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Posts Tagged ‘Bill English’

National’s war on Auckland: a report from the front

Posted by on May 17th, 2013

I woke today to hear Auckland deputy mayor Penny Hulse declare on Morning Report the housing accord between the Government and Auckland was in danger, and Auckland Council would not ratify the accord until certain matters had been sorted out.

Crikey, it didn’t take long for the centrepiece of the National Government’s Budget to start unravelling.

Was it poor political management? Did Ministers English and Smith really think Auckland Council would not be annoyed by the Goverment sneaking into the Bill extra powers to override the Council in direct contradiction of its agreement announced only a week earlier in a grip and grin session at Hobsonville involving Key, Smith and Brown?

Or was it all about getting a few hairy chested headlines the day after the Budget with the Government getting tough on housing affordability? And tough on Auckland Council as a useful proxy? Bill English told his post-Budget breakfast he wasn’t going to let 20 planners  in the Auckland Council planning department wreck the economy!

In any case, the Government has just bought itself a couple of months of uncertainty and controversy over its flagship housing policy. Auckland Council, with Len Brown’s inexhaustible supply of good will, has shown itself to be remarkably patient and wily when it comes to dealing with the long list of mostly South Island ministers sent to deal with it: Gerry Brownlee, Amy Adams, Nick Smith, and now Bill English. (Except Bill English is from Karori.)

This is a high stakes tactic for the Government. If they provoke Auckland Council enough the Council could walk away from the Accord. The Government would then have to choose between backing off and losing face, or using its new powers to override Auckland Council and impose its own planning rules.

I suspect that would not go down well with Aucklanders who tend to view central government Wellington as a foreign country which should as much as possible be kept at bay.  Imposing martial law on Auckland Council’s urban planning would be unpopular to say the least.

National are already offside with Aucklanders on transport (the most recent Herald poll had support for the City Rail Link at 63%). Gerry Brownlee’s impersonation of a human roadblock has left the city distinctly unamused. Even National’s traditional allies like the Employers and Manufacturers Association, and the Chamber of Commerce, have deserted it on this issue.

Over-riding Auckland Council’s planning laws would be up there with the suspension of Environment Canterbury and Gerry Brownlee’s post-quake wartime powers in the great pantheon of this National Government’s power hungry dealings with local councils.

National clearly thinks local government is a convenient punching bag. And I have no doubt councils around the country are watching this latest stoush with alarm. The housing accords bill sets up a legal framework that allows these powers to be used anywhere in the country.

It will be really interesting to watch how this slow motion punch up plays out. The super city reforms created something new and different. The Auckland Council, representing one-third of the country’s population and bigger than Fonterra and Telecom combined, is not like a council. It is more like an Australian state government.

And with mayoral and council elections in October, a stoush with the National Government may be just what Len Brown needs to guarantee re-election. (Maurice Williamson by the way has gone very quiet on his mayoral plans. I suspect there is an inverse relation between the amount of time the Government spends fighting Auckland Council and Maurice’s poll numbers.)

Given the constitutional supremacy of Parliament, the National Government could bludgeon Auckland Council into  submission if it wanted to. But is that an outcome, with all the likely consequences, National really wants, given that in relatively short time it is going to need the votes of  Aucklanders?

Labour voted for the Bill at first reading for two reasons: the housing affordability crisis demands a response and while it is inadequate, it is at least something.  The accord cherry picks from the draft Unitary Plan. Opening up greenfields land and fast tracking consenting gives no guarantee that any affordable housing will be built.

We also felt that if the Government and Auckland Council spent six weeks hammering out an agreement on this issue then it at least deserved scrutiny at select committee.  If Auckland Council decide not to ratify the accord that is going to make select committee hearings very interesting.

I think I might put up an amendment to the Bill giving Auckland Council the power to override the National Government if it can’t get what it wants and introduce a Capital Gains Tax in Auckland. Excluding the family home of course.

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Filed under: Auckland, housing, local government
15 Comments

Getting The Answers You Want

Posted by on April 21st, 2013

Given the Government’s enthusiasm for building Transmission Gully by Public Private Partnership (PPP), you’d be forgiven for believing that the NZTA has told Gerry Brownlee  it is clearly the best option for financing the project .

However, reading through cabinet committee papers and ministerial briefings, a very different picture emerges.

It turns out that Cabinet asked Gerry to explore the use of PPPs and he in turn asked NZTA to look at all the projects they currently have planned and decide which might be completed via PPP.

NZTA’s response was that Transmission Gully was the best candidate for a PPP.

Note that NZTA did not say a PPP is the best way to build Transmission Gully. Rather,  that if something had to be built by PPP, Transmission Gully would be the best candidate.

This is a classic case of only asking the questions that will get you the answer you want.

Asking “Which project is best suited to a PPP?” gets you a PPP whether or not the case for it stacks up.

Asking “What is the best way to build Transmission Gully?” would have got Transmission Gully built within a sensible timeframe and at a reasonable cost to the taxpayer.

So has the case been made that a PPP is the best way to build Transmission Gully?

No.

As noted in a Cabinet Committee paper prepared for Gerry Brownlee and Bill English, the cost of capital for the private sector is higher than it is for the crown and the actual value for money proposition will not be known until the proposals  have  been received.

In the event that neither of the shortlisted consortia can prove that building Transmission Gully by PPP is more cost effective than doing so by traditional procurement, the Government should pull the pin on the PPP.

But according to Gerry, Cabinet has already given the NZTA approval to finance and build the Transmission Gully highway using a PPP – and NZTA has indicated this will add an extra $2 billion to its costs over the next 30 years.

National is letting ideology and its desire to use taxpayers’ money to create low-risk, high-return investment opportunities for its banker buddies get in the way of making economically rational decisions.

The winners here are the corporate giants creaming profits off public infrastructure. The losers are Kiwi taxpayers and consumers.

Who is National really working for?

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Filed under: transport
13 Comments

How many electorates aren’t being well served by National MPs?

Posted by on September 4th, 2012

My post yesterday on Bill English and his mostly closed electorate offices in Balclutha and Gore has attracted some interest on Red Alert and on facebook.

A number of people commented that they were experiencing the same issues in other National-held electorates.

I’m wondering how many National Party electorate offices are actually staffed on a regular basis?

And how much direct constituency work they do and what options are open to constituents if they try to approach their local MP and are rebuffed, ignored or can’t make contact because it’s always closed.

Would be interesting to find out.

 

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Filed under: #OpenLabourNZ
44 Comments

A message to Bill

Posted by on September 3rd, 2012

On Saturday a dozen Labour Party members took a trip from Dunedin to Milton, Balclutha and a few other small places in between, to collect signatures for the Citizens Initiated Referendum to Keep our Assets.

A couple of observations:

1. Almost everyone we came across wanted to sign. A carful of young blokes in a 1970s Holden at the service station heading on a day out. A farming family from Gore. Shopkeepers, EVERYONE at the RSA…

2. I was told that Bill English’s offices in Gore and Balclutha are rarely open. I asked where do people go if they have constituency issues? The response was a resigned “nowhere”. I have told people to contact my office in Dunedin South if they have issues that need dealing with. It means more work for my staff, but it’s pretty shocking if the local MP can’t provide representation.

Bill English, it appears many people in your electorate don’t want you to sell our assets. And how about being a bit more available to them!

 

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Filed under: #ownourfuture
27 Comments

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.

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Filed under: Budget, economy, finance, Tax, Uncategorized
5 Comments

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.

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Filed under: Budget, Economic Development, economy
35 Comments

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.

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Filed under: Budget, economic, Economic Development, economy
31 Comments

Sticking up for your city

Posted by on April 22nd, 2012

It’s one of the main jobs of any member of parliament to stick up for your patch. You are elected by a constituency and they want and expect you to defend them and promote their rights. I don’t think constituents expect to get a better deal than anyone else in the grand scheme of things, but they don’t want to be treated with contempt and disrespect.

I don’t think it’s any surprise to anyone that I’ve come out fighting over the extraordinary, but probably predictable decision by Kiwirail to put the Hillside workshops up for sale. In Saturday’s Otago Daily Times I was quite forthright in expressing my views. I used some rather unladylike language and had to ring my mum the day before to warn her.

I stand by what I said. I think the government (and Kiwirail) have pissed on Dunedin. I think many Dunedin-ites agree. Saturday’s ODT editorial seems to agree too though in more polite terms.

I think that the only way we’re going to sort things is for Dunedin people to take control ourselves. And to have a future Labour government backing rail.

I’ll do my best to help find a buyer for Hillside. I’ll continue to take the fight to parliament and I’ll remain a thorn in the side of this government and the local National List MP Michael Woodhouse who has seriously let down the people of Dunedin in the pursuit of his own career. I’ll advocate for the need for and the importance of this industry to remain in public hands, and indeed to just bloody remain in our country.

When I took this job on I understood that there are times when sticking up for your city is more important than towing toeing a party line that you don’t agree with and which is going to hurt your city. It’s a judgement to be rarely exercised. Sometimes the greater good is more important than a local issue. But every MP should have the right and the responsibility to stand up for their city. This was one of those times. Woodhouse didn’t even think about it.

He blocked a select committee hearing on the petition signed last year by nearly 14,000 people (mostly from Dunedin) calling on the government to save the Hillside and Woburn (Hutt) workshops. He has never been held accountable for refusing to allow the people of Dunedin, the Hillside workers and their union to have a say before a parliamentary committee. He should be.

His government is negligent, disingenuous and downright liars about their responsibilities for Kiwirail and its decision and their knowledge of those decisions. As my colleague David Parker has said; if the KiwiRail board had made the same announcement without telling a Labour government, the board would have been sacked. It is just nonsense and untrue for shareholding Ministers to say they didn’t know Kiwirail’s direction and decisions. And it is very clear that they don’t oppose Kiwirail’s decision to sell Hillside.

There’s more at stake than the nearly 130 jobs, the loss of wages, taxes, skills and the more than 137 year history of a competent and valued rail manufacturing plant to the city of Dunedin. There are more than 70 engineering businesses clustered around Hillside. It’s the backbone of our city. It’s becoming more high tech. It’s a hugely important part of our local and regional economy.

This government doesn’t give a stuff. They allowed (and encouraged) it to be run down and now it’s being sold because Kiwirail says it’s not viable. Kiwirail deliberately made it unviable.

I ask you this. How is that that contracts have been handed to the Chinese to build rail wagons that are dubious in quality, when those same wagons could have been built here? They may have cost a bit more, but the workmanship would have been assured, the maintenance would have been less and have been more easily accomplished, and the people who built the wagons would have been earning decent wages and paying taxes in the New Zealand economy.

Kiwirail, and the government, has blocked any independent scrutiny of the dodgy process in awarding those contracts to China North Rail and the quality issues associated with the Chinese wagons. It’s time for some sunlight on both.

It is not false economy to manufacture in your own country. It’s our productive economy. I’d stand up for manufacturing jobs any day against paying for more pokie machines that create immeasurable social harm and are part of a mates deal to an organisation that will profit, might create a few more service economy jobs, but is unlikely add much more real value to our economy.

And I reckon that’s worth sticking up for.

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Filed under: asset sales, economy, infrastructure, jobs, John Key, Manufacturing, Rail
29 Comments

NZTE Focussed; Joyce Not.

Posted by on March 1st, 2012

NZTE has just presented a stellar annual report to the Commerce Select Committee. The new CEO Peter Chrisp and Chair John Mayson deserve credit.

Costs are down, focus is up, strategy is sharper. Performance measures are more rigorous.

NZTE’s emerging success gives the lie, however, to Bill English’s comment that there is nothing to be done about economic growth “it is what it is”.

And NZTE’s focussed success contrasts with the haphazard approach taken by Economic Development Minister Joyce’s to doing shady deals with individual corporates.

None of media (Canwest); Casinos (SkyCity) international film giants (Warner Bros) feature within NZTE’s strategy for target clients.

So if they are not prioirities for the experts, why is their Minister treating them so?

Likewise on FDI, NZTE is focussed on high-spillover investment that adds value to NZ, NOT selling farmland or assets that already exist. So why are National politicians doing the opposite?

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Filed under: Economic Development, Films, international, Investment
23 Comments

Assets and Elbows

Posted by on March 1st, 2012

Can the Government tell an asset from an elbow?

Had it thought through the fatal flaws in its partial privatization drive, or has it been taken by surprise? Hat tip to Clayton Cosgrove for bringing SOE sale issues to the fore. Here’s a potted summary of some emerging commercial and economic development implications:

- When the SOE’s are partially privatised they become companies with a partial public shareholding, regulated by commercial law and not the SOE Act. They are no longer SOEs. They no longer have the Crown’s good corporate citizen obigations. Elbow #1.

- That is why the s9 Treaty Clause debate is so fundamental. Iwi are 100% right to be outraged that the Crown’s obligations under the Treaty of Waitangi could be sold down the river (literally). If the Crown’s response is to indemnify the private investor and bear 100% of the ongoing Treaty obligation, then the taxpayer is effectively subsidising the private investor. Clayton nailed this last week. Elbow #2.

- Minority shareholders rights include the ability to invest in future profitable expansion plans. Dilemma for Crown: pony up its 51% of those future capital requirements or face equity dilution below 51% and loss of residual control. The Govt’s response has been to hedge how much it wil initially sell. Does 45% leave it enough of a buffer? For how long? How long is a piece of string? How does this affect its sale proceeds? In a rare moment of frankness Bill English fessed up that those proceeds are only a “guess”. You bet they are. Elbow #3.

- Magically the Government’s new-found forecasts of SOE dividend loss are not, apparenty. These were shamefully omitted from the Pre-Election Economic and Fiscal Update (PREFU) because they were apparently too hard to calculate. They have since been found in a bottom drawer and Lo! they show there will be precious few future divvies, so little loss. Ooops Why would a private investor buy them then? Elbow #4.

- Except Air NZ of course, which will be as cheap as chips after its sad losses last year. Crazy, stupid fire sale. Elbow #5.

- Speaking of which, future takeover threats must now be managed. Minority shareholders have rights. If a future merger or takeover provides them a windfall, they have the right to sell, most likely to foreign corporates or hedge funds (subject to the 10% individual cap, if any). What would the Crown do in the face of such temptation? Could it face legal action from minorities if it blocked such a future sale? How is the public protected from future leveraged asset stripping? Elbow #6.

- Potential cross-shareholding complications arise, as confirmed by the Chair of the Commerce Commission at the Commerce Committee hearing this morning. (I can’t comment on the Committee’s views but can on the issues diiscussed in public hearing). Lets say a foreign energy company bought the maximum allowable shareholding in each of the 3 SOE generators – risks of information pooling, coordination and anti-competitive behaviour would need to be policed by the Commission. At best there would be a lag while consumers suffered and prices rose. The Crown itself would have to be subject to Commission oversight in this regard. Sound complicated? Elbow #7.

Back to the original dilemma: did John Key know about all these issues when he started this privatisation crusade? If so, why was the Government not more transparent about them all before the election – with the public and even with its potential coalition partner?

Oh yeah, I momentarily forgot. It’s politics.

That being the case, lets fight this crazy plan to the last comma.

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Filed under: commerce, economic, Economic Development, economy, Energy, M?ori, privatisation, regulation, Uncategorized
13 Comments

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.

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Filed under: #ownourfuture, Budget, Capital Gains Tax, debt, economic, economy, finance, Global financial crisis, Investment, Tax, Uncategorized
29 Comments

Dr Brash defies National’s gravity and is speaking the truth

Posted by on September 23rd, 2011

Rarely would I agree with statements from Dr Don Brash, but he had me nodding my head in agreement for parts of his interview on Chinese Radio AM936 this morning.

Regarding Government spending, Dr Brash said the current National Government had spent much more than the previous Labour Government.

Dr Brash went on to say that both the previous National and Labour governments had managed government debt well, meaning the current John Key-led Government started from a good point. However under Prime Minister John Key and Finance Minister Bill English’s watch, government debt has gone from bad to worse.

This reminded me of our debate with National MPs in 2009. National claimed that ACC was leaking millions of dollars under Labour, we argued that the figures do not back up the National Governments unjust cutting of services and upping of ACC levies and that National’s claims were nothing more than scaremongering.

But it has now proved that the ACC debacle of 2009 was just a pre-cursor that led to the National Government hiking ACC levies before they privatise the organisation should they get another term in office.

The world will be a much nicer place if politicians would say what the issues really are (as they are).

Bill English’s repeated lines such as “in the last long nine years” and “economic mismanagement by Labour” may give him an instant boost in his blame game, but the facts will be spelt out sooner or later – just as Dr Brash did this morning.

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Filed under: ACC, asian
11 Comments

Meanwhile at the National Party Conference

Posted by on August 15th, 2011

While there has been a lot of coverage of the cynical welfare policy announcement from the National Party Conference, there has been a bit less attention on the fact that even National Party members have major concerns about the selling of our public assets.

On the Saturday of the conference, which by the sounds of things Captain Panic Pants and friends wanted to be a total non event, Bill English was taken on about whether assets would actually stay in Kiwi hands. Just how he would ensure this has been the subject of numerous questions in Parliament, but Bill revealed his hand to the delegates.

His answers are incredibly waffly and weak, and the second questioner in the video even says he is not convinced by English’s answer to the first question. Basically he said he could not guarantee that assets will stay in New Zealand hands, does not know how so-called Mums and Dads will be at the front of the queue and even said that they will not finalise how this will happen until after the election.

The problem with that is the “keeping assets in NZ” pledge is a critical part of the policy. The reality is it will not happen, and English has now acknowledged this. New Zealanders don’t like asset sales because they know just how much value has been lost from them over the years, and we want to keep key infrastructure in New Zealand hands. The Nats sale plans are bad economics and bad politics, and even their members know it!

With Labour, we will own our future, and keep public assets in the ownership of all New Zealanders.

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Filed under: asset sales
34 Comments

Cuts make lie of National’s promise not to cut front line services.

Posted by on July 20th, 2011

Apologies to David Clark, labour’s candidate for Dunedin North. I accidently posted this under my name not his. Clare

Cuts of up to 30 front line staff at Child, Youth and Family make a lie of National’s promise not to cut front line services.

Our community, our children deserve better. We cannot stand by and let these cuts occur.

In April, Bill English said National was ‘committed to moving resources from the back office to the frontline so we can deliver improved public services to taxpayers with little or no new money over the next few years’. *

Questions:

  • How is reducing the number of frontline social workers in Dunedin “moving resources to the frontline”?
  • How is making highly trained social workers redundant who support and protect our most vulnerable children going to “deliver improved public services to taxpayers”?

The Government needs to honour its promise to retain front line services. All New Zealanders should demand that the Government reverse this appalling decision.

* [Source: Minister of Finance press release, “Room for savings in state sector back office” dated 13 April 2011]

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Filed under: children, jobs, public services
3 Comments

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.

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Filed under: asset sales, Budget, Capital Gains Tax, debt, economic, economy, finance
37 Comments

Not news

Posted by on July 5th, 2011

The National Party did a bit of prep work on their great infrastructure announcement yesterday. The morning papers had the preview story, so the press secretaries must have been doing their jobs well in the weekend. The big announcement came last night, and well, it was not really an announcement at all as summed up by the NBR story

Bill English has admitted the government infrastructure plan released today does not contain detail on any infrastructure project that had not already been announced over the past 2-3 years.

That’s right this is actually a non-news story. The article goes on to say how there was little in the way of specifics or detail in the announcement. I am getting more and more feedback from all parts of the political spectrum of real concern that the National Party has no plan to lift the NZ economy out of its current state. This non-news announcement just adds to that.

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Filed under: economy, infrastructure
11 Comments

Double Dipton discovers social media

Posted by on June 27th, 2011

Screen shot 2011-06-27 at 1.20.42 PM

Bill English has discovered social media. How on earth will he find time to answer one whole question per week?

Still, it’s more than he answers in Parliament…

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Filed under: national, Social media
8 Comments

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!

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Filed under: Budget, democracy
35 Comments

Budget FAQ #6: Why the Deficit Hole?

Posted by on May 19th, 2011

Our Labour team wanted to understand why every year under National the budget deficit has far exceeded the forecast when they took office. In the graph below, the black line is the projection of the deficit made in December 2008, at the height of the global financial crisis. But you can see the actual deficits have been much larger.

Debt Composition 2008-2011

Part of this is due to National’s tax cuts, even accepting the rosy predictions English made about the cost of his tax packages, they still cost a significant amount (green blocks). This year the deficit has been worsened by one-off events in the form of the Christchurch earthquake and the South Canterbury Finance bailout (brown and purple blocks). But there’s still a huge difference between the 2008 projections and what happened that isn’t accounted for by the one-offs or the borrowing for tax cuts. What’s behind that?

When we look at the GDP growth forecasts vs reality for the same period, the answer becomes clear. Every year, National has projected that a return to strong growth is just around the corner which will mean more tax take, lower benefit costs  – and a smaller deficit. But it hasn’t eventuated. Instead, the economy has stagnated under National and every year National has evened up having to slap billions more on the taxpayers’ bill to cover for this economic underperformance (blue block).

 No doubt today’s budget will also contain rosy growth projections. Will the reality end up being more deficit blowouts?

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Filed under: Budget, debt, economy, finance, Global financial crisis, Tax, Uncategorized, Unemployment
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Budget FAQs #5: Growth Hockey Stick

Posted by on May 19th, 2011

The New Zealand economy has failed to fire under National.  As a result successive rosy Treasury forecasts have been revised downwards.  The starkest example is between last year’s May Budget and December Half Year Update.  

  2010 GDP Track Revision

Implications: The  growth upturn “hockey stick” just keeps getting pushed out into the future.  The so-called GST tax switch had no discernable positive impact on growth.  And the same rosy forecasts will be embedded in today’s Budget.  On this track record Budget 2011 growth  projections will not be worth the paper they are written on.

When the 2009 growth projections are added the picture gets even more interesting.  As this graph shows the actual GDP growth track has been so bad that it is back down to the proections made by Treasury during the darkest days of the 2008/9 global financial crisis.  

   2009-2010 GDP Track

In other words, despite the international crisis having passed 18 months ago and NZ receiving record prices for our agricultrual commodities, our economy has performed so badly that it is back down to the track Treasury predicted during the darkest days of the crisis.   Quite simply, whatever the Govt has been doing is not working. 

In a future post we will decompose the relative impact on debt of this under-performance and otehr factors like earthquakes.

There is no coherent plan from National on how to manage debt reduction alongside needed investments in economic and export development, closing the savings gap, repairing the damage to middle New Zealand, and giving all Kiwis hope and confidence for the future.

Labour has an integrated economic strategy that will achive that withi a fully costed programme that will reduce net debt over a 10 year economic cycle.  You can see the direction we are heading in set out in a recent speech I gave to Business NZ  here.

For the wonks among you, here is the underlying data – all the Government’s own numbers.

  GDP per capita, 95/96 dollars    
 

Actual

Half Year Update 2009

Budget 2010

Half Year Update 2010

30/12/2008

7,805

      

30/03/2009

7,700

      

30/06/2009

7,683

7,683

    

30/09/2009

7,677

7,694

    

30/12/2009

7,716

7,721

7,716

  

30/03/2010

7,741

7,741

7,758

  

30/06/2010

7,734

7,768

7,802

7,734

30/09/2010

7,701

7,795

7,909

7,747

30/12/2010

7,694

7,830

7,883

7,799

30/03/2011

  

7,873

7,928

7,859

30/06/2011

  

7,916

7,973

7,904

30/09/2011

  

7,967

8,026

7,948

30/12/2011

  

8,027

8,088

8,010

30/03/2012

  

8,055

8,118

8,039

30/06/2012

  

8,091

8,156

8,085

 Sources: Budget relevant documents and Statistics NZ series

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Filed under: Budget, business, Cost of Living, debt, economic, economy, finance, Global financial crisis, Inflation, Investment, jobs, monetary policy, Tax
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