

Most of Labour’s changes served to benefit the saver at the expense of the public purse. Not surprising seeing as it began the scheme.

And most of National’s tampering has reduced benefits to the saver and helped the public purse.

Very few other media commentators and columnists have taken National to task for what is undeniably a blatant election broken promise.

Cutting the $1,000 kick-start contribution is short-sighted. Even English had to admit on TV3’s ‘The Nation‘, on 23 May;

“…and New Zealand savings rates are now— have been positive for five years for the first time in decades.”

Our improved saving record has not come about because of anything National has done (despite English’s insistence). In fact, National has undermined every effort to improve this country’s dismal savings record.

In 1975, the then-Muldoon-led National government dumped the previous Labour government’s superannuation savings-policy. This cost our nation an estimated $278 billion (according to Infometrics and  the Financial Services Council).

The 2014 Infometrics report calculated that;

“… a worker on the average wage would have saved $256,000 in the scheme over the past 40 years.”

But Muldoon could not wait to get his meddling hands on the scheme, and like many things he touched, it died.

The same applies to the current Kiwisaver scheme.

The current Key-led National government’s piece by piece  gutting of Kiwisaver – ongoing since 2008 – confirms that no superannuation savings scheme is safe from that party’s political interference.

In this instance, removing the $1,000 kick-start contribution is a direct consequence of National’s ill-conceived tax cuts in 2009 and 2010, which left a gaping hole in National’s taxation-revenue.

In effect, New Zealanders continue to pay for those two unaffordable tax-cuts, whether by cutting back on government services such as bio-security; under-funding social organisations such as Relationships Aotearoa; increasing government user-charges such as Family Court fees, medical prescriptions; taxing children; introducing new taxes, etc, etc, etc.

National was so desperate to win the 2008 general election that despite the Global Financial Crisis, it proceeded with tax cuts that we simply could not afford.

National must now cut every form of expenditure it thinks it can get away with, if it is to escape the prospect of another Budget deficit next year.

We are the ones paying for what, essentially, was an election bribe.

On this occasion, though, our children will end up paying as well.

Addendum1

For more invaluable information, refer to Audrey Young’s excellent piece in the Herald, Why axing kickstart is an act of bad faith.

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References

Radio NZ: PM defends scrapping of KiwiSaver kickstart

NBR: Key signals ‘modest changes’ to KiwiSaver

Wikipedia: 2008 General Election

Bill English: National’s Economic Management Plan

NZ Herald:  Why axing kickstart is an act of bad faith

Fairfax media: Compulsory super ‘would be worth $278b’

Scoop media: National Reveals Biosecurity Cuts

NZ Family Violence Clearinghouse: Changes signalled to funding of community organisations; Relationships Aotearoa may close

Scoop media: Vulnerable children at risk from Family Court fees increase

NZ Herald: Prescription fees increase

NZ Herald: Budget 2012 ‘Paper boy tax’ on small earnings stuns Labour

Fairfax media: International airfares will rise new departure tax

Additional

NZ Herald:  National denies it misled voters over taxes

Previous related blogposts

Regret at dumping compulsory super – only 37 years too late

Did National knowingly commit economic sabotage post-2008?

Budget 2013: Suffer the little children… to starve

National guts Kiwisaver

The Mendacities of Mr Key # 12: No More Asset Sales (Kind of)

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This blogpost was first published on The Daily Blog on 27 May 2015.

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