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Posts Tagged ‘credit rating’

Standard & Poor’s just sabotaged Simon Bridges’ tax bribe announcement

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Poor Simon Bridges.

Since becoming Leader of the National Party, he has been dogged by embarrassing leaks (which appear to be ongoing even after Jami-Lee Ross’s departure from caucus); a once-trusted MP turned feral; another MP accused of bullying her staff; allegations of a culture of sexual harrassment in the Party; travel expenses that make him look profligate with taxpayers’ money; assorted bed-hopping; and a potential contender for his job breathing down his neck as his poll ratings continue to languish in single figures.

Never mind “it’s not easy being green” – being Blue right now is positively diabolical for Simon Bridges. The only thing missing is a National MP who is revealed to be an agent for a foreign power. Oh…

With indications that the Tax Working Group will shortly be making it’s final report back to the Coalition, and with expectations that it will recommend a Capital Gains Tax on property (excluding the family home), National has launched a multi-media campaign on taxation. Twitter, Facebook, as well as the msm have all carried National’s announcement to cut taxes (dressed up as “tax adjustments” to deflect criticism that National is once again planning to cut taxes for the rich).

It was revealing that Bridges decided to give his speech out-lining plans for  tax-cuts-dressed-up-as-tax-adjustments at the Canterbury Chamber of Commerce, in Christchurch. He would not dare make such a speech at the Child Poverty Action Group, foodbank, or community hall in a predominantly state housing area.

He made his pitch at the Canterbury Chamber of Commerce because those are the people who would – yet again – benefit from tax-cuts-dressed-up-as-tax-adjustments.

As well as offering the bog-standard tax-cut bribe, Simon Bridges also alluded to National’s so-called reputation for being a “prudent fiscal manager“;

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To which one couldn’t help but reply;

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But worse was to come for Simon Bridges.

A day later, international credit ratings agency, Standard & Poor’s, up-graded New Zealand’s sovereign outlook from “stable” to “positive”. The  S&P report noted;

“Accommodative monetary policy, population growth, higher wage outcomes and higher government spending” and a decline in the New Zealand dollar, was continuing to support growth, it said.

“We don’t believe trade tensions between New Zealand’s major trading partners will currently have a substantial impact on the country’s economy and external performance, particularly given that key exports are imported for domestic consumption in China, rather than for re-exporting.”

It was capitalism’s vote-of-confidence in a left-wing government with overtly left-wing policies.

Which stands in stark contrast with the credit-rating down-grade New Zealand experienced in 2010 and 2011 – under the right-wing, Key-led National government;

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New Zealand went from “stable outlook” in 2009 to “negative” by November 2010.  By September 2011, we had dropped from AA Positive to just AA.

In fairness, a sound explanation could lie with the fallout from the 2008 Global Financial crisis and Great Recession that followed.

But no. National compounded the fall in tax revenue resulting from the Recession by cutting taxes in 2009 and 2010, which reduced the tax-take even further. That meant only one recourse for then Finance Minister, Bill English: borrowing. Massive amounts of borrowing..

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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.

In opening remarks to the party’s annual conference in Wellington today Mr Key said National would incorporate Labour’s October 1 tax cuts, bring forward a second round to April 2009 – a year earlier than Labour – and a third round to April 2010.

Labour’s planned third round would not take effect until April 2011.

National is yet to explain how it will pay for the promised larger cuts.

But deputy leader and finance spokesman Bill English told delegates National was prepared to borrow more to fund infrastructure.

He said New Zealand had one of the lowest levels of debt of any developed country and “additional borrowing” for infrastructure would boost economic growth.

Even after Treasury released a report predicting a $30 billion deficit, then National leader (and subsequent PM), John Key, was not prepared to abandon his party’s planned taxcut bribe;

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.

Mr Key said National anticipated that the figures would be bad but thought “even Michael Cullen could do better than this”.

But he said his party would proceed as planned with the announcement of their tax strategy on Wednesday and he said there would be tax cuts.

By mid-2009, National realised that spending cuts to social services would have to be made. The public were being “softened up” to the inevitable.

Despite drastic spending cuts to social services; ceasing payment to the NZ Superannuation Fund, and redundancies in the state sector – it was all futile and  insufficient to meet the duel cost of reduced revenue due to recessionary pressures and the – now obviously unaffordable – taxcuts.

By May 2011, the National government was borrowing $380 million per week. Debt stood at $71.6 billion.

National’s crazy borrowing had been exacerbated by tax cuts that we could ill-afford. This is why Standard and Poor’s took alarm at National’s tax-cuts and borrowings, and downgraded our credit outlook to “negative”. It could be said that New Zealand was ‘Going Greek’ in the South Pacific.

So when current National Party leader, Simon Bridges boasted that New Zealanders “trusted National with managing the economy. You know we’ll be careful with your money” – people with long memories reacted with justified derision.

Make no mistake – and let me spell it out with crystal clarity:  there is no such thing as a ‘free school lunch’ or tax-cuts without consequences. School lunches (which are a social necessity) are usually paid for by taxpayers.  Tax-cuts will be paid by all of us, if sufficient numbers of voters buy into Bridges’ tax-cut bribe.

Expect National to cut spending on vital social areas; sell remaining state assets (by stealth, if they can get away with it); stop contributions (again) to the NZ Super Fund; and increase user-pays government charges. Bridges may even go so far as to raise gst again.

As well as promising de facto tax cuts, Bridges has also made other, expensive promises;

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It is difficult to understand how National will pay for it’s promises with all those taxes abolished. And what does Bridges mean “in our first term“? What, exactly, are they planning for a second term?

We have heard this terrible “tax cuts” song before. It will not sound better the second time around.

I hope New Zealanders have better sense than to fall for this fiscal sleight-of-hand again.

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References

Radio NZ: Bridges – National caucus didn’t leak travel expenses

Otago Daily Times: More National Party leaks

Fairfax/Stuff: Another alleged recording of phone call between Simon Bridges and Jami-Lee Ross is leaked

Radio NZ: Maggie Barry bullying claims – Ex-staffer speaks out

Mediaworks/Newshub: National to conduct independent review into party culture

Radio NZ: Simon Bridges defends $113k expenses bill

Noted: Parliament’s star-crossed lovers who crossed each other

Otago Daily Times: Could Collins become National’s new leader?

NBR: Bridges clocks lowest Newshub-Reid poll rating of any National leader for a decade

Newsroom: Newsroom Investigation – National MP trained by Chinese spies

Mediaworks/Newshub: Capital gains tax set to be biggest political scrap of the year

Twitter: Simon Bridges

Facebook: Simon Bridges

Fairfax/Stuff: National promises three-yearly income tax cuts in first major speech of 2019

Fairfax/Stuff: Improved S&P outlook ‘underlines’ position of NZ economy, says Grant Robertson

The Treasury: Credit Ratings

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

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

Fairfax/Stuff: Labour Budget pledges face axe

NZ Herald: Govt borrowing $380m a week

Fairfax/Stuff: Government debt rises to $71.6 billion

Twitter: Simon Bridges – 30 January 2018 2.44pm – abolish taxes

Additional

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

Other Blogs

Greater Auckland: What happens if you get rid of the Regional Fuel Tax?

The Daily Blog: Yawn – Simon Bridges promises less than a weekly Big Mac Combo in tax cuts

The Standard: Show us the money Simon

Previous related blogposts

“It’s one of those things we’d love to do if we had the cash”

Tax cuts & school children

The Mendacities of Mr Key #3: tax cuts

The consequences of tax-cuts – worker exploitation?

Plunket and the slow strangulation of community organisations

The cupboard is bare, says Dear Leader

An earthquake separates John Key and ‘The Iron Lady’, Margaret Thatcher

The Mendacities of Mr Key # 19: Tax Cuts Galore! Money Scramble!

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This blogpost was first published on The Daily Blog on 1 February 2019.

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If National are such prudent fiscal managers…

… why is it that Standard & Poors, Moodies, and Fitch constantly downgrade our sovereign credit rating whenever they are in power?

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new-zealands-foreign-currency-credit-rating-history2

Source: NZ Debt Management Office

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Just wondering.

This blogpost was first published on The Daily Blog on 31 December 2013.

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Of Polls, Politics, & Pollution

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“Do as I say, Not as I Do”, is not a particularly savvy way to relate to an important electorate such as Epsom,

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It beggars belief that a Party leader could ask voters in a given electorate to vote for the candidate of another Party – whilst he himself supports his own Party’s candidate.  John Key has stated categorically,

“‘I’m going to vote for Goldsmith. I am the National Party leader and I am going to vote for the National Party candidate and give my party vote to National.Source

One wonders how National supporters in Epsom must be feeling.

The leader of their Party hints that they should vote for ACT’s John Banks, whilst Key himself votes for the National candidate, Paul Goldsmith?

And if Paul Goldsmith is the “sacificial lamb” – why is he standing as an electorate candidate anyway?  National could just as easily – and more honestly – simply not stand a candidate and mount a publicity campaign for the Party Vote only,

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In effect, National’s  electorate candidate is not really campaigning to win. And if he doesn’t want to win, why is he standing? To give  Epsom National supporters a “wink and a nod” to Electorate Vote ACT and Party Vote National?

And if such is the case – what possible legitimacy does that give ACT when they can’t attract electorate support on their own merits?

So much for ACT being a Party that encourages success through merit. Especially when they apply the merit-based principle to Maori:  Maori Must Earn Auckland Seats On Merit .

As the ACT statement sez;  “Let our bright boys and girls EARN their seats.

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ACT and National’s  machinations in Epsom are, of course, due to ACT’s low poll ratings. Practically every single poll has them around the 1.5-3.5% mark. Under MMPs rules, if they cannot cross the magical 5% Party Vote threshold – or – win an Electorate Seat, they will end up like  The Alliance and NZ First: out of Parliament.

(Despite what critics of proportional representation would have us believe, MMP is not a very ‘forgiving’ system to small Parties.)

The latest Horizon Poll makes for very interesting reading. Horizon is the only polling company that prompts Undecideds to state a preference. Under this system, the results appear to give a far more realistic result of Voter’s intentions, rather than the ‘fantasmagorical‘ results that have National at 53-55%-plus,

Horizon is the only polling company publishing results for don’t know voters.

Horizon’s results are for

  • Decided voters
  • Undecided voters with a preference

who are

  • Registered to vote and who
  • Intend to vote.

The poll finds

  • National has 36.8% of registered voters (down 2.7% since September 22)
  • Labour 25.7% (-1.1%)
  • Green Party 11.6% (up 0.9%)
  • New Zealand First 6.2% (- 1.1%)
  • Mana Party 2.3% (+ 0.3%)
  • Act 3.4%  (down 1.4% from September and down from a high of 5.3% in May shortly after Don Brash became leader)
  • Maori Party 1.7% (+0.7%)
  • United Future 0.4% ( 0% in September)
  • Conservative Party of New Zealand 2.2% (new party, first time measured)
  • New Citizens 0%
  • Other parties 1.2%

National has highest voter loyalty:  76.2% of its 2008 voters still support it. It has picked up 19.9% of Act voters and 9.1% of Labour voters (while Labour has picked up 7.6% of National’s).

The Greens have 68.7% voter loyalty and are gaining 2008 voters from the Maori Party (23.1%) and Labour (14.6%).

Labour has 63% voter loyalty, losing 14.3% to the Greens, 9.1% to National and 3.7% to New Zealand First.

The Maori Party has 30.8% voter loyalty, losing 23.1% of its 2008 voters to the Greens and 19.1% to Mana.

Assuming John Banks wins the Epsom electorate seat for Act, Peter Dunne retains Ohariu-Belmont, the Maori Party retains its four electorate seats and Hone Harawira retains Te Tai Tokerau, a 122 seat Parliament  would result, with a two Maori Party seat overhang, comprising:

National 50

Act 5

Maori party 4

United Future 1

Current governing coalition: 60 seats

Labour 35

Green 16

NZ First 8

Total: 59 seats

Mana 3

Horizon Research says a great deal depends on the support New Zealand First attracts at November 26.

Horizon polls have had the party at 6% or higher since November 2010. (Note the poll’s margin of error is +/- 2.2%).

Source

If correct, National is in trouble.  Their chances of a second term are not guaranteed, and judging by the public’s low opinion of National’s performance of the grounding of the m.v. Rena; the double credit-rating downgrades; the questionable veracity of the so-called Standard & Poors  “email”; and various promises made that have not been kept, John Key’s “teflon” image is definitely beginning to show signs of wear and tear.

And with the RWC behind us, and the public “partyed-out”, a return to politicking may be a welcomed diversion for many. Especially as people begin to focus on issues such as asset sales and the sales of farmland – both contentious and highly unpopular with the public.  In a way, the RWC may even strengthen opposition to asset/farm sales to foreigners.

After all, if we’re good enough to beat the world in rugby, then  why the dickens aren’t we good enough to hold on to our taongas?! Explain that, Dear Leader!!

On the other hand, though Labour leader Phil Goff has consistently polled lower than Key, his dogged determination to persevere and not fold under media scrutiny may actually earn him “brownie points” with the public.

Goff can wear the label of  “underdog” with real credibility. If Labour can play on this in a subtle manner, and show that Goff does not cave under pressure; that he keeps on like the proverbial ‘Energizer Bunny’ when all seems lost; and that he doesn’t rely on shallow charisma and meaningless smiles and utterances – he is in with a fighting chance.

God knows that lesser mortals would’ve probably chucked it in long before now, and call for a replacement from the “benches”.

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Another Horizon Poll has shown what many suspected would be the reaction from New Zealanders over the grounding of the m.v. Rena: that the government was slow of the mark and wasted precious time in delaying action,

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Source: Horizon Polls

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Taken in isolation, the grounding and response from government and statutory bodies would probably have raised no more than slight annoyance from the public.

But the grounding of the Rena is now the third major disaster this country has experienced; on top of the Pike River Mine explosions and the Christchurch earthquakes.

In both instances, central government made promises to locals that – in hindsight – may have been unrealistic at best, and irresponsible at worst. Public patience with the ever-smiling, waving, John Key may be wearing just a bit thin.

Then on top of all that, was the near-disaster of the Rugby World Cup’s opening night. The government had well and truly taken their collective eyes of the ball that night, and it is pure good luck that no one was seriously injured or killed in the mayhem.

Unrealistic promises and slow responses were only the beginning.

We also have the government intending to bring deep-sea oil drilling to our coastal waters. More than half the country by now must be asking themselves,

Just hang on a mo’, Mr Prime Minister! If we can barely cope with a single stranded freighter, sitting on the surface of the sea – how the heck are we going to cope with a major oil disaster that might be two or three times the depth of the Gulf of Mexico disaster?! Aside from hoping for good luck that nothing goes wrong, we’re not really prepared are we, Mr Key?

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To make things worse, is the disquieting suspicion that our de-regulated safety regime; lax building codes; and continual cutbacks to government workers are  contributing to a systematic running-down of essential services. Especially when even  emergency services are now starting to feel the blades of National’s  savage cuts,

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When the aspirational middle class Baby Boomers start to feel that their comfort zones are threatened, government politicians should take heed. That’s when we throw out governments. We don’t like our “comfort zones” upset. (It upsets our delicate tummies.)

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Now let’s really stir the political pot of discontent;   our youth seem to have re-discovered their own political power and realised that leaving matters to the Older Generation (us) may not achieve the outcomes they desire. God knows our generation has succeeded in wrecking the global economy; threatening the stability of the Eurozone; and bringing the once great super power that is the United States, to it’s knees.

Young folk have woken up to the world around them – and they are not very happy at what they find,

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The recent government interference in Student Union affairs (forcing voluntary unionism upon people who may not necessarily wish for it) should be a stark wake-up call to young people that National governments – far from being “hands off” and opposed to “nanny statish” behaviour – can be just as controlling as their counterparts allegedly were.

In fact, more so. After all, this “hands off” government did force almalgation on Aucklanders without any democratic referendum being conducted. National had no hesitation in passing legislation to ban cellphone usage whilst driving (but not banning  applying makeup or eating whilst driving). Then they lifted the driving age. And have begun liquor law reforms. And John Key is even now contemplating the ungodly “Nanny Statish” policy of making Kiwisaver compulsory!! Oh dear gods – whatever next?!

Oh, that’s right – National wanted to  extend Police powers to allow greater video surveillance in the community. (Which even ACT decided was a step too far.)

All in all, the gloss has worn away from this government, and it’s track record of the last three years cannot be dismissed with a smile and a wave, with a hollow promise chucked in for good measure.

And young New Zealanders are starting to flex their political muscle.

Not too bad, on top of winning the rugby world cup, eh?

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And the Band played on…

27 September 2011 2 comments

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Greece is close to defaulting; the Eurozone faces collapse; the United States owes over $14.3tn  (tn = trillion)  in debt; and now China is facing economic problems.

Despite a new crisis confronting the world economy,  John Key is still showing his vacant optimism? Either he knows something that the rest of the world doesn’t – or he’s grinning and hoping the election will be over before the next global economic “crunch” hits us.

Either way – we’re in trouble. Because National has no economic strategy and no job-creation policies – none. Instead, they have been cutting government workers, despite promises not to do so in 2008, and adding to our high numbers of  jobless,

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Despite Finance Minister Bill English returning from the United States today and briefing  Mr Key on the weekend’s IMF meeting – all of which was bad news – the Prime Minister maintained an unfeasibly optimistic attitude. This, despite Key admitting,

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“He characterised the mood as very dark. There is genuine fear that both the US and Europe could be in for a tough time in the next 12 to 24 months.” Source

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Despite obvious indications that things are about to turn to custard, John Key is still publicly optimistic,

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This vacant optimism extends to cutting 170 teaching positions from quake ravaged Christchurch, as well as throwing over two thousand government workers onto the unemployment scrapheap. These are the people who make government “tick”, including those at DoC who are charged with protecting our environment – so we can market ourselves as “Clean & Green” to overseas visitors.

As for job creation, National has done very little in this area except for it’s much-vaunted cycle-way – which has created 215 new jobs – not the 4,000 estimated by John Key in May, 2010. The Job Summit, held in February 2009 (remember that?) produced nothing of worth.

All of which amounts to increasing New Zealand’s vulnerability to the next, looming global economic crisis. If you still hold doubts, listen to this gentleman, market trader Alessio Rastani, interviewed by the BBC. If this doesn’t scare you, then – as Bill Shakespeare once said, you are made of sterner stuff,

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[click on image to view Youtube upload]

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It is staggering to realise that since November 2008, when National was elected to power, they have done almost nothing to promote job creation policies. Quite the contrary, in nearly three years, this John Key-led National government has;

  1. Cut the Training Incentive Allowance for solo-parents  to pay for further education and career-training. This is the same benefit that Paula Bennet received when she was a solo-mother, and which funded her University course.
  2. Permitted youth unemployment to reach nearly 20%. – despite promising a “Youth Guarantee” to allow full training for young New Zealanders. This never happened.
  3. Suggested that our low-wages, in comparison to Australia, was a competitive advantage.
  4. Cut $146 million from skills training.
  5. Plans to cut 170 teaching positions from Christchurch.
  6. Cut taxes twice, in April 2009, and October 2010.
  7. Borrowed in excess of $380 million a week, till we are $16.7 billion in debt.
  8. Permitted jobs to go to overseas companies, instead of local manufacturers, resulting in yet more job losses.
  9. Sacked over 2,000 government employees, despite promising not to do so in 2008. (Instead, John Key promised to cap the number of of government workers.)
  10. Initiated no new job creation policies.

With no job creation policies;  National making government workers redundant; borrowing vast amounts from overseas whilst cutting cutting, John Key has left New Zealand vulnerable to the next economic shock.

To illustrate: prior to the 2008 economic recession, our unemployment rate was 3.8%. Post-2008, unemployment more than doubled to 7%, since reducing slightly to 6.8%.

With the next crisis looming, if we start the “ledger” at 6.8% unemployment rate; $16.7 billion in debt; and no policies to fund job creation – then matters will only get worse. We simplyhave very  little room remaining to manouver when the next crisis impacts on us.

National has relied on “market forces” to create jobs – the very same market forces that have crippled the Eurozone and United States, and are now starting to affect China.

Which is why Alessio Rastani’s comments in the Youtube clip above, are so frightening – frightening because we have squandered three years to plan and prepare for this eventuality.

Meanwhile, the Prime Minister, John Key, has more amusing things to focus his mind on,

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+++ Updates +++

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