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Posts Tagged ‘OECD’

Foot in mouth award – Bill English, for his recent “Flat Earth” comment in Parliament

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idiot bill english

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I won’t be wanting to see any hint of arrogance creeping in… One of the big messages I’ll be wanting to give incoming ministers and the caucus is that it is incredibly important that National stays connected with our supporters and connected with the New Zealand public.John Key, 22 September 2014

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It appears that Finance Minister, Bill English did not get the memo from Dear Leader Key’s office:  “Dont get arrogant!”

On 29 June, near two years after Key’s warning, Bill English’s cockiness has landed him in deep, fetid water when he responded to a question from Labour’s Grant Robertson in Parliament;

Grant Robertson: “Does he agree with the statement of Pope Francis I that “Inequality is the root of social evil”,  given that inequality has risen in New Zealand on his watch, and is it not time he got back to confession?”

Hon Bill English: “ There is no evidence that inequality in New Zealand is increasing.

A day later, interviewed by an exasperated Guyon Espiner, English again denied that inequality was increasing in this country. English’s tortuous mental and verbal gymnastics to deny rising inequality was utterly unconvincing and judging by the tone of his own voice, he wasn’t convincing himself either;

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Porirua family can only afford biscuits - bill english - radio nz - inequality - poverty

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English’s assertion that inequality in New Zealand is not rising beggars belief, when nearly every metric used has come precisely to that conclusion.

From the Salvation Army, last year;

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income inequality - salvation army - child poverty

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The Children’s Commissioner reported on increasing child-poverty, rising by  45,000 over a year ago to now 305,000  children now live in poverty;

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A third of NZ children live in poverty - childrens commissioner

 

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Statistics NZ’s report on the problem was unequivocal – “Between 1988 and 2014, income inequality between households with high incomes and those with low incomes widened“;

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income inequality - statistics nz - poverty

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1988 – When Rogernomics began in earnest. What a surprise.

Interestingly,  income inequality fell slightly in 2004, when Working for Families was introduced by the Clark-led Labour Government. Working For Families was the same policy derided by then-Opposition Finance spokesperson, John Key, as “communism by stealth“.

From the last bastion of “radical marxism”, the OECD, came this damning report on rising inequality in New Zealand impacting on our economic growth;

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income inequality - oecd nz - poverty

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The Report stated that “rising inequality is estimated to have knocked more than 10 percentage points off [economic] growth in Mexico and New Zealand“.

And even our Dear Leader once admitted that New Zealand’s “underclasses” was growing;

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key admits underclass still growing - poverty - foodbanks - homelessness

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So, is everybody – including Bill English’s boss – wrong?!

Is Bill English the sole voice-in-the-wilderness trying to spread The Truth, whilst everybody else – including faraway OECD – is wrong?!

Or has he run foul of Dear Leader’s prescient warnings not to become arrogant?

Enjoining the poor to ignore hunger and simply “Let them eat cake” did not work out well for a certain person 223 years ago. Bill English may not lose his head over his obstinate refusal to see the world around him – but he may lose the election next year.

So for Bill English, on behalf of those who are low-paid; homeless; unable to afford to buy a home; unemployed; poor; and will be spending tonight in a car or an alleyway, I nominate Bill English for a Foot In The Mouth Award;

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Foot In Mouth Award

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References

NZ Herald: Election 2014 – Triumphant PM’s strict line with MPs – Don’t get arrogant

Parliament Today: Questions & Answers – June 29

Radio NZ: Porirua family can only afford biscuits (audio)

Fairfax Media: Child poverty progress ‘fails’, Salvation Army says

Radio NZ: A third of NZ children live in poverty

Statistics NZ: Income inequality

MSD: Future Directions – Working for Families

NZ Herald: National accuses Government of communism by stealth

OECD: Trends in Income Inequality and its impact on economic growth

NZ Herald: Key admits underclass still growing

Newstalk ZB: Demand for food banks, emergency housing much higher than before recession

Additional

Office of the Children’s Commissioner:

Previous related blogposts

When National is under attack – Deflect, deflect, deflect!

State house sell-off in Tauranga unravelling?

The Mendacities of Mr English – Fibbing from Finance Minister confirmed

Why is Paula Bennett media-shy all of a sudden?

Park-up in Wellington – People speaking against the scourge of homelessness

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national's free market solution to housing

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This blogpost was first published on The Daily Blog on 5 July 2016.

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A fair go in New Zealand?

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equality - inequality

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A very insightful piece by Dr Deborah Russell, lecturer in taxation at Massey University, and Labour candidate for Rangitikei, raised  a clear picture of the difference between equality and inequality;

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Deborah Russell - We all deserve to get a fair go

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There is little doubt that inequality has increased over the last thirty years. In  February this year, a bungle by Treasury resulted in  child poverty numbers being  underestimated by twenty thousand. Income inequality  was also underestimated.

Part of the reason has been one aspect of the neo-liberal “revolution”: tax cuts and increased user pays.

New Zealanders could do well to reflect that, since 1986, we have had no less than seven tax cuts;

1 October 1986 – Labour

1 October 1988 – Labour

1 July 1996 – National

1 July 1998 – National

1 October 2008 – Labour

1 April 2009 – National

1 October 2010 – National

At the same time we have had less revenue from SOEs as they were privatised or partially-sold off.

So it’s little wonder that more and more User Pays has crept into our economy/society, such as $357 million in “voluntary” donations for ‘free’ schooling, that parents have to cough up each year. That’s on top of school uniforms, text books, shoes, personal equipment, etc.

The neo-liberal revolution of the 1980s and 1990s didn’t stop, it just became more covert, with incremental increases, so we barely noticed. And when we did notice – such as the increase of prescriptions from $3 to $5 – public opposition was muted. Yet, once upon a time, prescriptions cost 50 cents each, and before that, were free.

An indicator of growing inequality is the level of home ownership in this country. This is a core statistic that cannot be fudged by National’s spin-doctors and their right-wing wannabes/sycophants.

According to the 1986 Census, home ownerships rates in New Zealand was  74.1%, with 23.1% renting.

By 2013, according to last year’s census, the figures had changed radically;

» 49.9% owned their own home  (54.5% in 2006)

» 14.8% homes were owned by a Trust (12.3% in 2006)

» A total of 64.8% of households owned their home or held it in a family trust (66.9% in 2006)

» 35.2% were renting/did not own their own home (33.1% in 2006)

As the Census 2006 Housing in New Zealand report stated,

“Over the 2001 to 2006 period the incomes of the majority of private-renter households have for the first time since 1986 increased more quickly than owner-occupier households. This supports the contention that an increasing number of working households on what would previously be considered ‘reasonable’ incomes can no longer access home ownership.

The decline in home ownership rates over the 1991 to 2001 period was significantly greater for younger households than it was for older households. This trend would appear to have continued over the 2001 to 2006 period. The gap between the home ownership rates of couple-with-children households, who have historically had the highest home ownership rates, and other types of households, narrowed over the 1991 and 2001 period, and has continued to narrow over the 2001 to 2006 period. Conversely, the home ownership rate gap between couple-only households and other types of households has widened over both periods, in favour of couple-only households. Home ownership rates as would be expected increase with household income. There are, however, differences between regions, based we suspect, on differences in average house prices by region.”

The upshot is that whilst home ownership rates are in free-fall –  unsurprisingly renting is steadily increasing.

National’s response to address our critical housing? To reduce demand – not by building more houses – but  by restricting first home owners with a 20% Loan To Value Ratio (LVR). This measure forced a sizeable chunk of house-buyers from the market, whilst local and offshore speculators were allowed free reign.

This is most definitely not what was promised to this nation in the late 1980s, when “trickle down” was supposed to increase our wealth. To the contrary, as the decades slide by, it is more and more apparent that we’ve been cruelly hoaxed.

I am reminded of something John Key said in a speech, when he scathingly condemned the previous Labour government in an election speech on 29 January 2008;

 

 

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John Key wanking on about some crap
“Well, I’ve got a challenge for the Prime Minister. Before she asks for another three years, why doesn’t she answer the questions Kiwis are really asking, like: […] Why can’t our hardworking kids afford to buy their own house?”

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Good question, Dear Leader. Good question.

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Postscript – A tale of denial

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#1 – Crisis

NZ housing market most overpriced - report

 

#2 – Denial

PM denies OECD figures reflect housing crisis

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#3 – Blame others

Housing crisis worse under Clark's Government - Key

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#4 – Revelation

Key 'out of touch' over housing crisis

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#5 – Toughlove

You’re wrong John, there is a housing crisis in NZ

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# 6 – Acceptance?

 

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References

NZ Herald: Deborah Russell: We all deserve to get a fair go

Radio NZ: Govt disappointed by stats bungle

Fairfax media: Children in poverty vastly underestimated

NZ Herald: Parents fundraise $357m for ‘free’ schooling

NZ 1987-88 Official Yearbook: Table 6.4. TENURE OF DWELLINGS (6.1 Households and dwellings)

Statistics NZ: 2013 Census QuickStats about national highlights – Home ownership continues to fall

Statistics NZ: 2006 Census – Dwelling ownership

Centre for Housing Research:  Census 2006 Housing in New Zealand

John  Key.co.nz: A Fresh Start for New Zealand

Radio NZ: NZ housing market most overpriced – report

Radio NZ: PM denies OECD figures reflect housing crisis

NZ Herald: Housing crisis worse under Clark’s Government – Key

TV3: Key ‘out of touch’ over housing crisis

Scoop media: You’re wrong John, there is a housing crisis in NZ

Additional

Fairfax media: Housing affordability getting worse

Closer Together-Whakatata Mai: New Zealand’s income inequality problem

 


 

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selling housing

This blogpost was first published on The Daily Blog on 21 May 2014.

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National, The Economy, and coming Speed Wobbles

1 March 2014 4 comments

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The Nationalmobile

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For a while, the news seemed dire for the Left, and impressively positive for National;

  • A recent Fairfax Media-Ipsos poll put National on 49.4%  versus  31.8% and 10% respectively for  Labour and the Greens.
  • The latest Roy Morgan Poll had National at 48%, compared to 30% and 12% for Labour and the Greens respectively.
  • Annual average economic growth  was 2.6% to September 2013.
  • The Household Labour Force Survey for the December 2013 Quarter showed a drop in unemployment, from 6.2% to 6%.
  • Dairy prices (and thusly export reciepts) continued to rise.
  • The trade deficit continued to slowly improve.
  • And there was just enough ambiguity around recent child poverty statistics to allow National, and its drooling sycophants,  to claim that it was no longer a  growing problem (it was simply a constant problem).

However, is everything as it really seems? Is the news all rosy and are we rushing head-first toward the “promised land“, the much heralded, Neo-liberal Nirvana?

Or, are dark clouds beginning to appear on the horizon?

New Zealand’s economic recovery is predicated mostly on the Christchurch re-build, and piggy-backing on the global economic situation picking up. As Treasury reported in 2012;

The Canterbury rebuild is expected to be a significant driver of economic growth over the next five to ten years. The timing and speed of the rebuild is uncertain, in part due to ongoing aftershocks, but the New Zealand Treasury expects it to commence around mid-to-late 2012.

As predicted,  the ASB/Main Report Regional Economic Scoreboard recently revealed that Canterbury had over-taken Auckland as the country’s main center for economic growth.

Meanwhile, the same report outlines that Auckland’s “growth” is predicated on rising house prices. Economic “growth” based on property speculation is not growth – it is a bubble waiting to burst.

The other causal factor for our recovery is international. The IMF reported only last month;

Global activity strengthened during the second half of 2013, as anticipated in the October 2013 World Economic Outlook (WEO). Activity is expected to improve further in 2014–15, largely on account of recovery in the advanced economies. Global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO. But downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain...

Being  mostly an exporter of commodities (meat, dairy products, unprocessed timber, etc), New Zealand cannot but help ride the wave of an upturn in the global economy as increasing economic activity creates a demand for our products.

Any economic recovery, as such, has little to do with the incumbent government – just as the incumbent governments in 2008 and 2009 had little to do with the  GFC and resulting recession (though National’s tax cuts in 2009 and 2010 were irresponsible in the extreme, reliant as they were on heavy borrowings from overseas). We are simply “riding the economic wave”.

As the global up-turn generates growth in New Zealand’s economy, paradoxically that leaves us vulnerable to new, negative, economic factors;

1. The Reserve Bank has indicated that  it will begin to increase the OCR (Official Cash Rate) this year.

Most economists  are expecting the OCR to rise a quarter of a percentage point on March 13. As Bernard Hickey reported in Interest.co.nz;

Wheeler said in early December he expected to raise the OCR by 2.25% by early 2016, which would lift variable mortgage rates to around 8% by then. The bank forecast interest rate rises of around 1% this year and a similar amount next year.

2. An increase in the OCR will inevitably flow through to mortgage rates, increasing repayments.

As mortgaged home owners pay more in repayments, this will impact on discretionary spending; reducing consumer activity, and flow through to lower business turn-over.

Even the fear-threat of higher mortgage interest rates may already be pushing home owners to lock-in fixed mortgages. Kiwibank for example, currently has a Fixed Five year rate at 6.9%. ANZ has a five year rate at 7.2%. Expect these rates to rise after March.

If home owners are already fixing their mortgages at these higher rates, this may explain the fall in consumer confidence, as the Herald wrote on 20 February,

New Zealand consumer confidence fell from its highest level in seven years this month, while remaining elevated, amid a pickup in inflation expectations and the prospect of interest rate increases.

It may also explain, in part, this curious anomaly which recently featured in the news cycle,

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Govt deficit bigger than expected as tax trickles in

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The Herald report goes on to state,

The smaller tax take was across the board, with GST 2.3 per cent below forecast at $7.5 billion, source deductions for personal income tax 1.2 per cent below forecast at $11.71 billion, and total corporate tax 4.9 per cent below expectations at $3.56 billion.

Treasury officials said some of the lower GST take was due to earthquake related refunds, and that the shortfall in Pay As You Earn might be short-lived. The corporate tax take shortfall was smaller than in the previous month…

  • A drop in GST would be utterly predictable if consumer spending was falling.
  • Personal income tax would be falling if employers were cutting back on part-time work available. Which indeed seems to be the case, according to the latest Household Labour Force Survey (HLFS) Poll on unemployment,

Over the year, the total number of under-employed people increased by 27,200 to 122,600. As a result, the under-employment rate increased 1.0 percentage points to 5.3 percent.

Less wages equals less spent in the economy and less PAYE and GST collected by the government.

  • This would also account for the drop in corporate tax take falling by  4.9%.

The effect of the Reserve Bank’s decision to begin raising interest rates will be to dampen economic activity and consumer demand. This will be bad news for National.

3. An increase in the OCR will inevitably also mean a higher dollar, as currency speculators rush to buy the Kiwi. Whilst this may be good for importers – it is not so good for exporters. If we cannot pay our way in the world through exports, that will worsen our Balance of Trade; in turn risking our international credit rating; which in turn can  impact negatively on the cost of borrowing from off-shore (the lower our credit-rating, the higher interest we pay to borrow, as we are considered a higher lending risk).

This, too, will affect what we pay for our mortgages and capital for business investment.

4. As economic activity and consumer demand falls, expect businesses not to hire more staff and for fresh  redundancies to add to the unemployment rate. Unemployment will either stay steady later this year, or even increase.

Less people employed or a reduction on work hours for part-time employees will also result in a lower tax take.

5. As interest rates rise, in tandem with the Reserve Bank’s policy on restricting low-home deposits, expect home ownership to fall even further. This will increase demand for rentals, which, in turn will push up rents. Higher rents will also dampen consumer spending.

6. As the global economy picks up and demand for oil increases, expect petrol prices to increase. This will have a flow-through effect within our local economy; higher fuel prices will lead to higher prices for consumer goods and services. This, in turn, will force the Reserve Bank to ratchet up interest rates (the OCR) even further.

7. As businesses face ongoing pressures (described above), there will be continuing  pressure to dampen down wage increases (except for a minority of job skills, in the Christchurch area). For many businesses, the choice they offer their staff will be stark; pay rise or redundancies?

8. Expect one or more credit rating agencies (Fitch, Moodies, Standard and Poors) to put New Zealand on a negative credit watch.

9. According to a recent (21 February) Roy Morgan poll, 42%  of respondents still considered the economy their main priority of concern. 21% considered social issues as their main concern.This should serve as a stark warning to National that people will “vote with their hip wallets or purses” and if a significant number of voters believe that they are not benefitting from any supposed economic recovery, they will be grumpy voters that walk into the ballot booth.

Interestingly, the “Economy” category also included the social issue of “Poverty / The gap between the rich and the poor”.  16% believed that “Poverty / The gap between the rich and the poor”was a major factor within the economic situation – a significant sub-set of the 42%.

Add that 16% to the 21% considering social issues to be the number one priority, and we see the number of respondents in this category increasing to 37%. That is core Labour/Green/Mana territory.

10. National has predicated its reputation as a “prudent fiscal manager”  on returning the government’s books to surplus by 2014/15. As Bill English stated just late last year,

“We remain on track to surplus in 2014/15, although it will still be a challenge to actually reach surplus in that financial year.”

Should National fail in that single-minded obsession, the public will not take kindly to any excuses from Key, English, et al. Not when tax payer’s money has been sprayed around with largesse by way of corporate welfarism. Throwing millions at Rio Tinto, Warner Bros, China Southern Airlines, Canterbury Finance, etc, will be hard to justify when National has to borrow further to balance the books.

On top of which is the $61 billion dollar Elephant in the room; the government debt racked up by National since taking office in 2008. As Brian Fallow wrote in the Herald in 2011,

The concern about government debt is not so much about its level, but the pace at which it is increasing. In June 2008 net government debt was $10 billion, or 5.6 per cent of GDP, and gross debt $31 billon, or 17.2 per cent of GDP.

Since 2008, New Zealand’s sovereign debt has increased six-fold – made worse in part by two ill-conceived and ultimately unaffordable tax cuts.  Those tax cuts were, in essence, electoral bribes made by John Key to win the 2008 general election. (Labour’s paying down of massive debts it had inherited from National in the 1990s, plus posting nine consecutive surpluses, had come around to bite Cullen on his bum. Taxpayers were demanding “a slice the action” by way of tax cuts.)

That debt will eventually have to be repaid. Especially if, as some believe, another global financial shock is possible – even inevitable. With a $60 billion dollar debt hanging over our heads, we are not well-placed to weather another global economic shock. In fact, coupled with private debt, New Zealand is badly exposed in this area (as the OECD stated, in the quote below).

So the “good news” currently hitting the headlines is not so “good” after all, and many of the positive indicators have a nasty ‘sting in the tail’. As the OECD  recently reported,

The New Zealand economy is beginning to gain some momentum, with post‑earthquake reconstruction, business investment and household spending gathering pace.Risks to growth remain, however, stemming from high private debt levels, weak foreign demand, large external imbalances, volatile terms of trade, a severe drought and an exchange rate that appears overvalued. The main structural challenge will be to create the conditions that encourage resources to shift towards more sustainable sources of prosperity. Incomes per head are well below the OECD average, and productivity growth has been sluggish for a long time. Lifting living standards sustainably and equitably will require structural reforms to improve productivity performance and the quality of human capital.

As the election campaign heats up, expect the following;

  1. Greater media scrutiny on National’s track record,
  2. The public to become more disenchanted with Key’s governance as economic indicators worsen and impact on their wallets and purses,
  3. National (and its sycophantic supporters) continue to blame welfare beneficiaries; the previous Labour government; the GFC and resulting recession; and other “external factors” for their lack-lustre performance,
  4. Key and various business  figures to become more strident in their attacks on Labour and the Greens,
  5. A dirty election campaign , including a well-known extremist right-wing blogger releasing personal information on political opponants, which will backfire badly on National,
  6. National to fall in the polls; NZ First will cross the 5% threshold; and Labour/Greens/Mana to form the next government, with Peters either sitting on the cross benches, or taking on a ministerial portfolio outside Cabinet.

So it’s not the Left that should be worried.

National is on shakier ground than many realise.

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References

Fairfax Media: National on wave of optimism – poll

Roy Morgan: National (48%) increases lead over Labour/ Greens (42%) – biggest lead for National since July 2013

NZ Herald: Economic growth hits 4-year high

Statistics NZ: Household Labour Force Survey: December 2013 quarter

Fairfax Media: Dairy prices squash trade deficit

NZ Herald: NZ’s trade deficit remains despite better terms

Fairfax Media: Inequality: Is it growing or not?

NZ Treasury: Recent Economic Performance and Outlook

Fairfax media: Canterbury overtakes Auckland in economic survey

IMF: World Economic Outlook (WEO) Update

Reserve Bank:  Price stability promotes a sustainable expansion

Interest.co.nz:  Bernard Hickey looks at what the Reserve Bank’s OCR decision means for mortgage rates and house prices

NZ Herald: Consumer confidence slips as rates increase looms

NZ Herald:  Govt deficit bigger than expected as tax trickles in

Statistics NZ:  Unemployment December 2013 Quarter

Roy Morgan: Economic Issues down but still easily the most important problems facing New Zealand (42%) and facing the World (36%) according to New Zealanders

NBR:  Govt sees wider deficit in 2014 on ACC levy cut, lower SOE profits

Fairfax media:  Public debt climbs by $27m a day

NZ Herald: Govt debt – it’s the trend that’s the worry

NZ Herald: Cullen – Tax cuts but strict conditions

OECD: Economic Survey of New Zealand 2013

Previous related blogposts

TV3 Polling and some crystal-ball gazing

Other blogposts

The Daily Blog: Latest Roy Morgan Poll shows the Labour funk

The Daily Blog: Canaries In A Coal Mine: Has The Daily Blog Poll anticipated Labour’s Collapse?

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The Cost of Living

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 23 February 2014.

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When the Rich Whinge about paying tax

17 February 2014 3 comments

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I can't afford this and pay my tax

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It seems that after seven tax cuts since 1986, the rich still aren’t satisfied;

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taxation rich poor

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The matriarch of the Horton family – the 41st richest family in New Zealand according to the 2012 NBR Rich List and worth an estimated $220 million – Dame Rosie Horton, is complaining that “increasing the rate on the wealthy to provide services for lower income New Zealanders would just discourage hard work” and claims that “the country is already overtaxed and demanding an even greater take from the wealthy would only put people off working hard“.

New Zealand?! “Over-taxed”?!

After two tax cuts (2009 and 2010) which saw the wealthiest and top income earners benefit the most, Horton is still insisting that New Zealand is “over-taxed”?

Well, let’s put that to the test and compare New Zealand to Australia, via the KMPG on-line tax rates indicator;

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KPMG - individual tax rates

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Verdict: New Zealand’s highest individual tax rate (33%) is lower than Australia’s (45%) and lower than the Oceania average (37.75%).

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KPMG - corporate tax rates

Verdict: New Zealand’s corporate tax rate (28%) is lower than Australia’s (30%) – though marginally higher than the Oceania average (27%).

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KPMG - indirect tax rates

Verdict: New Zealand’s indirect tax rates, GST, is higher (15%)  than the Australian rate (10%) or the Oceania average (12.92%).

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The only tax rate higher than Australia or the Oceania average is GST. That tax is recoverable by companies (through their GST Return), and does not impact on rich families (who can also avoid it with some skillful accounting) unlike poorer or middle class families.

So let’s compare New Zealand globally. Where do we stand on taxation rankings? In 2006 the US-based Tax Foundation positioned New Zealand at number 22 out of 30,  in terms of high-to-low taxation ranking;

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Tax Foundation: Top Marginal Combined Individual Income Tax Rates in the OECD
2000 and 2006

Country

Top Combined Marginal Individual Income Tax Rate in 2000a

Rank

Top Combined Marginal Individual Income Tax Rate in 2006a

Rank

Percentage Reduction in Marginal Rate
(2000-2006)

Denmark

59.70%

3

59.74%

1

0.06%

Sweden

55.38%

4

56.60%

2

2.20%

France

53.25%

6

55.85%

3

4.88%

Belgium

63.90%

1

53.50%

4

-16.27%

Netherlands

60.00%

2

52.00%

5

-13.33%

Finland

48.67%

8

50.90%

6

4.58%

Austria

45.00%

17

50.00%

7

11.11%

Japan

50.00%

7

50.00%

7

0.00%

Australia

48.50%

9

48.50%

9

0.00%

Canada

46.41%

13

46.41%

10

0.00%

Germany

53.81%

5

45.37%

11

-15.67%

Spain

48.00%

10

45.00%

12

-6.25%

Italy

46.40%

14

44.10%

13

-4.96%

Switzerland

43.23%

21

42.06%

14

-2.71%

Portugal

35.00%

28

42.00%

15

20.00%

Ireland

44.00%

20

42.00%

16

-4.55%

Poland

40.00%

23

40.00%

17

0.00%

Greece

45.00%

18

40.00%

18

-11.11%

United Kingdom

40.00%

24

40.00%

19

0.00%

Norway

47.50%

11

40.00%

20

-15.79%

United States

46.09%

15

39.76%

21

-13.74%

New Zealand

39.00%

26

39.00%

22

0.00%

Luxembourg

47.15%

12

38.95%

23

-17.39%

Korea

44.00%

19

38.50%

24

-12.50%

Iceland

45.37%

16

36.72%

25

-19.07%

Hungary

40.00%

25

36.00%

26

-10.00%

Turkey

35.60%

27

35.60%

27

0.00%

Czech Republic

32.00%

30

32.00%

28

0.00%

Mexico

40.00%

22

29.00%

29

-27.50%

Slovak Republic

35.00%

29

19.00%

30

-45.71%

Average

45.93%

  

42.95%

  

-6.46%

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Note that the Ranking chart above is dated 2006 – three years before National’s tax cut in 2009, and a further year before the 2010 tax cut.  Our marginal tax rate is now at 33%, putting us even further down the Chart, just above the Czech Republic. That would put New Zealand at number 28 out of 30.

The following chart is a comparison of corporate tax rates;

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United States 39.10%
Japan 37.00%
France 34.40%
Belgium 34.00%
Weighted Average (by GDP) 32.50%
Portugal 31.50%
Germany 30.20%
Spain 30.00%
Mexico 30.00%
Australia 30.00%
Luxembourg 29.20%
New Zealand 28.00%
Norway 28.00%
Italy 27.50%
Canada 26.10%
Greece 26.00%
Simple Average 25.50%
Denmark 25.00%
Austria 25.00%
Netherlands 25.00%
Israel 25.00%
Finland 24.50%
Korea 24.20%
United Kingdom 23.00%
Slovak Republic 23.00%
Sweden 22.00%
Switzerland 21.10%
Estonia 21.00%
Chile 20.00%
Turkey 20.00%
Iceland 20.00%
Czech Republic 19.00%
Hungary 19.00%
Poland 19.00%
Slovenia 17.00%
Ireland 12.50%

Source: OECD Tax Database
PART II. Taxation of Corporate and Capital Income. Table II.1. Corporate income tax rate: Combined Central and Subcentral (column 4):
http://www.oecd.org/tax/taxpolicyanalysis/oecdtaxdatabase.htm

(Via The Tax Foundation – http://taxfoundation.org/article/oecd-corporate-income-tax-rates-1981-2013)

Whilst New Zealand ranks above the Simple Average, at number 11 (equal with Norway) we are still considerably below the Weighted Average (by GDP) and well below our major trading partners, Australia and the United States (figures not shown for China).

Another ranking is the Marginal Effective Tax Rate on Capital Investment, OECD Countries, 2005-2013. On this scale, New Zealand ranks 13th out of 34 nations. At a rate of 21.6%, we are well under the weighted average of 28.5%, though marginally above the unweighted figure of 19.6%. Australia, Japan, and the US rank well above us in higher marginal effective tax rates on capital investment.

So is New Zealand “over-taxed”?

Or are we hearing the remonstrations of a woman with considerable wealth, enjoying a life of luxury and privilege that 99% of New Zealanders could only imagine.

That’s 99% of us.

Horton belongs to the remaining 1%.

Which, in that context explains why she is bleating about having to pay anything resembling her fair share of taxation.

This blogger acknowledges that Horton may well contribute to charities. If so, good for her.

But contributing to charities is no substitution for taxation which ensures that State resources are fairly shared out, according to need, priorities, and maximising benefit for the country as a whole.

However Horton decides to prioritise her philantropy is her choice. But left to the random vaguaries of personal  philantropy, some will always miss out. Goodwill is important, but is no substitute for ensuring the widest, and optimally organised  distribution of resources to health, education, roading, public transport, the justice system, environmental conservation, etc, etc, etc, etc – all the things which New Zealanders enjoy and take for granted every day of their lives.

Why is it that with all their considerable wealth, the rich still feel the need to complain? With a dollar value of $220 million, Horton and her family will never have to worry about paying the mortgage of rent on time; whether their power bill will be higher yet again this winter; if they can afford to pay their children’s uniforms and “voluntary” school fees; and how much they’ll be able to afford to spend on groceries.

The infra-structure of this country did not materialise out of thin air; built up over-night by pixies. It was built by people paying taxes, and the State (the people’s collective will)  building everything from scratch.

When Horton switches on her light-switch tonight, I hope she spares a thought for the tax-dollars that went to pay for the dams; the access roads; the transmission lines; and the workers’ wages who built this incredible asset.

Rather than complain about taxation, Horton should count herself lucky, and give thanks to whatever deity she worships, that she was born in New Zealand.

It could easily have been Somalia.

They have little or no taxation.

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References

Radio NZ:  Philanthropist dismisses ‘rich tax’

NBR: The Rich List at a Glance (Wealth order)

NBR: HORTON family

Tax Foundation: Top Marginal Combined Individual Income Tax Rates in the OECD 2000 and 2006

Tax Foundation: Marginal Effective Tax Rate on Capital Investment, OECD Countries, 2005-2013

News.Com: Tax collecting a deadly job in Somalia, five taxmen killed this year

Previous related blogpost

Greed is good? (28 August 2011)

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election 2014

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 10 February 2014.

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Mediaworks, Solid Energy, and National Standards

17 June 2013 3 comments

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Solid Energy looking to sell Southland land

Acknowledgement: Radio NZ – TV3’s owners in receivership

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Stupidity heaped upon government incompetence – there is no other way to describe the fiasco that Solid Energy has become since National took office in 2008. Whether it was National Ministers  encouraging Solid Energy to expand their operations during a time of  recession or  forcing it to borrow huge sums and then pay it to the National government as “dividends” – Key, English, Joyce, et al have a lot to answer for.

It is not often that a government will run a SOE into the ground and then blame others for their incompetance. (See previous blogpost: Solid Energy – A solid drama of facts, fibs, and fall-guys )

News that Solid Energy may be planning to sell 3,500 hectares of land, and which may be purchased by offshore investors, is the final humiliation.

At this stage, I will make the following point;

  1. I don’t care if a foreign purchaser resides in Boston, Berlin, or Beijing. The negative economic consequences to New Zealand are all the same.
  2. Rightwingers maintain that it doesn’t matter if the land is sold into foreign ownership; “no one can take it away”. But that’s not the point. It’s not the land that is removed – but the profits  generated for owners. It is dividends  to overseas investors that can be “taken away”, thereby reducing our income; worsening our balance of payments; and ultimately pushing up interest rates.
  3. Land sales to overseas investors denies the birthright of  all New Zealanders to participate in land based enterprises. It is difficult for young people to buy a farm when competing with wealthy  investors from Boston, Berlin, or Beijing. In the end, those young New Zealand may end up tenants in our own country – which Dear Leader himself said was not desirable (see: PM warns against Kiwis becoming ‘tenants’ ).

The most common sense solution to this problem (I refuse to call it an “issue”) is simple and straightforward.

If local buyers cannot be found, the land should be transferred to SOE Landcorp, to hold it in stewardship. Good, productive farmland could be later sold/leased to young New Zealanders who want to get on the first rung of the ladder to farm ownership.

Selling/leasing to the next generation of New Zealanders – our children – is a sound way to give them opportunities in our own country.

Why we would deny them that birthright and instead prefer to sell to faceless foreign investors, sitting in offices halfway around the word, defies understanding.

As Bruce Jesson said in his book, about the neo-liberal mentality to sell off everything to the highest bidder, and bugger  the consequences; Only their Purpose is Mad.

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MediaWorks in receivership

Acknowledgement: NZ Herald – MediaWorks in receivership

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It is a great shame that Mediaworks is in this position. Their flagship broadcaster, TV3, has raised the quality and standard of programming in this country. Unlike the mediocre rubbish on state-owned TVNZ, TV3 has treated the viewer with a fair measure of respect.

Programmes like Campbell Live, Outrageous Fortune, and Inside Child Poverty have been nuggets of gold at a time when mainstream media is dumbing down faster than John Banks’ integrity post-Skycity and Dotcom donations scandal.

This leftwing blogger wishes the company all the best for the future; fervantly hopes that no one loses their job; and looks forward to more high-quality programming  from TV3.

See more at The Daily Blog by Selwyn Manning: Breaking News: New Company Newco Positions To Purchase MediaWorks Off Receivers

Breaking News: New Company Newco Positions To Purchase MediaWorks Off Receivers – See more at: http://thedailyblog.co.nz/2013/06/17/breaking-news-tv3-radiolive-owners-mediaworks-has-gone-into-receivership/#sthash.YBRLNczb.dpuf

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Teachers to boycott trial of national standards computer system

Acknowledgement: Radio NZ – Teachers to boycott trial of national standards computer system

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The biggest problem and greatest threat from National Standards is the American phenomenon, “Teaching to Tests”. As Gordon Campbell wrote, four years ago when National Standards were first mooted by the Nats,

The main risk is that national testing will foster mechanical ways of assessing of children’s learning, as teachers get pressured into ‘teaching to the test’ – thus narrowing what they teach, and fuelling a focus on simplistic measuring rather than on creating a richer, and more child-oriented environment.

Quite simply, what this means is that for schools to “look good” in league tables (another right wing invention that inevitably follows National Standards), they will be pressured to teach  students solely to answer tests. Nothing more, nothing less.

Because otherwise, a school risks looking poorly in National Standards results. Couple this with “performance related pay”, and “teaching to the test” to guarantee a high ranking in League Tables, becomes a dead cert.

Parents should not only be worried – they should be downright angry. This undermines our education system and turns it into a farce. Kids become expert at answering tests – but not much more. Problem-solving, initiative, increased knowledge, and even more tradition curricula, become secondary.

Because, really, if we’re going to have “performance related pay”, then teachers will make damn sure that their school doesn’t fall behind in any National Standard and subsequent League Table.

Interestingly, China, Sth Korea, Singapore, and Hong Kong are also at the top of the OECD PISA scale.  International education scholar, Yong Zhao (see bio here), pointed out why in December 2010;

… China has become the best education nation, or at least according to some experts and politicians. Chinese students (a sample from Shanghai) outscored 64 countries/education systems on the most recent PISA, OECD’s international academic assessment for 15 year olds in math, reading, and science…

[…]

I don’t know why this is such a big surprise to these well educated and smart people. Why should anyone be stunned? It is no news that the Chinese education system is excellent in preparing outstanding test takers, just like other education systems within the Confucian cultural circle—Singapore, Korea, Japan, and Hong Kong…

[…]

That’s the secret: when you spend all your time preparing for tests, and when students are selected based on their test-taking abilities, you get outstanding test scores.

Acknowledgement:  A True Wake-up Call for Arne Duncan: The Real Reason Behind Chinese Students Top PISA Performance

Is this education?. Or is this a  corruption of education and turning our children into mass-trained cogs, able to pass tests, but not much more in terms of free-thinking and expanding knowledge?

Make no mistake. This is setting us up for failure in the decades to come.

Perhaps, instead we should be looking at the Finnish experience,

In his country, Dr. Darling-Hammond said later in an interview, teachers typically spend about four hours a day in the classroom, and are paid to spend two hours a week on professional development. At the University of Helsinki, where he teaches, 2,400 people competed last year for 120 slots in the (fully subsidized) master’s program for schoolteachers. “It’s more difficult getting into teacher education than law or medicine,” he said.

Dr. Sahlberg puts high-quality teachers at the heart of Finland’s education success story — which, as it happens, has become a personal success story of sorts, part of an American obsession with all things Finnish when it comes to schools…

[…]

Both Dr. Darling-Hammond and Dr. Sahlberg said a turning point was a government decision in the 1970s to require all teachers to have master’s degrees — and to pay for their acquisition. The starting salary for school teachers in Finland, 96 percent of whom are unionized, was about $29,000 in 2008, according to the Organization for Economic Cooperation and Development, compared with about $36,000 in the United States.

More bear than tiger, Finland scorns almost all standardized testing before age 16 and discourages homework, and it is seen as a violation of children’s right to be children for them to start school any sooner than 7, Dr. Sahlberg said during his day at Dwight. He spoke to seniors taking a “Theory of Knowledge” class, then met with administrators and faculty members.

“The first six years of education are not about academic success,” he said. “We don’t measure children at all. It’s about being ready to learn and finding your passion.”

Acknowledgement: New York Times – From Finland, an Intriguing School-Reform Model

Solutions?

1. Don’t vote for National in 2014.

2. Look at Finland for our answers to improve education – not the US which is lower on the OECD PISA ranking than us. (Finland is near the top.)

3. Be wary of simplistic rightwing agendas.

Other Blogs

Gordon Campbell: National Education Tests, And Michael Jackson

The Political Scientist:  National Standards and Neanderthals – “They will know what is required …” – Part I

The Political Scientist: National Standards and Neanderthals – “They will know what is required …” – Part II

The Political Scientis: National Standards and Neanderthals – “They will know what is required …” – Part III

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12 June – Issues of Interest

12 June 2013 4 comments

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Looking at the pieces

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Nigel Latta on National Standards

On Facebook, child psychologist and TV host, Nigel Latta, had this to say about the recent National Standards “results”;

‘National Standards’ aren’t.

The latest national standards ‘results’ being reported in the media are utter nonsense. Pure and simple. Even if we ignore the large inconsistencies between the way that the ‘standards’ are measured (and we can’t because the inconsistencies make comparisons all but impossible), and the fact that it assumes all children of a given age are maturing at the same rate (which they don’t), and we ignore the impact of little things like child poverty (which some politicians like to do much to their shame), it’s still impossible to say anything at all about a change in the numbers when you only have two data points.

They can’t say that a difference of 1.2-2% on the various measures between last year and this year is an ‘improvement’, because we simply don’t know.

If you had assessed all of those very same children again the day after they were assessed for these numbers, in the exact same conditions with the exact same measures, then you would also get a different number. That’s because in the real world we have this little thing called statistical variation–things never work out exactly the same. To make any meaningful statements about ‘improvements’ you need meaningful measures (which national standards aren’t anyway) over several different data points (i.e. over several years).

I wish the media would get that very simple, but very important point. Politicians will spin it as a gain, but it isn’t. It’s simply meaningless statistical ‘noise’.

The government went with national standards because they thought voters would like it, not because it’s the best thing for making progress on education. If we really wanted to lift our ‘national standards’ then, perhaps as a beginning, we’d take more care of the large numbers of our kids living in poverty.

When they produce their ‘rankings’ of schools I’m pretty sure it’s going to show a trend whereby higher decile schools meet/exceed the ‘standards’ much more than lower decile schools. I wonder why that might be? And who do we blame for that? Teachers?

Don’t be sucked in by all this political positioning. My advice is to ignore the national standards tables because they don’t mean anything. There’s a reason teachers were so opposed to the way these ‘national standards’ are being used… fundamentally because it’s nonsense!

Nigel Latta, Facebook, 12 June 2013

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100% Pure brand busted!

New Zealand’s distance from it’s major trading partners (except Australia) has always been a major impediment to our trading. Our point-of-difference has  been the quality of our food products, and has made them desirable commodities on that basis.  Branding ourselves as “100% Pure” and  “Clean and Green” were marketing tools that created a multi-billion dollar export industry.

But that is coming to an end.

We are not “100% Pure” and nor are we “Clean and Green”. Anything but.

National has paid lip service to being green.

Pollution has been allowed to increase.

It’s focus on “reforming” the RMA to allow for exploitation mof sensitive environmental areas; more and more chemicals ion our farms; allowing dangerous deep sea drilling of our coastline; mining in Conservation lands; and ditching our committment to the Kyoto Protocol – have not gone unnoticed by our trading partners.

And those trading partners  are starting to react accordingly,

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Sri Lanka demands DCD testing on NZ milk powder

Acknowledgment: Radio NZ – Sri Lanka demands DCD testing on NZ milk powder

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An over-reaction?

Not when National has appointed a  board to over-see a resource consent application to allow an increase of nitrogen pollution  in the Tukituki River  by a staggering 250% !

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Nitrate proposal seen as death knell for river

Acknowledgment: Radio NZ – Nitrate proposal seen as death knell for river

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This will not doubt be ratchetted back to “only” 50% or 100%, and National will claim that they are “listening” to public concerns. It’s an old political trick when a deeply unpopular policy is put forward. Make a number unfeasibly large; then offer a lower number, and claim that government has listened to the public. In reality it was the lower number all along that was the preferred option.

National has consistently undermined environmental protections in this country, as well as knee-capped DoC by sacking staff and under-funding it’s operations.

We are now starting to pay the price of right-wing policies that pursue business and profit ahead of  preserving our environment.

What National and it’s one-eyed supporters don’t seem to comprehend is that business and profits are dependendent on our clean and green environment. Mess up the environment and expect to lose customers and profits.

Just ask the Sri Lankans.

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User-pays healthcare?

For those neo-liberals and naive National supporters who advocate replacing our socialised healthcare system with privatised healthcare insurance, I present the reality,

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NZ private health insurance uptake hits 6-yr low

Acknowledgment: NZ Herald – NZ private health insurance uptake hits 6-yr low

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Private health-privider,  Wakefield chairman Alan Isaac said,

“The total number of New Zealanders with private health insurance (is) decreasing.”

Acknowledgment: IBID

Well, no wonder!

Even as private healthcare companies like Wakefield are complaining about losing customers, they are hiking premiums and still making a 27% increase in full-year earnings. Twentyseven percent! Compare that to other investments, and you begin to realise that these companies aren’t doing too bad.

That’s 27% that could have been re-invested in healthcare – but is instead going into the pockets of shareholders.

What would happen, I wonder, if New Zealand’s healthcare system was fully privatised and  went totally “free market”, as ACT policy demands?

This OECD chart suggests the result, if we were ever foolish enough to go down that road,

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OECD - private - public - healthcare expenditure -2007

Source: OECD – Total health expenditure per capita, public and private, 2007

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At 7,290, the United States spends nearly three times as much on healthcare as we do. Their private/public health costs are vastly greater than the entire public/private expenditure we have here in New Zealand with our “socialised” system.

And ACT wants to emulate our American cuzzies?!

The only thing the USA has demonstrated is that a privatised healthcare system will result in a massive blow-out in costs and rapacious profits for shareholders.

The argument from the neo-liberal Right is that private enterprise is “more efficient” and better for consumers. This is absolute bollocks.

If anything, private health insurance is highly ineffective at delivering  universal healthcare for it’s clients,

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Ongoing jumps in health insurance costs

Acknowledgment: Fairfax Media – Ongoing jumps in health insurance costs

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As has been observed by others in the past, private health insurance is relatively cheap when you are young, healthy, and make few demands for medical intervention.

But with old age; increased infirmity; and heightened vulnerabilty comes increased premium payments for policy-holders. Just when they most require increased medical services.

This is the fatal flaw in private medical insurance; those who most require it, will pay the highest premiums. And pay, and pay, and pay…

Just ask the Americans.

See also: NZ Herald – Jack Tame: Sickness is too expensive in the land of the free

Other blogs:  Canadian and U.S. healthcare – a debate

Canadian and U.S. healthcare – a debate
Canadian and U.S. healthcare – a debate
Canadian and U.S. healthcare – a debate

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Some good news at last…

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It has been a stain on our reputation that despite our anti-nuclear legislation, our Superannuation Fund was still investing in overseas companies engaged in producing atomic bombs and cluster munitions. This was a problem (I refuse to call it an “issue”)  that I highlighted  in December, last year.

Previous related blogposts:  New Zealand’s OTHER secret shame

Previous related blogposts:  New Zealand’s OTHER secret shame – *Update*

The Superannuation Fund has done the right thing by no longer continuing to invest in Babcock & Wilcox, Fluor Corporation, Huntington Ingalls Industries, Jacobs Engineering Group, Serco Group and URS Corporation;

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Super Fund sells nuclear investments

Acknowledgment: Fairfax Media – Super Fund sells nuclear investments

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The other weapons we are no longer investing in is the manufacture of cluster-munitions. These vile things are the weapons-of-choice for vicious dictators and other repressive regimes which they use against their civilian population.

They have been used in Syria, against unarmed civilians. Children have been killed by these monstrous devices.  (see: Syrian children ‘killed by cluster bombs’)

Cluster munitions have been outlawed by  nearly 100 nations which signed a  treaty to ban cluster bombs.  In 2009, to their credit, the current National-led government  passed legislation banning these obscene weapons from our country. This included the possession, retaining, stockpiling, assistance, encouragement, or even inducement to deal with them.

NZ Parliament: Cluster Munitions Prohibition Act 2009 (17 Dec 2009)

It would take a ruthless person to discount this human suffering and advocate for our continued investment in their manufacture.

The Superannuation Fund was effectively breaking the law with it’s investments in General Dynamics, L-3 Communications, Raytheon, and the Goodrich Corp.

It’s good to see that our fingers are no longer bloodied by such  investments.

As for right-wingers who dismiss investment in atomic bombs or cluster munition – go play with a cluster bomb.  Come back to me after it’s detonated in your hands. Then we’ll talk.

Just ask the Syrians.

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The bucks stops with me over there, somewhere…

I guess it was inevitable, really…

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Deputy Secretary resigns over Novopay

Acknowledgment: Radio NZ – Deputy Secretary resigns over Novopay

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Did we really, really expect any one of the three Ministers who signed off on Novopay to put their hand up and admit responsibility?!

No less than three ministers signed off on Novopay, to allow it to “go live”;

  • Education Minisrer Hekia Parata
  • Associate Education Minister Craig Foss
  • Finance Minister Bill English

Because doesn’t it strike people as  indicative that Minister for Everything, aka, Mr Fixit, Steven Joyce was appointed Minister in charge of Novopay – thereby taking responsibility for this ongoing balls-up away from Parata?! (see: ODT – Joyce to take on handling of Novopay)

Despite the so-call “ministerial inquiry”, Joyce had a very interesting point to make on 31 January;

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Government sticking with Novopay - for now

Acknowledgement – Radio NZ – Government sticking with Novopay for now

Steven Joyce revealed that Education Minister Hekia Parata, Finance Minister Bill English and former education minister Craig Foss approved the use of Novopay despite being told that it had bugs.”

So… how can  Joyce’s statement be reconciled with his statement, five months later,

Reporting to Ministers was inconsistent, unduly optimistic and sometimes misrepresented the situation.”

Source: Beehive.govt.nz: Ministerial Inquiry report into Novopay released

Either Ministers were “told that it had bugs” or  reporting wasunduly optimistic and sometimes misrepresented the situation“. Which is it?!

By the way, the Ministerial Inquiry was undertaken by Maarten Wevers and Chairman of Deloitte New Zealand Murray Jack.

Mr Weavers was former head of the Department of the Prime Minister (John Key) and Cabinet.

Connect the dots.

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WhiteWash

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Other blogposts: Gordon Campbell on the latest Novopay revelations

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

9 January 2013 3 comments

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

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

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

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Inequality & Poverty

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give the rich tax cuts

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The rhetoric:

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

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

See: Speech to North Shore National Party luncheon

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

See: The Kiwi Way: A Fair Go For All

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

See: IBID

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

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

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

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

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

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

[…]

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

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

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

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

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

See: A Fresh Start for New Zealand

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

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

The results:

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

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

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

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

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

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

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

Tax cuts:

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

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

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tax-cuts-april-2009

Source

Additional info

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

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

Dear Leader replied,

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

See: TheyWorkForYou Blog – Tax Cuts—Implementation

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

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

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Budget 2010 - What the tax cuts mean for you

Source

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

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

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

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

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

So much for National’s promises in 2008,

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

[…]

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

See: National – Tax Policy

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

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

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

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

Amongst the Report’s findings,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See: View from the top

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

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

[…]

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

Source: MSD

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

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Over the two decades to the onset of the global economic crisis, real disposable household incomes increased in all OECD countries, by 1.7% a year, on average (Table 1). In a large majority of OECD countries, household incomes of the top 10% grew faster than those of the poorest 10%, leading to widening income inequality. Differences in the pace of income growth across household groups were particularly pronounced in some of the English-speaking countries, some of the Nordic countries and Israel. In Israel and Japan, real incomes of people at the bottom of the income ladder actually have fallen since the mid-1980s.

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

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Source: OECD

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

Source:  IBID

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[See also Addendum 2 below.]

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

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

Source:  IBID

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

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

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

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

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

Source:  IBID

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

The OECD report is backed up by Statistics New Zealand,

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

See: Household Labour Force Survey: September 2012 quarter

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

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

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

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

A much-condensed precis of the Report;

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2012 MSD Household Incomes Report ‘Summary’

  1. Household incomes BHC (before deducting housing costs) rose in real terms for all income groups from 2007 to 2009, continuing the steady growth that began in 1994,
  2. Income inequality increased significantly between 1988 to 2004, then fell from 2004 to 2007 as a result of the WFF package, and was still around the same level in 2009 as in 2007,
  3. Income inequality grew very rapidly from 1988 to 1992, followed by a slower but steady rise through to 2004,
  4. From 2004 to 2007 inequality fell mainly as a result of the WFF package,
  5. Median Household  incomes fell 3% in real terms after little change (+1%) from HES 2009 to HES 2010,
  6. This fall followed a long and strong rise in the median from the mid 1990s to 2008-09 averaging 3% pa in real terms. GDP per capita increased at 2.5% pa over this period on averagwe,
  7. Incomes fell for deciles 3-6, but rose for the top decile especially,
  8. At the very bottom (P15 down), incomes were flat from HES 2010 to HES 2011 (protected by benefit rates being CPI adjusted and NZS being wage related),
  9. Inequality decreased significantly from HES 2009 to HES 2010 then rose from HES 2010 to HES 2011 to its highest level ever. This volatility reflects the impact of the GFC,
  10. On the AHC (HouseHold income after deducting housing costs) moving line measure, the child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of households with children with high  ‘outgoings-to-income’  (OTIs),
  11. The 2009 child poverty rate is almost double the rate that prevailed in the early 1980s,
  12. In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 230,000 children (22%) below the low-income threshold (ie ‘in poverty’), down from 380,000 (37%) in 2001,
  13. Hardship rates for children rose from 15% in the 2007 HES to 21% in HES 2011 using the ELSI measure. In part, this reflects the falling incomes of those in deciles 3-6, some of whom may already have been in a precarious financial position – the loss of income has been enough to tip them into hardship even though their incomes are still above the poverty threshold,
  14. Chronic poverty (as defined in the Incomes Report) is about having an average household income over seven years that is below the poverty threshold over those years. Looking at children in poverty in a HES survey (cross-sectional), 60% of them are in chronic poverty in any survey and 40% in temporary poverty. In addition there are others who are in chronic poverty but not in current poverty in that one year – this group is about 20% of the number in current poverty.
  15. In 2009, between 460,000 and 780,000 people were in households with incomes below the low-income thresholds (ie ‘in poverty’),
  16. In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 650,000 (15%) below the low-income threshold (ie ‘in poverty’, down from 930,000 (25%) in 2001,
  17. In 2009, just over one in three poor children were from households where at least one adult was in full-time employment, down from around one in two before Working for Families (2004),
  18. Income poverty rates for single person working-age households trebled from the 1980s to 2007 (10% to 30%) and were 35% in 2011. One in 9 poor people and 1 in 4 poor households are from this group. The rates are higher for the older group living on their own (45-64 years) than for the younger group,
  19. In 2001, 42% of households in the lowest income quintile had high ‘outgoings-to-income’, but this fell to 34% by 2004 reflecting the introduction of income-related rents, and has remained steady since then (33% in 2009),
  20. In 2009, 37% of children lived in households with high ‘outgoings-to-income’, a rise from 32% in 2007, and 26% in 2004 – the 2004 figure was the lowest proportion for some time, following the introduction of income-related rents in 2001 (when the proportion with high ‘outgoings-to-income’ was 32%),
  21. In 2009, on the Social Report measure (AHC ‘fixed line’ 60%), there were 650,000 (15%) below the low-income threshold (ie ‘in poverty’, down from 930,000 (25%) in 2001,
  22. The child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of households with children with high ‘outgoings-to-income’,
  23. The 2009 child poverty rate is almost double the rate that prevailed in the early 1980s,
  24. Just over two of every three two parent families were dual earner families in 2009, up from one in two in the early 1980s, but down from nearly three in four in 2004,
  25. Children in sole parent families have a higher risk of hardship (46%) than those in two parent families (14%). This reflects the relatively low full-time employment rate for sole parents (35% in 2009) –  73% of sole parents were in receipt of a main benefit in 2009,
  26. The value of New Zealand Superannuation (NZS) fell further below the median household income from 2007 to 2009,
  27. People living in sole parent households are a relatively small subgroup, making up only 8% of the population.    Only 3% of those in sole parent households are found in the top income quintile.  On the other hand, a high proportion have incomes in the lower end of the income distribution.
  28. High housing costs relative to income are often associated with financial stress for low to middle income households.  Low-income households especially can be left with insufficient income to meet other basic needs such as food, clothing, transport, medical care and education,
  29. For the bottom quintile, the proportion with high ‘outgoings-to-income’ reduced from 2001 to 2004 with the introduction of income related rents, then remained steady in 2007 and 2009 at the 2004 level.1   For all but the bottom quintile, the proportion with high housing costs rose strongly from 2004 to 2007.  From 2007 to 2009, the situation for the second quintile continued to worsen, such that by 2009, each of the two lower quintiles had one in three households with high ‘outgoings-to-income’,
  30. From 2007 to 2009, median household incomes (BHC – HH income before deducting housing costs) rose by 4.3% pa in real terms (8.6% in total).  This continues the steady growth in the median from the low point in 1994.  The AHC (HH income after deducting housing costs) median rose less rapidly (3.2% pa), reflecting the relatively rapid rise in average accommodationcosts,
  31. The increasing dispersion of household incomes from the 1980s through to 2009 is clear. For the period as a whole, incomes for households above the median increased proportionately much more than did the incomes of households in the lower three deciles Real equivalised household incomes (BHC) decile boundaries, 1982 to 2009   .
  32. In 2009 the incomes of the bottom 30% of the population were on average only a little better in real terms than those of their counterparts two decades earlier in 1988. On the other hand there were more substantial gains in the period for the top half of the distribution. The income distribution is therefore much more dispersed in 2009 than in 1988,    Real equivalised household incomes (AHC) decile boundaries (2009 dollars)  .

  33. The most significant structural change to the income distribution over the two decades from 1984 to 2004  is a significant hollowing out of the middle parts of the distribution from $12,000 to $30,000 (equivalised) and a corresponding increase in the proportion of the population in higher income households.  There was also a small increase in the proportion of the population in low-income households in this period.  From 2004 to 2007, the impact of the Working for Families package in that period is very clear for low to middle income households.The income distribution was more dispersed in 2004 than in 1984.  From 2004 to 2007 income inequality decreased.
  34. The significant change in shape of the income distribution from 2004 to 2007 reflects two main factors: (A) the impact of the WFF package on low to middle income households and (B) the reduction in the number of people in households whose main source of income is an income-tested benefit (100,000 fewer in 2007 than in 2004)
  35. As recently as 1996, the government of the time in New Zealand was openly disapproving of any poverty discourse.  However, in 2002, in the context of the Agenda for Children, the government made a commitment to eliminate child poverty, and in the Speech from the Throne in November 2005, the Governor-General described the Working for Families package as “the biggest offensive on child poverty New Zealand has seen for decades”.   The current National-led government, like the previous Labour-led government, espouses the principle that ‘paid work is the best way to reduce child poverty’. New Zealand does not however have an official poverty measure.
  36. The rise in moving line child poverty rates from 1990 to 1992 was driven by two factors: the rise in unemployment, and the 1991 benefit rate cuts which decreased real incomes for beneficiaries by a greater amount than the median fell in the period,
  37. From 1992 to 1998 the 60% of median moving line poverty rate for children fell as unemployment rates fell and incomes for those around the poverty line rose more quickly than the median in the period,
  38. From 1998 the median continued to grow in real terms, but the incomes of many low-income households with children remained fairly static through to 2004.  This meant that the moving line child poverty rate rose to 2004, indicating that low-income households with children were on average further from the median in 2004 than in 1998,
  39. On the After Housing Costs (AHC) moving line measure, the child poverty rate increased from 2007 (22%) to 2009 (25%), reflecting the rise in the proportion of HouseHolds with children with high OTIs (‘outgoings-to-income’ ratio),
  40. From 2004 to 2007, the poverty rate fell strongly … for the working poor than for the beneficiary poor. There were no further policy changes to housing assistance from 2007 to 2009 – the maximum rates of assistance remained fixed and did not move in line with movements in housing costs, and net housing expenditure rose for low-income households with children.  This is reflected in the rise in child poverty rates from 2007 to 2009 using the moving line AHC approach.

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

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

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

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

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

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

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

See: The Kiwi Way: A Fair Go For All

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

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

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

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

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

  1. An irrational prejudice against the poor
  2. A debilitating lack of will

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

On 28 November 2006, John Key said,

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

I see no evidence of that.

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

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Key admits underclass still growing

Full story

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Addendum 1

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

Addendum 2

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

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OCED_New Zealand_GINI_coefficient 1970s_late_2000s

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

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

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

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

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working for families

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

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

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

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

HES year

Before taxes and transfers (market income)

After taxes and transfers (disposable income)

Reduction (%)

1986

36.4

26.4

27

1991

42.4

31.3

26

1996

43.1

32.9

24

2001

43.1

33.1

23

2004

41.7

32.9

21

2009

40.3

32.3

20

2010

38.3

30.2

21

2011

42.2

33.5

21

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

Additional

Dominion Post:  Children need changes now – commissioner

 

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Inequality and poverty

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=fs =

Johnny’s Report Card – National Standards Assessment – Growth

9 January 2013 7 comments

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

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

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

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Growth

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Recent history:

In the past, whenever National (or the right wing “Labour-ACT” government of the 1980s) came to power, the result was never very good,

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Decline in economic activity

Source: Dunedin Star

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Highest jobless rate in 2 years - 7 May 1998

Source: Otago Daily Times

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Redundancies hit Tranz Rail workers hard - 2 Oct 1998

Source: Otago Daily Times

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Current Account deficit blows out to 10-year high - 28 Jan 1997

Source: Otago Daily Times

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The rhetoric:

The National Party has an economic plan that will build the foundations for a better future.

* We will focus on lifting medium-term economic performance and managing taxpayers’ money effectively.

* We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.

* We will cut taxes, not just in election year, but in a regular programme of ongoing tax cuts.

* We will invest in the infrastructure this country needs for productivity growth.

* We will be more careful with how we spend the cash in the public purse, monitoring not just the quantity but also the quality of government spending.

* We will concentrate on equipping young New Zealanders with the education they need for a 21st century global economy.

* We will reduce the burden of compliance and bureaucracy, and we will say goodbye to the blind ideology that locks the private sector out of too many parts of our economy.

And we will do all of this while improving the public services that Kiwis have a right to expect.  ” – John Key, 29 July 2008

See: 2008: A Fresh Start for New Zealand

Growing the economy is the Government’s number one priority, and science and innovation have a key part to play in that growth.

Indeed, this Government has made science and innovation one of the six cornerstones of its economic growth agenda. We’ve done this because New Zealand needs an economic jolt. Our productivity and economic growth have been sluggish for decades and as a result we have slipped down the OECD’s ranking of national wealth per capita.

Our performance compared to other smaller advanced economies has been uninspiring at best. For example, in 1976 our per capita income was slightly ahead of Australia. It was nearly 20 percent greater than the OECD average.

We are now 20 percent behind the OECD average. Australia, by contrast, is still about 20 percent ahead.

Finland is another example of our relative decline. In 1979 our per capita income lines crossed – New Zealand going down and Finland going up. The Finns are now about 20 percent ahead of us.

So, how do we turn the situation around? ” – John Key, 1 July 2011

See: National Economic Development Forum

Present  reality:

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Declining traffic bad for the economy

Full story

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Unemployment up to 7.3pc - a 13 year high

Full story

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KiwiRail under fire over job cuts

Full story

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Current account gap narrows as trade balance shrinks

Full story

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Two things would be fair to say,

    1. National inherited an economy with low unemployment and net government debt at an all time low of 5.6% of New Zealand’s GDP, net. (Far from being fiscally profligate as National claims, Labour actually behaved more responsibly than National has done, as the information below clearly illustrates.)
    2. The Global Financial Crisis was not an event of National’s making. (Though the ideology of corporate greed, profiteering, and minimal government oversight which contributed to the Crisis is most certainly one that National shares.)

As Treasury data shows, New Zealand’s net government debt situation worsened from 2008 to June of 2012,

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NZ Government net debt 2008 - 2012

Source: Treasury – Financial Statemement of the Government of New Zealand

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NZ Government net debt 2008 - 2012 table 16

Source: IBID

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Table 16 above opened with a net government debt of 5.6% – left by the outgoing Labour government.

It closed with 25% net government debt – a fourfold increase – courtesy of National’s “prudent fiscal management”.

As the Treasury document explained,

Net debt increases as a result of cash deficits and
declines as a result of cash surpluses. It also
fluctuates in line with valuation movements in the
underlying financial assets and liabilities of the Crown
and movements in the amounts of currency issued to
New Zealand banks.

Net debt increased this year, continuing the steady
increase since the global financial crisis (figure 11).
Net debt increased from last year primarily due to
additional borrowings over the year to meet the
residual cash deficit (refer table 17).

Source: IBID

In other words, National took in lower revenue – taxes – which  inevitably resulted in increased borrowings; slashing of State services and funding; increasing user pays for other state services;  mass redundancies of state sector workers, and impending partial state asset sales.

The Treasury document goes on to show how much revenue was lost between 2008 and 2012,

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NZ Government tax revenue 2008 - 2012

Source: IBID

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A recent NZ Herald report has updated Treasury’s expections. The tax-take, GDP growth, and unemployment outlooks are not good,

A weaker economic outlook over the next four years has taken a bite of nearly $8 billion out of the Government’s forecast tax revenues for that period.

Nevertheless the Treasury is still forecasting a return to surplus, though only just, on schedule by 2015.

The forecasts in yesterday’s half-year economic and fiscal update are in line with the latest consensus forecasts, which means they are significantly weaker than in the Budget.

The growth track is lower by around 0.5 percentage points a year.

It reflects downwards revisions to expected growth among New Zealand’s trading partners, and a kiwi dollar expected to remain around present levels until the first half of 2014, so that net exports subtract from growth for the next couple of years.

Unemployment has been revised higher; it is 7.3 per cent now and still expected to be 5.6 per cent by March 2016.

See: Outlook slashes tax-take by $8b

The forecast rate of tepid growth is on top of low to negative growth in the last four years,

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NZ GDP growth rate 2000 - 2012

Source: tradingeconomics.com

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So what caused the drop in government tax revenue? And why did the lower tax revenue impact on higher unemployment and lower domestic growth?

The answer, in part, is not hard to uncover, and the following reports tell the story of how National undermined (sabotaged?) our nation’s government accounts.

First, we were offered The Bribe,

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National's 2005 tax cut plans still credible - Key

Full story

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Then we got the warning signs,

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Treasury to Rescue Fannie and Freddie

Full story

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Russia Halts Trading After 17% Share Price Fall

Full story

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Lehman folds with record $613 billion debt

Full story

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We were not exempt from the looming storm that was the coming Global Financial Crisis ,

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Recession confirmed - GDP fall

Full story

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National’s response?

The prudent step to take would have been to cancel the tax cuts as simply unaffordable.  (Labour’s Phil Goff generously promised to support National had it taken such a prudent measure. See: Labour would support deferral of tax cuts)

As a nation, we  would then maintain social services (education, housing, healthcare, justice system, early childhood education, superannuation, etc)  – or cut taxes. We could not have both. Not without even further massive borrowings from overseas.

National’s decision to persevere with their taxcuts beggered belief for those who understood the seriousness of the GFC and the recession we had fallen into,

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Key - $30b deficit won't stop Nats tax cuts

Full story

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The consequences of  National’s irresponsible cutting of taxation revenue was utterly predictable,

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Govt borrowing $380m a week

Full story

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Govt's 2010 tax cuts 'costing $2 billion and counting'

Full story

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Writing for the NZ Herald, Brian Fallow put the cost of taxcuts at $8 billion. (See:  Outlook slashes tax-take by $8b)

Only a fool (or devoted National supporter – the two are not mutually exclusive) could believe that we could give away billions in tax cuts without resorting to massive borrowings to cover the shortfall.

The result was a government deficit rising fourfold from 2008 to 2012, as the above Treasury stats clearly show.

National then desperately needed to balance the books. It scrimped and scrapped by cutting the state sector; raising taxes (gst, fuel tax, ACC levies, government charges, etc) elsewhere; closing tax exemptions for property investors; and cutting back on services (see: Student allowances a thing of the past for post-graduate students ).

Even paper delivery kids were not exempt from the grasp of this Scrooge-like ‘government’. See:  Budget 2012: ‘Paper boy tax’ on small earnings stuns Labour)

It also desperately needed to proceed with it’s state asset sales.

A cynic with a conspiratorial ‘bent’ might suspect that National deliberately manufactured it’s own debt crisis so that it could justify the partial privatisation of Meridian, Genesis, Might River Power, Solid Energy, and Air New Zealand, to it’s corporate/investor/aspirationist constituent-base.

In doing so, not only was the door left open for their privatisation agenda – but the side-effects of tax cuts left National with few options and manouvering room for job creation policies.

With net government debt quadrupling in four years from $10.2 billion (2008)  to $50.6 billion (2012), and taxation revenue falling from $56.7 billion (2008) to  $55 billion (2012), their hands were seemingly “tied”.

Compounding matters,    National cut back state services and  fired thousands of state sector workers, resulting in a further drop in  expenditure, all of which  impacted harshly on the economy.

Whether Free Marketeers like it or not, the state is the #1 business generator in our economy and society. When it cuts spending, the flow-on effects on  other, down-stream businesses, is inescapable.

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Govt austerity slows growth, keeps rates low - RBNZ

Full story

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With higher income earners either saving their tax cuts or paying down debt, tax cuts failed to “fire” the economy as Little Leader said in 2009 and Dear Leader adamantly predicted in  2010,

By taking firm, early and decisive action, the Government is managing the downturn to cushion the immediate impact on New Zealanders and to enhance future growth.” – Bill English, 28 May 2009

See: Budget 2009 – House goes into urgency

We’ve cut all personal income tax rates, GST has increased to 15%, and we’ve boosted NZ Super, Working For Families, and benefit payments by 2.02% to compensate for the rise in GST.

Today’s changes are just one part of our comprehensive plan to grow the economy, create jobs, boost incomes, and raise living standards for all New Zealanders. The tax package improves incentives to work, and tilts the economy towards savings, investment, and exports.” – John Key, 1 Oct 2010

See: Tax cuts today

In May 2010, Key had even used the migration issue as justification to cut taxes for higher income earners, professionals, and others in top brackets,

We can be envious about these things but without those people in our economy all the rest of us will either have less people paying tax or fundamentally less services that they provide.

They include doctors, entrepreneurs often, scientists, engineers, lawyers, accountants, school principals and nurses.

On Thursday you will see a deliberate attempt to make sure those people stay and put their skills to work here in our economy.” – John Key, 18 May 2010

See:  Key again defends tax cuts

BS. All of it is, BS.

None of it worked, of course. The economy not only failed to grow – it  stagnated or contracted (see:  Economic recovery stagnates – NZIER). And despite two tax  cuts, migration to Australia skyrocketed – ten thousand higher than under the previous Labour government’s last four years.  (see related blogpost:  Johnny’s Report Card – National Standards Assessment y/e 2012: migration)

Up until 2011, two of our most important  industries – manufacturing and construction – contracted, at a time when the Christchurch re-build should have been growing their turn-over and profitability. The downturn in manufacturing and construction had a flow-on effect on the  Wholesale Trade sector,

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New Zealand in Profile_2012_economy

Source: New Zealand in Profile: 2012 – Economy

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Other measures of the economy show no sign of improvement,

Bank profits back over $3 billion while economy stagnates (24 April 2012)

then “good news”,

Pickup in economic growth predicted (29 Aug 2012)

followed two months later by bad news,

Businesses gloomy about economic growth (9 Oct 2012)

Current Account Deficit Widens (19 Sept 2012)

 Trade deficit widens as dairy values fall (27 Nov 2012)

Terms of trade continue to drop (4 Dec 2012)

Govt deficit up as tax take dips (5 Dec 2012)

Deficit $169m wider than predictions (6 Dec 2012)

Growth forecast cut, debt seen higher (18 Dec 2012)

Current account gap narrows as trade balance shrinks (19 Dec 2012)

Outlook slashes tax-take by $8b (19 Dec2012)

Whichever way one looks at it, it’s a mess.

And it’s simply a bad joke for Key to reassure us,

While I think we have to acknowledge that the last three years have been pretty tough with the Global Financial Crisis, on a relative basisNew Zealand’s been doing a better than a lot of other countries.” – John Key, 17 Nov 2011

See: Key and Goff Q&A: Creating jobs

Trying to suggest that we  are nowhere as bad off as other nations such as the US, Spain,  Greece, etc – so our current stagnating economy is somehow  acceptable – is sheer rubbish.

One might as well justify National’s poor performance and reckless decision-making by stating we are better off than Zimbabwe, Haiti, or Bangladesh,

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catching-up-with-bangladesh

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We should not be “worse off” than those nations – we headed into the Global Financial Crisis with relatively good economic indicators!

There is Always An Alternative!

A responsible government would have abandoned any prospect of taxcuts and prepared policies to keep people in work; off the unemployment queues;  paying taxes; and contributing to the economy.

Policies such as,

With Option #3, National appears to have missed the obvious.

Injecting several billion into a crash-programme to build ten thousand homes for New Zealanders, who are currently struggling to buy their own houses, makes sense.

The Christchurch re-build has proven this to be the case, as the NZ Herald reported on 20 December 2012,

The economy grew at an annual pace of 2.5 per cent, and was 2 per cent higher than the same quarter a year earlier. Revisions to previous quarters showed New Zealand dipped back into recession in the second half of 2010, with two 0.3 per cent contractions in each quarter.

 The New Zealand dollar dropped to 83.33 US cents after the figures were released, from 83.60 cents immediately before.

Construction kept the economy ticking over with a 4.5 per cent expansion, contributing 0.2 of percentage point to overall GDP. Electricity, gas, water and waste services grew 4.4 per cent in the quarter, contributing 0.1 of a percentage point in growth to GDP, underpinned by an increase in hydroelectric generation.

“Residential and non-residential building activities were both up strongly this quarter, and both were boosted by Canterbury,” Statistics NZ said in its report. “The upper North Island also contributed to the growth in residential building activity.”

The Canterbury rebuild, which is expected to top $30 billion, is widely seen as the saving grace for an economy that has struggled to recover from its deepest recession in two decades, and has been getting some help from a resurgent property market in Auckland in recent months.

See: Economy grows 0.2pc – saved by construction

Statistics NZ national accounts manager Rachael Milicich didn’t split hairs. She bluntly stated,

 “The growth in the latest quarter was driven by construction.”

See: Economic activity up 0.2 percent

As for the tax cuts stimulating the economy with extra spending – you can forget that pipedream. According to Statistics NZ,

Household consumption expenditure, which measures the volume of spending by New Zealand households, was flat this quarter (0.0 percent).

See: IBID

National not only bought the 2008 election with promises of unsustainable, unaffordable tax cuts – Key, English, Joyce, et al, squandered an opportunity to keep 70,000 New Zealanders in paid employment (see: Employment graph, 2008-2012).

It was all so unnecessary.

Addendum

In March 2008, the then Finance Minister, Michael Cullen said,

Even before these challenges hit home John Key wants to increase our debt to at least 25 per cent of GDP. But he does not pretend he wants to borrow more to pay for more services and he does not really believe he needs to borrow more to pay for roads. He only wants to outspend Labour on tax cuts.”

See: [Labour]Government will not borrow for tax cuts

According to Treasury, the current net government debt as at 30 June 2012  stands at… 24.8% of GDP – just shy of 25%,

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NZ Government net debt 2008 - 2012 - Cullen's prediction

Source: Treasury – Financial Statemement of the Government of New Zealand

Cullen called it 100%.

It’s a shame that 1,053,398 voters couldn’t look past their own selfishness, and the lure of cash dangled before them, by a Party that was hell-bent on it’s own agenda to win power at any cost.

For New Zealand, that cost measured $50 billion and 175,000 unemployed.

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Report_Card_growth

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Guest Author: Stop me if you’ve already heard this one

– Rob, The Standard blog

21 May 2011

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Time for a bit of in depth analysis of some of the key phrases in Bill English’s budget speech:

This Budget restricts the increase in public debt to manageable levels. Treasury’s December forecasts showed a dramatic and indefinite rise in debt levels. This is unacceptable to this Government because we do not want to saddle future generations with the cost of short term policies.

We will initiate a programme to lift productivity, improve competitiveness and sharpen New Zealand’s future economic performance.

We will consolidate the Government’s fiscal position, keep debt under control and ensure that Crown finances are properly managed.

This Government came into office with a plan to lift New Zealand’s economic performance.

I move on to our plan to balance the Government’s books. … This Budget will begin to restore the Crown balance sheet to its previous health.

The measures I have outlined will form key elements of our strategy to ensure that New Zealand emerges from the downturn stronger than it entered it.

The Government is determined that future taxpayers will not be burdened with higher debt which is unmatched by increases in productive assets.

To achieve this, the Government has made some difficult decisions.

The measures outlined this afternoon, the expenditure restraint shown by this Government, deferment of the tax cuts and deferment of Super Fund contributions, will keep the increase in public debt within acceptable levels. …

[This Budget] marks a turning point for New Zealand. Ten years of economic growth and expansive appetites for debt and Government spending have ended. Today we have outlined the challenge to rebalance the economy from debt and consumption to investment and exports.

The Budget will improve New Zealand’s international competitiveness.

It will get our debt under control and turning down.

It starts to create a government sector that provides better services and delivers better value for taxpayers.

It will help create new and sustainable jobs.

It will begin to build a platform for a much more ambitious New Zealand.

Mr Speaker, I commend this Budget to the House.

Ooops – Dammit! Sorry, my mistake. Wrong speech. That’s the budget speech from 2009. This is the one I meant:

The worst of the global crisis has for now passed and the economy has begun to grow again. In fact, New Zealand has weathered the economic storm better than many other developed economies.

Government policy struck the right balance between blunting the sharp edges of recession and maintaining control of public finances.

The Government is committed to policies that will reduce our vulnerabilities by tilting our economy away from debt and consumption toward savings, investment and exports.

These policies underpin the updated Treasury forecasts showing steady growth of around 3 per cent over each of the next four years.

The forecasts also show that this growth will raise real incomes of the average household by about $7,000 over the next four years, and create 170,000 jobs.

I now turn to the Government’s fourth objective, that of maintaining firm control of the government’s finances, so we can return the budget to surplus and reduce our rising debt.

The fiscal outlook has improved from last year, due to the economy returning to growth and the positive impact of Budget 2009 decisions.

The projected operating deficit for the next financial year is $8.6 billion or 4.2 per cent of GDP.

It is projected to improve steadily in each subsequent year, and to reach surplus in 2015/16, three years ahead of last year’s projection.

As a result of this improved outlook the debt projections have also become more favourable

We now have our debt under control and unemployment is beginning to fall.

We will emerge as one of the countries that other nations aspire to be more like.

There are risks to the recovery. A mountain of debt hangs over a number of our export destinations, and will also influence the markets that lend to New Zealand.

We cannot take for granted the contribution that the Australian and Chinese economies have made to our growth.

However, we are on track to a position most developed economies will envy.

This includes more new jobs, falling unemployment, rising family incomes,
quality public services and sound public finances.

Mr Speaker, This Budget continues to build a platform for a much more ambitious New Zealand.

Mr Speaker, I commend this Budget to the House.

Oh My. I really don’t know what’s wrong with me today. That’s the wrong speech again! That was the 2010 speech. This is the 2011 speech. Really this time:

Today I introduce a Budget that will further strengthen the long-term performance of the economy.

It supports economic forecasts that show growth returning to its highest in over five years and 170,000 net new jobs being created by 2015.

Our main task remains to return New Zealand to sustained prosperity. The economy has been underperforming since before the global financial crisis. Indeed, per capita GDP has not grown since 2004.

The OECD, the Savings Working Group and others have pointed out that we need to make the economy more competitive and lift national savings.

Currently, most businesses and households have successfully lifted their own savings. While that has hurt retailers for now, in the long term it is a good thing.

The main sector not saving is the Government.

The deficit in 2010/11 will be large, at $16.7 billion or 8.4 per cent of GDP. This includes a range of one-off costs, including the earthquakes.

The measures announced in this Budget will put both the Government’s finances and the economy on a much sounder footing despite a series of adverse events and a slower economic recovery.

The projected operating deficit will fall dramatically over the next three years. It will be in significant surplus from 2014/15.

This is a year sooner than the position forecast last year.

Budget 2011 shows how, from the depths of the global financial crisis when a decade of red ink was in prospect, and despite the devastating Canterbury earthquakes and other setbacks, the Government has laid the basis for future prosperity.

It is within sight of budget surpluses and falling public debt.

It has funded reconstruction of Christchurch, our second largest city.

It has in prospect the strongest growth for a decade.

It has materially improved the tax system.

It has placed KiwiSaver onto a sounder, more sustainable footing, and instilled a culture built on savings rather than debt.

And it will provide future New Zealanders with real choices about further lowering taxes, adding quality public services, or both.

We set a path for responsible government spending from the start of our term, and we maintain that path in this Budget.

This Budget continues to build a platform for a much stronger, more ambitious New Zealand.

Mr Speaker, I commend this Budget to the House.

Sounds awfully familiar doesn’t it. Right down to the recycled prediction of 170,000 new jobs. Why are the promises and predictions of 2011 any more realistic or believable than the failed promises and predictions of 2010 and 2009? How can anyone listen to Bill English, John Key and the Nats making these abundantly meaningless claims time after time without laughing? Know what they say eh. Fool me once, shame on you. Fool me twice…

 

 

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Acknowledgement

Reprinted with kind permission by Lprent, The Standard

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Jobs, jobs, everywhere – but not a one for me?

12 June 2012 9 comments

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Every so often, we see media articles like this recent ‘Herald‘ report,

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Full Story

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The story presents a picture of lazy, unprepared, unwilling unemployed – the usual cliched stereotype so beloved by the right wing who begrudge spending their taxes on a social welfare net (but at the same time prefer to live in a First World society without beggars lining the streets like some Third World, poverty-stricken nation).

The story refers to unemployment at 6.7% – and fails to mention that in December 2007, unemployment stood at 3.4% – placing us fifth fifth among  twentyseven OECD nations, behind Norway, The Netherlands, South Korea and Denmark.

In fact, contrast the above story with this one from the Herald, four years ago,

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Full Story

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The two headings could not be more contrasting – polar-opposites, in fact,

The miracle of full employment

 Monday April 7, 2008

Jobless unprepared for realities of workforce

Sunday May 27, 2012

A further scrutiny of the first story reveals the following;

  • A grand-total of four employers were interviewed
  • Two of the four offered minimum wage, two did not specify the rate offered
  • The jobs are not specified whether full time, part time, or casual
  • One employer admits that some  employees had walked out, but she does not disclose why

Too many questions are left unanswered.

Reading between the lines, though, one gets the impression that we are not being given the full story.

After all, even on $13.50 an hour, the gross wage is $540 for a 40 hour week.

Contrast that to $229.01 a week (gross) unemployment benefit for someone 25 and over.

The minimum wage is barely livable – but still vastly preferable to the dole.  Our Rest Homes are staffed by hundreds of  hard-working, dedicated people earning $13.61 – just eleven cents above the dole,

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Frank Macskasy Blog Frankly Speaking

Full Story

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Rest home work is hard and stressful – and yet we have people willing to put up with the pressures and  do the work necessary to look after our aged and infirm.

Which then poses questions as  to why the four employers in the top article are unable to attract and retain staff?

In this bloggers experience, employers who find it hard to attract and/or retain staff generally have “issues” with their managagement style; working conditions; pay and hours; and other related matters.

To further drive home some simple truths, these media reports should serve to dispel the nasty and manipulative myths surrounding those who are jobless,

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Frank Macskasy  Blog  Frankly Speaking

1000 apply for 150 K Mart jobs – Otago Daily Times – 11 June 1997

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Frank Macskasy  Blog  Frankly Speaking

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Frank Macskasy  Blog  Frankly Speaking

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Frank Macskasy  Blog  Frankly Speaking

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Lazy journalists who write inept stories without due diligence in research, and offering balance, add nothing to the sum total of human knowledge. Nor even a wee bit of insight as to what is really happening in our communities.

It’s easy-peasy to write a story that reinforces preconceived prejudices against a minority in society. No real talent required.

When politicians do it, it’s because they are utterly clueless and have no plan or policy to address unemployment. “Bene-bashing” is the de-fault setting of right-wing politicians who have no other options except to shift blame for poor economic activity onto the heads of welfare  recipients. (Because as we all know, the unemployed, solo-mums, widows, invalids, etc, are the ones who actually govern this country. Right?)

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But we expect better from journalists who are charged with asking questions; probing behind official lines; and holding our elected representatives to account.

Not assisting politicians’ to avoid responsibility.

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Media

Jobless unprepared for realities of workforce

The miracle of full employment

Unemployment rate lifts to 6.7pc

Reference

WINZ: Unemployment Benefit (as at 1 April 2012)

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Getting to the Heart of Politics – Metiria Turei 2012 Green Party AGM Speech

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Getting to the Heart of Politics

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[Metiria Turei]

Metiria Turei, MP & Green Party Co-Leader

Sunday, 03 Jun 2012 | Speech


The future of the Green Party is to be at the heart of New Zealand politics – its pivot and its conscience.

Our challenge lies in how we transform our country where the values of compassion and justice are at the heart of all the decisions we make, as a country, as a community, as a family.

The Greens are a modern, progressive political movement. What do I mean by progressive? The past has lessons but it does not provide a road map.

Progressive means we are in the business of creating the future, of genuine transformation.

Our challenge lies in how we ready ourselves for that future.

Our challenge lies in how we transform our country where the values of compassion and justice are at the heart of all the decisions we make, as a country, as a community, as a family.

Today I want to start with the family, who are at the centre of all things. And especially children, who must be at the heart of everything we do.

But first let’s talk about their mums.

Heart of Politics: Women and Children

In 1896, the Suffragists passed this resolution at their National Conference:

“That in all cases where a woman elects to superintend her own household and to be the mother of children, there shall be a law attaching a just share of her husband’s earnings or income for her separate use, payable if she so desire it, into her separate account.”

The Suffragists were clear – women have the right to economic independence whether she chooses to stay home to care for her children or chooses to work, whether she has a partner or not.

She has autonomy. She exercises her self-determination.

New Zealand women are rightly proud to have won the right to vote, a first in the world.

That’s good, we like it when women vote. And we especially like it when women stand for parliament.

In fact the Greens like it more than any political party. While other parties lose women MPs, the Greens build women’s political power.

But discrimination doesn’t end when women win the ability to vote, to choose our own careers, the right to decide when to start a family, or the right to earn the same pay as men.

Many women in Aotearoa are still living in the shadow of discrimination, exclusion, racism. If we shine a light in their direction we find:

  • New Zealand women are still paid 13% less than men doing a similar job
  • 1 in 3 New Zealand women will have a violent partner in her lifetime
  • 1 in 5 women will experience sexual violence
  • 232,000 New Zealand women live in poverty
  • 70 percent of women’s work is unpaid

And for Māori, Pacific and disabled women the numbers are much worse.

For all the very real gains women have made in the last century, there are glaring gaps – gaps that fuel inequality, injustice and poverty.

Do we think the women who took to the streets for equal pay would have thought we’d settle for a 13% pay gap?

Would the women who campaigned to provide contraception in New Zealand, receiving death threats for doing so, be satisfied that the Government now wants to “help” but only to stop women on the benefit from having babies?

Political and economic attacks against women and their children may look different these days, but they’re no less dangerous.

And for all the modern feminist advances we have made, the solo mum remains the primary target for society’s most vitriolic personal attacks – led these days by Paula Bennett who knows only too well how much it hurts, but plunges the knife in anyway.

This is a minister who:

  • exposed two solo mums and their children to public vitriol by releasing their private financial details in retaliation for their daring to criticise the slashing of the training incentive allowance
  • attacks women, battered and bruised, as failures and pariahs
  • is linking contraception to income support in an effort to control the reproductive decisions of economically vulnerable women
  • is forcing mothers into work and their babies into day-care as punishment for getting pregnant while on the benefit
  • berates a woman, however culpable she, knows the woman is herself beaten and bruised, ignoring the fact that a safe mum means a safe child.

The principle behind these attacks on women has been summed up by Colin Craig, reportedly saying:

“Why should say a 70 year old who’s had one partner all their life be paying for a young woman to sleep around? We are the country with the most promiscuous young women in the world. This does nothing to help us at all.”

Yes he is an extremist, but his comments are the logical summation of the rhetoric of the National Government.

The National Government tells New Zealanders every day that women, especially mums on their own, are weak, incompetent and incapable.

New Zealand women are not some statistic in a Durex survey.

We are not weak; we are not incapable of making our own choices.

When we are afforded the respect, resources and rights that we deserve, we are the thriving forces behind our families and communities.

Working equitably alongside men in our caucus and our party, the Greens are here for women, young and old, for mothers and for nannies.

Holly is touring Aotearoa showing the Inside Child Poverty documentary in a town near you so we confront and deal with the realities of poverty on women and their children.

Jan and Denise are working with women from unions and community networks to expose the impact of National’s low wage obsession on women and children.

Mojo is blazing a trail through the veil of discrimination for all women with disabilities and for the mothers of children with disabilities.

Eugenie is working with women who are standing up for our rivers so our kids can swim in clean water, women who want our rivers wild and free, where tuna can grow old and wise like our kuia.

Julie Anne has taken the government to task over failed transport plans and is championing smart green transport to make it safe for our kids to walk and cycle to school.

And Catherine is challenging the vicious cuts in education, exposing the ‘class warfare’ waged by Hekia Parata and presenting families with education solutions that respect their children’s learning.

Women are fierce. Our transformation is in our hands.

Child Poverty and solutions

Nelson Mandela once said: “There can be no keener revelation of a society’s soul than the way in which it treats its children.”

Twenty five years ago, New Zealand children lived in one of the most equal countries in the OECD.

Since then, the gap between those who have the most and those who have the least has grown faster here than anywhere else.

Our children now live in one of the most unequal countries in the developed world.

We are staring, not into a gap but a chasm – one driven deeper and wider by a Government hell bent on making those who can least afford it pay.

Ours is a country where, for many kids, a pair of new school shoes is a pipe dream.

  • Where, just last month, a Northland doctor wrote of children in his neighbourhood seen scrabbling through a pig slop bucket for something to eat
  • Where Maori kids are 23 times as likely as non Maori to suffer acute rheumatic fever – a third world disease
  • Where poor kids are one-and-a-half times as likely to die in childhood than other children
  • Where four out of five families have struggled at some time to have enough food.

For hundreds of thousands of our littlest people, Aotearoa is empty of the hope that the rest of us base our dreams on.

But this is not a place where people are poor because they make bad choices, as Key has said.

We refuse to blame our children for being vulnerable and hungry.

We will shine the light into corners where they’ve been swept and confront the choices we can make to change their lives.

Let’s close the chasm between those who have, and those who have nothing, and fight to make this country equal again.

Let’s get fierce for our children.

I believe in a New Zealand that looks after all its children, regardless of the family they’re born into.

I believe in a New Zealand that sees its vulnerable children as the potential Hone Kouka’s, Pauline Harris’ and Jeanette Fitzsimons’ that they are.

I believe in a New Zealand which refuses to tolerate the waste of that potential.

So I’m issuing us all with a challenge.

Children should be at the heart of everything we do. When we are truly child focussed, and make all decisions with the child’s well-being as the starting point, how can we ever go wrong?

First we must put aside our political differences.

We must work to devise a cross party consensus to raise our children out of poverty – in a similar way we all reached an accord over superannuation.

The super accord has worked for older people. They have had some of the best outcomes in the OECD, while our children have nearly the worst.

All the NGOs and organisations who work for and advocate for children are clear. Children are to be the priority, the heart of politics.

So we must put our money where our heart is.

The Service and Food Workers Union have launched a campaign for a Living Wage. This is a wage set at what a family needs to provide for their kids, to live with dignity and to participate in their community on an equal footing.

What does that mean in practice for our kids?

  • Going to school every day with a full lunch box, good shoes and a raincoat when it’s wet
  • Having the right sports gear to play soccer, netball, hockey or rugby. Having the money to get to music lessons, art class, for supporting their natural talents.
  • Having a warm, dry home so sickness is not a barrier to education and just having some good old fashioned fun.

A living wage is the way that we all contribute to and share in the benefits of families who are well, healthy and respected.

We have promised to give the kids of beneficiaries the same low income top up – the in-work tax credit – that children whose parents have jobs get. That will make a real difference to alleviating poverty.

If the child is at the heart of everything we do, how can we not extend paid parental leave to six months, so all babies can have the best chance of a great life by breastfeeding – if that’s possible – and bonding with their mum.

Keeping 200,000 kids in poverty costs us $2 to $4 billion a year in crime, ill health and lack of opportunity.

We must invest cleverly, and strategically, in the early years of a child’s life.

Having a high quality public education system is one of the best investments we can make in our children.

The recent budget saw an unprecedented attack on our public schools. The Government is pumping millions into private schools and their charter school trial while increasing class sizes for the rest of our kids.

The Green Party will defend public schools.

Mums and Dads need to know that when the Greens are in Government in 2014 we will unwind National’s education changes.

We will restore public schools to their rightful position as places of opportunity and human transformation, not the second tier institutions National want’s to make them.

We will strengthen our school system, not cut it.

We will unwind the cuts and protect smaller classes

We will not force teachers to compete with each other.

We will make sure our school system moved from being the least equal in the OECD to the most equal again.

We will improve access to education at all levels and reinstate the training incentive allowance at tertiary level study to provide a real ladder out of welfare like the one that helped me, and Paula Bennett, when we were young mums.

We see public education as the backbone of a fair and equal society and we will defend it to the hilt.

We will build more warm, dry homes and insulate the cold damp ones. Our home insulation scheme, negotiated with both Labour and more recently National, has been extraordinarily successful. For the cost of 370 million dollars, the benefit to New Zealand has been 1.5 billion dollars and counting. For every dollar spent, 4 dollars is returned.

Not only that but 18 deaths have been prevented. This is the Green economy in action.

We have saved money, saved power and saved lives.

And we would fund effective and affordable primary health care to rid our families of the third world diseases that plague our children.

How can we afford all of this? The truth is we can’t afford not to.

As John Key is fond of saying, it all comes down to choice.

He chose to:

  • give tax cuts to the wealthy, which costs us $729 million a year
  • lose $200 million because Treasury failed to monitor the Crown Retail Deposit Guarantee scheme
  • subsidise the agriculture sector through the emissions trading scheme at $1.1 billion
  • spend $12 billion on unnecessary roads
  • gift $34 million to massive, wealthy American film companies.

Yet the Government says that taking real steps to eradicating child poverty are not on its priority list.

Well, I say it should take heed of the wise words of Dr Seuss: “A person’s a person no matter how small.”

John Key needs to remember who he is actually working for.

A government makes choices about what it values. It demonstrates what it values, above all else, in how it spends public money.

The 2012 Budget made stark choices. Public money went to pay for the hole created by tax cuts for the wealthy, 100 million to promote the sale of your energy companies, 400 million for irrigation subsidies.

Millions have been given to private schools, so private school classes can be kept small while other kids in ordinary schools are squeezed in and ultimately squeezed out.

And it is all paid for by money from ill people needing medicines, families needing early childhood education or seeking higher education. It’s paid for by families, by women and ultimately by our children.

But New Zealanders make choices too. We all choose the values on which political decisions are made.

We can choose to shift the values of politics from the corporate and the individual to the community and to the family. To the heart.

We know the costs of failure, the costs of the wrong choice.

To make this shift we need a political and community transformation.

To be a society that looks after all our people and values the diversity and beauty in all our communities. It’s a choice we make together.

The Green Party will be the pivot, the heart of New Zealand politics, a modern, progressive political movement that voices our national conscience.

And by progressive I mean we are in the business of creating the future.

Our challenge lies in how we ready ourselves, ready ourselves for the challenge of government, for the challenge of implementation.

This is new territory for the country and for us. We will have to carve out new political relationships with our communities and other political players.

What will guide us, as it always has, is our commitment to our planet, to our charter, to our people and to our country’s children.

Because that’s our reality check.

We’ll know we’ve succeeded when Aotearoa can look into its heart and see a warm, happy child smiling back.

One with a full belly and a nice, shiny, new pair of shoes.

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Frank Macskasy Blog Frankly Speaking

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Acknowledgement

Reprinted by kind permission from the Green Party website

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= fs =

Finland, some thoughts…

21 March 2012 7 comments

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Finland & Capital City, Helsinki

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When David Shearer mentioned Finland in his speech on 15 March,  the right wing were quick to leap onto that reference and gleefully point out that our Finnish cuzzies had elected a right wing government, which had part-privatised some of it’s own state own enterprises. A grinning, mocking,  John Key made a Big Thing of it in the Debating Chamber (see video at 2:10), in a response to a ‘patsy’ question from National MP, Michael Woodhouse.

As usual, John Key told us only half the story. (What else is new?)

It is quite true that the centre-right party, imaginatively called – The Centre Party– and it’s Keysque leader, Esko Aho, were elected into office in 1991. It’s also true that The Centre Party and Aho were thrown out of office after just one term.

It seems that the Finns had little appetite for Right Wing governments.

And last year’s elections resulted in the Centre Party drop from the largest single party in the Finnish Parliament, to the fourth, it’s support dropping from 23.11% to 15.82%.

The Finns has ‘flirted’ with right wing governments, it’s true. But generally that flirtation results in a quickie-divorce.

Finland does indeed hold  lessons for New Zealand. As well as having a benevolent social welfare system;  a higher rate of personal income (Finland: $35,885  – New Zealand: 28,409); and one of the highest standards of (free) education in the world – they also have a low tolerance for right wing governments that attempt to mess with their Scandinavian model of social democracy.

In Finland, they hold the teaching profession in high regard and pay them well. Here in New Zealand, certain political and public elements prefer denigration and questioning if teachers are paid too much. Charming.

This is worth thinking about,

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The flexible curriculum is set by the Ministry of Education and the Education Board. Education is compulsory between the ages of 7 and 16. After lower secondary school, graduates may either enter the workforce directly, or apply to trade schools or gymnasiums (upper secondary schools). Trade schools prepare for professions. Academically oriented gymnasiums have higher entrance requirements and specifically prepare for Abitur and tertiary education. Graduation from either formally qualifies for tertiary education.

In tertiary education, two mostly separate and non-interoperating sectors are found: the profession-oriented polytechnics and the research-oriented universities. Education is free and living expenses are to a large extent financed by the government through student benefits. There are 20 universities and 30 polytechnics in the country. Helsinki University is ranked 75th in the Top University Ranking of 2010.

The World Economic Forum ranks Finland’s tertiary education #2 in the world. Around 33% of residents have a tertiary degree, similar to Nordics and more than in most other OECD countries except Canada (44%), United States (38%) and Japan(37%). The proportion of foreign students is 3% of all tertiary enrolments, one of the lowest in OECD, while in advanced programs it is 7.3%, still below OECD average 16.5%.

More than 30% of tertiary graduates are in science-related fields. Forest improvement, materials research, environmental sciences, neural networks, low-temperature physics, brain research, biotechnology, genetic technology and communications showcase fields of study where Finnish researchers have had a significant impact.

Finland had a long tradition of adult education, and by the 1980s nearly one million Finns were receiving some kind of instruction each year. Forty percent of them did so for professional reasons. Adult education appeared in a number of forms, such as secondary evening schools, civic and workers’ institutes, study centers, vocational course centers, and folk high schools. Study centers allowed groups to follow study plans of their own making, with educational and financial assistance provided by the state. Folk high schools are a distinctly Nordic institution. Originating in Denmark in the nineteenth century, folk high schools became common throughout the region. Adults of all ages could stay at them for several weeks and take courses in subjects that ranged from handicrafts to economics.

Finland is highly productive in scientific research. In 2005, Finland had the fourth most scientific publications per capita of the OECD countries. In 2007, 1,801 patents were filed in Finland. ” – Wikipedia

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Unlike New Zealanders, who seem to tolerate right wing policies that ultimately do more harm than good (and then leave us wondering why we’re in such a mess) – Finns boot their right wing governments out faster than you can say ‘Don’t let the door hit your neo-liberal arse on the way out‘.

Shearer was right. We can learn from our cuzzies in Finland.

But we probably won’t.

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Additional

OECD Country statistical profile:  New Zealand 2011-2012

OECD  Country statistical profile:  Finland 2011-2012

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Authors of our own mis-fortune?

20 February 2012 5 comments

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“Those who would actively choose to drive New Zealand into further debt to pay for tax cuts lack real ambition for our economy.”Finance Minister Michael Cullen, 7 March 2008

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“…in 2005 we promised tax cuts which ranged from about $10 to $92 a week, roughly $45 a week for someone on $50,000 a year. I described it as a credible programme of personal tax cuts and I’m committed to a credible programme of personal tax cuts. I believe that an ongoing programme of personal tax cuts that delivers the sort of magnitude that we’ve had in the past is potentially possible.”John Key, Leader of the Opposition, 20 May 2008

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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.” –  John Key, Leader of the Opposition,  2 August 2008

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“Our tax policy is therefore one of responsible reform…  We have ensured that our package  is appropriate for the current economic and fiscal conditions… This makes it absolutely clear that to fund National’s tax package there is no requirement for additional borrowing and there is no requirement to cut public services… National’s rebalancing of the tax system is self-funding and requires no cuts to public services or additional borrowing.”John Key, Leader of the Opposition, 20 October 2008

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“Taxpayers do not want further tax cuts if they mean more government borrowing, a new survey shows. The survey comes as social welfare campaigners say tax cuts failed to help those most in need. The New Zealand Business Council for Sustainable Development survey found that while most people wanted tax cuts planned for 2010 and 2011, they did not want them if it meant further borrowing… The survey found most people would spend the tax cuts on living expenses, while others looked to credit-card debt and mortgage payments. “New Zealand Business Council for Sustainable Development, 11 April 2009

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In 2008, National campaigned on promises of tax cuts knowing full well this country could not afford them. By November 2008, as New Zealand went to the polls, the international global banking crisis was in full swing, and recession was beginning to hit nearly every single nation on Earth (Australia and China were the lucky exceptions).

By March 2008, the US Federal Deposit Insurance Corp had identified 76 American banks as “in trouble”.

By July 2008, US financial giants, Fannie Mae and Freddie Mac were in trouble – and by September, both corporations were placed into a form of receivership.

A week later, and Lehmann Bros – one of the largest financial institutions in the US filed for bankruptcy. On the same day, the Russian stock market was forced to close, as shares plunged by up to 20% in a day.

On 26 September 2008, it was officially declared that New Zealand was in full recession.

(See full Time here.)

Against this backdrop, National proceeded with it’s election promises of tax cuts. As unfolding events would show, they were irresponsible promises – and carrying them out in April 2009 and October 2010 was even more reckless,

“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.”NZ Herald, 6 October 2008

Fast-forward four years, and we are now having to pay for those taxcuts – which were funded by borrowing other peoples’ savings from offshore banks,

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Source

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Full Story

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Full Story

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It is obvious to all but the most blinkered National/ACT supporter that our debt is growing because we have a shortfall of revenue, caused by this government’s ill-conceived tax-cuts. That shortfall is in the order of $1.4 billion.

A business columnist for the NZ Herald wrote,

“Just how much became apparent yesterday with the $1.4 billion drop in forecast tax revenue for this financial year.

The overall upshot is the Government’s cash deficit has blown out from $13.3 billion to $15.6 billion this year taking into account the unexpected expenditure and the drop in forecast tax revenue.”Fran O’Sullivan, 15 December 2010

CTU President, , Helen Kelly wrote,

“The unsuccessful tax switch (we called it a “tax swindle” at the time) last year was not fiscally neutral as was claimed. There is a $1.4b revenue hole. It wasn’t a fair switch. The gap in take- home pay between someone on $30,000 and someone on $150,000 a year grew by $135 a week as a result of tax cuts made by this Government.”Helen Kelly, 23 May 2011

And ex ACT MP, Muriel Newman said,

If we look back at the state of the books just before the last election, the impact on the country of the recession and the earthquakes become more evident. Crown revenue today is $1.4 billion lower than three years ago and Crown expenses $2.2 billion higher.Muriel Newman, 14 November 2011

Interestingly, Ms Newman blames the  blow-out in  government debt on “the recession and the earthquakes” – but makes no reference to the ’09 and ’10 tax cuts. In fact, she pours petrol on a bon-fire by saying that “ACT would lower the top rate of income tax to 25% and the company tax to 12.5%“.

One can imagine what that would do to the government deficit! (But then again, ACT would sell every single state-owned enterprise and scrap most welfare, to fund their deep tax cuts.  A society governed under ACT policies would be utterly alien to anything most New Zealanders could have dreamed of. I suspect Australia’s population would rise by four million, practically overnight.)

And, spelling it out in even simpler terms, the PSA’s analysis of the figures,

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“Tax Cuts Widen the Gap Between Rich and Poor

  • Government chose to make tax cuts in worst recession in 70 years
  • Total tax cuts worth $5.5 billion
  • Top 10% income earners got tax cuts worth $2.5 billion
  • GST increased to 15% – hurts low and middle income most
  • Tax cuts + GST left $1.4 billion hole in budget

Since 2008, National has introduced tax cuts that cost New Zealand around $5.5 billion a year in lost revenue. Most of the benefit has gone to the wealthiest.

National’s first set of tax cuts – the personal tax cuts and ‘Independent earner rebate’ taking effect in April 2009 – cost approximately $1 billion a year.

The second set of cuts – cutting the top income tax rate from 38% to 33%, and the company rate to 28% – will cost $4.5 billion a year, according to figures from the 2010 Budget. That gives a total of $5.5 billion.

National claimed that because it was also increasing GST, the tax changes would be “revenue neutral” – that is, the increase in GST would cancel out the income tax cuts. In fact, the losses from the income tax cut will outweigh the gains from GST by $1.4 billion. In other words, the so-called “tax switch” has blown a $1.4 billion hole in the budget.

The tax cuts have also made New Zealand a less fair place. According to Labour, the wealthiest 10% of New Zealanders will get 43% of the tax savings. And the gap in take-home pay between someone on $30,000 and someone on $150,000 a year grew by $135 a week as a result of the tax cuts.

New Zealand’s income tax rates are among the lowest in the OECD, as the Tax Working Group acknowledged.

In Australia , for example, income over $80,000 is taxed at 37%, and income over $180,000 is taxed at 45%.

Figures from the OECD itself show that, before National’s tax cuts, New Zealand’s “all in” top income tax rate – a measure that includes all taxes on income, including local and regional ones – was 38%. In contrast, the all in top income tax rate in Australia was 47%, and in most countries it was higher still.”PSA.org.nz

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This blog can confirm the PSA’s statement that “figures from the OECD itself show that, before National’s tax cuts, New Zealand’s “all in” top income tax rate – a measure that includes all taxes on income, including local and regional ones – was 38%“.

Why did they do it? Why did National make a $1.4 billion committment it knew we could ill-afford?

Answer:

  1. Because they could.
  2. Because they wanted to be the government. Badly. And nothing quite wins votes like promises of tax cuts (even unaffordable ones).
  3. Because they probably had no idea how bad the recession would be? Rubbish. Of course they knew: John Key’s background was in international finance. He knew precisely how bad the Recession was – and how bad it was likely to get in Europe.

The question is: why did we, the voters, do it? Why did 1,053,398 New Zealanders cast their vote for National in 2008? Why did we vote for tax-cuts – something we knew was unaffordable?

Whatever the reason, we are having to pay for those tax-cuts – or rather, the $1.4 billion in revenue short-fall that we now have to borrow from overseas.  In doing so, as this government continues to post budget deficits, it continues to cut back on services; raise government charges; and sack those state workers who have spent many years of their lives doing all the things we expect done for us in education, health, defence force, border control, conservation, etc.

It is inevitable that, unless New Zealand wins the international equivalent of Lotto, this government (or it’s successor, sometime in the next three years) will have to raise taxes again. Or, steal a page from Gareth Morgan’s book and implement a new, Land/Wealth tax. There is no other way to pay of our debt and pay for Christchurch’s re-build.

Something for all New Zealanders to ponder, next time National (or any other Party) promises us a tax cut, in return for our votes.

In the mean time, Bill English signed a document last year called a “PREFU” – Pre Election Economic & Fiscal Update,

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This document is now worthless. It may have only one use left.

And finally, will Finance Minister Bill English accept “overall  responsibility for the integrity of the disclosures within the Update“?

Does any politician ever accept responsibility for anything?

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Once Were Warm-hearted…

16 December 2011 14 comments

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Source

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Once upon a time…

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1935 First Labour government takes office

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The first Labour government assumed office as a result of its landslide victory in November’s general election. Led initially by the charismatic Michael Joseph Savage, it is best remembered for its landmark social welfare reforms.

One of the most significant aspects of this welfare policy was the 1938 Social Security Act, which has been described as ‘the greatest political achievement in the country’s history’. The Act combined the introduction of a free-at-the-point-of-use health system with a comprehensive array of welfare benefits. It was financed by a tax surcharge of one shilling in the pound (5%). The family benefit was extended to all mothers irrespective of the family’s income, increasing the number of allowances overnight from 42,600 to 230,000. This policy, which was often described as looking after New Zealanders from the ‘cradle to the grave’, was a key factor keeping Labour in power until 1949.

nzhistory.net.nz

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Which led to the beginnings of our modern society – a society which placed a high value on fairness; healthy families; and giving children every opportunity to grow up healthy. It truly was a concept of “no child left behind” – but put into practice and not just empty rhetoric,

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The family in the 1930s and ’40s

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The need for the New Zealand government to promote national interests during the Depression and the Second World War created a renewed appreciation of the role of the family within society. From 1935 the Labour government’s social policies supported young families with children, and from the 1940s there was an emphasis on preventative child welfare.

Much of this concern for children and their families stemmed from the perceived need to maintain a healthy nation: one capable of providing robust workers and, if necessary, soldiers for defence. It was also felt, in the spirit of egalitarianism, that everyone should have access to the nation’s resources.

Housing

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By the early 1940s there was a serious shortage of adequate housing in inner-city areas. A ‘needy families’ scheme, administered by the Child Welfare Branch, was set up in 1941. This provided assistance, primarily by re-housing large or poor families to maintain the household unit. By 1946 the scheme had helped over 900 families and more than 5000 children.

The Family Benefit

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In October 1945, Deputy Prime Minister Walter Nash introduced legislation for the Universal Family Benefit. The maternal figure of the family was to be sole beneficiary. William (Bill) Parry, Minister of Internal Affairs, explained: ‘We have to create such enthusiasm for the service the mother renders, that it will be lifted to the highest pinnacles of service in the nation.’ This benefit and other measures such as cheap housing and a well-funded health system did much to contribute to stability of household income and, in turn, to raise living standards.

nzhistory.net.nz

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Which in turn led to this, perhaps one of the most ambitious programmes to lift the health of our nation’s children,

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1937: Free Milk Every Morning

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Young New Zealanders once lined up for a free bottle of milk at school every morning. This scheme was introduced in 1937 to help children who had become undernourished during the Depression. It was also enthusiastically supported by famous dramatist, George Bernard Shaw, when he visited this country in 1934. And so, for the next 30 years, school children sat down for their daily half-pint. Crates of bottles were carried into the classroom by official milk monitors, who were also responsible for collecting up the empties after the session. Occasionally, an older amber glass bottle would arrive with the morning delivery and prove an attraction for keen consumers.

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Linton schoolboys delivering the school milk c. 1941.

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School milk bottles in the 1950s had cardboard tops which had a small hole for the straw and were often put to further use. Lengths of colourful wool were wound tightly around a pair of these cardboard discs to produce a decorative pom-pom.

In the 1960s 3,500,000 gallons of milk was distributed to the schools of New Zealand each year, but the value of the scheme was now being questioned. There were mixed views on the matter; some felt it had become unnecessary and was a disruption to the class, while others claimed that a number of New Zealand children still came to school without an adequate breakfast…

kiwianatown.co.nz

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1967: End of free school milk

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…  The scheme was a world first. Each day, milk monitors supplied a half-pint (284 ml) of milk to each pupil. By 1940, the milk was available to over 80% of schoolchildren. For a few years during the Second World War, pupils also received an apple a day.

The scheme lasted until 1967, when the government dropped it on cost grounds — and because some people were starting to question the benefits of milk…

www.nzhistory.net.nz

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I’m of the age where I can vaguely recall the crates of milk left in the concrete “pill-box” at my Primary School. I recall the “powerful” position of the Milk Monitor… and using the straws as make-shift blow-guns to fire small paper darts at my near-by class-mates.

It is interesting to consider that by 1967, the government-of-the-day decided that school milk was no longer required. Perhaps Keith Holyoake, the Prime Minister of the day, considered that it was a relic from a by-gone age of Depression, poverty, and extreme childhood health-problems that by the mid-1960s were but a distant memory.

New Zealand in the 1960s was healthy; single-incomes were sufficient to live on; and the country exported more than it earned because of our special relationship with Great Britain. But all this was to change…

  • Britain entered the EEC in 1973, impacting on our sheep-meat trade with that country. Suddenly we had lost our  major export market.
  • The oil shocks of 1973 and 1979 drove our balance of payments into the red, as we struggled to cope with  higher and higher fuel-prices.
  • Property prices skyrocketed in 1979, as people abandoned the outer suburbs and satellite-towns, in favour of inner-suburbs, to cut down on fuel costs.
  • Inflation soared, unemployed rose.
  • And in 1984, New Zealand elected a Labour Government with a secret agenda to implement neo-liberal “reforms” to create a free-market; reduce and eliminate trade trariffs; implement a  massive programme to sell state assets; and “reduce government expenditure” (ie; cut services).

We were assured that the implrementation of these “reforms” would generate wealth and that this would “trickle down” to lower socio-economic (ie, poor people) groups in our society.

The rest, I think, we can all remember without too much trouble.

“Trickle down” has proven to be a singularly poor joke – without much of a punch-line.

Wealth has certainly been generated – at the top.

We went from one income to double-incomes to maintain a household. Now even that is insufficient for many families.

Seven tax cuts have benefitted mainly high-income earners and the wealthy.

And wealth disparity has become so bad that even the OECD has taken notice and commented on it, in a recent report.

The Prime Minister, meanwhile, has his own thoughts on why we having worsening poverty in our once egalitarian country,

But it is also true that anyone on a benefit actually has a lifestyle choice. If one budgets properly, one can pay one’s bills.

“And that is true because the bulk of New Zealanders on a benefit do actually pay for food, their rent and other things. Now some make poor choices and they don’t have money left.” – John Key, 17 Feb 2011

Thank you for that, Dear Leader.  By the way, how is your  pay increase of $11,000 p.a. that you were recently given?

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How is it that we have arrived at a situation where, once again, we are returning to 1937 – and having to resurrect milk-in-schools?

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Full Story

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Full credit and kudos to Fonterra for going ahead with this plan.  There are many low-income families that find it hard to buy sufficient quantities of good, wholesome, nutritious food for everyone. After rent, power, rates, phone, etc, is paid for, food is usually at the bottom of the list.

This is especially so for the 90,000+ people who have lost their jobs in the last four years as the global recession hit our economy and impacted on communities.

However, ingrained poverty has been with us since the 1980s, and many of the gains of the last century have been lost.

Little wonder that Bryan Bruce’s recent documentary, “Inside NZ: Child Poverty” generated such a heavy, nationwide response.  Bryan Bruce laid it out for all to see, that poverty had returned to this country and that governments had no idea how to address this growing crisis. Or were unwilling to.

Clearly, we have a choice in front of us. Do we continue down our present course, and keep hoping for the best? Or admit that policies over the last thirty years have been a failure;  change tack; and proactively address the root causes of wealthy disparity and income gaps?

If the latter, then we have the wrong government in power to make good on three decades of failed economic policies.

Bill English was interviewed on Radio NZ this morning (16 December), and his responses to Kathryn Ryan’s questions were not reassuring,

Bill English and the new ministerial committee on poverty

This excerpt from the interview was most telling,

RYAN: “It’s to report every six months, the committee. What measures will it use?”

ENGLISH: “Well, look, we won’t  spend a lot of time arguing over measures, there’s any number  of measures out there ranging from gini co-efficients  to kind of upper quartile [and] lower quartile incomes. Lot of of that is already reported in the MSD social report that it puts out each year…”

If the Committee doesn’t monitor itself, how will it be able to measure it’s success (or fail) rate?

Why has the government not set measures in place – that it expects of every other government department to assess what value they give back to taxpaters?

And how does English’s rejection of measures compare with the National-ACT coalition agreement which stated, in part,

Key features of the agreement are:

• Continuation of ACT’s focus during the last term on publicly monitoring progress on improving the country’s economy wide performance using international benchmarks, and building on the work of the 2025 Taskforce, with a requirement for Treasury to report annually on the progress being made to improve the quality of institutions and policies, raise productivity, and reduce the income gap with Australia.Source

So the “country’s economy wide performance” will be measured using “international benchmarks” – but the Ministerial Committee on Poverty “won’t  spend a lot of time arguing over measures“?

Ok, got it.

We’ve got that, if anything, it is apparent that the so-called “Ministerial Committee on Poverty” is simply going to be another talk-fest, along the lines of the “Jobs Summit” in early 2009. Does anyone recall how many jobs came out of that “summit”? Perhaps this many.

At most, the so-called “Ministerial Committee on Poverty” appears to be little more than a sop to  Maori Party members, to justify the decision of party leaders to coalesce with National.

So here we are: New Zealand, circa 2011A.D.  Poverty. Low incomes. School milk. Growing wealth gap. New Zealanders migrating en masse to Australia. And paralysis/inertia in  our political leaders.

Seventysix years after Michael Joseph Savage implemented radical, bold, policies to create a new, egalitarian society – we are back at Square One.

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SAD STATISTICS

Children who go to school without breakfast – 17 per cent.

Households with children which run out of food – 22 per cent.

Households with children who use food banks – 10 per cent.

Source: Ministry of Health 2003 survey of 3000 children aged 5-14

Source

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Postscript

To all the food-faddists, right wing reactionaries and Me First people – your negative reaction to Fonterra’s plan to reintroduce milk to low-decile schools is simply apalling. Your knee-jerk hostility is not only unhelpful – but is a stark illustration as to why this once healthy and wealthy country is slipping further down on nearly every international and local  indicator-ranking.

Food faddists:  If you think milk is evil – fine. Don’t drink it. But leave our kids alone. They have the rest of their lives to live, whilst your particular food-fetishes come and go with the latest seasonal-fad. Their growing bodies need the calcium, vitamins A, D, etc, and other nutritional benefits of this simple food. Children cannot live on fresh air and sunshine  alone.

Right wing reactionaries: New Zealand has been the experimental “hot house” for neo-liberal, free market policies, since 1984. That’s about 28 years. In that time, the top income earners and 150 Rich Listers have increased their wealth. The rest of society has stayed still or gone backwards.

Latest reports confirm that the wealth-gap continues to widen – and you can’t dismiss  the OECD as some dastardly socialist satrap.

How much longer before this experiment is labelled a failure?

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Additional

Govt likely to back milk inquiry

Minister seeks parliamentary milk price probe

Woolworths lifts NZ supermarket earnings

Special inquiry into milk prices opens today

Soft drinks win in milk debate

Rolls Royce sales rocket as super-rich drive in style

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Privatisation of our schools?!

13 December 2011 8 comments

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This bizarre policy was never presented to the public during the recent election campaign and is a patent privatisation-by-stealth.

National are implementing this crazy right wing policy as a time when New Zealanders are tired  of politics and the Christmas shopping season is nearly upon us.

It is also the time when the news media winds down.

In effect, National and ACT are pushing a quasi-privatisation agenda far greater in scope than anything John Key disclosed to the public.

The questions that now beg to be asked are,

  • How far is National planning to go in this second term?
  • What else is on the block for privatisation or semi-privatisation?
  • Will socially conscious, liberal-minded National MPs accept this? Or will one or two balk at this a-bridge-to-far step?
  • Will schools accept this extreme policy? Or will we be seeing wide-scale resistance to this policy in the education sector?

How will National hope to implement such a controversial policy when they had considerable opposition to National Standards?

And what mandate does National have for such a plan? The answer is: none whatsoever.

What is even more paradoxical is that “Charter Schools” is an American concept – and yet their education system lags far behind ours in a recent OECD report,

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Full Story

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New Zealand came seventh on the OECD’s latest PISA survey of education performance, just below Canada and Singapore.

Our American cuzzies, by contrast, came fifteenth-equal with Poland and Iceland. The full rankings list can be seen here.

The obvious question that springs to mind is; why is National pursuing an education programme from a country that is lower down on an international ranking-list of educational outcomes? What possible gain is there from borrowing a system from a country that has worse outcomes than we do?

And why stop at a US system? Why not follow Kyrgyzstan, which is at the bottom of the OECD scale?

The only answer is that  National’s intention to adopt this dubious programme is based on ideology and nothing more. Like partial asset sales, National is banking on the free market and competition to improve education outcomes for our  low decile schools.

A laudible goal – but choosing a programme from a country that has education outcomes worse than ours? That is simply insane. Especially when, according to at least one comprehensive study, “Charter Schools” produce minimal improvements to education outcomes.

Our national pooled analysis reveals, on the whole, a slightly negative picture of average charter school performance nationwide. On average, charter school students can expect to see their academic growth be somewhat lower than their traditional public school peers, though the absolute differences are small

[abridged]

…Perhaps most revealing is the distribution of charter school effects relative to their immediate TPS comparison groups. Realistically, the relative standard of performance – whether charter schools are producing student outcomes that are at least as good as the schools in their community – is a fairly low threshold.

This study provides a level playing field for that test. The Quality Curve shows that there are a substantial number of charter schools that provide superior and outstanding results for their students; 17 percent of the charters in this study deliver learning gains that are better than the results that their TPS peers   achieve. These schools fulfill the promise of charter schools — both for the students they educate and for their collective demonstration that such schooling is feasible.

But the good news of the top performers is diminished by the preponderance of charter schools that do not perform to that high level. Thirty‐seven percent of the charters in this study produce learning gains that are significantly worse than what equivalent TPS students accomplish. This proportion is both alarming and regrettable. These underperformers put the better charter schools and the more general charter school promise at risk.” – Center for Research on Education Outcomes (CREDO), Stanford University, CA – http://credo.stanford.edu – June 2009

Yet again, we have a right wing government motre interested in  ideology than common sense.

“Charter schools” appears to be part of National’s secret agenda to transform schools into quasi-business models and transfer responsibility for management from the State, to private enterprise and organisations.

Our own educators seem thoroughly unimpressed,

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Full story

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But even our American cuzzies seem to be viewing “Charter Schools” with suspicion,

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Full Story

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What are we going to cut and how’s that going to impact our students? How many teachers are we going to have to lay off, how many Kaplan programs are we going to get rid of, how many early childhood education programs are we going to have to cut?” asked Unified Board member David Reeves. Ibid

It seems that “Charter Schools” are not simply intended for low socio-economic areas.  Parents living in more affluent suburbs should take note of what may lie in store for them,

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Full Story

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Parents in Remuera, Khandallah, and Fendalton should take note, perhaps?

As with so many New Right “reforms”, it appears that ideology outweighs common-sense and communities are left to deal with the consequences of policies that have dire consequences and questionable outcomes.

This is the experiment that National is planning to dump on us.

The next three years will not be a happy time for this country, I fear.

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Additional

Listen to a representative of principals on Radio NZ Checkpoint

TVNZ Close-Up:  What is so special about Onehunga High School?

OECD’s latest PISA survey of education performance

OECD:  Student Performance in Reading, Mathematics and Science

Report: Charter School Performance in 16 States, CREDO, Stanford University, CA, USA

Destiny Church may get funding for new school

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Has National declared class-war on New Zealand?

6 December 2011 8 comments

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What’s past is prologue

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“Class war” – not a piece of left-wing jargon I normally employ, as it has connotations that are seemingly out-of-date in the 21st Century. It is a term I normally associate with 1960s-style, cloth-cap marxist-leninist or maoist cadres, addressing factory workers as they’re about to “Down Tools and All Out, Bruvvers“!

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In 1947 a union official addresses London dockers. In the post-war years efforts were made by the unions to recruit new workers coming into British industry.

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However, “class war” seems to pretty well describe what this ‘new’ hard-right wing government is planning.

Since the Election on November 26, it is  apparent that this government has moved well away from the centre-right position it occupied from 2008-11.  There is a definite undertone of  cold harshness about this ‘new’ government. The old “smile and wave” has been replaced with a grim tension as the National-Dunne-ACT Coalition begins to announce policies that were never announced during the election campaign.

It is as if the facade of the  cheerful “vacant optimism” of John Key has been allowed to fall away – to be replaced with something cold and quite alien. I think New Zealanders are waking up to a Prime Minister that they never voted for.

It appears that the  first term of National was to “bed in” this government and lay fertile ground for their real policies – policies that are intended to transform this country as Rogernomic did in the late 1980s. National has declared war on our   social services,  remnants of our egalitarian past when most or all New Zealanders had a fair go.

Since Rogernomics, we were promised that increased wealth creation would “trickle down” to middle and low income earners, and  as a result incomes would rise. This has not happened. in fact, quite the reverse.

The OECD  (not exactly a left-wing organisation)  has warned “about the rise of the high earners in rich societies and the falling share of income going to those at the bottom, saying governments must move quickly to tackle inequality ,”

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Full Story

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Warren Buffett – one of the richest men on this planet – has said pretty much the same thing,

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Full Story

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Buffett has stated,

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.

The same could be said of high income earners and wealthy throughout the world, including here in New Zealand.

Since 1986, there have been seven tax cuts in New Zealand. Gst was introduced at 10% in the same year, and increased to 15% this year (despite assurance by John Key that he would not raise gst).

GST impacts disproportionately on low-income earners as they  spend all their income on necessities, whilst higher-income earners/wealthy invest, speculate,  or “park” their money. “Parking” wealth does not lead to increased spending in the economy and businesses suffer accordingly. Investment does not always lead to more jobs or higher wages either – simply an increased return to the investor.

The growing disparity between rich, middle-classes, and low income/poor began in earnest in the late 1970s,

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It is noteworthy that right-wing governments in the UK (“Thatcherism”) and USA (“Reagonomics”) implemented neo-liberal government policies such as tax cuts for the rich;   reduced social services and government spending; and stagnant wage-growth, at the same time – the late 1970s.

Could there be a link? Of course there is. Only a fool would deny the causal factors of neo-liberal governments and growing wealth disparity.

In New Zealand, right wing neo-liberal policies were introduced a little later, in the mid-1980s.

The result has been predictable, and follows overseas trends,

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Full Story

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Income disparity has been a growing problem and despite endless promises that “trickle down” theory works – wages have stayed static and those earning minimum wage barely have sufficient to surevive.  When questioned by Q+A’s Guyon Espiner on this issue, Bill English agreed,

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GUYON:  Okay, can we move backwards in people’s working lives from retirement to work and to wages?  Mr English, is $13 an hour enough to live on? 

BILL:  People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity.  It’s like being on a benefit.

GUYON:  What do you mean for a short time?

BILL:  Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position.Source

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The tax cut last year exacerbated that growing gap between the rich/high income earners and those on middle/low incomes,

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Source

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Only the most politically partisan – blinded by misplaced quasi-religious beliefs in neo-liberal ideology – can ignore the ample evidence that so-called “free market”  policies serve to make only the rich, richer. Meanwhile those at the bottom are mired in poverty. The middle-classes become debt-laden, as they have to borrow more and more to keep afloat financially.

We have created a recipe for disaster and in 2008 the fiscal chickens came home to roost.

In November 2011, 957,769  voters cast their ballot for a charismatic Prime Minister who seemed to be fairly centrist and common sense.

957,769  voters were duped.

This was not the same John Key nor National government they elected in November 2008.

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The Right Strikes Back

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Charter Schools

Charter Schools is nothing less than gradual privatisation by stealth. Instead of announcing to New Zealanders that schools will be put on Trademe and sold to highest bidders, the “Charter Schools” policy is far more subtle; and done piece by piece; step by step.

99% of New Zealanders would never countenance our schools being put on the chopping block and flogged of to Heinz Watties, Church of Scientology, Toyota, the Mormons, Uncle Tom Cobbly, etc. But that is precisely what “Charter Schools” is about. Under “Charter Schools”, a religious group or corporation can fund and take control of  your local school.

A Radio NZ report states,

Christian school leaders say the Government’s plan to trial so-called charter schools could give them a way to reach the most needy families.

Charter schools are part of a movement in the United States and Britain to get business and non-profit organisations to run government-funded schools free from many of the rules that govern regular state schools.

The schools are not allowed to charge fees, but can set teacher pay and their own school day and year.

A trial for such schools in South Auckland and central and eastern Christchurch was part of the confidence and supply agreement reached between the National and ACT parties on Monday.

Christian school leaders say the proposed schools might give Christian schools a way round current restrictions on their enrolments.

Most are integrated schools and must focus their enrolments on Christians. Charter schools would get the same funding, without those restrictions.

Christian school leaders say that will interest schools that want to help poor communities.

They say the schools would be fulfilling a Christian mission and would not try to convert people to Christianity. ” – Source

So if a christian fundamentalist group like “Exclusive  Brethren” took over my local primary school, they would not be replacing the science curriculum with Creationism? Or teaching girls to be “silent and obedient to men”? Or canning sex-education?

A NZ Herald article had this to say about “Chart Schools”,

The National party yesterday agreed to incorporate charter schooling as part of its government support deal with the Act Party, allowing private entities such as businesses, church groups and iwi organisations to take over management of schools but retain state funding under the scheme.

The charter school scheme will be trialled in South Auckland and Christchurch within the next three years.

Groups representing teachers and principals are outraged at the proposal.

Post Primary Teachers’ Association (PPTA) president Robin Duff labelled the charter school trial nothing but a “social experiment” on already vulnerable students.

“Why are they not putting a school like this in Epsom? I think some honest answers are needed.”

He said models overseas were ineffective; Stanford University research showed students at only 17 per cent of charter schools did better than at traditional schools.” – Source

When John Key was interviewed about the new  “Charter Schools” policy that ACT and National had jointly announced, he replied on Radio NZ,

“‘That’s MMP for you, isn’t it? That you agree to different proposals.”

Rubbish.

Once again, Key is spinning a lie to cover his backside.

The facts are simple, and a  visit to National and ACT’s website yields some interesting information.

National

There is no mention made whatsoever of “Charter Schools” in National’s policy, “Education in Schools“.  Nothing even remotely close.

National makes policy on employing unqualified people off the street to teach our children,

We will make it easier for schools to employ people with specialist skills who may not be a registered teacher, but who can undergo basic teacher training. That training may be on-the-job training.

They even hint at League Tables,

They also have clear targets they can measure their own achievements, and the achievements of their school, against.”

National will make secondary school performance information available to parents, so they are informed about their child’s learning environment.”

Improve reporting of system-level performance, including investigating school level reporting.”

National wants to psyco-analyse people to gauge their “disposition to teach”, in a quasi-Nanny State/Big Brotherish kind of way,

Improve the quality of initial teacher education, including a move to a post graduate qualification and minimum undergrad entry requirements, as well as a formal assessment of a ‘disposition to teach’.”

And National isn’t “quasi” in some of it’s Big Brotherish surveillance of ordinary New Zealanders,

Track students who leave school before 18 and make sure they are in some form of education or training.
Schools will be asked to report students who are leaving school and not going onto further training or employment, so we can support them and ensure they don’t end up on welfare.

So, if you’re 17 and about to leave school, for whatever reason, expect the eyes of  The State to be watching you.

National also makes some very grand, heart-warming, claims stating their supporting for schools in Christchurch in their “Education in Schools”  policy,

Double-funded students who moved out of Christchurch for 2011. That is, we funded the Christchurch school they no longer attended and also funded the school outside of Christchurch they did attend.”

However, they make no reference to the fact that, in September, Education Minister Anne Tolley announced cutting 167 full-time equivalent-positions from Christchurch schools, effective next year.  This lapse in painting a full picture of National’s policy and track record in Christchurch is another unpleasant example of dishonesty from this government.

But a big Nothing/Nada/No Way reference to “School Charters”.

ACT

Quite predictably, ACT, and it’s website, is a right-winger’s Onanistic delight.

Again, there is no mention of  “Schools Chart” in ACT’s education policy. Though they do rabbit on about “the benefits of making education more market-like and entrepreneurial.  ”

In fact, this is ACT’s full education policy,

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Source

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It’s interesting that ACT (and to a lesser degree, National) both make out that our education system is in dire straits.  Their inference is that only their policies will achieve grand outcomes – no one elses.

And yet, things are not as bad as they would have us believe,

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Full Story

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Ok, so we’re not ‘perfect’, and obviously we “Can Do Better” on our OECD Report Card. But matters are not so desperate that National has to implement a policy that neither they nor ACT campaigned on.  National, specifically, has no reference coming even remotely close to “Charter Schools” in it’s education policy.

Quite simply, National has ‘sprung’ this on the public. They have no mandate for such a radical re-shaping of our education system.

Trying to blame it on MMP and suggesting that it is ACT policy is duplicitous. They have deceived the elecorate – and as such parents, teachers, students, and the rest of the community have a legitimate right to resist implementation of this policy.

I suspect that “Chart Schools” is merely the tip of the iceberg. National and ACT have other surprises in store for us, and New Zealand will be in for a rude shock.

The Right Wing are in ascendancy in Parliament and they will run rampant with their “reforms”, mandate or not.

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Denniston Plateau

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Yet more evidence (if we ever really needed it) that this National-led coalition has taken off  the kid-gloves and has adopted an agressive, uncompromising,  right-wing posture. As well as ramming through  policy that was never presented to the electorate, expect National to be more open and brazen in breaking promises.

National’s intention to mine the ecologically-sensitive Denniston Plateau was made public by “Conservation” Minister Kate Wilkinson, a mere one-working day day after the election.  She could barely wait for the ballot papers to be counted before issuing a public statement that broke  a promise to make  future applications to mine on the conservation land  publicly notifiable.

On 20 July 201o, after mass protests throughout the country opposing mining on Schedule 4 Conservation land, Energy and Resources Minister Gerry Brownlee and Conservation Minister Kate Wilkinson issued this statement,

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After carefully considering the feedback received on the Maximising Our Mineral Potential: Stocktake of Schedule 4 of the Crown Minerals Act and Beyond discussion paper, the Government has agreed that:

  • i. No areas will be removed from Schedule 4 of the Crown Minerals Act.
  • ii. All of the 14 areas proposed for addition to Schedule 4 will be added to the schedule.
  • iii. A technical investigation will be undertaken of Northland (in strategic alliance with Northland Regional Council, the Far North District Council, and Enterprise Northland), the West Coast of the South Island and various other highly prospective areas in the South Island – excluding any Schedule 4 areas. This will identify mineral deposits and assist with hazard identification (for example, faults and slips), road maintenance and conservation planning.
  • iv. Areas given classifications equivalent to current Schedule 4 areas (for example, national parks and marine reserves) will in the future be automatically added to Schedule 4. Such classifications will be agreed by Cabinet.
  • v. Significant applications to mine on public conservation land will be publicly notified.

– Gerry Brownlee, Kate Wilkinson – 20 July, 2010

Source

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Australian mining company, Bathurst Resources, wants to mine an additional 50-80 million tonnes from the area over a 35 year period. Forest & Bird state,

The adjacent Stockton Plateau has been half destroyed by opencast mining in the past few decades. The Denniston Plateau has a history of underground mining, but has been spared – until now – this fate.

A new opencast coal mine proposed for the Denniston Plateau would destroy 200 hectares and increase New Zealand’s coal exports by up to 63% per year. But that would only be the beginning. The Australian company holds mining permits across the Plateau, which would generate an estimated 50 million tonnes of coal.” – Source

In effect, this,

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Denniston Plateau

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Would become this,

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Stockton Mine

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National’s open contempt for the democratic process; honouring election committments; and public consultation – should now be apparent to everyone. Worse still is their contempt for the people of this country.

How else does one explain a government that has so blatantly gone back on so many of it’s promises?

Wilkinson’s readiness to go back on her word is something that she – and her colleagues – should be deeply ashamed of.

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Urgency laws?

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National’s previous term saw the highest use of  “Urgency” to ram through legislation, in decades.

Expect more of the same, as they implement their right wing agenda at breakneck speed, before 2014. This is the method used by Douglas and Prebble in the 1980s.

Indeed, Douglas boasted at the speed at which he and his cronies introduced their “reforms”. The result was that public opposition to their agenda was difficult to mount.

The right wing have little time for the democratic process and public consultation. That should be readily apparent to us all by now.

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ACC

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I’ve no doubt that whilst ACC will not be privatised – that workplace accident compensation will be opened up to “marketplace competition”. This will be a rehash of National’s earlier experiment in accident insurance competition in the late ’90s.

Neo-libs. They love to recycle old policies, whether or not they were ever successful.

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Maori Party

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The Maori Party has not yet gone into formal coalition with National. They are currently conducting consultation with their constituents, by holding Hui around the country.

I have no doubt in my mind that Maori Party members will bitterly denounce any suggestion that they coalesce with National. To many, the last week has already been a fore taste of the right wing whirlwind that is about to hit this country.

For the Maori Party to be associated in any way, shape, or form with the impending storm will be a colossal misjudgement on the part of Maori Party leadership – and will guarantee their political demise in 2014.

Wise heads will try to warn Pita Sharples, Tariana Turia, and Te Ururoa Flavell, that entering into coalition with National and it’s coat-tailing little mini-Nats (Dunne and Banks) will be the death knell for the Maori Party.

The question remains; will they heed that warning? Or will they suffer the same fate as Tau Henare’s Mauri Pacific Party in 1999?

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Things To Come

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Let no one be under any illusion that this National Coalition v.2 is nothing like it’s predecessor from 2008-11. This is a fully-fledged, ideologically-driven, determined Right Wing Government.

And it has nothing to do with ACT.  ACT is a political corpse, and John Banks is carrying on in name only.

Despite MMP being designed to reign in the executive power of large parties, and prevent FPP-style single-party rule – National has managed to rort the system by creating proxies – Peter Dunne and John Banks – who are essentially National Party ministers-by-default.

National did not fail in their fight to win an outright majority in the House. They succeeded.

I hope that the voters of Epsom and Ohariu knew what they were doing when they voted for Banks and Dunne (and Green and Labour voters when they failed to vote tactically). Because they have helped achieved the near impossible under MMP:  a single-party government.

And we know what happens when a single-party government rules Parliament. What does a single-party government do?

Whatever it wants.

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References

National: Education in Schools Policy

ACT: Education policy

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Additional Reading

Education shake-up ‘biggest for years’

Key defends state-funded private schools

On charter schools – Gordon Campbell

Save the Denniston Plateau:Ours Not Mine

On income inequality – Gordon Campbell

The gap between NZs rich and poor

New Zealand wealth gap alarms charities

Wealth gap divides nation

Chris Ford: National/ACT Coalition aiming to complete New Right revolution

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Video

2011-12-06 – 3News – OECD: Inequality Growing Fastest in NZ

OECD: Record inequality between rich and poor

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From 2011 back to 1991?

1 December 2011 23 comments

Even without a Tardis, John Key’s National government is set to return New Zealand to 1991, as it plans to cut spending and make more state sector workers redundant,

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Full Story

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Yet, the NZIER is warning of dire consequences  should National proceed with more cuts to state sector spending,

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Source

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Many will recall that it was precisely brecause of severe cuts to state spending in 1991 that made New Zealand’s recession so much worse at the time. Ruth Richardson even boasted that her budget was the “Mother of All Budgets”.

Economic data is presented here, in graph form, and shows the immediate conseqences that impacted on New Zealand soon after Richardson’s Budgetary cuts were implemented. Unemployment skyrocketed to approximately 11% – the highest since Depression days in the 1930s.

It is generally considered that Richardson’s harsh cuts unnecessarily deepened New Zealand’s recessionary effects. It caused considerable misery throughout the country as businesses collapsed; GDP fell; the prison population increased; and credit ratings agencies downgraded the country.

As John Key’s government lays plans for implementing more state sector cuts, it is clearly apparent that New Zealand’s economy is still struggling,

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And just to really drive home the fact that matters are becoming dire,  ratings agency Standard & Poor’s today downgraded the credit ratings of our major banks;  ANZ New Zealand, ASB, BNZ, and Westpac New Zealand,along with their Australian parents.

Things are not looking terribly flash,

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Whilst it is abundantly obvious that we cannot influence events on the other side of the globe, and that the slow disintergration of the Eurozone; the economic downturn in China; and America’s mind-numbingly huge deficit – that our government can still play a role in what happens locally.

First and foremost, now is not the time to be cutting back on state sector spending and government workers. Adding to unemployment will not help matters and will simply,

  • reduce overall consumption spending by unemployed civil servants
  • make it harder for 154,000 currently unemployed to find jobs
  • reduce overall economic activity

John Key needs to read up on our recent history and learn from the mistakes of his predecessors, Jim Bolger and Ruth Richardson.

He needs to understand that government cutbacks during a recession will not help – and will actually make matters much worse.

Instead, the incoming government should be considering the following;

  • Shelve all plans for further cutbacks
  • Abandon further cutbacks of state sector employees
  • Implement a crash training programme for those currently unemployed, removing barriers such as fees
  • Raise the minimum wage to $15 an hour
  • Compensate the increase in  minimum wage with a correlating tax write-off/reduction, for companies affected for one year
  • Increase the top tax rate for income earners over $100,000
  • Review Working for Famlies for those earning over $100,000

Some high income earners, businesspeople, and free marketeers may squeal at the above suggestions – but we either pay to keep our economy afloat and maintain high employment – or we’ll pay for  welfare, increased crime, social dislocation and other problems, as well more skilled Kiwis fleeing to Australia.

Why not pay to achieve positive outcomes instead of the proverbial ambulance at the bottom of the cliff?

Because either way, we will pay.

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Additional

Wellington hit with leap in mortgagee sales

Wellington furniture company in liquidation

Fourth National Government of New Zealand

The 1991 Budget and Tertiary Education: Promises, Promises…

Reserve Bank – Employment-Unemployment

Dept of Corrections: Prison sentenced snapshot trend since 1980

Annual figures for Bankruptcies and Liquidations since 1988

Chris Ford: National/ACT Coalition aiming to complete New Right revolution

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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.)

From “Nanny State” to “Daddy State”…

I don’t think there’s much question that  serious social problems in this country  are not being addressed in any meaningful way by this current government…

So is the Prime Minister, John Key, really  aware of what is actually going on in New Zealand right now?  Well, judge for yourself…

So what is National doing about soaring youth unemployment?

At their recent Conference, held in Wellington, they came up with this…

(Article abbreviated)

They’re going to clamp down on booze and cigarettes?!?!

That’s it?

Oh good lord! And people thought that Labour was “Nanny Statist”?!?!

I wonder who will be next to feel the iron fist of National’s Polit-buro state control? The retired? Civil Servants? Anyone using state hospitals???

Congratulations, my fellow New Zealanders: we have gone past Nanny State to Big Brother.

It might be worthwhile considering that,

  • Not all unemployed youth smoke
  • Not all unemployed youth drink
  • Even if they do,  Key says that they will still receive “a limited amount of money for young people to spend at their discretion“.  Like… on booze and ciggies?!
  • Even if they won’t have enough “discretionary pocket money” – what is to stop them stealing it? Or selling their Food Card for cash, and then buying ciggies and booze?

In the meantime, how many jobs will this piece of neo-Nanny Statism create?

The answer, I submit, is:

Even the NZ Herald was quick to acknowledge this simple fact in their August 16 editorial,

Yet there is also nothing in the Prime Minister’s announcement that creates jobs for young people. There, the Government still has work to do.”

Meanwhile, as National blames the young unemployed of this country for the world recession, and proposes to penalise them by tinkering with their only means of survival – the problem continues unabated,

The last time youth unemployment was this high was in 1992…

1992?

Wasn’t that the previous National government led by Jim Bolger, with Ruth Richardson as Minister of Finance? And didn’t she implement a slash and burn economic policy in her “Mother of All Budgets” that resulted in unemployment reaching over 10%?!?!

Why, yes. It was.

Are we starting to see a pattern develop here, folks?

It is abundantly clear that National has no clue how to address this problem. Attacking welfare benefits which keep people from starving to death, or more likely, breaking into our homes to find food, is not an answer. It is a cheap shot geared toward winning votes from uneducated voters who hold the illusion that living on a benefit is a cosy arrangement (it is not).

There are no policies being announced to create jobs, or to train young people into a trade or profession.

National should be throwing open the doors of our polytechs to train young people into tradespeople that the community desperately needs. With the re-building of Christchurch shortly to commence – where are the necessary tradespeople going to come from? (Most have buggered of to Australia.)

If this is the best that National can come up with, then, my fellow New Zealanders, we are in deep ka-ka.

Meanwhile…

Dr Mapp said the research science and technology was the way to create jobs, economic growth and a higher living standard for the country.

“To that end, it is vital that high-tech, exporting companies maintain their competitive edge in global markets.”

The grants range from $300,000 to $5.9m and run for three years.

They are valued at 20 per cent of the research and development spend in each business and provide a maximum $2.4m a year for three years.

Dr Mapp said they provide the businesses involved with more financial security over that period.

Businesses to get grants in the latest round were involved in  software development, biotechnology, manufacturing and electronics.

Wellington companies which received grants:

Core Technology: $629,400

Open Cloud: $2,394,920

Xero: $4,040,000

Xero was founded by Rod Drury in 2006,  who made $65 million in the same year after selling his email archiving system AfterMail. Xero purchased Australian online payroll company,  Paycycle, in July of this year for A$1.5 million.

Which begs the question as to why the government has given away $4 million of tax-payers money when the owner is ‘flush’ with $65 million and has enough capital to buy off-shore  companies elsewhere.

Is this a prudent use of tax-payers’ money,  especially when,

* government is cutting back on social services?

* government has cut back on youth training programmes?

* government is borrowing $380 million a week, and telling the rest of us to “tighten our belts”?

At a time when government is berrating unemployed 16 and 17 year olds for being on the dole and  “smoking ciggies”, instead of  providing meaningful training and/or employment, it seems that National is still “picking winners” in the field of commerce.

$4 million could go a long way in providing training, and a future, for many 16 year olds.

By contrast, how much do young people, living away from home, recieve from WINZ? It must be a grand sum, to earn the Prime Minister’s stern attention. The answer is:

It’s a shame they’re not “picking winners”  with our unemployed youth.