Red Alert

Archive for the ‘Budget’ Category

Tertiary education is an investment

Posted by on June 30th, 2012

Looking through the budget papers released today, I found myself wondering again at the lack of vision in the recent budget.

The adage that ‘a zero budget is what you get when you’re economy is failing’ rings true in the context of the documents. There is no vision for a better society and no credible plan to address the fundamental problems with our economy.

Amidst the budget papers Treasury has provided (some would say predictable) advice on reintroducing interest on student loans.  It could be argued that this is Treasury’s prerogative – and it is.  But generally Ministers will tell officials beforehand if they’re wasting their time – and energy will be put into more productive tasks.  I expect the advice released signals that National Ministers have been actively considering putting interest back on student loans.

National have never liked the interest-free student loan policy that Labour introduced, and have added an ‘administration fee’ since coming to government.  They’ve cut access to student allowances.  Generally, they’re not afraid to restrict access to those with aspirations who are from poorer backgrounds and are otherwise unable to afford to study.  That is because National see education as a cost rather than an investment.

More fool them.


National’s priorities

Posted by on June 20th, 2012

This morning I’m at the Government Administration Select Committee. We’re currently holding a public hearing on the Estimates for Vote Prime Minister and Cabinet. Officials have just confirmed that this year’s Budget has allocated about $6.5 million of new money for a new IT system that will allow Ministers to get their Cabinet papers online.

I asked whether they had been asked by the PM to find this money by ‘reprioritising’ their existing spending. Apparently not. It seems DPMC are subject to a different standard of accountability than the rest of the public sector.

Not a great look for the PM to find $6.5 m of taxpayers money to fund a new filing system for cabinet papers in the same Budget they hiked up taxes for paperboys, a move that is only going to raise $14 million over the next 4 years. Shows where John Key’s priorities lie…


English catches up with Budget changes

Posted by on May 31st, 2012

At the start of question time today, I wondered why Bill English didn’t front for questions in Parliament.  I knew his planned trip to speak at the Dunedin Chamber of Commerce was postponed due to airplane issues.  I figured he must be stuck in Wellington with time on his hands.

Perhaps he didn’t want to personally front up and admit he’d got it wrong in a previous interview about the budget. 

So in Parliament today, Revenue Minister Peter Dunne fronted on Mr English’s behalf and admitted the Finance Minister had not understood the Child Tax Credit changes his Government rammed through under budget urgency.  Dunne confessed that Mr English had got it totally wrong in the Post-budget radio  interview on the changes to the child tax credit, labelled ‘the paperboy tax’.

Mr English said in the interview that interest on savings would not be taxed under the new regime – when in fact the opposite is true.

The frightening thing is key government Ministers do not appear to know what was happening in the Budget.

They have already backed down on some of the teacher changes, taking money from contingencies to cover that gaffe. Now they’re admitting they didn’t understand their own tax policy either.

We need pro-growth tax changes in New Zealand. This Government prefers tinkering with a system that is not working, and what is becoming increasingly clear is that they are not even on top of their tinkering.


The credibility cut

Posted by on May 29th, 2012

John Key has a problem.

In four long years National has failed to meet almost every economic target it has set for itself.

New Zealand’s economy is shattered. Unemployment is up sharply. 1,000 Kiwis are leaving every week for Australia. Exported goods have just collapsed by a horrific 17%. Now, apparently, students, the sick and the elderly are going to have their pockets picked by the government too.

Yet while some writers have always seen through the spin – economists Bernard Hickey and Gareth Morgan deserve particular mention – Key has kept much of the commentariat on-side by endlessly promising he has a plan for sustained economic growth.

Well no more, because the prime minister’s had a long-overdue credibility cut.

Historians will say Budget 2012 marked a watershed for this National government. They’ll say it’s when John Key lost his cheerleaders in the press; when opinion leaders began to concede National never had any economic literacy, any vision, or any plan. The scribes will write Key off as a typical National prime minister who burdened the poorest and most vulnerable with new taxes, and who slashed every public service he could, for no deeper reason than to fund tax cuts and special deals for the rich. They’ll record how, just like Rob Muldoon, Key lumbered the next Labour government with a destroyed economy and how every New Zealander was the loser from National’s economic vandalism.

Of course I don’t agree with everything the commentators are writing now. Far from it. But what’s changed is they are really testing Key’s spin and reporting their findings unvarnished – and I applaud the country’s journalists for their professionalism.

Take a look for yourself:

  1. “The major problem is that there is no clear economic growth agenda”, Fran O’Sullivan, New Zealand Herald.
  2. “The Budget delivered yesterday by the Minister of Finance, Bill English, had a distinctly underwhelming feel”, New Zealand Herald editorial.
  3. “It was billed as a Zero Budget, and that’s what we got”, Tim Hunter, Fairfax.
  4. “The Budget is contradictory. Fiscal policy will subtract from demand and from growth not just next year but for the next four years”, Brian Fallow, New Zealand Herald.
  5. “As far as ambitious measures to growth the economy, this Budget is a little light”, Corin Dann, TVNZ.
  6. “A fiscal surplus is not a growth strategy. While the Budget does allocate more money to science and innovation, the restraint on spending has meant the Government is unable to make the kind of quantum leap in industry assistance that would have justified the amalgamation of several Government departments into the new ‘super’ economic development ministry”,  John Armstrong, New Zealand Herald.
  7. “The figures are essentially meaningless… It is still forecasting growth of more than 3 per cent by early 2014. Growth has not been that high for four years and is now at a meagre 1.1 per cent. The growth rate is crucial. A single percentage point under the required rate and a $200 million surplus can be a $2 billion deficit before you can say ‘Standard & Poors’. On such flimsy foundations is the central political component of this Budget built”, John Armstrong, New Zealand Herald.
  8. “In the face of the negative realities – which are causing misery in households up and down the country – what English had to offer was a series of tweakings and Peter-to-Paul transfers that plugged a few holes here, and scratched an ideological itch there”, Gordon Campbell, Scoop.
  9. “There has been much speculation over the last 12 months on the merits of a capital gains tax and the anomaly that its absence presents from a tax policy perspective. New Zealand is unique among OECD countries in this regard… if there was ever a time to introduce a CGT it is now”, Greg Thompson, National Business Review.
  10. “Bill English’s fourth Budget pinches the pennies, raids nearly every piggy bank and even plunders the Government’s rainy-day fund. No-one, it seems, is safe – even kids with an after-school job have been frisked for extra revenue to help fill Government coffers”, Tracey Watkins, Fairfax.

So all in all it’s a thumbs-down for Key.

Please tell us what Budget 2012 has meant for your family.


The Paper Boy/Girl Tax Grab

Posted by on May 25th, 2012

A revealing level of blame shifting and spin in John Key’s response to the Paper Boy/Girl Tax Grab. Here’s what he said in the NZ Herald today

Mr Key – a paperboy in his youth – said he found out about the move at Cabinet on Monday and did not regret it despite the publicity.

He found out on Monday? After the Budget had gone to print? Definitely a game of blame Bill going on here. I imagine the conversation at Cabinet on Monday must have gone something like this, ” Ah, John, we’ve got this thing called the Budget on Thursday. Nothing much for you to worry about….”

But, wait, there’s more Mr Key goes on to say

A lot of people didn’t know they were entitled to them so they didn’t bother claiming. The amounts were fairly small and overall we have been trying to clean up the tax code

Yes, that’s right the amounts are “fairly small”, that is the point! It’s tax on children who earn less than $45 a week, of course the amounts are small. That’s why the credit is there, so they can get those very small amounts back.

And yes some people didn’t bother claiming, but obviously quite a few did given that the government gets $14 million out of this.

What a load of spin and nonsense for a piece of penny pinching from the pockets of paper boys and girls.

Filed under: Budget, Tax

Growing tall tales

Posted by on May 25th, 2012

Yesterday Bill English again painted a rosy picture of a New Zealand economy growing well compared to the rest of the world.

Unfortunately it’s yet another tall tale from National.

This country desperately needs sustainable economic growth to create jobs and incomes, to give families hope, and to reverse the brain drain.

But after four long years of the John Key government there is still almost zero growth.

New Zealand is not doing well by international standards. Our annual GPD growth is lagging behind Australia, Brazil, Russia, Mexico, Germany, Turkey, Korea, Switzerland, Poland, Norway, Venezuela, Argentina, South Africa, Finland, Austria, Bolivia, Estonia, Iceland, Israel, Chile and many of the Asian economies.

Actually we’re going backwards because yesterday Statistics NZ said exports have plummeted by a horrific 17%. That’s a dire reflection on the government’s lack of a recovery plan, and it’s an indictment on economic development minister Steven Joyce’s $120 million of cuts to the economic development budget.

What about National’s other tired tall tale; the idea that growth will magically ramp up any minute now?

Well we’ve been hearing this nonsense for years. Last year English promised 3.2% growth, but Treasury says it’s probably been less than 1.6%.

Now the finance minister is promising we’ll have 2.6% growth in the next year – and he’ll conjure up billions to get rid of the deficit too.

The reality is Mr English can pick the pockets of every paperboy and papergirl in the country, he can raise the prescription charges, he can force the students out of their training, he can wave goodbye to thousands and thousands more kiwis at the departure lounge, he can cut and cut and cut.

But his tall tales still won’t be true and National will still be a zero government.

Over the next few weeks I will be blogging more on why National’s growth performance is inadequate, why their GDP forecasts are thus rosy and unreliable, why the Zero Budget provides zero hope of any improvement, and what some alternatives might look like.

GDP


Urgently taxing toddlers

Posted by on May 25th, 2012

The test of urgent legislation is not just what is in the legislation, but what is not. On both counts this National government should be condemned.

It’s the day after the Budget and Parliament is sitting in urgency to debate new tax legislation. The Taxation (Budget Measures) Bill is apparently so important that National have:

  • Deferred the main Budget Debate;
  • Removed normal select committee review;
  • Imposed a retrospective effect.

So what is this tax bill about?

Is it the secret “base broadening measures”; National’s supposed answer to Labour’s future focussed capital gains tax?

Is it the closing of the major loophole by which half of the wealthiest 100 New Zealanders avoid being on the top tax rate?

Is it reinstatement of the Labour Government’s research and development tax credits, the key tool which was stoking our businesses’ engines of innovation?

Er, no, no and no.

The centrepiece of this Bill is picking the pockets of paperboys and papergirls.  Urgently taxing toddlers, if you will.

It’s laughable that National’s top economic priority is retrospectively stealing the pocket money of 68,000 kids.

But it’s incredibly sad that this is what government in our beautiful country has come to.

National has wrecked New Zealand’s economy.  Just yesterday they unveiled a horrific 17% plunge in exports.  But instead of getting a real plan to deliver a brighter future they’re plotting to tax toddlers.

The zero Budget of 2012 is yet another wasted opportunity for a country desperate for change.  It’s an insult to ordinary Kiwis who are working harder and longer for less and less.  It’s a slap in the face to law abiding families and small business owners who pay their taxes, and who deserve to get ahead instead of being pickpocketed.

New Zealand is losing 1,000 Kiwis every single week.  That’s 50,000+ a year.

Unemployment is up by 50,000+ since National took office.  The number on benefits is up over 50,000 too.

A zero Budget means zero hope for them, and all New Zealanders.

It also means zero pocket money for paperboys and papergirls.


The Budget in pictures

Posted by on May 24th, 2012

keyseconomicplan

Trying to find some time between speeches to write up a post on the Budget, but in the meantime this photo montage from a reader seems to get it about right.

Filed under: Budget

Four Years of Failed Promises

Posted by on May 24th, 2012


Reading through National’s Budget spin

Posted by on May 23rd, 2012

Tomorrow is Budget Day.  Tomorrow we’ll find out whether National actually does have anything resembling a pro-growth agenda, or whether it will all just be cost cutting.

We will also find out who gets what, and whether National will continue its habit of favouring the very wealthy at the expense of the broader community with its unaffordable tax cuts.

New Zealand’s Budget debate will occur against the background of a fierce battle around austerity economics vs growth economics.

Here’s a selection of articles which undermine the zero National Government’s spin on zero Budgets:

  1. The Economist says austerity Budgets in small countries, without fixing the broader international system problems, will simply undermine growth and jobs.
  2. Nobel Prize winning economist Joseph Stiglitz argues European austerity Budgets fail both economic and social fairness tests, and can drive economies into double-dip recession.
  3. The Financial Times balances this by noting small economies cannot simply spend their way out of a mess. Lax fiscal policy in small open economies can result in demand leaking offshore without resolving local structural problems.
  4. Writing in The Guardian, Professor Mariana Mazzucato, says small states can help drive growth and jobs by investing in innovation and skills, reducing risk for private sector commercialisation and growth.
  5. Will Hutton devastates the UK Conservatives’ zero Budget for their ignoring the role of the state in mitigating risk and creating jobs through driving innovation.

Tomorrow, National will argue that New Zealand needs a zero Budget.  Labour believes a zero Budget is what you get when you have zero growth in your economy, and zero plan for delivering the growth that’s needed to create jobs.

Responsible fiscal policy is important – Labour would always be careful and prudent with the state’s finances – but a zero Budget is not the only success test when you’re talking about the finances of a country that real people live in.

The articles show this is a global debate, not a local one.  New Zealanders need to understand the lessons of history, not repeat them.


Budget prediction

Posted by on May 16th, 2012

051412krugman3-blog480Thanks Paul Krugman (blog) and Josie Pagani (Radio NZ today)

Tags:
Filed under: Budget, economic

National’s job claims vs reality

Posted by on February 23rd, 2012
National's job claims vs reality

National's job claims vs reality

Even though the Household Labour Force Survey report reveals that John Key’s ‘brighter future’ promise has utterly failed to materialise in terms of jobs for a growing group of New Zealanders, it hasn’t stopped Mr Key claiming it won’t still come true. Yet we know he has no overall plan, no vision for how this will happen. Last year he made the incredible claim that Budget 2011 would create 170,000 jobs over the next 5 years. He continued to make this claim despite not being able to show anything in the Budget that would actually lead to job creation other than low interest rates and ECE funding. Simply managing the economy and ticking off boxes and hoping that market forces will deliver on the jobs is unbelievable. As expected the Govt is on track to once again fall short of its promise. The 2011 Budget documents predicted 36,000 jobs would be created in the year to March 2012. As at Dec 2011 just 10,000 jobs have been created, leaving the Govt to create a massive 26,000 jobs in the final quarter. If JohnKey keeps promising New Zealanders the world but not delivering, his credibility will be on the line, and we all know the story of the boy who cried wolf, don’t we?


What it takes

Posted by on February 16th, 2012

It’s great to see the formation of a new group of businesses and the CTU working together to find resolution to the PoAL issues.

The group, which includes Mainfreight Group Managing Director Don Braid, Heart of the City, CEO Alex Swney, CTU President Helen Kelly and Michael Lorimer, Director Grant Samuel & Associates, say they believe there is  a demand from a range of groups in Auckland for a

“new approach that balances the need for the Port to make a return and the Port’s role as a service to business, in Auckland, employer of Aucklanders and guardian of the beautiful Auckland space it occupies”.

They have called a meeting in early March to develop a Charter for the Port that calls on the Council to take a broader view of the Port’s future and a vision of a triple bottom line approach to the Port , which includes :

  1. A  Port that meets the needs of both those onshore (the importers and exporters of New Zealand) and offshore (the shipping companies) now and in the future;
  2. A  Port that shares its land with the public, protects its environment and sees itself as part of the development of Auckland including encouraging use of the waterfront and harbour for recreation; and
  3. A  Port that adopts a modern approach to employment relations which maintains an efficient and productive Port including retaining decent jobs and is not part of a “race to the bottom” in employment practice.”

Yes to all that.

Michael Lorimer says :

“The current approach means the Port Board is being forced to cut costs and capital expenditure. This impacts on us all. Now is the time to put up a new vision for the Port that recognises its primary role as a service to this City and New Zealand and its return to the Council must be based on a longer term understanding of its unique role in the City.

The need to increase earnings is being used to justify the current plans to reduce working conditions on the Port including contracting out labour. We support decent work conditions and oppose casualisation in the manner being proposed by the Port. Not only is it unnecessary but it could cause major disruption to its customers and contribute to increasing inequality.”

I’m heartened to hear this from major Auckland businesses and the CTU. We’ve got some smart people working together here who understand that the key to a productive Auckland port isn’t as simple as selling off jobs to the lowest bidder.

I congratulate them all.


Keeping the ratings agencies happy

Posted by on October 3rd, 2011

Governments quite often set the criteria by which they want their policies or budgets to be judged. In his Budget speech in May this year John Key was very clear about how he judged his Budget to be a success- the accolades of Standard and Poor’s. So how should we judge the Government’s success, given the double downgrade?


Why The Downgrades Matter

Posted by on October 3rd, 2011

The public does not need to take our word for it that the current government’s economic policies are not working.  There is now even more objective evidence in the form of two important credit rating downgrades delivered on “Black Friday”.

I have written an op-ed for the Herald on why the “Ratings Ref” yellow carded NZ.  Standard and Poors and Fitch agree on what is fundamentally wrong.  They say:

  • First “very high external imbalances, accompanied by high household and agriculture sector debt” (S&P). These are mainly house and farm mortgages borrowed through the banks from foreign lenders to fuel our property obsession.
    • That’s not a new problem and it has levelled off a bit with the recession. But it is at historically high levels and makes New Zealand “an outlier among peers” according to Fitch.
  • Second, “dependence on commodity income” says S&P.  Despite record milk prices we are still not paying our way in the world.  The current account deficit is a long term issue. But it will worsen to 6.9% of GDP while the Net International Investment Deficit (NIID) will grow from 78% to 85% over the next five years.
  • Third “emerging fiscal pressures associated with (our) aging population” (S&P), including health and superannuation.  Suspending the NZ Super Fund pre funding hasn’t helped.

The reaction from Bill English on Q & A yesterday was uttlerly inadequate.  He maintains the government will keep on doing what it is doing.  As if that has done any good so far  – $37 billion extra debt, 47,000 more unemployed and 3.6% lower GDP now than when they were elected.

Here is the Government’s spin, and some perspective on it:

  • We have worked hard to control government spending and succeeded”.  The problem is that some $37 billion of debt has been added since the National Government took office – some $18 billion in this year alone.  While nobody blames any government for earthquakes – and the ratings agencies recognise that both sides of the political spectrum are exercising fiscal restraint, this is not enough to avoid a downgrade.   The agencies’ arenot swayed by the prospect of liquidating $5 billion of SOE assets.
  • We are better placed than some other countries”.   Being “better placed” than Iceland, Greece or Portugal is cold comfort.  Nor is it sufficient, in the face of paralysis in the US and chaos in Europe, to take refuge in Chinese and Australian expansion.  The risks of a slowdown in both economies are significant, and s the ratings agencies demand New Zealand  takes responsibility for its own future.
  • “We are still on track for surplus in 2014-15.  So she’ll be right”.   As if.  The precise timing of short term fiscal balance is not the issue that has worried the ratings agencies.  The long term deterioration driven by poor savings performance, weak exports and the mountain of real estate debt is.  Clutching at such irrelevant straws only highlights the absence of better ideas. 

Proof of the bankruptcy of National’s ideas is in this sobering fact:  only one quarter of OECD countries have been downgraded by Fitch in the last three years.  The last time this happened to NZ was in 1998.  It is nonsense to say we are riding the waves better than most.  To the contrary New Zealand is highly exposed, and saddled with a government that has no plan.

Labour has the policies and the political courage to make a difference and to do what is needed: capital gains tax, strong saving policy, monetary reform and strategic economic development.  It is vital that we implement them before it is too late.

Be in no doubt: what happened on Friday is a very serious development that will have repercussions for many years.  I will write further on what this means for the average Kiwi family.


Lies, Damned Lies and … Steven Joyce.

Posted by on July 19th, 2011

Our opponents have been tied all in knots as they attempt to rebut the obvious – that Labour’s CGT is an idea whose time has come.

First the leader of the National Party, John Key, shrilly claimed it would be a “dagger through the heart” of western capitalism – or as Bomber Bradbury put it “aliens were coming to eat our pets”.

Then Bill English said it was a good idea in theory – but wasn’t comprehensive enough.

So with tweedles dee and dumb at cross-purposes, they called in the “cavalry” on Sunday – a Steven Joyce press release with some bodgied numbers from his Beehive hacks.

It tried very hard to construct a strawman and then shoot it down.   Trouble was, the strawman bore no resemblance to Labour’s policy.

First, Mr Joyce alleged that our tax plan had not replaced the capital value of the non-sale of SOEs:  “You see Labour done a big lie, and said it is a choice of asset sales or their tax package. But they have not calculated for any increased borrowing through no sales”.

John Armstrong made the same mistake in his Herald column: ”In May’s Budget, National cunningly “booked” the money from its planned post-election sell-off of such shares even though the money has yet to be realised.  Some of that “money” has been set aside for $900 million in capital spending.  Labour has exacted revenge for this trickery by simply ignoring it” .

Sorry John, our numbers do incorporate the asset sales revenue because it’s in National’s net debt track and our net debt track is based on theirs. Not getting that revenue is essentially the sole reason why our net debt track is above National’s in the first few years.

Second Mr Joyce  tried the line that we had not modelled in the cost of interest on debt.  Wrong again.  Interest costs are fully included.

Third, he argued we would achieve “$0″ on our tax avoidance crackdown.  Wrong again:  IRD says there is $3.5 bn in colleectable tax debt (of $5.5 bn total); and over $300m p.a. in avoidance through trust structures; as well as -$500m on the $200 bn invested in property.   Bill English says there is $5 back for every extra $1 in IRD tax collection.  IRD says 30:1.  It all makes our provosion that rises over 5 years up to $300m look pretty modest.

Three strikes and your credibility is out, Steven.


National backs their mates, again…

Posted by on May 26th, 2011

Last year the National government was roundly criticized for setting aside $4.8 million in the Budget to be allocated to the Pacific Development Agency (PEDA) without a competitive tender process.  Keep in mind that when first quizzed about it Bill English’s first reaction, as it so often is, was to deny the whole thing. It took months of investigative work by the NZ Herald to establish that in fact not only did English know all about it, it was inserted into the Budget at his behest and officials didn’t know what to make of it.

The NZ Herald also suggested at the time the funding was part of an English-inspired effort to secure greater support for National amongst pacific voters. In the end they were forced to back down and a competitive tender process resulted in PEDA missing out completely.

Did they learn their lesson? It seems not. This year’s Budget allocated $2.4 million to Parents Inc, once again without a competitive tender process. The chief executive of Parents Inc, Bruce Pilbrow, was the Deputy Commissioner of the Families Commission (appointed by Paula Bennett) until he resigned just two days before the Budget. Why wasn’t the contract put out for tender? When did Pilbrow find out Parents Inc was getting the funding?

At the very least it’s a bad look for the government to set funds aside for specific organisations without going through robust processes to ensure the taxpayer is getting value for money. It leaves them open to charges of cronyism and looking after their mates, but then again, there are plenty of other examples of where the National Party are doing just that!


$15 minimum wage rapture

Posted by on May 23rd, 2011

Harold Camping’s prediction of the rapture dominated the US headlines for the past few days, and, like countless other rapture predictions, proved to be wrong.

Similarly, Phil Goff’s announcement at Congress that Labour will lift the minimum wage to $15 an hour in the first year if we are elected to government in November has already brought out the “it’s the end of the world” cries from the usual suspects and the same old arguments about costing jobs.

There’s research on both sides, most of it now a little dated, but someone drew my attention to this much more recent American study by Ari Dube, a Labour economist and Assistant Professor at the University of Massachusetts.

It tracks the effect of minimum wage increases over a period of 20 years and looks at differentials across state borders where the minimum wage is higher on one side of the border than the other. The findings are that increasing the minimum wage does not impact on job loss either in the short or long term.

It also found no difference in unemployment because of raised minimum wages during the higher unemployment of the recession.

You won’t be surprised that I am really pleased about Phil Goff’s announcement.

It is a solid promise that will be delivered, unlike John Key’s vague commitments about wages and jobs in his budget, based on dicey Treasury forecasts.  Why anyone would fall for such a lack of substance, I have no idea.

Remember when John Key talked big about 4,000 jobs to come from his cycleway? But oh dear, only 200 have resulted so far.

But expect more end of the world predictions about increasing the minimum wage.

Thankfully, Labour has a whole lot of ideas, some announced at Congress, much more to come.


Pinky Agnew’s budget poem – “The Bill”

Posted by on May 20th, 2011


Making stuff up #2

Posted by on May 20th, 2011

Strong wages and job growth was the headline run acrosss the country on Tuesday as the government’s spin on what the Budget would contain. Here’s an example

I didn’t believe it. Here’s what I tweeted

clarecurranmp Clare Curran

John Key tells bald faced lies. His budget will NOT deliver strong wages and job growth. Stop believing his bullshit NZ

17 May 

And what have we got? A Budget of cuts. That tells lies about job growth. That clearly won’t deliver strong wages.

This morning I read the regulatory impact statement on the Taxation Bill which cuts Kiwisaver and Working for Families. It says:

The proposal to increase the compulsory employer contribution rate at the same time as increasing the minimum employee contribution rate will lead to some additional costs on businesses that employ staff, by increasing labour costs; in teh short term this may reduce firm profitability. The additional cost for employers is likely eventually to be reflected in wage settlements for all employees…

Wages won’t go up. What incentive have employers got to put them up?

The prediction that the economy will strengthen isn’t based on strong fact. It’s making stuff up.