Posts Tagged ‘Treasury’

Did National knowingly commit economic sabotage post-2008?

24 January 2013 19 comments


cheesecolour tax cuts


By now, it has become fairly well known that National’s tax cuts in 2009 and 2010 were unaffordable and impacted disastrously on government revenue (and subsequent spending) in following years.

In 2008, National tempted voters with promises of “self funding” tax-cuts. (Though “self funding” was never very clearly explained.)

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.

Source: Economy – Tax Policy 2008

The pledge of  “no requirement to cut public services  ” was also one that was made (and subsequently broken in dramatic fashion).

In May 2008, Key was making bold statements  of  “meaningful”  tax cuts,  “north of $50“,

John Key…  said National would be looking at economic figures and what other promises Dr Cullen made in the budget on Thursday… But he was very confident” National could deliver an ongoing programme of tax cuts, like that promised in 2005”.

See: National’s 2005 tax cut plans still credible – Key

Despite the growing black clouds of  a global downturn, Key was still optimistic. When questioned by Sue Eden of the NZ Herald whether National’s tax cuts programme of 2005 were still credible given uncertain economic circumstances, Dear Leader replied,

Well, I think it is.”


By early August 2008, as United States mortgage-institutions Fannie Mae and Freddie Mac  were  sinking into a credit crisis, Key remained defiant in the face of looming recessionary forces,

National will fast track a second round of tax cuts and is likely to increase borrowing to pay for some of its spending promises, the party’s leader John Key says.

But Mr Key said the borrowing would be for new infrastructure projects rather than National’s quicker and larger tax cuts which would be “hermetically sealed” from the debt programme.

The admission on borrowing comes as National faces growing calls to explain how it will pay for its promises, which include the larger faster tax cuts, a $1.5 billion broadband plan and a new prison in its first term.

It has also promised to keep many of Labour’s big spending policies including Working for Families and interest free student loans.

Mr Key today said there would be “modest changes” to KiwiSaver.

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

How does one ” “hermetically seal” tax cuts  from the debt programme ” ?!

The ‘crunch’ came on 6 October 2008, when Treasury released a document known as the “PREFU” (Pre-Election Economic and Fiscal Update). This Treasury report analyses and discloses the fiscal and economic state of the nation, with short and medium-term outlooks, based on international and local trends.

The 2008 PREFU started with this dire warning,

The economic and fiscal outlook has deteriorated since the Budget Update

In the five months since the Budget Update was finalised, we have witnessed a number of significant domestic and international developments: in particular, the deepening of the international financial crisis, the slowing housing market, and growing pressure on households and businesses. These developments are key factors in our updated view of the economy and the government’s finances set out in this Pre-election Update.

We are now expecting weaker economic growth over the next few years, resulting in slower growth in tax revenue and higher government expenditure. Combined with increases in the costs of some existing policies, these factors lead to sustained operating balance deficits and higher debt-to-GDP ratios.

The economic outlook is weaker …

Imbalances have built up during nearly a decade of sustained growth, including inflation pressures, an overvalued housing market, high household debt and a large current account deficit, with implications for interest rates and the exchange rate. With the economy slowing, these imbalances are starting to unwind – as are imbalances in the global economy – but there is a long way to go.

See: PREFU 2008 – Executive Summary

The opening statement went on to state with unequivocal frankness,

The international financial crisis has deepened and is having an adverse impact on global economic growth. New Zealand is expected to feel the effects of the financial crisis principally through the tighter availability and increased costs of credit, but also through a fall in business and consumer confidence, falling asset values and lower demand and prices for our exports.


The weaker economic growth that we are forecasting is reflected in reductions in our tax revenue forecasts. Compared with the Budget Update, we expect tax revenue to be on average around $900 million lower for each of the next three years.

  • The weak outlook for the household sector will have a direct impact through GST, which is forecast to grow by around 4% per annum over the next five years, compared with 7.5% over the six years to 2007.
  • With firms’ margins under pressure and profitability low, underlying corporate income tax is forecast to decline by 3% in the 2009 June year, and growth is expected to be negligible in 2010 as accumulated tax losses offset profits.
  • A relatively robust forecast for wages over the next few years helps to keep underlying growth in PAYE up at around 5% per annum.

The largest single change in government spending in the Pre-election Update is an increase in the expected costs of benefits. Compared with the Budget Update, benefit expenses are around $500 million per annum higher, reflecting both an increase in numbers of beneficiaries as a result of the slowing economy, and the impact of higher inflation on the costs of indexing benefits.


As a result of the various factors set out above, the government’s debt outlook deteriorates. This leads to higher debt servicing costs, which are forecast to be around $500 million per annum higher


Treasury continued – in considerable detail – to outline the gloomy prospects  for New Zealand’s fiscal and economic short-term and medium-term outlooks (see:  Fiscal Outlook),

In Risks and Scenarios, Treasury wrote,

Since the Budget Update, global developments have been more in line with the alternative scenario than the Budget forecast and global financial and economic conditions have worsened significantly. On the domestic front, finance companies have continued to face reduced debenture funding and more finance companies went into receivership or moratorium in the past three months. The speed and magnitude of the slowing in domestic demand has been more abrupt and greater than forecast in the Budget Update.

Reflecting these recent international and domestic developments, we have made significant downward revisions to our growth forecasts in this Update. However, the financial turmoil has intensified since the finalisation of our economic forecasts. As a result, we have seen the downside risks to our growth forecasts increase markedly, particularly in the years to March 2010 and 2011.

See: 2008 PREFU – Risks and Scenarios

Unlike his “lack of knowledge” over the GCSB monitoring of Kim Dotcom, or the Police report on John Banks, John Key cannot feign ignorance over the 2008 PREFU report,

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.”

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

Especially when Bill English admitted his knowledge of the PREFU,

The figures outlined in the Prefu are a bit worse than we expected, and we are currently digesting them. However, National is not content to run a decade of deficits.”


In an example of black-humoured irony, English went on to say,

New Zealand can no longer afford Michael Cullen and Labour’s big-spending low-growth policies.”


But evidently New Zealand could afford National’s  “ big-tax-cutting low-growth policies“?

On 6 October 2008, Key reacted to the PREFU (proving he had full knowledge of it’s contents, and made this astounding comment when questioned about National’s planned tax cuts, at 0:40,

“REPORTER: What is your growth programme, does it include tax cuts?.”

“JOHN KEY: It certainly does include tax cuts. We have a programme of tax cuts.”


Key reacts to 2008 PREFU figures

See: Key reacts to [2008] PREFU figures


Key’s comments following 0:40 seem equally bizarre, and at 2:28 admits that “… we can’t deliver anything other than, ‘yknow,   a legacy of deficits for New Zealand…” – and still continues to warble on about cutting taxes, including trying to justify “debt for future growth“.

The consequences were a $2 billion hole in government tax revenue (see:  Outlook slashes tax-take by $8b;   Govt’s 2010 tax cuts ‘costing $2 billion and counting’); budget deficits (see:  Budget deficit $1.3b worse);   increased borrowings (see:  Govt borrowing $380m a week); cuts to the State sector in terms of services and jobs (see:  Early childhood education subsidies cut; 10 August: Unhealthy Health Cuts, 2500 jobs cut, but only $20m saved); and surreptitious increases in government charges and taxation elsewhere (see:  Petrol price rises to balance books; Student loan repayments hiked, allowances restrictedPrescription charges on the rise); and asset sales  (see: Govt says asset sales will cut debt).

The point of this blogpost is simple.

It’s not to look back, at the past…

… it is to look forward to the future.

When National makes Big Promises, be wary of the nature of said promises, and the underlying , invisible “hooks” contained within them.

Quite simply when the Nats offer you a “tax cut”, the first question that should pop into your head is not, “Oh goody, I wonder how much I’ll get!”

The first thought should instead be, “Uh oh, I wonder how much that’s going to cost me!”.

Because as sure as evolution made little green apples and the sun will rise tomorrow, the Nats care very little about your pay packet.

They care only about “rewarding hard work” [translation: more income for the rich] and “making the veconomy more competitive”  [translation:  implementing their neo-liberal agenda for their ideological crusade to turn this country into a Market-driven economy, away from an egalitarian society].

In the process, if they have to turn our country into a slow-rolling, economic train-wreck, then so be it.

They can always blame someone else,


Key blames Labour for his Govt's wage gap failings

See video: Key blames Labour for his Govt’s wage gap failings


Key even blames Labour for the  global recession !? (see @ 0:48)

In the meantime, did National recklessly  damage the New Zealand economy with unaffordable tax cuts, despite Key & Co being given ample warning by Treasury – simply to get elected in 2008?

Draw your own conclusions.

The evidence speaks for itself.


I lied  get over it!




Additional reading

The Atlantic: Tax Cuts Don’t Lead to Economic Growth, a New 65-Year Study Finds (16 Sept 2012)


National Party: Economy – Tax Policy 2008

NZ Herald: National’s 2005 tax cut plans still credible – Key (20 May 2008)

NZ Herald: Nats to borrow for other spending – but not tax cuts (2 Aug 2008)

The Treasury:  Pre-election Economic and Fiscal Update 2008 (6 Oct 2008)

NZ Herald: $30b deficit won’t stop Nats tax cuts (6 Oct 2008)

BBC News: Bank shares fall despite bail-out (13 Oct 2008)

Bay of Plenty Times: John Key: We cannot afford KiwiSaver (11 May 2011)



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John Key’s track record on raising wages – 5. The Minimum Wage

11 November 2012 7 comments


Continued from: John Key’s track record on raising wages – 4. Rest Home Workers



5. The Minimum Wage


From 2004 to 2008, the minimum wage rose from $9 to $12 – an increase of $3 in four years.

From 2009 to 2012, the minimum wage rose from $12 to $13.50 – an increase of $1.50 over three years.

See: Dept of Labour – Previous minimum wage rates

Last year, Labour, the Greens, NZ First, and Mana campaigned to raise the minimum wage to $15 ($16 for Mana).

When a worker at a fast-food outlet asked John Key to raise the minimum wage to $15 an hour, he  rejected the proposal, saying,

It will go up, but it won’t go up straight away.”

See:  Raising minimum wage won’t cost jobs – Treasury

Key’s right. At the glacial speed that National increases the minimum wage, it will take another three years to deliver $15 an hour.

Yet it took only a couple of years to implement two massive taxcuts that gave hundreds, thousands,  of dollars a week, to the top income earners.

Priorities, eh?

The real insult is that  Key and English both admit that the minimum wage is difficult to live on.

Key said,

Look, I think it would be very difficult for anyone to do that.”

See:  Ibid

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 ENGLISH:  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 ENGLISH:  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.

See: TVNZ’s Q+A: Transcript of Bill English, David Cunliffe interview

The Department of Labour claimed  a rise in the minimum wage  would cost 6,000 jobs.

But Treasury disagreed, saying,

This has not been true in the past. The balance of probabilities is that a higher minimum wage does not cost jobs.”

Raising the minimum wage would certainly benefit SMEs (Small-Medium Enterprises), as low-income earners spend their entire wages on goods and services. Any rise in paying wages should be offset by increasing till-takings with customers spending more.

So it appears blatantly obvious that no good reason exists not to raise the minimum wage.

After all, in 2009 and 2010, National gave away far more in tax cuts for the rich.

And precisely how does this raise wages, as per Dear Leader’s promises?

Next chapter: 6. Youth Rates



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EXCLUSIVE STORY: Anti-asset sale Flash Occupation at Clemenger BBDO offices!

28 August 2012 23 comments



Background: The Company

Clemenger Group Limited is the holding company of a group of companies involved in advertising and marketing communications services throughout Australia and New Zealand. It is the largest communications group in Australia and New Zealand. Clemenger Group Limited has about 1500 employees and is headquartered in Melbourne, Australia. 26% of the shares are held by Clemenger Communications staff and 74% by BBDO Worldwide. BBDO Worldwide is in turn part of the Omnicom Group, which the largest communications group in the world.”

Source:  Wikipedia Clemenger Group

Source: Clemenger Group/About CGL

Background: Asset Sales

Last year, National opened a tender for companies which might be interested in a multi-million dollar contract to handle an advertising/publicity campaign for up-coming asset sales,

Advertising agencies are working through the Christmas holiday period to meet a Treasury request for proposals to provide the advertising and communications campaigns that will accompany the Government’s partial privatisation agenda over the next three years.

While no budget is given for the contract, it is likely to be one of the largest new pieces of Government-funded advertising work agencies have seen for some time, but they have been given just 28 days to respond over the traditional shutdown period of Christmas and New Year.

See: TVNZ News: Ad agencies scramble for asset sales contract

On at least two fronts, the tender process was seen as dubious by various groups.


A formal Request for Proposals was issued on Decermber 15, with a deadline of January 9 for responses, leading industry veterans to suggest the Treasury has already made a choice of agency, but needs to follow Government rules requiring a tender process.

Advertising consultant and agency developer Mike Hutcheson says it is likely the Treasury already knows who they will give the job to, and this kind of fast-tracking is typical of such Government contracts.

“It’s a bit of a charade that Government departments and local authorities always go through because their choice is quite limited. There will be relatively few who can actually handle it,” said Hutcheson.

“Government departments have to go through a process and in fact it’s meant to be quite a transparent process, but usually it’s pre-determined.

“There will be someone in Government who would favour someone for sure. They’ll want someone to win, and whoever it is generally knows in advance”. “

See: Ibid

Secondly, the Green Party pointed out that seeking tenders for contracts over the December/Christmas and Easter period contravened Department of Prime Minister and Cabinet (DPMC) Guidelines for best-practice. The Guidelines states,

Unless it is unavoidable, government entities should be sensitive to the needs of busy people and not initiate tendering processes in the three weeks before Christmas, the week after Christmas and around Easter.”

See: Asset sale contract ‘broke rules’

So, not only was the timing of the tender process seen as disturbingly hasty by some – but it was held over a period which the Department of Prime Minister and Cabinet guidelines itself stated quite clearly, should be avoided.

A spokeswoman for Treasury, Chris Major, said whilst Treasury was ‘mindful’ of DPMC’s guidelines, that,

Those guidelines note that RFPs should be avoided at Christmas if possible; in the case of the Mixed Ownership Model programme it was deemed necessary and unavoidable to proceed with procuring advertising and communications services in December/January.”

See: Ibid

It’s hard to understand why Treasury wanted “to proceed with procuring advertising and communications services in December/January”  – no advertising or publicity has taken place either last year or this year.  Only a website has been put up, and there is no apparent reason for urgency in that regard.

Someone, it appears, was in a hurry to award this particular contract.

The tender process closed on 9 January 2011, and the lucrative contract was awarded to Australian-based company,  Clemenger BBDO, thereafter,

State-Owned Enterprises Minister Tony Ryall said Treasury made decisions about contracts.”

In which case, why have a Minister of the Crown?  Why not have Treasury run the country (gods forbid)?

Is this  the sort of  “personal responsibility” that National continually demands from the public – but not from themselves?  The “Buck Does Not Stop Here”, obviously.

Clemenger BBDO will be paid a multi-million dollar sum for the contract, but National has refused to disclose the figure, citing “commercial sensitivity”,

Finance Minister Bill English yesterday told Parliament the cost of the contracts were commercially sensitive but the Government would release figures ”in due course”.”

In effect, politicians are handing over unknown  millions of dollars of our money, to corporates,  to sell our own state assets, to corporates.

Al Capone was in the wrong job.

Tuesday, 28 August: Aotearoa is Not For Sale organised another ‘Flash Occupation’ – this time targetting Clemenger BBDO in Kent Tce, Wellington.

At around 2pm, the small group of a dozen activists – some in corporate attire – met at Te Aro (Pigeon) Park, in Manners St. The group discussed tactics; reaffirmed a committment to non-violence; and practiced singing several anti-sale songs. The songs were popular titles such as “Down by the Riverside“, which had been adapted for the current situation, and re-titled, “We’re gonna stop the asset sales“,



Placards and banners were prepared, including this new one, “No Asset Sales – No Higher Prices – No Corporate Welfare“,



All in readiness, the group set off to Kent Tce, a ten minute walk from the Park,



The group was in good spirits, and continued practicing singing the songs we would soon be sharing at the offices of Clemengers,



Target dead ahead; the corporate offices of Australian-based, Clemengers BBDO. Interesting to note that being an overseas-owned company, any fees paid to this company will be remitted offshore, to foreign shareholders.

The sale of our state assets was already resulting in the outflow of profits to overseas investors,



A brief demonstration took place outside the company’s doors. Considering the honking of car horns, it was evident that the public supported our presence, and more importantly, the message we were conveying,




The group then headed into the building,



The target of our ‘Flash Occupation’, emblazoned on the wall of the ground floor foyer,



And into the Reception Area, where a startled receptionist was the first to see the messages we had brought to Clemengers,



The Flash Occupation broke into song, as we moved through the offices,



At all times, the event was recorded. Not just to spread the event through on-line video, but to protect against mischievous allegations of violence or damage,



As the protestr moved through the offices, leaflets were distributed outlining why we were there and explaining why Clemenger’s participation in asset sales was unacceptable,



We sang our protest songs with gusto, and this blogger noticed more than a few office workers smiling to themselves. (Ok, we won’t be appearing any time soon on the next  “New Zealand’s Top Idol“…)



But we gave the Clemenger’s staff seated behind the activists entertainment, and a clear message: Aotearoa is not for sale!



At this point, Clemenger’s Wellington Managing Director, Andrew Holt (center, white shirt), appeared and advised us that the police had been called and that we should leave.

We stood firm. We had more songs to sing, and a final message to read out,



The singing continued. We would not move on until our message had been delivered, in full, and understood by everyone at Clemengers,




Andrew Holt  (standing behind banner) stood with some of his staff (unseen, behind banner), as the singing came to an end,



Shane read out a message, as Andrew Holt looked on, and  listened,

“The power companies Mighty River Power, Genesis Energy, and Meridian Energy belong to those who built them from scratch, benefitted from them in the past and benefit  from them today;

all New Zealanders.

The proposed sale of these State Owned Assets means the transfer from public into private ownership of these essential national services. We know that this will result in higher power prices for thepublic and loss of control of our electricity-generating capacity.

We think your role in this process is outrageous and we, as members of the public, object to paying fees to you to help sell what we already own.

No sale of state assets!”

In the background, another Clemengers staffer can be seen on the phone – talking with police?



Having delivered the message, the ANFS activists departed from the building peacefully, and with no damage or mess  left behind.

Another Flash Occupation peacefully and successfully completed, the group separated and departed.

Clemengers was now the second corporation, connected to asset sales, that had been visted by a Flash Occupation.

See: Anti-Sale protestors invade Bell Gully offices





Copyright (c)  Notice

All images are freely available to be used, with following provisos,

  •     Use must be for non-commercial purposes.
  •     Where purpose of  use is  commercial, a donation to Child Poverty Action Group is requested.
  •     For non-commercial use, images may be used only in context, and not to denigrate individuals.
  •     Acknowledgement of source is requested.


NZ Parliament:  Questions for Oral Answer: State-owned Energy Companies and Air New Zealand, Sales—Contracts for Related Services Govt ignores ad guidelines for SOE contract

Fairfax: Asset sale contract ‘broke rules’


Aotearoa Is Not For Sale – Facebook

Aotearoa Is Not For Sale – Website



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ACC – A Complete Cock-up

22 June 2012 1 comment



Revelations unearthed and made public by the Green Party, that ACC paid bonuses to their staff to ‘bump’ long-term clients from their books comes as no surprise. Only the most naive would still believe that everything was hunky-dory at ACC.

See:  ACC bonus pay for claimant cull

Faced with the revelations, ACC Minister, Judith “Hugs’n’Crushes” Collins belatedly admitted that ACC staff are paid bonuses, and tried to justify the payments as  “a good thing” because ‘it gets the clients back to work’.

Yeah, right.

Nice spin, Minister.

Then ACC’s departing chief executive Ralph Stewart chipped in, rejecting accusations that bonuses were made to bump clients of ACC’s books,

No one can leave ACC until they are rehabilitated. There are two clear steps. The rehabilitation step’s first, leaving the scheme second – it’s not the other way around.”

See:  ACC claimants removal motive denied

Let me put this as delicately as I can: bullshit.

This blogger is aware of at least one person in the late 1990s,  who was bumped from ACC’s books and onto a WINZ invalids benefit, after a work-related back-injury.  ACC actually paid for the client to be flown from Dunedin to Auckland, to be  “assessed” by one of ACC’s “independent” consultants.

Result; she was taken off ACC’s books and made a WINZ “client”.

If anyone wonders why the numbers of invalids and sickness beneficiaries have risen in past decade – whilst ACC’s long-term clients have reduced – wonder no more. This is where invalids/sickness beneficiaries have come from.

This is backed up by a  2007 report on ACC clients  removed from ACC’s books,  showing 46% were out of work, with nearly 25% on the unemployment benefit.

See:  Long-term ACC client list pruned


WINZ Beneficiaries


Actual MSD figures


ACC long-term clients




The woman in question received no rehabilitation and her back injury persists to this day.  “No one can leave ACC until they are rehabilitated” – therefore rings hollow in this blogger’s mind.

It is a bit rich for Ralph Stewart to be rejecting that bonuses were made to reduce long-term ACC clients – whilst at the same time   admitting,

Mr Stewart said long-term claimants have dropped by about 1200 since November, to about 10,400-10,500, but denied he was put in the job to move on claimants.

He said only 20 percent of staff incentives relate to rehabilitation.”

This is the same man who,

  • oversaw  ACC’s  accusations of extortion levelled against Ms Pullar and laid a complaint with the Police;
  • during the police investigation had listened to Bronwyn Pullar’s taped conversation of a meeting held between ACC staff; Michelle Boag; and herself;
  • and yet stayed silent at a subsequent media conference that the taped conversation actually proved Pullars innocence!


ACC Chief Executive Ralph Stewart and Chairperson John Judge


Aside from the very real possibility that ACC’s executives may be guilty of the crime of wasting Police time (see:  The Jackal: ACC’s false police complaint against Bronwyn Pullar), why on Earth should we believe anything that escapes Ralph Stewart’s mouth?

Ralph Stewart is not averse to mis-representing facts when his suits his agenda. He has already demonstrated that his word cannot be taken at face-value.

The evidence is compelling: ACC is mis-using Corporation funds to pay it’s staff bonuses to push long-term clients off its books.

Next question: what is Judith Collins going to do about it?





ACC minister put pressure on bosses to make complaint – Labour

TV3 Sixty Minutes:  The Eye of the Storm

Gordon Campbell on the incentive payments at ACC



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Fifty cents an hour? I’m under-whelmed by Dear Leader’s Generosity…

8 February 2012 5 comments



Labour Minister Kate Wilkinson today announced a 50 cents per hour  increase in the minimum wage, from $13 an hour, to $13.50 an hour.

Our Dear Leader says,

Between making sure that people can feed their children and look after their families and themselves and also ensure that they keep their job…

“…We’re on our way to the magical $15 people talk about, but we can’t get there in one step.” – John Key, 8 Feb

Dear Leader is now saying that families  “can feed their children and look after their families” on minimum wage?!

That’s not what Bill English said last year.  When questioned by Q+A’s Guyon Espiner on this issue, English responded,


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


In today’s “Dominion Post“,  Kate Wilkinson says that, “Government was advised raising the minimum wage would result in up to 6000 job losses“.

Noticeably,  she does not disclose what advice, or from whom, she is referring to. It can’t be Treasury advice, because as TV3’s Patrick Gower reported on his blog last year,


“…research from the United Kingdom suggests minimum wages may have no effect on employment, or that minimum wage effects may still exist, but they may be too difficult to detect and/or very small.” – Source


NZ  Treasury stated that “…the claim a minimum wage rise may cost jobs has not been true in the past“. – Ibid

In other words, Wilkinson and Key are making it up as they go along. And finding it increasingly difficult to keep their ‘stories’ straight, it would seem.

On the other hand, there is little ambiguity in this story from a couple of years ago,



It beggars belief that New Zealanders – a national once proud of their  egalitarian society – can view this situation with anything but angry disdain.

When did it become socially acceptable that the richest 1% increased their wealth by a massive 20%, as well as gaining the greatest benefit  from the 2009 and 2010 taxcuts, whilst those on the minimum wage increase their income by a measely 50 cents an hour?

50 cents an hour. Or $20 a week.

By contrast, our elected representatives did very well last year from their pay increases.

Do you want to know what MPs, Ministers, and the P.M. are now paid?

Click here

John Key’s words continue to  echo throughout New Zealand,


We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, 29 January 2008


Here’s a thought, Dear Leader; if the top 1% could increase their wealth by 20% – why not increase the Minimum Wage by precisely the same amount?

That would raise the minimum wage to $15.60 an hour.

Still not as high as our Aussie cuzzies enjoy – but getting there.

So what about it, Dear Leader, are you keen to share the wealth around a bit?

Show us how “unrelenting” you really are.




Previous Blog post

Bill English: Minimum Wage Not Sufficient to live on!

Treasury’s verdict on raising the Minimum Wage? – Part II


Minimum wage rising by 50c

Other Blogs

NZ Govt celebrate Charles Dickens’ 200th birthday with 50 cent increase in minimum wage



Government sprung on SOE sale plan!!


Full Story


As well as trying to “quietly” drop all references to Treaty obligations, under Section 9 of the SOE Act 1986 – something guaranteed to buy a fight with their coalition partner, the Maori Party –  there are other  revelatory aspects  of the draft Treasury document that should  also be a matter of considerable concern.



The Government’s mixed ownership model

Intitial public offerings (IPOs)

An initial public offering, or share float as they are often called, is a way of selling some or all of a  company to a large number of investors. Shares in the company are offered for sale to retail investors (individuals, sometimes referred to as “mums and dads”) through an advertising campaign to the public and through shareholders.Source



Intitial public offerings (IPOs)

Once a minority shareholding in each company is sold, the government proposes that the company will be governed in the same way as other listed companies and that they will be subject to the Companies Act 1993 and other relevant legislation, the NZX listing rules and the companies’ constitutions.  The crown will not reserve any special rights  to itself, except that it is still to decide whether it will a have any special power to approve the chairman of the Board, as it has for Air New Zealand.” Source


With regards to Paragraph 1, above, it is interesting that the Treasury report refers to “retail investors (individuals, sometimes referred to as “mums and dads”)“. In effect, it is a ‘slip’ on Treasury’s part, acknowledging the reality that “mum and dad investors” is simply propaganda “code” (newspeak) for common, garden-variety, investors.

There is nothing “mum and dad-ish” about corporate share-brokers working on behalf of investment companies.

Government uses the term “mum and dad investors” to hide the reality that shares in part-privatised SOEs will be purchased by individuals in dapper suits and silk ties, operating  out of very nice offices, on behalf of Very Big Corporate Clients.

Government myth: busted.

Paragraph 2, above, is even more insidious and refers to, “Once a minority shareholding in each company is sold, the government proposes that the company will be governed in the same way as other listed companies and that they will be subject to the Companies Act 1993 and other relevant legislation…” and furthermoremore, “The crown will not reserve any special rights  to itself…”.

In effect, once partially-privatised, the Government intends that none of  the entire State Owned Enterprise will  be governed by the State Owned Enterprises Act 1986. (Not just the privatised 49% part.)

Specifically, Section 4 of the Act,


 Principal objective to be successful business
  • (1) The principal objective of every State enterprise shall be to operate as a successful business and, to this end, to be—

    • (a) as profitable and efficient as comparable businesses that are not owned by the Crown; and

    • (b) a good employer; and

    • (c) an organisation that exhibits a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do so.

    (2) For the purposes of this section, a good employer is an employer who operates a personnel policy containing provisions generally accepted as necessary for the fair and proper treatment of employees in all aspects of their employment, including provisions requiring—

    • (a) good and safe working conditions; and

    • (b) an equal opportunities employment programme; and

    • (c) the impartial selection of suitably qualified persons for appointment; and

    • (d) opportunities for the enhancement of the abilities of individual employees.


And most specifically, this part of  it’s Principal Objectives,


“…an organisation that exhibits a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do so.”


Any committment to promoting clean, sustainable energy; considering the needs of the community in it’s activities; and other social responsibilities will all vanish if  the SOEs concerned are “ governed in the same way as other listed companies and that they will be subject to the Companies Act 1993 and other relevant legislation… [and] …the crown will not reserve any special rights  to itself…”


In the case of Genesis Energy, Mighty River Power, and Meridian Energy – their sole objective will be to make greater profits for government and private share-holders.

Those profits will be generated by raising power prices.

Guess who pays those higher power prices? (Clue: look in the mirror.)

Right about now, any person reading this who voted for National last year must be entertaining serious regrets at ticking “National” for the Party Vote. Those folk who voted for National – and conversely, those who failed to go out and vote for an alternative Party opposed to asset sales – must be wondering if they will end up paying for their voting choices.

Of course they will  pay for voting National.

Every month. When their power bill comes in.




NZ Herald: Asset sale draft plan internet blunder



If size doesn’t matter…

5 February 2012 6 comments




Well, it seems that we’re about to witness yet another broken promise from this shabby government. It seems that after three years, John Key, Bill English, and their mates were hoping we had forgotten their pledge “that National will not cut spending to education“.

Because now we have this,




It occurs to me that…

“I can tell you categorically that National will not cut spending to education,” the party’s education spokeswoman Anne Tolley said in a statement today.” – Anne Tolley, 5 August 2008

conflicts with…

Finance Minister Bill English is not ruling out an increase in class sizes, saying all Government departments are tasked with finding ways to save money, and staff costs are one of them.” – Bill English, 3 February 2012

Bill English’s comments that “there is clear evidence that class size does not significantly affect the quality of students’ education” is all rubbish, of course. Common sense will tell us that a teacher can give more attention to each child in a class of 20 – than s/he can in a class of 40. Especially if there are children with disabilities; special needs; or just plain disruptive kids in the room.

Professional studies confirm this common sense approach.

But even if it were true that  “class size does not significantly affect the quality of students’ education” – can that  rule-of-thumb be applied elsewhere?

What about… the government Cabinet?

New Zealand reportedly has one of the biggest Cabinets (ministers, and suchlike) for a country the size of ours,


New Zealand Cabinet:  28

Population: 4.4 million

Ratio: 1/157,142

British Cabinet: 23 (currently)

Population: 62.2 million

Ratio: 1/2.7 million

Australian Cabinet (Federal only – excluding State Cabinets): 21

Population: 22.8 million

Ratio: 1/1.08 million

Irish Cabinet: 20

Population: 6.2 million

Ration: 1/310,000


We have more Cabinet minister per head of population than Britain, Australia (Federal Parliament), and Ireland.

And it’s costing us truckloads of cash. Ministers of the Crown don’t come cheap these days,


How They’re Paid

Prime Minister –  New salary (backdated to July 1): $411,510. Was: $400,500.

Deputy Prime Minister –  New salary: $291,800. Was: $282,500.

Cabinet Minister –  New salary: $257,800. Was: $249,100.

Minister Outside Cabinet –  New salary: $217,200. Was: $209,100.

Speaker and Opposition Leader – New salary: $257,800. Was: $249,100.

Backbenchers – New salary: $141,800. Was: $134,800.



So, excluding the Prime Minister, 27 cabinet ministers is costing the tax-payer;

Deputy PM: 1 X $291,800 (p/a) = $291,800

Cabinet Ministers: 18 X $257,800  (p/a)  = $4,640,400

Ministers Outside Cabinet: 8 X $217,200 = 1,737,600

Total cost of Cabinet, per annum (ex Prime Minister) = 6,669,800


Six point six million dollars each year. Throw in one smile & wave Prime Minister at $411,510 p/a, and the wages bill for that talkfest comes to over $7 million a year.

And that figure does not include allowances such as housing, superannuation, etc.

If we followed the Irish ratio, we would have fourteen ministers (including the PM), or, one Minister per 314,285 people (approximately). That would roughly halve the cost of Cabinet minister salaries.

And if a Minister needed assistance, there are another 106 or 108 (depending on over-hangs) MPs in Parliament who could assist with Ministerial duties (but still be paid a Back-bencher’s salary).

So what about it, Mr English?

If “class size does not significantly affect the quality of students’ education” then obviously, we should be able to apply precisely the same rule to Cabinet,

Cabinet size does not significantly affect the quality of  Ministers’ performance.

And we could plow the $3.5 million (approximately)  saved, plus ministerial perks, into training and hiring more teachers to educate our children.


We can start on Monday.