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National ramps up attack on unemployed and solo-mums (part rua)

24 September 2012 6 comments

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Continued from: National ramps up attack on unemployed and solo-mums

Yesterday (12 September) Welfare Minister Paula Bennett released this piece of spectacular “data” to the media,

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Full story

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It was one of those “Shock! Horror!” stories that the media loves – great headlines, not much critical analysis. When you read the whole “story”, the questions that are not answered scream out at you,

  1. What is full meaning of the statement “An actuarial valuation conducted as part of the Government’s welfare reforms shows the average total cost of those who had received a working-age benefit in the year to June 30, 2011 was $78.1b”?
  2. Why did the Fairfax reporter not cross-reference invalid and sickness beneficiaries to ACC policy of “exiting” clients onto welfare, where ongoing rehabilitation was not available? (ACC staff rewarded for cutting off clients – MP)
  3. How accurate is the report?
  4. How does this report help create 170,000 new jobs, promised by John Key last year?  (See: Budget 2011: Govt predicts 170,000 new jobs)
  5. What was the point of the report, when Bennett herself has admitted on TVNZ’zs Q+A,“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.” – Paula Bennett, 29 April 2012 (See:  http://tvnz.co.nz/q-and-a-news/transcript-paula-bennett-interview-4856860)
  6. Why has National spent $800,000 on this “report”, when previously  Bennett refused to undertake further research to gain information on child poverty,  “of course there is poverty in New Zealand. This has been acknowledged by the Government but it’s not a priority to have another measure on it” ? (See: Combating poverty more important than measuring it.)

It’s interesting that Paula Bennett rejected calls for further research to quantify the levels of child poverty in this country stating that, ” it’s not a priority to have another measure on it” – but feels it necessary to spend nearly a million dollars of our taxes on a study of  “an actuarial valuation” on long-term costings of  welfare.

If this doesn’t raise the hackles and outrage of New Zealanders then they are truly braindead.

Worse still is the timing of the realease of the Taylor Fry report.

The report – designed to paint unemployed and solo-mums in a maximum damning light – was released on 12 September.

A day later, this story became public,

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Full story

Listen: Listen to more from Bill English on Morning Report

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Thus far, that story does not seem to have appeared in any other media.

It has been quietly “buried” under a mountain of negative press releases from National.

This blogger has zero doubt that National was fully aware that Statistics New Zealand was in the process of releasing the data on job losses to the public. That story, plus ongoing redundancies and rising unemployment led National’s taxpayer-funded spin-meisters to pre-empt Statistics New Zealand’s bad news shocker, and instead release their own “Shock, Horror!” story.

Thus far, it seems to have worked.

But for how long?

Meanwhile, the Reserve Bank has released an astonishing report blaming National’s policies for low economic growth,,

Fiscal consolidation is expected to have a substantial dampening influence on demand growth over the projected horizon. This consolidation will, all else equal, lead to a lower OCR (official cash rate) than would otherwise be the case.

See: Govt austerity slows growth, keeps rates low – RBNZ

National fails to create the 170,000 new jobs they promised us last year, and blames beneficiaries for their incompetance? Noice.

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Addendum

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Yesterday, this blogger emailed Paula Minister on National’s recent bout of beneficiary bashing,

Date:   Wednesday, 12 September 2012 2:23 PM
From: Frank Macskasy <fmacskasy@yahoo.com>
Reply-To: Frank Macskasy <fmacskasy@yahoo.com>
Subject: Recent “welfare reforms” – Some questions for you.
To: “Paula.bennett@parliament.govt.nz” <Paula.bennett@parliament.govt.nz>
Cc: Chris Laidlaw RNZ <sunday@radionz.co.nz>,
    “campbelllive@tv3.co.nz” <campbelllive@tv3.co.nz>,
    Dominion Post <editor@dompost.co.nz>,
    Daily News <editor@dailynews.co.nz>, Daily Post <editor@dailypost.co.nz>,
    Hutt News <editor@huttnews.co.nz>, Jim Mora <afternoons@radionz.co.nz>,
    “Joanna Norris ( DPT)” <joanna.norris@dompost.co.nz>,
    Kim Hill <saturday@radionz.co.nz>,
    “kate.chapman@fairfaxmedia.co.nz” <kate.chapman@fairfaxmedia.co.nz>,
    John Key <john.key@parliament.govt.nz>, Listener <editor@listener.co.nz>,
    Morning Report <morningreport@radionz.co.nz>,
    NZ Herald <editor@herald.co.nz>,
    Nine To Noon RNZ <ninetonoon@radionz.co.nz>,
    “news@dompost.co.nz” <news@dompost.co.nz>,
    “news@radionz.co.nz” <news@radionz.co.nz>,
    Otago Daily Times <odt.editor@alliedpress.co.nz>,
    “primenews@skytv.co.nz” <primenews@skytv.co.nz>, Q+A <Q+A@tvnz.co.nz>,
    Southland Times <editor@stl.co.nz>, TVNZ News <news@tvnz.co.nz>,
    The Press <letters@press.co.nz>,
    The Wellingtonian <editor@thewellingtonian.co.nz>,
    “tariana.turia@parliament.govt.nz” <tariana.turia@parliament.govt.nz>,
    Waikato Times <editor@waikatotimes.co.nz>,
    Wairarapa Times-Age <editor@age.co.nz>
Kia ora Ms Bennett,
 
Regarding your proposals to compel the unemployed, solo-mothers, etc, to undertake various obligations, or face having their welfare payments cut, I have some questions to put to you;
  1. Will recipients of Working for Families – which some call a “welfare benefit – also be expected to compulsorily enroll their children in Early Childhood Education and doctors? If not, why not?
  2. Will superannuitants who are caring for children also be expected to compulsorily enroll their children in Early Childhood Education and doctors? If not, why not?
  3. Will children of all families, regardless of financial and/or employment circumstance also be expected to compulsorily enroll their children in Early Childhood Education and doctors? If not, why not?
If  compulsory early childhood education and doctor’s visits for children of unemployed, solo-mums, and other welfare recipients is such a good idea that National is willing to enact legislation, and financially penalise parents for failing to carry out this policy – why are other parents also not being compelled to enroll their children in Early Childhood Education and medical clinics?
 
Is there a basis upon which only the unemployed who have been made redundant from companies, government departments, and SOEs, are being targetted? What is that basis?
 
If unemployed or low-income families are financially unable to enroll their children in Early Childhood Education, doctors, etc, what steps will National take to offer additional financial assistance?
 
Do you still stand by your comment that you made on TVNZ’s Q+A on 29 April 2012, that, “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”.
 
And lastly; is this propopsal – plus your other so-called “welfare reforms” – simply not an attack on the unemployed and solo-mothers to deflect attention away from your government’s inability to generate the 170,000 new jobs that Prime Minister John Key promised us at the last election?
 
I await any possible answer you might be able to provide to these questions.
 
Regards,
-Frank Macskasy
Blogger
 

PS: This correspondence is not to be regarded as permission, whether actual or implied, to release any personal details about me that the State might hold about me.

Her office has responded today (13 September),

Date: Thursday, 13 September 2012 9:06 AM
From: Natalie Hansen <Natalie.Hansen@parliament.govt.nz>
To: “‘fmacskasy@yahoo.com'” <fmacskasy@yahoo.com>
Subject: FW: Recent “welfare reforms” – Some questions for you.

Hello Frank

The Hon Paula Bennett, Minister for Social Development has asked me to thank you for your email. 

Consideration is currently being given to the matters you raise and you may expect a reply at the Minister’s earliest opportunity.

Kind regards

Natalie Hansen

Private Secretary, Office of Hon Paula Bennett Minister for Social Development | Minister of Youth Affairs Executive Wing 5.5, Parliament Buildings| Private Bag 18041 | Wellington 6160

Telephone: +64 4 817 6815 | Fax: +64 4 817 6515 | Email: Natalie.hansen@parliament.govt.nz

Consideration is currently being given to the matters”  I raised?

It will be interesting to see what – if any – rational response Bennett comes up with. This should be good.

* Up-date*

Date:  Monday, 24 September 2012 3.57PM
From: “J Key (MIN)” <J.Key@ministers.govt.nz>
To: Frank Macskasy <fmacskasy@yahoo.com>
Subject: RE: Recent “welfare reforms” – Some questions for you.

Dear Mr Macskasy,

On behalf of the Prime Minister, Rt Hon John Key, I acknowledge the copy of your email sent for Mr Key’s information.

Regards,

E Tanga          

Ministerial Assistant/Records Officer           

Office of the Prime Minister

No further response  received from Paula Bennett’s office as at 24 September.

 

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Sources

Scoop.co.nz: Combating poverty more important than measuring it

NZ Herald: Fate of youth gloomiest stat of all

NZ Herald: Benefit tally ‘not an excuse for hard line’

NZ Herald: Andrew Cardow: Bennett out-nannies Labour’s nanny state

NZ Herald: Govt austerity slows growth, keeps rates low – RBNZ

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Bennett confirms: there are not enough jobs!

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Paula Bennett Q+A Shane Taurima

Source

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Last Sunday (29 April), Shane Taurima interviewed Welfare Minister, Paula Bennett, on National’s proposals to “reform” welfare in this country. Taurima also questioned Bennett on National’s track record on job creation, and the availability of jobs for the unemployed.

The results  were disappointing, if not a little startling.

First up; the explosive rise in youth unemployment.

Youth unemployment is defined as anyone between the ages of 15 – 24.

Shane Taurima asked,

SHANE
83,000 young people aged between 15-24 not in education, employment or training. Now, that’s roughly the population of Palmerston North doing nothing. What are you doing about it?

Bennet immediatly defaulted to Politicians Defence Posture #1 – she tried to ‘fudge’ the figures,

PAULA
… We’re seeing the unemployment rate of benefit go down, so we sort of peaked in January 2010, 23,500 young people 18-24 on benefit. We’re now at about 15,500.

No, Minister, the  number is not 23,500, nor 15,500, nor 7 dwarves – it is 83,000. Focus, woman, focus!

Last year, Duncan Garner wrote on his blog,

Where are the jobs? Seriously. Where are the real jobs for these young people and sickness and invalid beneficiaries? The only way to really stop the number of beneficiaries going through the roof, is jobs, jobs and more jobs.” – Duncan Garner, TV3 journalist, 16 August 2011

See: Unemployed youth would fill Eden Park

That dramatic statement was made in regard to the scandal of 58,000 young people, between the ages of 15-24, who were not in any  education, training or work.

That was eight months ago.

The figure now, is 83,000. The number has increased by 25,000 since Duncan Garner wrote those imploring words, demanding to know  “Where are the jobs?”

Shane Taurima questioned Paula Bennett on the rise of out of work young people,

SHANE         
So when are we going to see some results, though, Minister? When will we see the reduction in these numbers? Go back to the 83,000 figure. 83,000 young people doing absolutely nothing. When will we start to see results? When?

PAULA         
Yeah. So what you see is those that are on the unemployment benefit-

SHANE         
When will we start to see results?

PAULA         
They’re the ones that are the hardest hit, yeah? We are already seeing results for them.

SHANE         
We’re not seeing results…

PAULA         
We are. We have fewer…

SHANE         
We are not seeing fewer people doing nothing, Minister.

PAULA         
We are actually seeing more young people in work now than there were two years ago, and that, Shane, is a fact.

So point one: National Ministers excel at doublethink. For them, going from 58,000 to 83,000 is a decrease – not an increase. Why couldn’t that nice Mr Taurima see that?

Next; when Shane Taurima asked,

SHANE         
Can I ask you about work, though? Do you think that there is a job out there for all these young people who really really want a job? Is there a job out there for young people who really want a job?

Bennett’s reply was jaw-droppingly honest. In fact, she was frankly speaking when she said,

PAULA         
No. 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.

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.

In which case, Minister Bennett and Prime Minister Smile & Wave – what is the point of spending millions on welfare ‘reforms’, when it’s not welfare that is broke – but the availability of employment, FFS?!?!

What is the point of the insane idea of issuing debit cards to 16 and 17 year old beneficiaries; to prevent them buying booze and tobacco – when it’s already illegal for retailers to sell them booze and tobacco?!?! If that’s a real problem – shouldn’t the police be prosecuting those retailers?!

What is the point of blaming beneficiaries and claiming that they are on welfare because of lifestyle choiceswhen 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???

In effect, it is not welfare that needs  “reforming”. Welfare is working perfectly fine as a life-support mechanism for people out of work. So we don’t have to step over  cold,  stiff corpses on our footpaths because they had no shelter, food, warm clothing, medical care, etc, to stay alive.

Yet, blaming welfare beneficiaries is precisely what National is doing. At every opportunity they refer to beneficiaries as the problem, instead of the lack of jobs,

This week I announced a ministerial group to lead work on improving New Zealand’s welfare system.

I want this country to have a welfare system that encourages personal responsibility, helps people into paid jobs, and protects our most vulnerable.

The independent Welfare Working Group’s recent report shows our welfare system isn’t working as well as it could.

We have to do better for hardworking taxpayers, for beneficiaries who are falling far short of their potential, and for children growing up in welfare-dependent households.

Long-term welfare dependency robs people of confidence, motivation and aspiration. Ultimately it can rob their children of these things, too.

This Government is not prepared to leave this large group of New Zealanders behind. I’m ambitious for what we can achieve in this area, and I look forward to announcing our welfare reform policies before the election.” – John Key, 3 June 2011

Key’s  June 3rd statement above makes not one single reference about any job creation policies whatsoever. It refers once to helping “people into paid jobs“. Nothing else.

So where are those jobs, Mr Prime Minister?

And why did John Key announce a “a ministerial group to lead work on improving New Zealand’s welfare system” – when it ain’t the welfare system that is broke – but the availability of jobs?!?!

Isn’t that rather like running out of fuel in your car and then telling the mechanic to fix the car’s engine???

This has been part of the problem: National continuing to blame beneficiaries for being on welfare. The question is,

Why doesn’t National implement job creation policies, apprenticeships, and skills training?

Why doesn’t National invest in projects such as building 10,000 new state houses – which would not only ‘soak up’ unemployment and reduce the welfare bill – but would stimulate the economy and provide desperately needed homes for many families in this country?!

The reason is very simple. And mind-numbingly stupid.

Further into the interview, Shane Taurima asks Bennett,

SHANE         
Are you proud of the 20% increase, though?

PAULA         
Of course I’m not, but I actually – it’s business that makes those jobs out there. We’ve been supporting them. We’ve seen that the number of youth unemployed come down.

Bennett said it: “… it’s business that makes those jobs out there“.

Gerry Brownlee, the Minister for Earthquake Recovery said precisely the same thing recently, when Cantabrians were trying to convince him that there was a desperate housing/accomodation crisis developing in Christchurch. Brownlee said that “the solution is best left to the market”,

The idea that the Government would set up a big work camp somewhere in the city I think is just a little bit too much of a stretch.  You’ve got contractors who are coming into town … to make money.  And there’s nothing wrong with that, but I think you would have to ask the question, ‘Where is the obligation for the Crown to provide accommodation in that event?’

National is fixated on adhering to the neo-liberal, market-driven ideology.  As such, it does not believe in state intervention – it believes that business should be providing solutions.

Employment and housing are two examples where National is waiting for private enterprise to take the lead.

In which case, they will be waiting for a very long time,

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Full Story

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The report goes on to state,

The number of people employed in construction fell to 174,600 from 178,800, while education and training fell to 192,900 from 199,300.”

We are going backwards in construction!?

At a time when an entire city needs to be re-built – we are going backwards in construction?!

On top of that, those in training and education fell from 199,300 down to 192,900???

The problem is not with welfare nor with beneficiaries.

The problem is with National, refusing to engage  and implement programmes to address these problems. Instead, by relying on the private sector, it washes it’s hands of any meaningful solutions – and when those solutions fail to materialise, they talk of “welfare dependency” and “welfare reforms“.

Anyone holding out for National’s promises of 170,000 new jobs and rising wages will be sorely disappointed. As Minister Bennett admitted on 29 April – “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“.

Unfortunately, going by John Key’s comments today, when he responded to the report of rising unemployment – our Dear Leader is seriously out of touch with reality,

The number of people on the benefit’s going down. Just the feedback we have from employers is that they are feeling more confident. Part of that creation of part time work I think is just then taking our first tepid step towards actual full time employment for people.”

No help there.

It seems we will have to wait for a new government to fulfill National’s pledges.

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References

TV3 Duncan Garner:  Unemployed youth would fill Eden Park

TVNZ Q+A: Guyon Espiner interviews Bill English

TVNZ Q+A: Transcript of Paula Bennett interview

NZ Herald: Unemployment rate lifts to 6.7pc

Yahoo News: Failed economic management drives up unemployment

John Key:  Speech to National Party Northern Region Conference

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It’s a simple matter of choice.

1 September 2011 2 comments

With Labour’s release today, of their youth skills/employment policy, voters are now presented with the clearest choice yet between the two main parties. Aside from the issue of asset sales, where National has announced a programme of part-privatisation, and Labour opposes any/all privatisation, employment policy is the real litmus of both party’s essential core philosopies.

National prefers to step back and allow the “free market” to work it’s magic.

Labour has no hesitation in using the power of the State to address social-economic problems.

The National Business Review – hardly an organ for marxist-leninist groups – was  moved to report on an opinion piece penned by Duncan Garner;

“In a lengthy blog post, Unemployed youth would fill Eden Park, Duncan Garner declares that ‘this government’s biggest failure to date is our young people’.  With 58,000 youth not in work or education, ‘We are at crisis point. 27.6% of those aged 15-24 are out of work and out of luck. It’s even higher for Maori and Pacific youth’. And how has the Government performed on this issue? Garner says ‘there is a yawning gap between Key’s rhetoric and the reality’, and asks, ‘So what did Key do in the weekend to target the problem? Very little’. He suggests that ‘Key needs to be bold, he needs to take risks’.”

Source

In stating that Key had done “very little” to target the problem,  Garner was referring to the Prime Minister’s policy speech at National’s Conference on 13 August.  Indeed, thus far National’s track record at addressing unemployment has consisted of the following;

  • Building a cycleway. Anticipated new jobs: 4,000. Actual new jobs created: 215.  (Source)
  • Hiring an advisor for Finance Minister, Bill English, at $2,000 a day. (Source)
  • A new payment card for 16,17, and some 18 year old beneficiaries that could not be used for things like alcohol or cigarettes; (though it’s already illegal for 16 and 17 year olds to purchase these products)
  • … and… that’s it.

Source

It is worth noting the seriousness of youth unemployment in this country. According to the Department of Labour;

“Youth aged 15–19 years have an unemployment rate over three times that of the entire working-age population. Young workers are more vulnerable to downturns in labour market conditions due to their lower skill levels and lesser work experience. The latest official figures show that 17.2% of youth aged 15 to 19 and 8.4% of those aged 20 to 24 years were unemployed, which represents a deterioration of the trends found in the report. Maori and Pacific youth had significantly higher unemployment rates.”

Source

Ducan Garner seems in no mood to respond to John Key’s “smiles and waves” politics when he opens his piece with this caustic observation;

“58,000. This is the crucial number that should be ringing in John Key’s ears every night he bunks down in the refurbished Premier House.

58,000 young people between the ages of 15-24 are not in education, training or work. The majority of them are on a benefit.”

Garner adds,

“Sure the recession has been tough on young people worldwide. 81 million youths are now unemployed around the globe, it was 71 million before the recession. It is a ticking time bomb. In London, it’s already exploded.”

Source

And there we have it:
  1. Problem: growing, lingering unemployment.
  2. Potential disaster: social unrest, exploding into mass-violence.
  3. Solution – ?
To demonstrate how utterly vacuous National’s policy has been to date, let me juxtapose two media reports  outlining policy releases from both Labour and National.  Have a good look at these;

[click to expand]

Labour would cut dole, increase training

National to clamp down on youth beneficiaries

Which offers new jobs, and which offers tinkering with welfare?

At a time when New Zealand has 170,000 unemployed – of which 58,000 are aged 15-24; when we will be needing thousands of skilled tradespeople to re-build a broken city that has endured massive earthquake devastastion; the current government has done next-to-nothing during its three year tenure.

Except create 215 new jobs in building a cycleway; hire some very expensive advisors; and give tax cuts to some very rich people.

In doing so, we do not have the skilled tradespeople required to re-build Christchurch.  Because we are currently losing around 20 skilled tradespeople a day to overseas destinations such as Australia.  At the same time, people are losing their jobs in Christchurch and unemployment is rising.

To show how badly this government has failed, nothing better illustrates that failure than this;

 

 

Only the most die-hard National/ACT supporter will believe this this situation is acceptable. (And they usually come up with all manner of excuses why it is acceptable.) But I suspect – or at least hope – that ordinary New Zealanders who look at this situation and will ask the inevitable hard questions;

  1. Why are we not offering training for unemployed?
  2. Why are we not planning  to put our people to work?
  3. Why are we hiring workers from overseas?
  4. How will this help unemployed New Zealanders to get back into the workforce?

On the 13 of August, at the National Party Conference,  Prime Minister John Key stated,that “the current system “is not working and needs to change“.

Unfortunately, he wasn’t talking about job creation or training for unemployed. He was talking about not letting 16 and 17 year olds buy booze and ciggies.

Goff says it is ”crazy”to have high youth unemployment alongside a growing skills shortage crisis“.

Which one resonates with you?

Postscript;

 

A bouquet  to Hutt Gas and Plumbing Systems Ltd ,  a Lower Hutt company that is one of the many thousands of small businesses in our communities, quietly ‘beavering’ away in the background,  that make  our economy work.

 

 

Hutt Gas & Plumbing featured on TV1’s evening news where Phil Goff released Labour’s youth skills and employment package.

Hutt Gas & Plumbing train several apprentices, giving young people an opportunity to learn a trade; earn a wage; and contribute to their local community.  These folk are the real pillars of our society. Not the big, flash corporations and financial institutions that shuffle bits of paper around, and make their profits on speculation.

These are the small companies that deserve our support and encouragement. They are the ones that some of our children will rely on for jobs’ training to get into a trade.

Kudos to Labour for planning to increase apprenticeships. This is the hard policy planning that will create jobs and give our kids opportunities.

And a bloody big brickbat for Minister for Tertiary Education Steven Joyce, for  saying that Labour’s proposal was just National policy dressed up,

They’re basically doing what the government is already doing, they just want to throw more money at it.”

It’s rather revealing that National thinks that creating jobs for our young people is  “throwing money”.

Because buying 34 new BMW limousines, for National ministers, is not “throwing money”?

National – as fiscally prudent as a heroin addict?

John Key today announced that the proceeds from state asset sales could be used for roading…

Now hang on a mo’…

I thought National was intending to part-privatise Meridian Energy, Genesis Energy, Mighty River Power, coal miner Solid Energy, and Air New Zealand to pay off some of the $71 billion debt that National has racked up since it came to office in 2008?!

Now Key is suggesting that National may use the proceeds to pay for roading? Strangely enough, Key makes no mention of selling state assets to fund infra-structure here.

The questions that spring to my mind are;

1. Where is the income from Road User charges, gst on fuel, and other roading-related taxes that we are paying every time we fill up our vehicles at the pumps???

2. Wouldn’t it make more sense to use the profits from Meridian Energy, Genesis Energy, Mighty River Power, coal miner Solid Energy, and Air New Zealand, for infra-structure spending – rather han the actual generators of those profits???

3. If National has to rely on asset sales for infra-structure spending – what will they be relying on once all state assets are privatised and we’ve lost the entire income-stream???

This is like a heroin addict selling his car to pay for his next ‘fix’. What will he sell next? And what will he do once all his possessions are gone?

It’s not exactly a “good look” when a government behaves like a drug addict.

As for the good people of Kapiti – they got the government they voted for. It’s hard for me to feel any sympathy on this issue. My thoughts are with the 140 people who lost their jobs at MAF today. Or the thousands of others who’ve been made redundant these last three years.

My anger is directed at those individuals who blame welfare beneficiaries for the predicament they are in. The finger-pointers who blame the poorest and most vulnerable for daring to be poor and vulnerable.

To the people of Kapiti; you helped elect this government to office. You now have a wee taste of what it feels like to be steam-rolled and to be victimised.

Remember this on 26 November.

A warning from a very, very rich man…

17 August 2011 1 comment

Warren Buffet is  regarded as one of the most successful investors in the world.  He is  ranked among the world’s wealthiest people and was ranked as the world’s wealthiest person in 2008. He is the third wealthiest person in the world as of 2011.

He is not a disaffected socialist, nor  “random leftie” – he has serious money in his bank account(s). So when this guy warns us that the wealthy are not paying their way, and have been “coddled by billionaire-friendly governments” – you know he’s saying something important.

And that we should take note…

Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

(Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.)

Buffet’s analysis holds true for New Zealand as much as it does for his own country, the USA.

In April 2009 and October 2010, this government awarded the highest income earners and the wealthiest the most in tax-cuts.

At the same time, the top ten wealthiest people in NZ (and probably others  throughout the world also increased their wealth by 20 percent) – whilst the rest of the global economy was wracked by the worst recession since the 1930s, and millions lost their jobs.

The old excuse that the “wealthy work hard and should be rewarded for their labours” no longer deserves to be taken seriously.  Most of us work hard, and long hours.

It is time that governments stopped coddling the rich. It’s not like they can take their wealth off-planet to Mars or elsewhere. The rich will still invest their vast wealth.

But it’s time they paid their fair share as the price of living in societies that gave them the opportunities to create their wealth.

It’s high time National looked at a fairer taxation system, and paid for the social services and job creation-friendly policies, rather than the top 10% of  the population and middle-class rich-wannabees.

Otherwise, prepare yourselves for a society of growing inequality.

So far, the indicators are not good…

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Well, I think the ‘message’ is reasonably clear for all but the most ideologically-blind.  Question is – what are we going to do about it?

(Hint: more of the same will probably not work.)

Unemployment; A right way and the Government way…

13 August 2011 2 comments

As per usual, the National Party conference this year has focused on beneficiaries and social welfare.  Listening to these people, who seem utterly oblivious to the harsh realities of New Zealand in a recession, we have the Prime Minister, John  Key, saying that the current social welfare  system,

“…is not working and needs to change.

When young people go on welfare, by definition, they stay there longer and cost the state more…and rob themselves of a tremendous opportunity.

Every New Zealander can be entitled to that brighter future, no moreso than young people”.

?!?!

Nowhere does Key or any of his colleagues acknowledge that 160,000 people are currently jobless. The current rate of 6.6% is double  that prior to the beginning of the recession in 2008, when it stood at 3.8%.

I wonder – does John Key or any other National MP believe that 80,000 New Zealanders woke up one morning in late 2008 and decided to chuck in their jobs, where they earned $600, $700, $800 or more – to go onto the dole to receive $201.40 (nett, p/w, single person 25+)? Or $335.66 (nett, p/w, married couple)?

I doubt it.

I harbour a suspicion – not backed up by any firm evidence, I admit – that National MPs are not actually thick enough to believe that the vast  majority of unemployed New Zealanders prefer to be jobless.

So why target unemployed Kiwis who happen to have had the mis-fortune to have lost their jobs – and are still being made redundant every day?

Simple. Beneficiary bashing – or “welfare reforms” to give it a more palatable, acceptable term – wins votes. There is a part of middle class New Zealand that envisions every single welfare recipient to be a character out of  “Once Were Warriors” or a dope-smoking hippy.

This chunk of middle-class New Zealand is harshly punitive in it’s attitude toward poverty, welfare, and solo-mothers (but not solo-fathers).  They see the poor; the unemployed; and solo-mothers as being there because of deliberate “bad lifestyle choices”.  Holding such prejudiced views is easier than having to think hard and deep about the complex economic and social causes that have created our own under-class in New Zealand. If someone is to blame, for their own mis-fortune,  we don’t have to act.

And if there’s one thing that human beings love; it’s simplistic answers to hard questions.

National (and it’s right-wing cousin, ACT) understand this dark streak in our collective psyche and exploit it to the last possible vote.

However, it does nothing to address the very real social and economic problem of unemployment. Bashing beneficiaries is like criticising someone for getting sick – ultimately futile and counter-productive.

To date, this National government has done very little to create jobs; to reduce barriers to education; to train young New Zealanders for life in the 21st Century.

National’s contribution to job creation has been… the cycleway. They have also cut the TIA (Training Incentive Allowance) which, for many,  was a ticket off welfare and into paid employment. That happens to be the same TIA that Welfare Minister, Paula Bennett used to get off the DPB.

Nice one, Ms Bennett.

John Key says that the “current system is not working”.

Wrong, Mr Key. The current system is functioning as it should; feeding people who are without incomes.

It is the unemployed who are “not working”.

Where are the jobs, Mr Key; where are the jobs?

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Sources:

Grim Day of Redundancies

BoP Times : 1,000 people applied for just 90 jobs

Food parcel families made poor choices, says Key

Jobs to go at textile factories

10 applicants for every one shelf-stocking job

National Party Conference – Day One

Employment Blow as Vbase cuts 151 jobs

2700 applicants for 150 jobs

National promises to unleash welfare reforms

Lower Hutt jobs to go as shops shut

Applicants queue for 20 jobs at new KFC store

Getting young people off welfare a priority

300 job losses in Hawke’s Bay

Demand Strong for New Jobs Up for Grabs in Glenfield

National Party Conference – Day One