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Economy : How can we convince voters Labour’s economic policy will work? Labour Leadership Q&A #9

Posted by on September 12th, 2013

14 Questions for 2014

Virtual Hustings Meeting – Question 9

Economy : How will you convince voters Labour’s economic policy will work?

Question : How can we get the voting public to believe that the present economic thinking has failed? And that Labour’s ideas will work for them?

Submitted by : Angie Croft, Christchurch

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Explanatory Note: From September 10th to 14th 2013 as part of the official selection process for a new leader the New Zealand Labour Party is holding a “Virtual Hustings Meeting” hosted by Red Alert and organised by Scoop Amplifier. Over 7 days questions were solicited from eligible voters in the election. The questions and answers are now being posted as a set of 14 posts at the Red Alert Labour Party Blog. This started Tuesday 10th September, and continues till Friday 13th September. At Red Alert all-comers are welcome to discuss the answers in the comment section of the blog. The candidates are expected to participate in these discussions at times over the five days till Saturday 14th September.

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LABOUR LEADERSHIP CANDIDATES’ ANSWERS

Answer from Grant Robertson

We have to relate our economic vision to the reality of everyday lives.

This means an economy where people come before money. Where the centerpiece is full employment- decent jobs paying decent wages.

We need to talk about Labour using the power of government to help create a productive economy, not one like National’s that is based on speculation and selling off assets.

To create this economy we cannot tinker at the edges. We have to leave behind the neo liberal agenda and create a Labour way. This means changing the settings of monetary policy, giving Kiwi firms a fair go at government contracts, lifting wages, reducing power prices, building affordable homes and investing in industry and regional development.

The message from Labour must be, the economy will work for all New Zealanders not just John Key’s mates.

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Answer from David Cunliffe

We need to be clear that the Global Financial Crisis (GFC) blew the lid off the myth that trickle-down economics will create a fairer, more prosperous New Zealand.

Free markets left to their own devices are ultimately destructive of human well-being. Unregulated markets tend towards monopolies and often concentrate vast wealth in the hands of a few. Neither outcome is sustainable or morally right.

When National says they are going to cut people’s legs off, Kiwis don’t want to hear that Labour will too, just nearer the ankles and with more anaesthetic. The post-GFC modern social democratic alternative must include:

• using the power of the state to intervene when markets fail;

• guaranteeing fair workplaces and decent wages through employment laws, including industry standard agreements;

• lifting the minimum wage to $15 and rolling out a living wage as fast as can be afforded;

• building new partnerships between communities, regions, industries and an empowering and investing State; and

• revised marco-economic settings that do not solely focus on inflation but include growth, employment, and our external balance.

New Zealand desperately needs change.

The next Labour Government mustn’t be more of the same.

I am offering Labour a bold economic agenda and leadership with the vision and economic credibility to see it through.

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Answer from Shane Jones

Our ideas are exciting. We will use both the market and the State.

I am convinced that our tax system can be refined to incentivise and expedite fresh investment.

Industry will be actively supported, regional development will be promoted and in special cases underwritten.

Our mix of economic stewardship and equity is desperately needed throughout NZ.

I have the experience and the communication skills to sell this narrative.

ENDS


15 December 1975: National Day!

Posted by on August 28th, 2012

15 December 1975 is a day that will continue to haunt National.

It was on that date when the newly elected, powerful and undoubtedly popular Prime Minister Robert Muldoon abolished the compulsory New Zealand Superannuation Scheme which was initiated by the previous Labour Government.

If only Muldoon and the National Government of the day hadn’t terminated the scheme it would now be worth more than $240 billion and “transformed the NZ economy into a world beater over the past 30 years.”

According to Brian Gaynor and other leading economists, Muldoon’s “dreadful” political decision instead transformed New Zealand from the potential Switzerland of the Southern Hemisphere into a low-ranking OECD economy. And it was the worst economic decision in the past 40 years.

The ripples of that decision are still being felt to this day. In fact, if the scheme wasn’t squashed then New Zealand would be much better positioned economically, would be able to own many more assets and would not incur that much Crown debt.

(more…)


Can English tell us the correct bill please?

Posted by on December 20th, 2010

You would think the Finance Minister would know his numbers inside out, but what he said and what he did seem to be way out.

He talks about savings but his National-Act-Maori Government is borrowing $300 million a week.

In a Press Release on May 20, Bill English said that $112 million had been freed up in Corrections contributing towards the $1.8 Billion in total savings his Government announced at the Budget.

However in response to a written question (09522 -2010) on May 25 from my colleague Grant Robertson, the Minister contradicted this by saying that $131 million had been saved in the area of Corrections.

And the Minister added, as usual, with some big words that they were through savings in “internal efficiencies, reducing offender costs and savings from greater economies of scale”.

So I asked the CEO of the Department of Corrections Mr Barry Matthews in a recent Law and Order Committee meeting if he knew which figure was correct. Unsurprisingly, Mr Matthews could not answer it either.

But if Mr English cannot work out the correct figure, then who can?

The Hon Mr English has been Finance Minister for over two years now out of the three-year term. Ordinary Kiwis should have a “reasonable expectation” of our Finance Minister to know his numbers.


Are your speeches hot, Bill?

Posted by on October 29th, 2010

In the book Pam’s Political Confessions, there is a quote that Lyndon Bird Johnson once said to economist J.K Galbraith which effectively describes Bill English’s recent performance in the House:

Did y’ever think , Ken, that making a speech on economics is a lot like pissing down your own leg? It seems hot to you, but it never does to anyone else.

If you have watched Bill English during Question Time, I’m sure you will feel that Mr Johnson is right on the money (no pun intended!) with our resident Minister for Dipton.

We have heard the Finance Minister constantly repeating the lines that he is putting right nine years of economical ‘mis-management’ by Labour.

Two years have passed of the three year term and it’s now time for Mr English to take responsibility for New Zealand’s financial situation, instead of laying the blame on the Labour Government.


The Turning Point (III): The Keynesian Resurgence

Posted by on March 25th, 2010

In  the wake of the global financial crisis, the Washington Consensus is dead.

Keynes, however, is alive and well.

Keynesian fiscal intervention helped avoid a second Great Depression in 2008-9, just as it rescued economies from the first one in 1929-35.

Not surprisingly, there has been an explosion of recent writing on the Keynesian Resurgence.

From the Financial Times’ Martin Wolf and IMF Chief Economist Olivier Blanchard to Noel laureate economists Paul Krugman and Joseph Stiglitz, Dani Rodrik and Robert Reich, lessons are being drawn from the crash to answer the question: “what next?”

I am currently reading Paul Krugman’s ‘Return of Depression Economics” and will blog on this shortly. Robert Skidelski’s “Keynes: The Return of the Master” is emerging as a “must read” for social democrats, alongside Wilkinson and Pickett’s “The Spirit Level“.

Here is a quick taste of some common themes that emerge:

  • Neoclassical economics cannot prevent major cyclical crashes crashes and asset bubbles. Its theoretical underpinnings look increasingly shaky. Global financial re-regulation is urgent.
  • The inequality of wealth and income flowing from trickle down economics has been bad for everybody: more equal societies empirically do better. Reducing inequality has a strong economic payoff.
  • Active government is more necessary than ever in the wake of the crash, but will have to be smart and cost effective.  It will learn from both the post-War Keynesian period and the neoclassical consensus that followed it, and be different from both.
  • Counter-cyclical fiscal policy makes sense, and there is potential to automate some of the stabilisers to build the balance and resilience of markets.

Contrast this to the current National government: still preaching trickle down tax cuts for the richest few; ignoring the growing inequality and sense of despair among the many; hidebound by the ideas of an era that has already passed; bereft of leadership as it stares in the rear view missor of focus group entrails and last month’s polls.

The world is changing fast. New Zealand deserves new thinking. Fast.


Plain Wrong English

Posted by on November 18th, 2009

Well folks, after weeks of dithering, the good folks at TVNZ have finally admitted what everyone else knew all along – that the idea of gifting hundreds of thousands of dollars of free ads to Bill English was wrong and ill conceived, and that their clearance process was flawed.

The interesting thing is that Bill still doesn’t seem to get it – he is still denying that there was any error of judgement on his part….. sound familiar?


Banking Inquiry progress

Posted by on September 4th, 2009

Oral hearings concluded at the multi-party Banking Inquiry yesterday after a range of worthwhile submissions from organisations and individuals. Submissions presented orally included KiwiBank, Federated Farmers, Finsec, the Productive Economic Council and others on Wednesday, and the Manufacturers and Exporters Association, Council of Trade Unions, the Family Centre of Anglican Social Services and the Mangere Budgeting and Family Support Services on Thursday, along with some submissions from members of the public.

The Inquiry certainly gathered momentum. There were 48 submissions received or expected, 15 oral presentations to the Inquiry and around 40 press articles, TV clips and a wide range of radio coverage.

Judging by the emails coming in we have succeeded in our short term goal of presenting the Inquiry as a serious and balanced effort to get to the heart of a complex set of issues on behalf of ordinary Kiwis who are being disadvantaged.

While some media at first questioned the non-Select Committee process, none have been able to dispute the range or substantive nature of the submissions received. Between these submissions, Members’ questions and the work of our excellent research team we have the basis for an excellent report to come.

Most submissions will be posted on the website and you can read yesterday’s press release and a brief summary of key oral submissions here.

Research by the Inquiry team is ongoing and a final report is expected to be available in late October.

Stop press: ASB Bank has just announced a cut to its short term varial interest rate which is of course purely coincidental.


Banking Inquiry preparation gathers pace

Posted by on August 24th, 2009

You’ll be seeing a bit more of the Banking Inquiry over the next few weeks.

Check out www.bankinquiry.org.nz for some new material you might find interesting: Jim, Russel and I explaining the whys and wherefores, an FAQ page and a page with logistical details. Ads will be running this week as a reminder call for submissions, which close on 31 August.

It’s certainly not too late to have your say, either directly via the website, or by writing to us at: The Parliamentary Banking Inquiry, Room 3.046, Parliament House, Wellington (freepost).

Look forward to hearing from you.

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Filed under: bank, finance

Speaker changes mind on Banking Inquiry rooms

Posted by on August 7th, 2009

Yesterday we announced that the Speaker, Dr the Hon Lockwood Smith, had changed his mind on whether or not to allocate Parliamentary space for the multi-party banking inquiry.

We had initially requested the use of Select Committee rooms, as these were well set up with tele-conferencing facilities and were an appropriate size and format. He declined that request because he didn’t want to give the impression it was a Select Committee inquiry, he said, and further argued that a multi-party inquiry was not, in his view, part of the business of Parliament.

Jim Anderton, Russel Norman and I took this up with him in discussion. We provided him with past precedents from when the Committee rooms had been used on many occasions by everyone from lobbyists to Parliamentary friendship groups to multi-party announcements to who knows what, including private social functions. We argued based on recent Business Committee decisions, that legitimate Parliamentary business is broader than just the meetings of the House in full session or its Committees.

MPs are rightly accountable to the public for their work around the country in their electorates and on issues of public policy and importance, whether it is inside the Chamber or out. There is no doubt that the issue of bank interest rates is of significance when up to a billion dollars is at stake and it raises important questions about monetary policy and supervision of the system.

We are pleased that on reflection Speaker Smith has changed his mind and now allocated some excellent space on the second floor of the Beehive, which will be ideal for our purpose

Thank you Dr Smith. Your decision has saved a more extended debate on the constitutionality of Parliamentary business at this time.


Has the Minister seen any reports…

Posted by on July 6th, 2009

One of the favoured parliamentary question approaches of recent times has been for a government  backbencher to ask ” Has the Minister seen any reports of alternative approaches to dealing with the economic crisis” (or whatever issue).  This is followed by (often irrelevant and meaningless) comparisons to something a former Labour Minister said 20 years ago.

Well, for the benefit of the Ministers of Finance and Education, here is an alternative approach for dealing with the effects of the recession.  The Australian Government is providing training places at TAFEs (polytechnics)  for those who lose their jobs.  This is exactly what could have been part of the nine-day fortnight, or indeed  a stand-alone policy.  It recognises that if you are serious about improving productivity, training and skill development are the key. 

I am particularly taken with Kevin Rudd’s quote

The government cannot stop the global recession from bearing down on communities across Australia but it can reduce the impact by taking local action to support training and jobs.

John Key seems to understand the first half of that quote, but is a lot less focused on the second half, and NZ is the poorer for that.


A bunch of old bankers

Posted by on July 1st, 2009

I’ve seen some extraordinary manouvers in Select Committees – but few as brazen as the Government’s moves today to block the proposed Banking Inquiry in the Finance and Expenditure Committee.

Here’s the sequence of events, which until today were under privilege and could not be told.

On 12 March the Reserve Bank cut the Official Cash Rate, but the major banks didn’t. Governor Bollard was clearly concerned and said so. I questioned him at the time at FEC and publicly called on the major banks to pass through the full cuts.

The Finance & Expenditure Committee issued a strongly critical report on 9 June which gave rise to wide public debate – not only on short term rates but also on trans-Tasman equivilence of lending terms and the overall $4.5 billion banking profits at a time when businesses are failing and ordinary hard working Kiwi households are struggling.

At his next appearance at FEC the Reserve Bank Governor supported the proposal of FEC conducting an inquiry into these issues.

The Chairman, Craig Foss MP, proposed that the possible inquiry be into “The Relationships Between the Official Cash Rate and Short Term Interest Rates”.

On behalf of Labour members I proposed a somewhat broader topic – An Inquiry Into Recent  Banking Practices, Including a Particular Focus on Retail Interest Rate Margins. In doing so, our aim was to ensure an holistic view was taken of banking practices, margins and profits.

Interestingly several major banks publicly expressed support for the inquiry, and on its broader terms.

The FEC then called in the Reserve Bank again to get further advice on the issues. While its detailed reports remain confidential to the Committee the Reserve Bank has also publicly stated:

1. OCR cuts have not been fully passed through to short term variable interest rates – either to businesses or households.

2. Medium term loan costs may reflect the higher costs of domestic and offshore borrowing.

In order to progress the inquiry, Labour and Green members expressed willingness to work in a bi-partisan way and proceed on the basis of National’s narrow inquiry topic.

National tried to delay further, but I proposed that a vote be held on the National Chair’s narrower topic.

National voted against their own topic. ACT and their new best friends in the Maori Party followed suit.

I then sought to adopt National’s inquiry topic by amendment into my own motion.

National and friends blocked that.

National, ACT and Maori (NAM) then blocked the original Labour inquiry topic.

In other words, despite all their public posturing National did a back flip and blocked its own inquiry as well as Labour’s.

The Prime Minister and the Minister of Finance roared like lions in public.

English confirmed he then had meetings with various senior bankers.

National then killed the inquiry dead.

Go figure.

Can they really continue to profess they have the interests of ordinary Kiwis at heart?


Weldon busted by Bolger

Posted by on June 25th, 2009

Wellington is too small for anything to stay secret. Café discussion spreads.

Yesterday morning Treasury had a meeting addressed by Mark Weldon NZX CEO and Key spokesperson.

  1. Weldon as part of a speech on behalf of Key suggested that SOEs boards should develop strategic plans on the basis of privatisation or partial privatisation over a two to five year time period.
  2. Jim Bolger was very critical of Weldon, NZX performance as a monopoly and the fact that all around the world taxpayers have been forced to pick up after the excesses of so called financial experts. This won’t endear him to Key.

English: Lion to Lamb

Posted by on June 18th, 2009

Well, today in Question Time Bill English had an attack of honesty. He confirmed that over the last week he had received representations from almost all of the major banks, and that preceded his change of emphasis from demanding full pass-through of interest rate cuts to struggling households and businesses, to emphasising the need for a stable (and profitable) banking sector as “the government’s top priority”.

As such he has left the banks in no doubt they have a free hand to withhold interest rate cuts – despite the substantial taxpayer subsidies involved in retail and wholesale guarantees, and provide tens of billions of dollars in banking assets underwritten via the Reserve Bank’s balance sheet.

In so doing his government has sold out struggling Kiwi families and businesses paying more than they should for mortgages and loans. In the last year only 449 out of 575 basis points of OCR reductions have passed through to home mortgages and only 243 of 574 basis points have been passed through to short term business loans.

What is now on the public record is this sequence of events:

Last week John Key said: “Our big aim is that if the Reserve Bank Governor does cut rates tomorrow that actually flows through to what consumers are paying, because in the last cut that Alan Bollard delivered it ended up with the banks and not with the consumers” (June 10, One News, 6pm)

Last week Bill English said:

10 June 2009 – NZ Herald – ‘”Taxpayers are supporting the banks, and we want the banks to be able to demonstrate that they are going to support businesses and households through a tough time in the economy, even if it affects their profits a bit”.

10 June 2009 – NZ Herald – “Remember, these are organisations with hundreds of thousands of customers, and those customers are keen to see they are treated fairly.”

Then “three, if not four major banks” paid them a visit or made well placed calls.

On Monday 15 June at his post-Cabinet press conference John Key said:

“I am not sure an inquiry will achieve a  lot. Labour have been making a lot of noise on this issue but actually when they were in government lending rates were much higher than they were today.”

And on Tuesday 16 June Bill English told the House:

“I must say to members that in the face of those adverse circumstances a parliamentary inquiry might be interesting, but it is not exactly clear to me how it would help those people who are feeling the pressure.” (Question Time, 16 June)

If the government was relaxed about banks withholding interest rate cuts, they should not have pretended to be lions last week and reveal themselves as lambs this week.

The net result of this sorry charade has been to demonstrate the decisive influence of the Aussie banks over the New Zealand National government. Where is the economic sovereignty in that?

I have issued a statement on National’s weak-kneed double-talk, which can be found here.

Action now turns back to the Finance and Expenditure Committee possible inquiry into banking. Watch this space.