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Posts Tagged ‘Steven Joyce’

St. Steven and the Holy Grail of Fiscal Responsibility

30 November 2017 2 comments

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National’s Steven Joyce is up to his old tricks, pontificating and lecturing the new Coalition government on “fiscal correctness”

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Which called for this timely reminder to the former Minister of Finance…

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from: Frank Macskasy <fmacskasy@gmail.com>
to: NZ Herald <letters@herald.co.nz>
date: 22 November 2017
subject: Letter to the editor

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The editor
NZ Herald

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Former Finance Minister, Steven Joyce, rails against the Coalition government’s plans to introduce a regional fuel tax for Auckland, claiming;

“Because if they controlled their costs properly they’d be able to have the sort of money, the $150 million a year that a regional fuel tax would generate, they’d have that in surplus if they just ran the council properly.

… ‘hey get your costs under control’.” (Radio NZ: “Auckland Council could avoid fuel tax – National Party”)

This is the same minister whose previous government racked up $70 billion in debt during their nine years term – exacerbated by two unaffordable tax cuts in 2009 and 2010, and increasing debt by $2 billion each year. (Scoop media:  “Govt’s 2010 tax cuts costing $2 billion and counting”) In effect, National borrowed money – up to $450 million per week in 2009 – from offshore to put into the pockets of mostly top income earners.

Which made a mockery of John Key’s claim in August 2008 that National’s planned tax-cuts would be “hermetically sealed” from the rest of National massive borrowing plans. (NZ Herald: “Nats to borrow for other spending – but not tax cuts”)

Let’s hope the Auckland Council doesn’t follow National’s appalling record of “controlling their costs properly”. It would bankrupt the city.

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-Frank Macskasy

[address and phone number supplied]

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Each time the Nats open their mouths to carp about the Coalition’s reforms, it is a delight to remind them of their own pitiful track record over the last nine years. And for Steven Joyce, I offer his very own:

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Postscript

It appears that Mr Joyce has taken offence at something I’ve said. The poor fragile flower has blocked me from his Twitter account;

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It is highly reassuring to know that  I have been noticed by those in high office. And amusing to realise just how incredibly thin-skinned they are.

My work continues.

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References

Radio NZ:  Auckland Council could avoid fuel tax – National Party

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

ODT:  Government now borrowing $450 million a week – claim

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

Twitter:  @stevenljoyce

Other blogs

Werewolf: The Myth of Steven Joyce

Previous related blogposts

Joyce, TPPA, and wine exports

Key & Joyce – competing with Paula Bennett for Hypocrites of the Year?

Steven Joyce – Hypocrite of the Week

Letter to the Editor – Steven Joyce, Hypocrite of the Year

Steven Joyce rails against low mortgage interest rates; claims higher interest rates “beneficial”

Dollars and sense – Joyce’s hypocrisy

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This blogpost was first published on The Daily Blog on 25 November 2017.

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Dollars and sense – Joyce’s hypocrisy

7 November 2017 4 comments

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You’d think that after the humiliation of being dumped from government, that National’s ex-Ministers would keep a relatively low profile in the next few months.

You’d think that National’s former ministers and backbenchers would be familiarising themselves with their newly-appointed roles as impotent  Opposition MPs.

You’d think that National’s members of parliament would be nursing massive, Jupiter-sized hang-overs after drowning their collective sorrows at being turfed out of office by the ungrateful peasantry.

Not so.

Former Economic “Development” Minister in the Former National Government, Steven Joyce, has been busying himself  critiquing the recently-elected, newly-sworn-in, Labour-Green-NZF coalition.

Even before the dust settled on the recent election; the subsequent swearing-in ceremony at the Governor-General’s residence on 26 October, and only three days since the new government ministers have barely moved into their new offices, Joyce has been making mischief like a spoiled brat.

On 30 October, Joyce demanded;

“Mr Robertson has done two long-form interviews over this weekend and yet New Zealanders are still none the wiser about the cost of the coalition’s programme and the impact on their back pockets.”

He added,

“They also have a right to know whether the new Government’s spending plans in actual dollars will match the cast-iron commitments Labour repeatedly made before the election.”

Now bear in mind that this is the same National (ex-)government that, in 2008, campaigned on tax-cuts despite the Global Financial crisis already impacting on New Zealand’s economy that year.

On 6 October 2008, Key was only too happy to dangle the tax-cuts carrot in front of a gullible electorate, to win power;

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.

The rest is history. National won the 2008 election. Tax-cuts were enacted in April 2009 and October 2010.

All that despite a massive budget blow-out deficit of $15.4 billion by March 2009;

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The tax cuts were (and still are!) costing us around $2 billion per year, according to figures obtained by the Green Party from the Parliamentary Library.

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

“The National Government said that their signature 2010 income tax cut package would be ‘fiscally neutral’ — paid for increased revenues from raising GST. That hasn’t happened. The net cost for tax cuts has been about $2 billion,” Green Party Co-leader Dr Russel Norman said today.

“Borrowing $2 billion in 18 months to fund upper-income tax cuts is fiscally irresponsible.

“National’s poor economic decisions have led to record levels of government debt and borrowing.

“They have also broken a promise to the electorate when they said their tax cut package was going to be fiscally neutral.”

Whilst it can be justifiably argued that New Zealand’s debt increased because of the 2008 Global Financial Crisis and two Christchurch earthquakes – both of which were out of National’s control – the loss of revenue through two unaffordable tax cuts in ’09 and ’10 were of it’s own making.

Against this backdrop of gross fiscal irresponsibility, Steven Joyce has  pontificated that “New Zealanders are still none the wiser about the cost of the coalition’s programme and the impact on their back pockets“.

It could also be argued that “most New Zealanders are still none the wiser about the cost of National’s tax-cuts and the impact on their social services“.

Steven Joyce lecturing the incoming coalition government on fiscal integrity and transparency would be like Robert Mugabe advising the U.N. on human rights.

Or like Steven Joyce telling the “truth” about a non-existent $11.7 billion “hole”.

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Postscript – A letter to the Editor

from: Frank Macskasy <fmacskasy@gmail.com>
to: Dominion Post <letters@dompost.co.nz>
date: 31 October 2017
subject:Letter to the editor

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The editor
Dominion Post

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Opposition MP, Steven Joyce, has been busying himself attacking the recently elected Labour-Green-NZ First Coalition government.

Despite barely moving into their new offices on 27 October, three days later Joyce was complaining;

“…New Zealanders are still none the wiser about the cost of the coalition’s programme and the impact on their back pockets. They also have a right to know whether the new Government’s spending plans in actual dollars will match the cast-iron commitments Labour repeatedly made before the election.”

Mr Joyce should settle down and take a deep breath. The coalition government has only been sworn in since 26 October.

The new government’s policies will be better costed than National’s unaffordable tax-cuts of 2009 and 2010. Those tax-cuts cost this country $2 billion p.a. according to the Parliamentary Library.

John Key happily over-looked NZ’s growing budget deficit, as reported on 6 October 2008;

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 … is predicted to blow out from around $3 billion a year to around $6 billion a year.

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-Frank Macskasy

 

 

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References

Fairfax media: Jacinda Ardern’s new government sworn in

Radio NZ:  550 staff move office at Parliament this weekend

NZCity:  Ardern won’t budget on coalition costs

Mediaworks:  Spending plans ‘totally affordable’ – Jacinda Ardern

NZ Herald:  Recession confirmed – GDP falls

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

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

Infonews:  Government’s 2010 tax cuts costing $2 billion and counting

Fairfax media:  Which side of the fiscal hole debate are experts standing on?

Additional

Frankly Speaking: Time-line

NZ Herald:  National and Labour’s nine years in charge – what the data shows

NZ Treasury: Debt

Previous related blogposts

“Less Debt and Lower Interest Rates” – Really?

Solid Energy and LandCorp – debt and doom, courtesy of a “fiscally responsible” National Govt

Observations on the 2017 Election campaign thus far… (wha)

Observations on the 2017 Election campaign thus far… (whitu)

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This blogpost was first published on The Daily Blog on 1 November 2017.

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National’s $11.7 billion hole is right where they left it

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Remember Steven Joyce’s claim there was a “$11.7 billion hole” in Labour pre-election budget?

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The claim of an $11.7 “fiscal hole” became a dominating irritant throughout the election campaign, even though in large part it failed simply because no one else (except Bill English) agreed that it existed.  TV3’s “Newshub” even created this now-famous, handy, infograph to illustrate the fact that Joyce and English were effectively on  their own;

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The claim has been largely forgotten, except when the Left need a handy reminder of right-wing duplicity to throw at National/ACT trolls – just to wipe any smirk of entitlement  from their silver-spoon-fed faces.

Except, on Thursday, 23 November, there was a curious – and disturbing – juxtaposition of media stories in Fairfax’s Dominion Post;

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Joyce seems curiously very sure of himself on the existence of the “hole”;

“Unfortunately, sadly, I think it looks like over time I will be proven correct. I genuinely don’t take any joy out of that because actually all that says is that the new Government is going to spend more than it said to meet its promises, and that’s because it didn’t allow enough money for other things

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Sadly I think we’ll get to the ($)11(b) over time.”

Where might this “hole” come from, if it exists?

One possible answer lay on the front page of the same edition on the Dompost;

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The report, by Fairfax journalist Rachel Thomas, revealed a massive shortfall in spending on medicines alone;

Cancer patients say they are sick of paying for their own survival after an independent report revealed a $682 million “hole” in government funding for lifesaving medicines.

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The $682m figure in Wednesday’s report from the New Zealand Institution for Economic Research (NZIER) is the amount it says would be needed to restore the community pharmaceuticals budget to 2007 levels.

In real terms, Budget spending for prescription medicines, vaccines, haemophilia treatments, nicotine replacement, and cancer medicines – sometimes administered in hospitals – dropped from 6.2 per cent in 2007 to 3.6 per cent in 2018, according to the report.

Now granted that Medicines New Zealand is a “drug lobby group” – but the NZIER which analysed the problem also revealed their methodology;

The NZIER report was commissioned by Medicines New Zealand, a drug lobby group, and collated from Pharmac annual reports and Official Information Act requests.

When former Health Minister, Jonathan Coleman, was asked to explain the massive $682 million hole in the medicines budget, his reply was;

Since 2007, almost 900,000 Kiwis had received 426 new and widened-access medicines. “It’s important to note that … Medicines NZ [has] a direct interest in increased Pharmac spending.”

Notice that Coleman – whose working relationship with DHBs has been frought over the last three years – deflected from the issue itself. His reference “to note that … Medicines NZ [has] a direct interest in increased Pharmac spending” fails to address the relevant fact that, according to NZIER, spending on medicines has fallen under the previous National government.

He deliberately evaded the question.

Which is hardly surprising given that English’s miraculous budget surpluses appear to have been made at the expense of  under-funding for services such as healthcare – including  mental health – throughout the country.

This poses some serious questions for the new Coalition government…

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from: Frank Macskasy <fmacskasy@gmail.com>
to: Dominion Post <letters@dompost.co.nz>
date: 26 November 2017
subject: Letter to the editor

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The editor
Dominion Post

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Let us recall that on 5 September, National’s then-Finance Minister and “Fix-It Man”, Steven Joyce, made a startling claim that Labour’s alternative budget concealed a $11.7 billion “hole”.

Joyce’s claim was scrutinised by economists, commentators, and even a right-wing think-tank and lobby group – and declared to be unsusubstantiated by any known facts. Only Joyce, supported by his leader Bill English, maintained the existence of a purported “hole”.

On 23 November, Fairfax reported findings by the NZIER that PHARMAC’s medicines budget was underfunded by a whopping $682 million. (“$682m ‘hole’ in medicine budget”). When asked to respond, former National Health Minister Coleman criticised those that commissioned the report – Medicines NZ, a pharmaceutical lobby group – but in no way disputed the figures.

In essence, PHARMAC’s funding budget suffered a savage cut from 6.2% in 2007 to 3.6% in 2018 – the equivalent of $682 million in vital medicines.

No wonder Joyce was so confident that a fiscal “hole” existed where none could see one.

Joyce knew precisely that the $11.7 billion “hole” was of National’s own making; a legacy “gifted” to the incoming Coalition government, and a ticking fiscal time bomb waiting to detonate as incoming Finance Minister, Grant Robertson, uncovered further hidden funding shocks.

What other “legacy gifts” has Joyce left us?

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-Frank Macskasy

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[address and phone number supplied]

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References

National Party:  Labour must explain where the money is

Mediaworks:  Economist consensus – there’s no $11.7b hole in Labour’s budget

Fairfax media:  Steven Joyce sticks to $11.7 billion hole in Government budget

Fairfax media:  Cancer patients renew call for more funded medicines, as report reveals $682m ‘hole’

Radio NZ:  ‘Extraordinary’ conflict between DHBs and health officials

Other Blogs

The Standard:  Health disasters – useless Coleman in all kinds of shit

Previous related blogposts

Weekend Revelations #1 – Dr Jonathan Coleman

Observations on the 2017 Election campaign thus far… (wha)

Dollars and sense – Joyce’s hypocrisy

St. Steven and the Holy Grail of Fiscal Responsibility

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This blogpost was first published on The Daily Blog on 28 November 2017.

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Observations on the 2017 Election campaign thus far… (wha)

11 September 2017 2 comments

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Who paid for the Budget surplus?

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The 2017 Pre-Election Fiscal Update (PREFU) revealed that the Nats had achieved a respectable $3.7 billion surplus – contrasting sharply  with the $1.6 billion forecasted surplus in the May 2017 Budget.

How did National achieve such a remarkable feat, despite reduced revenue from tax cuts in 2009 and 2010 and the re-build after the Christchurch and Kaikoura earthquakes?.

One doesn’t have to search far to find one possible answer where cuts were made to achieve their much-vaunted surplus;

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The answer has been revealed in an editorial in the New Zealand Medical Journal last year;

New Zealand’s health budget has been declining for almost a decade and could signal health reforms akin to the sweeping changes of the 1990s, new research claims.

Six prominent industry health leaders and researchers contributed to the editorial in the latest edition of the New Zealand Medical Journal, after several months analysing Government documents and data.

Their analysis showed Government spending in health had steadily tracked downward since 2009, despite constant reassurances from health ministers that spending was increasing year-on-year.

The $16.1 billion 2016 Health Budget, announced on Thursday, was $170 million more than last year, including $124m for Pharmac, $96m for elective surgery and $39m for a new bowel screening programme.

However, the researchers’ analysis of Budget data from 2009-10 found the country’s health budget had fallen short of what was needed each year to cover new services, increasing costs and the Ministry of Health’s cost-weighted index, which accounted for population growth and ageing.

The accumulated “very conservative” shortfall over the five years to 2014-15 was estimated at $800 million, but could be double that, Canterbury Charity Hospital founder and editorial co-author Phil Bagshaw said.

Writing for Fairfax,  Ashleigh Stewart  pointed out;

Vote Health’s operational expenditure decreased from 6.32 per cent to 5.95 per cent as a proportion of GDP in the same five years.

Government expenditure was set to continue falling overall, with New Zealand ranked 26th out of OECD countries for spending as a proportion of GDP in 2013.

This meant further cuts for health spending, which was estimated to drop by about 4 per cent a year.

“The continued under-resourcing of our health services . . . is not owing to unaffordability; it is a policy decision to reduce government expenditure overall and introduce tax cuts,” the editorial said.

Anyone who  harbours illusions that tax cuts are beneficial should think twice. Especially if  they have to face  waiting months or years on hospital waiting lists for critical surgery, or turned away because the system is stretched to breaking point;

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Then again, those like Bill English – who stands to gain the most from tax cuts – are also the most likely to be able to afford private health insurance.

National’s tax cuts should come clearly labelled;

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Because they really are.

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Steven Joyce – Pot. Kettle. Hypocrite.

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In the Dominion Post on 5 September, Steven Joyce was ‘doubling down’ and digging his hole deeper, as he steadfastly maintained National’s spin (aka, lie) that Labour’s Budget had a “$11.7 billion hole” in it;

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Joyce’s claims have since been rubbished by various economists – including, surprisingly, the right-wing think-tank, the NZ Initiative (formerly Business Roundtable);

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Acknowledgement for above graphic: Newshub

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More damning still was another remark Joyce made about Labour’s fictitious $11.7 billion “hole”;

“That level of spending and increased debt can only lead to one thing – higher interest rates for Kiwi mortgage holders.”

Which is risable as National has borrowed  eight times Joyce’s figure of $11.7 billion;

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That’s right;

“Government annual operating expenditure in these forecasts increases from $77 billion to $90 billion over the next four years, which is sufficient for significant ongoing improvement in the provision of public services,” Mr Joyce says.

And interestingly, during National’s massive borrowing-spree, interest rates have remained low. Joyce’s contention that borrowing leads to higher interest rates for mortgage holders doesn’t seem to have happened (yet) – and National has borrowed like there’s no tomorrow.

By making up outright lies about Labour’s budgetary plans, Joyce has not only revealed himself as as deceptive  – but drawn unwanted attention to National’s own irresponsible borrowing over the last nine years.

Well done, Steven;

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Peter Dunne. Ohariu. Coat-tailing.

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If it hasn’t been said already, the seat of Ohariu has become irrelevant.  Whether Brett Hudson or Greg O’Connor wins is now academic. Once again, it is the Party Vote that counts.

When Dunne was standing, the coat-tailing provision made him a valuable asset to National. If Dunne breached the 1.2% threshold as well as winning Ohariu, he would’ve dragged in another MP off the United Future party list.

It is the same reason National offered patronage to David “H” Seymour to gift him Epsom: the possibility of an extra ACT MP via MMP’s coat-tailing rule.

This is why Judith Collins doubled-down and stubbornly refused to implement the Electoral Commission’s recommendations in 2013  to eliminate the coat-tailing provision.

The Green Party was thus correct to stand a candidate in Ohariu. Whilst the Greens are not seeking to win the electorate, they are chasing Party Votes – and Ohariu is another opportunity to remind voters that the Greens are vital for this country’s environmental well-being.

Simply put; to be healthy we need our Greens.

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National’s fiscal hole?

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Bill English’s announcement on 4 September on TV3’s Leader’s Debate that his party would raise 100,000 children out of poverty in the next three years appears to have been policy made-on-the-hoof.

Because it’s not a matter of simply raising incomes for poor families. As English pointed out in the Debate, it is far more complex, requiring support from an array of social services;

“There’s two things you need to do, one is lift incomes the other is get inside the very toxic mix of social issues which we know are family violence, criminal offending and long-term welfare dependency. We’ve got the best tools in the world now to support rising incomes with cracking the social problems.”

This comes on top of National’s other pledges to improve access for social services;

National have pledged 600,000 low-income New Zealanders will have access to $18 GP visits. 

National will also expand the community services card to an additional 350,000 people, with low incomes and high housing costs.

Alongside free GP visits for under 13s and the Very Low Cost Access (VLCA) scheme for GP visits, which were already in place, National’s new policy would mean more than half of New Zealanders would be eligible for either free or cheap doctors visits. 

Health Minister Jonathan Coleman also chucked in a few more lollies from Labour’s lolly-jar;

“As well as getting access to cheap GP visits, 350,000 more New Zealanders with lower incomes and high housing costs, will receive cheap prescriptions, free emergency dental care and free glasses for children through their new community services cards.”

Plus National’s $10.5  billion “Roads of National Significance”.  (Called that, because those Roads are Significant for National to be re-elected.)

The obvious question is: has Steven Joyce checked if  it’s all been costed?

Are there any lurking micro-Black Holes in National’s Budget?

Wouldn’t it be ironic if…?

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References

Radio NZ:  Govt’s books show one-off $2bn boost

NBR:  Budget 2017 – Government forecast surpluses narrow on family package, capital spending

NZ Herald:  Report shows 170,000 people who need surgery are not on waiting list

Radio NZ:  Patients suffering because of surgery waits – surgeon

NZ Herald:  700 surgeries postponed as Auckland hospitals struggle to cope

Fairfax media:  Southern patients may be dying while waiting for surgery – Labour

Radio NZ:  Prostate cancer patients face wildly varying wait times

Radio NZ:  Southern DHB in a ‘slow motion train crash’

Scoop media:  280,000 New Zealanders waiting for surgery, wait times up

Fairfax media:  Thousands left off surgery waiting lists suffering indefinitely – study

Fairfax media:  Who is missing out on surgery? Government releases first figures of ‘phantom waiting list’

Fairfax media:  Researchers claim NZ health budget declining, publicly-funded surgery on way out

Fairfax media:  Busy Hamilton clinics turn away ambulances

Newsroom:  Election 2017 Live – Leaders clash in fiery debate

Dominion Post:  National accuses Labour of $11.7b spending plan error, Labour says National got it wrong

Mediaworks:  Economist consensus – there’s no $11.7b hole in Labour’s budget

National Party:  Pre-Election Fiscal Update 2017 (alt. link)

Fairfax media:   Government’s MMP review response slammed

Mediaworks:  Newshub Leaders Debate – Bill English commits to poverty target

Fairfax media:  National pledges $18 doctors visits for an extra 600,000 New Zealanders

Fairfax media:  National announce $10.5 billion roading plan

Previous related blogposts

Observations on the 2017 Election campaign thus far… (tahi)

Observations on the 2017 Election campaign thus far… (rua)

Observations on the 2017 Election campaign thus far… (toru)

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This blogpost was first published on The Daily Blog on 6 September 2017.

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Steven Joyce rails against low mortgage interest rates; claims higher interest rates “beneficial”

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National is increasingly on the back-foot with New Zealand’s ever-worsening housing crisis. Ministers from the Prime minister down are desperately trying to spin a narrative that the National-led administration “is getting on top of the problem“.

Despite ministerial ‘reassurances’, both Middle and Lower Working  classes are feeling the dead-weight of a housing shortage; ballooning house prices,  and rising rents.

Recently-appointed Finance Minister, Steven Joyce,  has found a new unlikely scapegoat, blaming the housing bubble and worsening housing affordability  on current low interest rates.  On 11 May, on Radio NZ’s Morning Report, he said;

“We have very, very low interest rates historically, and as a result that’s directly linked to how much house prices are being bid up around the world. It’s not the sole reason for why we have high asset prices around the world, it’s not just houses, it’s shares and everything else. But it is certainly one of the dominant reasons for that. And unfortunately it’s going to be a little bit of time yet before that changes, although there’s indications that this period of ultra-low interest rates that the world has seen is coming to an end. And so I think that, that, will improve affordability over time.”

Radio NZ’s Guyon Espiner reacted with predictable incredulity that Joyce was relying on interest rates rising to “improve affordability over time“.

Joyce’s finger-pointing and blaming “very, very low interest rates historically” is at variance with a speech that former Dear Leader, John Key, gave in January 2008 where he specifically indentified higher interest rates as a barrier to home ownership;

* Why, after eight years of Labour, are we paying the second-highest interest rates in the developed world?

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* Why can’t our hardworking kids afford to buy their own house?

Good questions, Mr Key

Got any answers, Mr Joyce?

Because according to Statistics NZ, home ownership rates have worsened since John Key gave his highly-critical speech, nine years ago;

Home ownership continues to fall

  • In 2013, 64.8 percent of households owned their home or held it in a family trust, down from 66.9 percent in 2006.

  • The percentage of households who owned their home dropped to 49.9 percent in 2013 from 54.5 percent in 2006.

Home ownership reached a peak of 73.8% by 1991. Since then, with  the advent of neo-liberal “reforms” in the late ’80s and early ’90s, home ownership has steadily declined.

Those who have benefitted have tended to be investors/speculators. In 2016, 46% of mortgages were issued to property investors/speculators in the Auckland region. Despite a watered-down, pseudo-capital gains tax,  referred to as the “bright line” test implemented in October 2015, investors/speculators still accounted for 43% of house purchasers by March of this year.

The same report revealed the dismal fact that first home buyers constituted only 19% of sales.

John Key’s gloomy plea, “Why can’t our hardworking kids afford to buy their own house?” rings truer than ever.

Poorer families are fairing no better.

National’s abysmal policy to sell off state housing has left a legacy of families living in over-crowded homes; garages, and cars. This scandal has reached the attention of the international media.

From the Guardian;

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From Al Jazeera;

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As with our fouled waterways, we have developed another unwelcomed reputation – this time for the increasing scourge of  homelessness.

But it is not just the sons and daughters of the Middle Classes that are finding housing increasingly out of their financial reach. The poorest families in our society have resorted to living in over-crowded homes or in garages and in cars.

National has spent millions of taxpayer’s dollars housing families in make-shift shelters in motels. At the behest on National ministers, WINZ have made it official policy to recoup money  “loaned” to beneficiaries to pay for emergency accommodation;

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National’s track record on this growing community cancer has been one of ineptitude.

In 2015, Dear Leader Key made  protestations that  no problem exists in our country;

“No, I don’t think you can call it a crisis. What you can say though is that Auckland house prices have been rising, and rising too quickly actually.”

He kept denying it – until he didn’t;

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Unfortunately, former-and current State beneficiary, and now Social Housing Minister, Paula Bennett, apparently ‘did not get the memo’. She still denies any housing crisis in this country;

“I certainly wouldn’t call it a crisis. I think that we’ve always had people in need. So the other night on TV I heard the homeless story was second in and then the seventh story was a man who’d been 30 years living on the streets.”

Despite  being in full denial, in May last year Bennett announced that National would be committing $41.1 million over the next four years  for emergency housing and grants.

By April this year  it was revealed that National had already spent $16.5 million on emergency accomodation. It had barely been a year since Bennett issued her Beehive statement lauding the $41.1 million expenditure, and already nearly a third of that amount has been spent.

This is clear evidence as to how far out-of-touch National is on social issues.

The stress and pressure on Ministers and state sector bureaucrats has become apparent, with threats of  retribution flying.  This month alone, a MSD manager and associate minister of social housing, Alfred Ngaro, were revealed to have warned critics of the government not to talk to the media;

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Bennett went on to make this extraordinary statement;

“I spend the bulk of my time on social housing issues and driving my department into seriously thinking about different ways of tackling this.”

Her comment was followed on 20 May, on TV3’s The Nation, when current Dear Leader, Bill English tried to spin a positive message in  National’s ‘fight against homelessness’;

“Our task has been to, as we set out three or four years ago, to rebuild the state housing stock. And that’s what we are setting out to do.”

English and Bennett’s claims would be admirable – if they were not self-serving hypocrisy.

In 2008, Housing NZ’s stock comprised of  69,000 rental properties.

By 2016, that number had fallen to 61,600 (plus a further 2,700 leased).

In eight years, National has managed to sell-off 7,400 properties.

No wonder English admitted “we set out three or four years ago, to rebuild the state housing stock“. His administration was responsible for selling  off over ten percent of much-needed state housing.

No wonder families are forced into over-crowding; into garages and sheds; and into cars and vans.

Confronted by social problems, National ministers duck for cover. Especially when those same social problems are a direct consequence of their own ideologically-driven and ill-considered policies.

National ministers English, Bennett, Joyce, Nick Smith, et al are responsible for our current homelessness.

Parting thought

Left-wing parties and movement are generally proactive in identifying and resolving critical social problems and inequalities. It is the raison d’etre of the Left.

The Right seem only able to belatedly react to social problem and inequalities.

Especially when they caused it.

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References

Interest.co.nz: PM says no housing crisis in Auckland

NZ Herald: Housing shortage growing by 40 homes a day

Fairfax media: House prices rise at an ‘eye-popping’ rate for 6 NZ regions – Trade Me

Interest.co.nz: Median rents up $50 a week over last 12 months in parts of Auckland

Radio NZ: Lessons for NZ in Australia’s Budget

NZ Herald: John Key – State of the Nation speech

Statistics NZ: 2013 Census QuickStats about national highlights

Statistics NZ: Owner-Occupied Households

Radio NZ: Homeless family faces $100k WINZ debt

Interest.co.nz: New official Reserve Bank figures definitively show that investors accounted for nearly 46% of all Auckland mortgages

Simpson Grierson: New “bright-line” test for sales of residential land

Property Club: First buyers still missing out in Auckland’s most affordable properties

The Guardian: New Zealand housing crisis forces hundreds to live in tents and garages

Al Jazeera: New Zealand’s homeless – Living in cars and garages

NZ Herald: No house, not even a motel, for homeless family

Radio NZ: Key denies Auckland housing crisis

Radio NZ: No housing crisis in NZ – Paula Bennett

Beehive: Budget 2016 – 3000 emergency housing places funded

Mediaworks: Homeless crisis costing Govt $100,000 a day for motels

Radio NZ: Emergency housing providers instructed not to talk to media

Radio NZ: Ngaro apologises for govt criticism

TV3: The Nation – Patrick Gower interviews Bill English

Housing NZ: Annual Report 2008/09

Housing NZ: Annual Report 2015/16

Previous related blogposts

Can we do it? Bloody oath we can!

Budget 2013: State Housing and the War on Poor

Budget 2013: State Housing and the War on Poor

National recycles Housing Policy and produces good manure!

Our growing housing problem

National Housing propaganda – McGehan Close Revisited

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

Housing Minister Paula Bennett continues National’s spin on rundown State Houses

Another ‘Claytons’ Solution to our Housing Problem? When will NZers ever learn?

Government Minister sees history repeat – responsible for death

Housing Minister Paula Bennett continues National’s spin on rundown State Houses

Letter to the Editor – How many more children must die, Mr Key?!

National under attack – defaults to Deflection #1

National’s blatant lies on Housing NZ dividends – The truth uncovered!

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Problem…

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Solution.

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This blogpost was first published on The Daily Blog on 21 May 2017.

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Election ’17 Countdown: Joyce – let the lolly scramble begin!

25 February 2017 1 comment

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(Or, “Under-funded health, education, and other social services? Let them eat tax-cut cake!”)

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2017 Election – Opening Gambits and Giveaways

You can tell it’s election year; the lolly-scramble (aka, hint of tax cuts) has begun;

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Historical Context

Cutting taxes (and social services on-the-sly) is one of National’s mainstays when it comes to election promises. Bribes work best when a government has nothing left to offer.

Who can forget the infamous  2008 election campaign, where – despite the Global Financial Crisis firmly taking hold of the New Zealand economy – then-National Party leader, John Key promised tax cuts.

In January 2008;

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

[…]

And we will do all of this while improving the public services that Kiwis have a right to expect. ”

In March 2008, then Finance Minister, Michael Cullen warned against borrowing for tax cuts;

“ Those who would actively choose to drive New Zealand into further debt to pay for tax cuts lack real ambition for our economy…

[…]

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.

His plan would cost an extra $700 million a year in financing costs alone, around what the government has invested in new health services for each of the last two years.

But the real worry is that Mr Key’s pro-debt policy shows he does not take long-term challenges seriously. His risky deal for tax cuts today would leave the bill to our children and grandchildren tomorrow.”

Undeterred, Key pursued his irresponsible promises and in August 2008 announced to a gullible public;

National will fast track a second round of tax cuts and is likely to increase borrowing to pay for some of its spending promises.

Key made the incredible assertion that tax-cuts would not impact on government debt;

So that will be extremely clear cut and rather hermetically sealed.

Key’s claim of “hermetically sealing” tax cuts from the rest of government fiscal activity was never fully explained, and nor did the MSM ever challenge that unbelievable promise.

In October 2008, Key repeated his fantasy of affordable tax cuts;

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’ .

The rest is history. National was elected to power on 8 November and tax cuts implemented in 2009 and 2010. Government borrowing and  debt rocketed;

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A third round scheduled for 2011 was cancelled as the budget blow-out  caused – in-part – by  unaffordable tax-cuts began to hit home even on a profligate National-led administration.

By May 2011, National was borrowing $380 million per week to fund it’s debt. Bill English and John Key seemed startled by the government’s deteriorating financial position;

Finance Minister Bill English said the Government’s financial position had deteriorated “significantly” since late 2008.

“The pre-election update in 2008 forecast that the deficit for this year would be $2.4 billion,” he said.

“It’s much more likely to be around $15b or $16b.”

That level of deficit, as NZPA has previously reported, will be the highest in New Zealand’s history and Mr English confirmed that today.

Prime Minister John Key confirmed the average weekly borrowing figure, which he said was unaffordable.

Michael Cullen’s warnings over unaffordable tax cuts seem to have been long-forgotten as collective amnesia over-took the National Party leadership.

Worse still, it was the rising army of unemployed who were to pay the fiscal bill for National’s profligacy;

More than three quarters of all beneficiaries will be forced to seek work or face cuts to their payments under sweeping recommendations from the Government’s Welfare Working Group… Working group chairwoman, economist Paula Rebstock, said the present high levels of welfare dependency meant major changes were needed. “ There are currently few incentives and little active support for many people reliant on welfare to move into paid work. Long term benefit dependency can be avoided if investments are well targeted and timely…”  Social Development Minister Paula Bennett said the report was an opportunity to change the welfare system and would feed into Government work in the area.

Key indulged in National’s favourite activity when things went horribly wrong after his administration’s apalling policty-decisions. He blamed those at the bottom of the economic heap;

Prime Minister John Key says beneficiaries who resort to food banks do so out of their own “poor choices” rather than because they cannot afford food. “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.”

By 2016/17, National’s net debt had reached $66.3 billion. (Damn those beneficiaries’ “poor choices”.)

The Joy of Joyce’s Tax Bribe

On 8 February this year, Joyce announced aspects of this year’s coming Budget. Joyce  dangled the tax-cut carrot  in  front of voters;

It is also very important to remain mindful that the money the Government spends comes from hard working Kiwi families. We remain committed to reducing the tax burden on lower and middle income earners when we have the room to do so.

On the same day, Joyce voiced concerns about New Zealand’s massive mountain of private debt;

I have discussed DTIs with the Reserve Bank Governor, who remains concerned about the levels of debt in some households in the context of recent increases in house prices.

Joyce has good reason to be nervous. As of this year, New Zealand’s household debt has reached stellar proportions;

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Any further tax-cuts will not only be based on cuts to social services (health, education, housing, NGOs, etc), but may further fuel the housing bubble.  This would raise the prospect of a monstrous  three-headed creature of National’s making where;

  • it would likely have to have to borrow to fund the tax-cuts,
  • fuel an increase in private debt as tax-cuts are spent on a property-buying binge,
  • as well as driving first-home buyers out of the market as housing-prices take off again.

Joyce voiced this concern on 8 February;

The use of macro-prudential tools can be complex and affect different borrowers in different ways. I am particularly interested in what the impacts could be on first home buyers.”

So further tax cuts may have negative impacts that a fourth National administration would have to deal with if it wins the 23 Sept election.

On top of which, New Zealanders would be faced with further cuts to social services and increasing user-pays in health and education. From our on-going housing crisis;

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homelessness-in-new-zealand

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… to more user-pays in education;

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…in healthcare;

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… and the gutting of NGO services through budget-cuts;

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When Kiwis take up National’s tax-cut bribes, they end up paying more, elsewhere.

But even slashing the budgets for the state sector and NGOs is insufficient to meet the multi-billion dollar price-tag for tax-cuts.  National is desperately having to scramble to find money where-ever it can. So-called student loan “defaulters” are firmly in National’s eyesights;

Almost 57,000 student loan borrowers found in Australia

The agreement came into force in October and the details of around 10,000 New Zealanders were found in the first data match. The process has since been refined and a total of 56,897 people have now been located.

“These borrowers have a combined loan balance of $1.2 billion and $430 million of that is in default. Inland Revenue will now start chasing up these borrowers and taking action to get their student loan repayments back on track,” says Mr Joyce says.

Mr Woodhouse says “The data shows that more than half of these borrowers left New Zealand over five years ago, with nearly a quarter having been away for more than 10 years. A third of them have not returned to New Zealand in the past four years. One third of the group has had no contact with Inland Revenue, and 43% have not made a payment since they left New Zealand.

“It’s time these people did the right thing and met the obligations they signed up to when they took out their student loan,” Mr Woodhouse says.

Who else will National target to squeeze money out of?

What social services will National slash to fund tax-cuts?

What further user-pays will be implemented?

One further question; if National does not pay down our sovereign debt – how will the country cope with another global financial crisis and shock to our economy? As Joyce himself pointed out;

 

“ We need to keep paying down debt as a percentage of GDP. We’ve set a target of reducing net debt to around 20 per cent of GDP by 2020. That’s to make sure that we can manage any shocks that may come along in the future.”

 

When National took office from Labour, the previous Clark-Cullen government has prudently resisted National’s tantrum-like demands for tax cuts and instead paid down our sovereign debt. As former Dear Leader Key himself was forced to admit;

In 2005, as Leader of the Opposition;

“ Firstly let me start by saying that New Zealand does not face the balance sheet crisis of 1984, or even of the early 1990s. Far from having dangerously high debt levels, gross debt to GDP is around a modest 25 percent and net debt may well be zero by 2008. In other words, there is no longer any balance sheet reason to justify an aggressive privatisation programme of the kind associated with the 1980s Labour Government.

In 2012*, as Prime Minister Key  justified the partial sale of state-owned assets;

The level of public debt in New Zealand was $8 billion when National came into office in 2008.  It’s now $53 billion, and it’s forecast to rise to $72 billion in 2016.  Without selling minority shares in five companies, it would rise to $78 billion.  Our total investment liabilities, which cover both public and private liabilities, are $150 billion – one of the worst in the world because of the high levels of private debt in New Zealand.”

(* No link available. Page removed from National Party website)

With our current debt of $66.3 billion, we no longer have a safety-buffer. That is the current dire state of our government books.

It is astonishing that Joyce has the nick-name of “Mr Fixit”, as he makes irresponsible hints of tax cuts to come.

Little wonder that Joyce’s unearned reputation as “Mr Fix It” was deconstructed by journalist and political analyst, Gordon Campbell;

The myth of competence that’s been woven around Steven Joyce – the Key government’s “Minister of Everything” and “Mr Fixit” – has been disseminated from high-rises to hamlets, across the country. For five years or more, news outlets have willingly (and non-ironically) promoted the legend of Mr Fixit…

[…]

Of late however, the legend has lost some of its lustre. More than anything, it has been his handling of the SkyCity convention deal that has confirmed a lingering Beltway suspicion that Joyce’s reputation for business nous has been something of a selfie, with his competence appearing to be inversely proportional to his sense of self-esteem. Matthew Hooton’s recent critique of Joyce in NBR – which was inspired by how the SkyCity convention deal had cruelly exposed Joyce’s lack of business acumen – got a good deal of traction for that reason. On similar grounds, Joyce’s penchant for (a) micro-managing and (b) the prioritising of issues in terms of their headline potential has resulted in his ministerial office becoming somewhat notorious around Parliament for (c) its congested inefficiency and for (d) a not-unrelated extent of staff burnout.

[…]

Not only is Joyce’s ministerial office renowned as an administrative bottleneck – where issues tend to be ranked in terms of their p.r. potential for the Minister – none of this seems to be in service of any wider goal or vision. As Mr Fixit, Joyce tends to be engaged in the equivalents of blown fuses and leaking taps – rather in the re-design of the political architecture. Joyce has simply never been – and has never pretended to be – a big picture kind of politician. He has been never someone with an abiding interest in – or the intellectual stamina for – systemic change.

The re-election of National this year – by any means necessary, whether beneficial to New Zealand or not, no matter what the social or financial costs – appears to be ‘Mr Fixit’s’  latest ‘DIY’ project.

And like most DIY budgets, wait for the blow out.

Just like 2009.

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References

Interest.co.nz: Finance Minister says Government remains ‘committed to reducing the tax burden

Scoop media: Tax cuts still in the mix for Joyce’s first budget

Sharechat: Tax cuts still in the mix for Finance Minister Steven Joyce’s first budget

Radio NZ: Budget date set, tax cuts likely

NBR: Government hints at tax cuts in Budget 2017

Fairfax media: Joyce signals low and middle earners’ top rates target for tax cuts

NZ Herald:  The Economy Hub – About those tax cuts… Steven Joyce, the big interview

NZ Herald: John Key – State of the Nation speech

Scoop media: Government will not borrow for tax cuts

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

Guide2: National Party – Tax Policy

NZ Treasury: Financial Statements of the Government of New Zealand for the Year Ended 30 June 2010 – Debt

NBR: Tax cuts scrapped in budget

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

NZ Herald: Govt borrowing $380m a week

Fairfax media: Extensive welfare shake-up needed – report

NZ Herald: Food parcel families made poor choices, says Key

NZ Treasury: Budget Economic and Fiscal Update 2016

Beehive: 2017 Budget to be presented on 25 May

Beehive: Finance Minister requests cost-benefit analysis on DTIs

NZ Herald: New Zealand residential property hits $1 trillion mark

Beehive: Almost 57,000 student loan borrowers found in Australia

Scoop media: John Key Speech – State Sector Under National

Werewolf: The Myth of Steven Joyce

Other Blogs

The Hand Mirror: A crack in the wall

Previous related blogposts

Tax cuts & school children

Letter to the editor: Setting it straight on user-pays in tertiary education

Letter to the Editor: tax cuts bribes? Are we smarter than that?

The Mendacities of Mr Key #3: tax cuts

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

The Mendacities of Mr English – Social Services under National’s tender mercies

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This blogpost was first published on The Daily Blog on 20 February 2017.

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The Mendacities of Mr English – Social Services under National’s tender mercies

12 February 2017 2 comments

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Context

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On 25 January, as Radio NZ returned to it’s normal broadcasting schedule (and putting away it’s dumbed-down “summer programming” until next December/January), John Campbell had his first interview with John Key’s replacement, Bill English.

Campbell raised several issues with English; the US withdrawal from the TPPA; the Pike River mine disaster; and the housing crisis. At this point, English made this staggering claim;

@ 5.58

“We’ve got a government actually with a good record on addressing, in fact, some of the toughest social issues. There may be disagreement over means by which we’re doing it, ah, but our direction is pretty clear. And you know over, certainly heading into election year we think that the approach the government’s developed around social investment, around increasing incomes is the right kind of mix – “

English’s bland assertion that “government actually with a good record on addressing, in fact, some of the toughest social issues” is at variance with actual, real, mounting socio-economic problems in this country.

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Key indicator #1: Unemployment

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The latest HLFS unemployment stats show an increase from 4.9% to 5.2% in the December 2016 Quarter. However, in all likelihood, the unemployment numbers are actually much, much, higher since Statistics NZ arbitrarily altered the way it  calculated what constituted  unemployment.

On 29 June 2016, Statistics NZ announced that it would be changing the manner in which it defined a jobseeker;

Change: Looking at job advertisements on the internet is correctly classified as not actively seeking work. This change brings the classification in line with international standards and will make international comparability possible.

Improvement: Fewer people will be classified as actively seeking work, therefore the counts of people unemployed will be more accurate.

The statement went on to explain;

Change in key labour market estimates:

  • Decreases in the number of people unemployed and the unemployment rate

  • Changes to the seasonally adjusted unemployment rate range from 0.1 to 0.6 percentage points. In the most recent published quarter (March 2016), the unemployment rate is revised down from 5.7 percent to 5.2 percent 

  • Increases in the number of people not in the labour force 

  • Decreases in the size of the labour force and the labour force participation rate

The result of this change? At the stroke of a pen, unemployment fell from 5.7% to 5.2% for the March 2016 Quarter (and subsequent Quarters).

If the “current unemployment figures” from Stats NZ are reported as “5.2%’, they may well be back to the original March 2016 figure of 5.7%, before the government statistician re-jigged definitions.

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Key indicator #2: Housing

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– Home Ownership

According to the 1984 NZ  Yearbook, in 1981 the number of rental dwellings numbered 25.4% of housing. 71.2% were owner-occupied. Nearly three quarters of New Zealanders  owned their homes.

Home ownership reached it’s maximum height in 1991, when it stood at 73.8%. Since then, it has steadily declined.

By 2013 (the most recent census survey), the numbers of rental dwellings had increased to 35.2% (up 33.1% in 2006). Home ownership had decreased to  49.9%  (down from  from 54.5% in 2006). If you include housing held in Family Trusts, the figure rises to 64.8% of households owning their home in 2013, down from 66.9% in 2006.

Whether you include housing held in Family Trusts (which may or may not be owner-occupied or rented out), home ownership has fallen steady since the early 1980s.

Renting has increased from 25.4% to 35.2%.

More and more New Zealanders are losing out on the dream of home ownership. Conversely, more and more of us are becoming tenants in our own country.

As Bernard Hickey from Interest.co.nz said in December last year;

Nearly two thirds of the 430,000 households formed since 1991 are tenants.

Think about that for a moment. It is a stunning revelation of how the young and the poor have been hit the hardest by the changes in New Zealand since the mid-1980s, and on an enormous scale.

It means two thirds of the kids born in those families grew up in rental accommodation, and more than 80% of those are private rentals (although the Housing NZ homes are often no better). That means they often grew up in mouldy, damp, cold and insecure housing. It’s true that some homes occupied by their owners are also below par, but it’s a much lower proportion and owners have the option to improve their homes through insulation and ventilation.

The NZ$696 billion increase in the value of New Zealand’s houses to NZ$821 billion between 1991 and 2015 means the 64% of owners in live-in houses have also had plenty of financial flexibility to improve those houses. Renters have had no access to that wealth creation and are not allowed to put a pin in the wall, let alone put in a ventilation system or some batts in the ceiling. The take-up for the Government’s home insulation and heating subsidies were vastly higher among home-owners than they were for landlords.

Those 284,000 renting households formed since 1991 have also often been forced to move schools and communities and all the roots that build families because New Zealand’s rental market is so transient.

[…]

It illustrates the scale of the fallout from that collapse in home ownership from 1991. Not only has it handicapped the education, health and productivity of a entire generation of New Zealanders, but it is set to magnify the likely growth in pension and healthcare costs of our ageing population. And that’s before the wealth and income inequality effects.

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– Affordability

In 2016, the 13th Annual International Demographia International Housing Affordability survey rated New Zealand as one of the most unaffordable housing markets in the world;

The most affordable major housing markets in 2015 are in the United States, with a moderately unaffordable Median Multiple of 3.9, followed by Japan (4.1), the United Kingdom (4.5), Canada (4.7), Ireland (4.7) and Singapore (4.8). Overall, the major housing markets of Australia (6.6), New Zealand (10.0) and China (18.1) are severely unaffordable. (p2)

[…]

In New Zealand, as in Australia, housing had been rated as affordable until approximately a quarter century ago. (p24)

A 2014 report by the NZ Institute for Economic Research stated  the “the average house price rose from the long-run benchmark of three times the average annual household income to six times“;

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The NZIER report refers to several reasons for increasing housing prices; slow supply of land; demographic demand (from ‘Baby Boomers’); and investor demand caused by lack of a capital gains tax. Interestingly, the Report also refers to an “over-supply of finance”;

The loosening of financial standards and rising household debt relative to income has happened over a long period of time. The increase in indebtedness has coincided with rising house prices relative to incomes. This suggests that increased household indebtedness has at least partly contributed to the increasing price of homes. (p14)

Prior to Roger Douglas de-regulating the banking/finance sector, New Zealand banks could only lend depositor’s funds as mortgages.

As a result, mortgage money was “tight”, and scarcity helped keep house prices down. Vendor’s expectations were kept “in check” by scarcity of bank funds. Prior to the mid 1980s, Vendor’s Finance (by way of a Second Mortgage) were commonly-used financial tools to assist house-owners to sell and buyers to complete a purchase.

Once the banking sector was opened up, and monetary policy relaxed, cheap money flooded in from overseas for banks to on-lend to house-purchasers. As property investor, Ollie Newland vividly explained in the 1996 TV documentary, Revolution;

“I got a phone  call from my bank manager to say some bigwigs were coming up from Wellington to have a chat with me. I thought it was just one public relations things they do. I had a very small office, it wasn’t much bigger than a toilet cubicle, and those five big fellows  crowded in with their briefcases and books and they sat on the floor and the arms of the chairs – I only had one chair in the place – and stood against the walls. Their first words to me were, we’re here to lend you money. As much as you want. For somebody like me, and I’m sure it’s the same for everybody else, to suddenly be told by the bank manager that you could have as much money as you want, help yourself, that was a revelation. We thought we had died and gone to heaven.”

Unfortunately, the side affect of this was to increase vendor’s expectations to gain higher and higher prices for their properties. Combined with recent high immigration, and a lack of a comprehensive capital gains tax, and the results have been troubling for this country;

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As well as increasingly unaffordable housing, we – as a nation – are sitting on a trillion-dollar fiscal bomb.

Think about that for a moment.

Little wonder that in September last year, the Reserve Bank issued the sternest warning yet that we were headed for impending economic mayhem;

A sharp correction in house prices represents a key risk to the financial system, and one that is increasing the longer the current boom in house prices persists. A severe downturn in house prices could have major implications for the banking system, with over 55 percent of bank loans secured against residential property. Moreover, elevated household debt levels and a growing exposure of the banking system to investor loans could reinforce a housing downturn and extend reductions in economic activity, as highly indebted households are forced to reduce consumption and sell property.

As with many other individuals, institutions, organisations, business leaders, left-wing commentators, media, political pundits, political parties, the NZIER was (and still is) calling for a comprehensive capital gains tax to be implemented.

Even then, this blogger suspects we may be too late. National (and it’s predecessor, to be fair) have left it far to late and the economic horse has well and truly bolted.

Even a Capital Gains Tax at 28% – New Zealand’s current corporate tax rate – may be insufficient to dampen speculative demand for properties.

Meanwhile, the dream of Kiwis owning their own homes continues to slip away.

Depressingly, New Zealanders themselves have permitted this to happen.

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– State Housing

If the Middle Classes and their Millenial Offspring are finding it hard to buy their first home, think of the poorest  families and individuals in our communities. For them, social housing consists of packing multiple families into a single house; living in an uninsulated, drafty,  garage; or in cars.

Last year, the story of mass homelessness exploded onto our media and our “radar” as New Zealanders woke up to the reality of persistent poverty in our cities;

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Although on occassion, the mainstream media found them themselves  in embarrassingly ‘schizophrenic’ situations as they attempted to reconcile reporting on our growing housing crisis – whilst raising advertising revenue by  promoting “reality” TV programmes that were far, far removed from many people’s own disturbing reality;

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According to UNICEF;

295,000 New Zealand kids are living beneath the poverty line, which means they are living in households where income is less than 60% of the median household income after housing costs are taken into consideration.

One way to alleviate poverty is to provide state housing, at minimal rental, to families suffering deprivation. Not only does this make housing affordable, but also strengthens a sense of community and reduces transience.

Transience can have deletarious effects on families – especially on children – who then struggle with the stresses of losing friends; adjusting to new neighbourhoods, and new schools.

A government report states that transience for children can have extreme, negative impact on  their learning;

Nearly 3,700 students were recognised as transient during the 2014 year. Māori students were more likely to be transient than students in other ethnic groups.

[…]

Students need stability in their schooling in order to experience continuity, belonging and support so that they stay interested and engaged in learning.

All schools face the constant challenge of ensuring that students feel they belong and are encouraged to participate at school. When students arrive at a school part-way through a term or school year, having been at another school with different routines, this challenge may become greater.

Students have better outcomes if they do not move school regularly. There is good evidence that student transience has a negative impact on student outcomes, both in New Zealand and overseas. Research suggests that students who move home or school frequently are more likely to underachieve in formal education when compared with students that have a more stable school life. A recent study found that school movement had an even stronger effect on educational success than residential movement.

There is also evidence that transience can have negative effects on student behaviour, and on short term social and health experience

Writing for The Dominion Post, in April 2014, Elinor Chisholm and  Philippa Howden-Chapman pointed out the blindingly obvious;

Continuity of education and supportive relationships with teachers are critical for children’s educational performance.

“Churn” is not good for educational performance or enrolment in primary health care, where staff can ensure children are properly immunised and chronic health problems can be followed up.

It was for this reason that, in our submission on the Social Housing Reform Bill late last year, we strongly recommended that families with school- age children should be excluded from tenancy review.

Secure tenure and stability at one school would allow children the best chance of flourishing. In high- performing countries such as the Netherlands, children are explicitly discouraged from changing schools in the middle of the school year.

The bill had announced the extension of reviewable tenancies to all state tenants (new state tenants had been subject to tenancy review since mid- 2011). However, the housing minister, as well as the Ministry of Business, Innovation and Employment, had made clear that the disabled and the elderly were to be excluded from tenancy reviews.

In our submission, we acknowledged the Government for recognising the importance of secure tenure.

People who are compelled to move house involuntarily can experience stress, loss, grief and poorer mental health. Housing insecurity is also associated with poorer physical health.

National’s policy of ending a state “house for life”;  increased tenancy reviews for state house tenants, coupled with the sale of state houses, is inimical to the stabilisation of vulnerable families; the well-being of children in those families; and to communities.

In 2008, Housing NZ owned 69,000 rental properties.

By 2016, that number had dropped significantly to 61,600 (plus a further 2,700 leased).  National had disposed of some 7,400 properties.

Between 2014 and 2016, at least 600 state house tenants lost their homes after “reviews”.

This, despite our growing population.

This, despite John Key’s own family having been provided with the security of a state house, and Key enjoying a near-free University education.

This, despite John Key, ex-currency trader,  and multi-millionaire, admitting in 2011 that New Zealand’s under-class was growing.

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Key indicator #3: Incomes & Inequality

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In June 2014, Oxfam reported on New Zealand’s growing dire child poverty crisis;

The richest ten per cent of New Zealanders are wealthier than the rest of the population combined as the gap between rich and poor continues to widen.

Oxfam New Zealand’s Executive Director Rachael Le Mesurier said the numbers are a staggering illustration that the wealth gap in New Zealand is stark and mirrors a global trend that needs to be addressed by governments in New Zealand, and around the world, in order to win the fight against poverty.

“Extreme wealth inequality is deeply worrying. Our nation is becoming more divided, with an elite who are seeing their bank balances go up, whilst hundreds of thousands of New Zealanders struggle to make ends meet,” said Le Mesurier.

Figures for the top one per cent are even more striking. According to the most recent data, taken from the 2013 Credit Suisse Global Wealth Databook, 44,000 Kiwis – who could comfortably fit into Eden Park with thousands of empty seats to spare – hold more wealth than three million New Zealanders. Put differently, this lists the share of wealth owned by the top one per cent of Kiwis as 25.1 per cent, meaning they control more than the bottom 70 per cent of the population.

Oxfam New Zealand’s Executive Director, Rachael Le Mesurier, was blunt in her condemnation;

“Extreme inequality is a sign of economic failure. New Zealand can and must do better. It’s time for our leaders to move past the rhetoric. By concentrating wealth and power in the hands of the few, inequality robs the poorest people of the support they need to improve their lives, and means that their voices go unheard. If the global community fails to curb widening inequality, we can expect more economic and social problems.”

A 2014 OECD report placed New Zealand as one of the worst for growing inequality;

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Not only was inequality a social blight, but according to the report it impacted negatively on economic growth;

Rising inequality is estimated to have knocked more than 4 percentage points off growth in half of the countries over two decades. On the other hand, greater equality prior to the crisis helped increase GDP per capita in a few countries, notably Spain.

According to the OECD assessment,  income inequality had impacted the most on New Zealand, with only Mexico a close second;

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The OECD Report went further, making this “radical” observation;

The most direct policy tool to reduce inequality is redistribution through taxes and benefits. The analysis shows that redistribution per se does not lower economic growth.

The statement went on to “qualify”  any suggestion of socialism with a caveat. But the declaration that “analysis shows that redistribution per se does not lower economic growth” remained, constituting a direct contradiction and challenge to current neo-liberal othodoxy.

In August 2015, former City Voice editor, and now NZ Herald social issues reporter, Simon Collins revealed the growing level of child poverty in this country;

The Ministry of Social Development’s annual household incomes report shows that the numbers below a European standard measure of absolute hardship, based on measures such as not having a warm home or two pairs of shoes, fell from 165,000 in 2013 to 145,000 (14 per cent of all children) last year, the lowest number since 2007.

Children in benefit-dependent families also dwindled from a recent peak of 235,000 (22 per cent) in 2011, and 202,000 (19 per cent) in 2013, to just 180,000 (17 per cent) last year – the lowest proportion of children living on benefits since the late 1980s.

But inequality worsened because average incomes for working families increased much faster at high and middle-income levels than for lower-paid workers.

The net result was that the number of children living in households earning below 60 per cent of the median income after housing costs jumped from a five-year low of 260,000 in 2013 to 305,000 last year, the highest since a peak of 315,000 at the worst point of the global financial crisis in 2010.

In percentage terms, 29 per cent of Kiwi children are now in relative poverty, up from 24 per cent in 2013 and only a fraction below the 2010 peak of 30 per cent.

In September 2016, Statistics NZ confirmed the widening of  income inequality from 1988 to 2015,  between households with high  and  low incomes;

  • In 2015, the disposable income of a high-income household was over two-and-a-half times larger than that of a low-income household.
  • Between 1988 and 2015, the income inequality ratio increased from 2.24 to 2.61.  

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The neo-liberal “revolution” took place from the mid-to-late 1980s. Hardly surprisingly, the rise in income inequality takes place at the same time.

Income inequality dipped from 2004 when Labour’s “Working for Families” was introduced.

However, income inequality worsened after 2009 and 2010, when National cut taxes for the rich; increased GST (which impacts most harshly on low-income families and individuals); and increased user-charges on essential services such as prescription fees, ACC levies, court fees, etc. Increasingly complicated WINZ requirements for annual re-applications for benefits and complex paperwork may also have worsened the plight of the country’s poorest.

Despite all the promises made by the Lange government; the Bolger government; and every government since, our neo-liberal “reforms” have not been kind to those on low and middle incomes.

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Key indicator #4: Child poverty

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According to Otago University’s Child Poverty Monitor in 2014;

Child poverty has not always been this bad – the child poverty rate in the New Zealand many of us grew up in 30 years ago was 14%, compared to current levels of 24%.

Thirty years prior to 2014 was the year 1984. David Lange’s Labour Party had been elected to power.

Roger Douglas was appointed Minister of Finance. The Member for Selwyn, Ruth Richardson, was also in Parliament, taking notes.

The term “trickle down” entered our consciousness and vocabulary. It promised that, with tax cuts; privatisation; winding back state services; and economic de-regulation, wealth would trickle down to those at the bottom of the socio-economic ladder.

How is that working out for us so far?

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So much for  the “aspirational dream” offered to us by “trickle down” economics.

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Key indicator #5: The Real Beneficiaries

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In June last year, Radio NZ reported  the  latest survey of household wealth by Statistics NZ. It found;

“…the country’s richest individuals – those in the top 10 percent – held 60 percent of all wealth by the end of July 2015. Between 2003 and 2010, those individuals had held 55 percent. The richest 10 percent of households held half of New Zealand’s wealth, while the poorest 40 percent held just 3 percent of total wealth.”

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Following hard on the heels of the Stats NZ report,  Oxfam NZ made a disturbing revelation;

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Three years after her previous public warning,  Oxfam New Zealand’s, Rachael Le Mesurier, was no less scathing. Her exasperation was clear;

“The gap between the extremely wealthy and the rest of us is greater than we thought, both in New Zealand and around the world. It is trapping huge numbers of people in poverty and fracturing our societies, as seen in New Zealand in the changing profile of home ownership.”

National minister, Steven Joyce responded. He was his usual mealy-mouthed self when interviewed on Radio NZ about the Oxfam report;

“There’s always inequality but again you have got to look at those reports carefully because in that report a young medical graduate who has just come out of university would be listed as somebody who is in the poorest 20 per cent because they have a student loan.They’ll pay that student loan off in about four years and they’ll be earning incomes of over $100,000 very quickly.

So although they’re in those figures today, they won’t be in those figures in five years’ time.”

Which appears to sum up the National government’s head-in-sand attitude on child poverty and income inequality.

Economist, Shamubeel Eaqub, though, had a different “take” on the issue and warned;

“Every time we see a new statistic on inequality, whether it’s in terms of income, opportunities or wealth, it shows very clearly that New Zealand is being ripped apart by our class system.”

When economists begin to issue dire social warnings, you know that matters have taken a turn for the worse.

So where does that leave our New Dear Leader Bill English  with his insistence  that “we’ve got a government actually with a good record on addressing, in fact, some of the toughest social issues”?

English’s assertion to John Campbell on Radio NZ, on 25 January, (outlined at the beginning of this story) makes sense only if it it is re-phrased;

“We’ve got a government actually with a good record on addressing, in fact, some of the toughest wealth-accumulation issues. There may be disagreement over means by which we’re doing it, ah, but our direction is pretty clear. And you know over, certainly heading into election year we think that the approach the government’s developed around private investment, around increasing incomes for the wealthiest ten percent is the right kind of mix – “

Not a very palatable message – but vastly more truthful as income inequality continues to wreak appalling consequences throughout our communities and economy.

Otherwise, English appears to reside not so much in the Land of the Long White Cloud, but in the Realm of Wishful Thinking.

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References

Radio NZ: Checkpoint – Bill English on the challenges of his first month as PM

Scoop media: Unemployment rate rises to 5.2 percent as labour force grows

Statistics NZ: Household Labour Force Survey – Revisions to labour market estimates

NZ 1984 Yearbook: 3A – General SummaryCensus of population and dwellings 1981 (see “Tenure of Dwelling”)

Statistics NZ: Owner-Occupied Households

Statistics NZ: 2013 Census QuickStats about national highlights – Home Ownership

Interest.co.nz: Bernard Hickey says the collapse in home-ownership rates among families formed since 1991 is an unfolding disaster for NZ’s economy, our society and the Government’s finances

International Demographia: 13th Annual  International Housing Affordability

NZ Institute for Economic Research: The home affordability challenge

Monetary Meg: What is vendor finance?

Radio NZ: NZ immigration returns to record level

NZ On Screen: Revolution

NZ Herald: New Zealand residential property hits $1 trillion mark

Reserve Bank: Regulatory Impact Assessment of revised LVR restriction proposals September 2016 – Adequacy Statement

The Guardian: New Zealand housing crisis forces hundreds to live in tents and garages

Fairfax media: One in 100 Kiwis homeless, new study shows numbers quickly rising

Al Jazeera: New Zealand’s homeless: Living in cars and garages

NZ Herald: Homelessness rising in New Zealand

Radio NZ: Homeless family faces $100k WINZ debt

TV3 News: The hidden homeless – Families forced to live in cars

TV1 News: Housing crisis hits Tauranga, forcing families into garages and cars

UNICEF: Let’s Talk about child poverty

Education Counts: Transient students

Dominion Post: Housing policy will destabilise life for children

NZ Herald: State housing shake-up – Lease up on idea of ‘house for life’

Radio NZ: Thousands of state houses up for sale

Housing NZ: Annual Report 2008/09

Housing NZ: Annual Report 2015/16

Fairfax media: Nearly 600 state house tenants removed after end of ‘house for life’ policy

NZ Herald: Key admits underclass still growing

Oxfam: Richest 10% of Kiwis control more wealth than remaining 90%

NZ Herald: 300,000+ Kiwi kids now in relative poverty

Statistics NZ: Income inequality

Law Society: Civil court fee changes commence

Fairfax media: Prescription price rise hits vulnerable

Salaries.co.nz: ACC levies to increase in April 2010

Radio NZ: Thousands losing benefits due to paperwork

Scoop media: Health Issues Highlighted in Child Poverty Monitor

NZ Herald: Hungry kids foraging in pig scraps ‘like the slums of Brazil’

Fairfax media: Damp state house played part in toddler’s death

NZ Herald: More living in cars as rents go through roof

NZ Doctor: Tackle poverty to fight rheumatic fever

Radio NZ: 10% richest Kiwis own 60% of NZ’s wealth

Fairfax media: Wealth inequality in NZ worse than Australia

Radio NZ: Steven Joyce responds to Oxfam wealth inequality report

Additional

Dominion Post: Kids dragged from school to school

Other Blogs

The Standard: John Key used to be ambitious about dealing with poverty in New Zealand

Previous related blogposts

Lies, Damned lies and Statistical Lies

Lies, Damned lies and Statistical Lies – ** UPDATE **

National exploits fudged Statistics NZ unemployment figures

2016 – Ongoing jobless tally and why unemployment statistics will no longer be used

CYF – The Hollowing Out of a State Agency

The Mendacities of Mr Key # 18: “No question – NZ is better off!”

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

The Mendacities of Mr English – Fibbing from Finance Minister confirmed

Rebuilding the Country we grew up in – Little’s Big Task ahead

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This blogpost was first published on The Daily Blog on 7 February 2017.

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