Take the money and run

Published
by
IrishBill
on July 24, 2008
in workers' rights
. 29 Comments

I just read Gordon Campbell’s latest Scoop column about the omnibus tax bill and quickly followed it with Frog’s piece on the matter and I am not impressed.

The first reading of the government’s bill took place last night and within its myriad of dull tax stuff was a hidden barb for the quarter of a million New Zealanders who work in manufacturing.

That barb is the move to give tax breaks to manufacturers who move their production offshore. Yep. You heard right. The government will be providing New Zealand manufacturers with a tax incentive to outsource their production. Just as long as they keep their head office in good old NZ.

Sue Bradford has pointed out the absurdity of this situation most succinctly:

What the Government is proposing will give Icebreaker a tax cut for making lovely outdoor wear in China, but not Earth Sea Sky making lovely outdoor wear in Christchurch. Norsewear, that former iconic brand, will reap a financial benefit for having taken its jobs to Asia, while Swazi, staunchly staying local, will miss out.

This Bill will give tax cuts to large firms that send fish to China for filleting and packing, but not to small fishermen who process locally, and who create environmental and social benefits by not carting fish back and forth across the planet.

This Bill would give Fisher and Paykel a tax cut for the whitewear it makes in Mexico but not for the whitewear it makes in Auckland.

Cullen’s answer to this is that we will lose the whole kit and kaboodle if we don’t pay people to ship their manufacturing jobs overseas and we’ll be stronger in the long run. I’d like to see the not-so-good doctor tell that to the workers at F & P and their families.

And they wonder why people call them the red tories.

Hat-tip: Gordon Campbell; Frog

Finance companies - a graphic explanation

Published
by
Steve Pierson
on July 24, 2008
in economy
. 19 Comments

With the collapse of Hanover Finance, the 25th finance company to go under, Hanover co-owner Mark Hotchin has declared ‘the finance companies’ model is broken’. Here’s an illustration of that model:

I think they went wrong at step 1. Of course, as always, it’s the schmucks who lent Hotchin and Watson the money who lose out. Meanwhile, construction work on Hotchin’s $30 million mansion continues.

Between the lines: Nats’ work rights policy

Published
by
Steve Pierson
on July 24, 2008
in national and workers' rights
. 66 Comments

You know you’re in for a treat when a political party’s ‘policy’ (I still refuse to consider half a dozen bullet points a policy) concerning the rights of New Zealanders at work – the place most of us spend a good part of our days – nearly avoids any mention of the word ‘rights’. On its surface, National’s ‘workplace’ policy seems fairly mild (bullet points help in that regard) but, when you look at what it actually means in practise it’s classic National: anti-worker, anti-rights, anti-wage rises. The difference between this policy and Brash’s extreme 2005 policy is one of tone, not substance.

Introduce a 90-day trial period for new employees by agreement between the employer and the employee, for businesses with fewer than 20 staff.

We’ve discussed the 90 Day No Rights policy already (1,2). It’s a mandate for bad bosses to stand over vulnerable workers. Workers will be able to be fired for refusing to work in unsafe conditions, refusing to do unpaid overtime, joining a union, or any of a limitless list of ‘reasons’. Bad bosses will be able to keep the threat of instant dismissal over new workers at all times.

Continue to allow union access to workplaces with the employer’s consent. • Restore workers’ rights to bargain collectively without having to belong to a union.

Unions currently have the right to reasonably access workplaces to talk to members and to recruit. This policy means National would allow employers to bar the union from the workplace. Non-union collective bargaining is when a ‘bargaining agent’ (often the boss or paid by the boss) draws up a collective contract between workers and the boss. The boss refuses to deal with the workers’ union because there’s already a collective contract; workers can accept the collective offered or get nothing. These moves are designed to undermine collective bargaining and, thereby, weaken workers’ power to win better pay and conditions.

Retain the Mediation Service but ensure it is properly resourced with properly qualified mediators. • Require the Employment Relations Authority to act judicially in accordance with the principles of natural justice, including the right to be heard, and the right to cross-examine before an impartial referee. • Allow injunctions and important questions of law to be heard in the first instance in the Employment Court. • Allow a right of appeal to the Court of Appeal.

The mediators in the Mediation service are already properly qualified, unless by ‘properly qualified’ National means ‘pro-employer’. The other changes seem designed to make the system more litigious and expensive, putting roadblocks in the way of workers being able to enforce their remaining work rights.

Keep four weeks annual leave, but allow employees to request trade of the fourth week for cash.

If you believe that the choice will genuinely be in workers’ hands, I have some magic beans you might be interested in buying.

Appoint a working party to review the Holidays Act, especially the issue of relevant daily pay.

Labour introduced relevant daily pay to make sure a worker’s leave pay equalled her average daily pay because many waged workers earn a large part of their pay through regular overtime but were previously only paid their ordinary time wages when they were sick or on holiday. National wants to reverse this.

Sometimes what is missing is just as revealing as what’s there: There’s no mention of ACC, paid parental leave, minimum wage increases, Kiwisaver, meal breaks, time and a half on public holidays, and so on. And despite all the rhetoric we’ve heard over the last year, absolutely no mention of how National would lift wages.

UPDATE: Jafapete has some good analysis here and Rogernome likewise here.

Bollard cuts the OCR

Published
by
Steve Pierson
on July 24, 2008
in economy
. 17 Comments

The Reserve Bank has dropped the Official Cash Rate from 8.25% to 8%. Inflation is well outside the Bank’s 1-3% target range but there appears to be a recognition that there’s no point strangling our economy with high interest rates when that can’t bring down international oil and food prices.

Don’t expect mortgage rates to instantly drop a quarter of a percent though. The banks had already priced in a 50% chance of a rate cut and the still unwinding credit crunch means banks have to pay a premium to get credit from abroad at present (and they can’t get enough domestically to meet demand). Not to mention that 80% of mortgages are on fixed interest terms.

These same factors worked against the Reserve Bank’s effort to slow the economy 2-3 years ago. International credit liquidity (there was lots of cheap credit back then) and fixed mortgages buffered the economy from the rising OCR and, now, they will dampen the stimulatory effect of a lower OCR.

Critics of the Reserve Bank argue it was too slow to raise interest rates and head off the housing bubble and that it has been too slow in easing now, pushing the economy into recession. Underlying all this there is a need for a serious examination of the timeliness of monetary policy and whether its myopic focus on inflation is right for New Zealand.

Open up the trusts

Published
by
Steve Pierson
on July 24, 2008
in election funding, national and nz first
. 53 Comments

Bob Jones confirmed on Morning Report that he gave $25,000 in 2005 to New Zealand First. The money was to be funnelled to NZF through the Spencer Trust but, according to the party’s declaration of donations the money was not passed on (parties’ declarations of donations are supposed to include any donations from a legal or natural person totalling over $10,000 in a financial year, NZF reports no donations over $10K since 2004 and none from the Spencer Trust).

Now, we have what appears to be proof of wrongdoing in New Zealand First. Either the money donated by people like Jones through the Spencer Trust was used to pay NZF bills and it wasn’t properly declared or the money was not used to pay the NZF’s bills but for some other reason, which is not why the money was donated. It may be that Peters was not aware that this was happening but something is rotten inside NZF.

The only way to clear all this up now is for all parties to open the books of their secret trusts so that Kiwis can finally be certain of who has been donating to parties and that the money has been used as donors intended. Here is a list of all secret trusts, the party each gave to, and the totals of declared money funnelled through them since 1996.

National:
NZ Free Enterprise Trust - $635,000
South Free Enterprise Trust - $17,999
Waitemata Trust - $2,100,188
Ruahine Trust - $318,948
Holland Memorial Trust - $152,168.71

NZF:
Spencer Trust - ?

(some parties, mostly National, also received money funnelled through law firm trust funds but there is no way those could be opened to scrutiny)

Fortunately, these trusts are now illegal thanks to the Electoral Finance Act but that’s useless if money from them is simply not declared. Now, parties must prove they’ve been honest. So, how about it National and NZF? Restore our faith; open up the trusts.

[Update: To be clear. I would love to see all large (say $200+) anonymous donations banned but it's not possible to open the lawyers' trust accounts or name past anonymous donors, whereas it is possible to open up the books of the trusts. For the record, since 1996 declared donations through secret trusts, lawyers trusts, or given anonymously have totalled: Nats-$4.3mil, Lab-$2.1mil, Act-$0.8mil, Greens-$20K, UF-$37.5K, Progs-$40K, NZF $6.3K]

EMA Kiwisaver campaign in breach of EFA?

Published
by
Steve Pierson
on July 23, 2008
in business, election funding and workers' rights
. 53 Comments

The Employers and Manufacturers Association’s advertising campaign to defend the ability of employers to make workers pay their own Kiwisaver employer contribution while pocketing the taxpayer subsidy is the most hamfisted and transparently cynical piece of PR I’ve seen in some time.

It’s outragous that the EMA should claim it’s standing up for workers’ rights when it is really just trying to protect bad employers. But it’s not surprising. This is, after all, an organisation that has opposed every single gain made by working people in the last nine years and has an industrial arm that helps employers dismiss their workers and cut their pay.

It’s, therefore, no surprise that the EMA has had to resort to running an expensive advertising campaign (they can’t actually mobilise any workers in favour of their cause) and the media have seen it for the blatantly cynical PR move it is.

What’s more, this whole embarrassing exercise may be in breach of the Electoral Finance Act. I’ve just had a tip-off from a reader who has laid a complaint with the Electoral Commission this afternoon.

It turns out the EMA has failed to register as a third party, which means it has an election spending limit of $12,000. Today’s ad was a half page full colour in the Herald, putting it at around $15,000 according to a recent rate card and pushing the EMA well over their legal spending limit. The ad also entangles the New Zealand Herald, which is in breach for publishing it.

Judging by the text at the bottom of the advertisement it appears the EMA knew this would be the case all along but thought they could get around the law by passing it off as issues advertising, which is exempt under the Act. A quick look at section 5 of the Act shows this is not the case. It’s expected the same ad will appear in the Dominion Post tomorrow morning, at a cost of around $8,500. This ad will also be in breach of the EFA, as will the Dominion Post.

Deliberate attempts to breach electoral law and a cynical attack on workers - is this the best the EMA can do? Crappy ad design too.

[On a related note, if you haven't heard it already Alasdair Thompson lost the plot up against Trevor Mallard today on Morning Report. I never thought I'd see dear old Geoff have to turn someone's mic off before, but Alasdair's behaviour sure warranted it.]

Previewing National’s employment policy

Published
by
Tane
on July 23, 2008
in national and workers' rights
. 33 Comments

Word around the traps is that National is going to be releasing its industrial relations policy this afternoon.

My prediction is the policy will be sold as relatively moderate, but in reality will differ only slightly from their rather extreme 2005 plan. We can be sure that every single change will have the effect of rolling back the gains made by workers over the last eight and half years. None will improve workers’ rights or lift wages. There will be no mention of how National plans to close the now forgotten wage gap with Australia.

Here’s what I’m picking:

- A review of personal grievance rights, including the introduction of a 90 day no rights period for new workers in businesses with 20 or fewer staff.

- Removal of the ‘union monopoly’ on collective bargaining.

- Restrictions on union access to the workplace, making it harder for workers to organise or to see their union representatives. [Hat tip: Ben Thomas]

- Make the fourth week’s annual leave saleable by ‘mutual agreement’.

- Vague promises about reducing ‘compliance costs’, possibly including the removal of elected health and safety reps.

The rest of National’s planned reforms (rolling back the 2004 amendments to the ERA, paid parental leave, time and half on public holidays etc) will be shelved for the second round of reform after they gain power, while other planned reforms such as Kiwisaver will likely be released separately and dressed up as small business or superannuation policies.

We said earlier in the year that the one policy National can’t move on is employment law. Small target politics might well be the name of the game, but this is one dead rat National and its supporters won’t stomach.

UPDATE: Well, it’s past 5 o’clock and there’s no policy yet so I guess that tip-off was wrong. Maybe tomorrow?

UPDATE 2: Looks like I was broadly correct. Yay, I guess…?

Drinking Liberally - Auckland

Published
by
lprent
on July 23, 2008
in uncategorized
. 11 Comments

Drinking Liberally - AucklandWHAT: Regular event for Drinking Liberally’s Auckland City chapter
WHEN: 7:30pm, Wed 23 July (TONIGHT)
WHERE: London Bar, corner Queen and Wellesley Streets, Auckland City.
WHO: You and any of your friends who may be interested
THIS MONTH: Mix and mingle, a great chance to meet fab new people, have a beverage or two, and talk politics if you are so inclined.
COST: Free, you will just need to buy your own drinks.

Entrance to the bar is on Wellesley St, go up to the top of the stairs and through the doors and we’ll probably be at the far end of the bar (where the stage is) setting stuff up.

Originally we had Margaret Wilson lined up to speak, alas she has had to reschedule for later in the year. We have had a mad-cap wacky series of adventures trying to line up a replacement, but our best attempts have all been stymied.  (We might even regale you with tales of our woe if you buy the right person a bevy on Wednesday).

And then we figured, what the heck, everyone had a good time at the first one and if anything was lacking from that it was sufficient time to get around and actually meet some new people, rather than just talking to those we already knew, so we thought you might feel the same way. Hence the mix and mingle for this round!

Cheerio good folk, see you Wednesday, or see you next time (Wednesday 27th August, same bat time, same bat place).

Julie
on behalf of your earnest chapter hosts - Conor, Katy, Lyn, Michael, Jordan, Lynn, and Julie

PS  There is a Facebook Drinking Liberally group that you may want to join if you are the joining type.  Just search groups for Drinking Liberally NZ.

Sorry about the late post.

Lynn

Between the lines: Nats’ outdoor rec policy

Published
by
Steve Pierson
on July 23, 2008
in environment, kremlinology and national
. 25 Comments

The ‘policies’ National is releasing are nothing more than bullet points but we know from a number of slips that these vague one-pagers only scrape the surface. When they’re talking to friendly audiences without the media around, National’s MPs tend to be more forthcoming and rightwing when discussing policy. Clues can also be found in the coded language of their ‘policies’. The trick is that often only specialists can see the implications of what National is suggesting. So, we’re talking to a number of specialists in relevant areas to help us read between the lines. Today - Outdoor Recreation:

• Change the focus of Conservation Boards and rename them Conservation & Recreation Boards (or similar). Membership of these boards will reflect the diversity of recreation pursuits. • Ensure that public access is achieved through negotiated agreements between landowners and local Conservation & Recreation Boards. • Create new affordable campsites for New Zealand families where there is demand.
= open up National parks to more invasive and damaging activities and opening marine reserves to fishing. That’s bad for our native animals and plants, the sustainability of our fisheries, and traditional users of National parks like trampers.

• Recognise the status of hunters as important stakeholders in the outdoor environment. • Establish recreation areas managed by hunters on conservation land using a framework that protects conservation values. • Include hunters in the decision-making process for the management of game animals.
= as hunters already have input these changes mean putting hunters ahead of conservation and other users of DoC land.

• Give Fish & Game the option to charge a differential licence fee for foreign anglers. • Develop management plans with stakeholders in fragile and iconic trout fisheries. • Oppose the introduction of recreational sea fishing licences. • Encourage local management of local fisheries.
= put anglers’ interests ahead of other members of the community and conservation.

Context: These changes seem designed to sacrifice conservation for recreation. The big beneficiaries: hunting and fishing tourist operators. Also, the Outdoor Recreation Party left its coalition with UnitedFuture last year, National may see money and votes in securing the support of the people between ORP.

If you can provide more specialist information on National’s ‘policies‘, such as broadband or early childhood education, flick us an email at thestandard@gmail.com.

Landlords: youse are better off renting

Published
by
Steve Pierson
on July 23, 2008
in housing
. 28 Comments

The graphic to the left was produced by the Property Investors’ Federation and was printed unquestioned in the Herald yesterday. The PIF uses the figures to claim Kiwis are better off renting. Here’s what’s wrong with them.

First, it’s comparing the average rent to the cost of buying a median house. Rental properties tend to be lower quality, cheaper - so are likely on average to be worth well below the national median. Comparing apples with apples would look at the rent on properties of the same value.

Secondly and most importantly, if you’re buying the house at the end of 25 years, you own a house. If you rent, at the end of 25 years you have nothing. That’s a pretty serious difference. If you buy rather than rent you might pay some more (less than the difference in the graphic though) but you end up with an asset in the end.

So, what is the Property Investors’ Federation’s interest in trying to convince Kiwis they are better off renting? Well, as the name suggests, the PIF is a political lobby group that represents landlords - ie people who make money off others renting from them, people who obviously think that owning properties, multiple properties, is worthwhile.

Why would a group of landlords want people to think renting is better than buying?

- to decrease demand for buying houses, so PIF members can buy them more cheaply
- to increase demand for rentals, allowing PIF members to put up rents
- to undermine the demand for the Government to intervene in the housing market with a large affordable housing policy. If the Government builds lots of affordable houses, PIF members’ tenants will be able to find cheaper rentals and cheaper houses to buy. That’s good for most Kiwis, bad for the PIF landlords.

Landlord lobby group comes out with flawed figures suggesting renting is cheap just as the Government appears to be developing a housing affordability policy. Funny coincidence that.

The Peters saga, a summary

Published
by
Steve Pierson
on July 23, 2008
in election funding and nz first
. 32 Comments

1 - In 2005, Owen Glenn paid $100,000 towards a legal defence fund for a case in Peters’ name.
2 - Peters was not told that Glenn had been a donor to that fund until last week according to both Peters and the lawyer Brian Henry. There is no evidence to the contrary. Neither Clark nor Key are accusing Peters of lying.
3 - There is a question of whether a legal defence fund should be declared in the registry of pecuniary interests or as a gift under Cabinet rules. It’s by no means clear that it should be. That’s what this issue boils down to - there is no suggestion of corruption, only potentially failure to comply with these two rules. This is being investigated by the Speaker and Cabinet officials. There is a further question over gift duty but inadequate information to go on at present.
4 - The Dompost has published allegations that the Vela family legally donated money to New Zealand First.
5 - Without providing any evidence (and despite the fact that the cheque pictured int he article clearly says ‘non-transferable’), the Dompost suggests that some of that money was diverted away from the party into Peters’ personal funds.
6 - Peters has not denied that the Vela’s made donations, he is under no obligation to reveal every legal donation to his party. Peters has stated he will sue the Dompost for defamation over its unevidenced allegations that he took party donations for his personal use.
7 - National refuses to rule out having Peters in a National-led Government based on the information available. They are calling on the Government to sack him on the available information.
8 - National wants the PM to investigate the internal finances of another party but refuses to open its own books.
9 - At the same time as these donations around Peters, National received over $2 million in anonymous donations funneled through trusts it set up specifically to hide the identities of its large donors. The practice is now illegal thanks to the Electoral Finance Act.
10 - Key has stated that National would repeal the Electoral Finance Act and make large anonymous donations and secret trusts legal again.

Personality cult

Published
by
Tane
on July 22, 2008
in brand key, interweb, john key and national
. 41 Comments

Some of our friends on the National Party end of the blogosphere have developed a rather odd habit over the years of referring to Helen Clark as ‘Dear Leader’.

Well fellas, I hate to break it to you, but if it’s a personality cult you’re after then look no further than the National Party’s new website.

Is that two… three… four pictures of John Key within the first fold of the homepage?

Focused on what matters indeed…

The War on P

Published
by
Eddie
on July 22, 2008
in ACC, national, privatisation and spin
. 7 Comments

National Party strategist and Dominion Post columnist Richard Long declared war on “P” today.

The “P’” word that is.

Privatisation.

Labour and the unions have attacked the proposed ACC changes by using the scare word “privatisation”, whereas the policy is actually aimed at providing choice in an area which is at present a monopoly.”

Actually Richard, it was Merrill Lynch who first used the P word. It’s there in the title header of the leaked report that blew open National’s plans and forced its hand into an early policy announcement:

Potential privatisation of the NZ casualty insurance market

And there’s the “P” word again in the first sentence:

If the National Government in NZ wins the election scheduled for later this year, there is a strong chance that it would move quickly to privatise the ACC”

 And then another five times on the first page alone and many, many more times throughout the report: 

Publicly, as best we can identify and contrary to statements made by several insurers we have met with in NZ, the National party has made no formal statement on its plans for ACC. Informally, however, we understand the NP has been very clear in saying it will privatise the ACC and we are told there is a well buried comment on the NP website suggesting they plan to privatise the market.”

So here we have again, John Key and National saying one thing to voters and another thing to big business – in this case the insurance industry.

If only the media would declare a war on “D” for deceit.

Unauthorised, unimpressive, unquestioning

Published
by
Steve Pierson
on July 22, 2008
in john key and slippery
. 94 Comments

I’ve finally got through part 1 of the Herald’s deification of John Key and it’s surprising how boring and mediocre he comes across.

Impressive contortions too. How three senior reporters with six months to write an article managed to avoid asking how Key could have both talked politics over the dinner table and not have an opinion on the Springbok Tour is beyond me. But the kicker is the line: “He is decisive and appears genuine, but at the same time does not like giving offence - it’s this aspect of his character which, as we shall explore in part two next week, provides the ammunition for his political opponents to label him “Slippery John”

Turning Key’s attempt to be all things to all people into a virtue is impressive.

Now, I’m not a fan of ‘yeah, right’ jokes but T-Rex’s is brilliant:

Chasing Peters, it’s easier than examining policy

Published
by
Steve Pierson
on July 22, 2008
in election funding and nz first
. 96 Comments

For my part, I don’t see the big deal in all this Peters donation stuff. Transparency in election funding is important (and it’s something that National and ACT have constantly opposed) but there is no evidence of Peters has been purposely secretive.

A legal defence fund set up for a court case involving Peters received a donation from Owen Glenn and, as per his strict practice, the lawyer, Brian Henry, involved did not reveal to Peters that Glenn was one of the donors to that fund. I see nothing wrong with that practice on Henry’s part – it seems designed to ensure politicians do not feel beholden to anyone who donates to their cause and to discourage donations in return for political favours. That’s all perfectly legal and, seeing as Glenn was happy to give openly to Labour it can be assumed that it was only Henry’s practice and Peters’ ignorance that kept Glenn from publicly declaring his donation to the legal defence fund.

The irony is that we are only aware that Glenn was a large donor at all because he gave openly and honestly to Labour. In contrast, National received over $2 million in secret donations that it purposely funnelled through anonymising trusts. We won’t see the media asking hard questions about who gave National all that money and why National was so desperate to keep the identities secret because they’ve been so thoroughly secretive that there is no evidence to work with.

Peters claims he didn’t know about the donation to the fund until Henry decided to break his practice on Friday, and I see no reason not to believe him. When Peters did find out he told the media quickly.

Peters did know a legal defence fund used to fund a case in his name had received donations but legal defence funds are specifically not included in the list of pecuniary interests, so there was no need to list it. The registry of pecuniary interests is a joke anyway – nearly every National and ACT MP hides their true financial interests by having family trusts, the holdings of which are not declared.

As for the Dompost’s ‘revelations’ today – various members of the Vela family and companies owned by the family gave amounts that may have totalled $150,000 to New Zealand First over a period of five years. So what? The donations are legal and, as long as NZF didn’t receive more $10,000 from any individual person (legal or natural) in one financial year, they didn’t have to be declared under the law of the time.

It’s an indictment on the New Zealand political discourse that, when there finally is a real policy contest to discuss, the dominant issue is a donation Owen Glenn gave three years ago. So much easier and fun to chase Peters than research big issues that actually affect people. So, excuse me if I continue to post on policy and issues that matter to Kiwis, rather than getting worked up about who knew what when over some old donations.

Kiwis love their rail

Published
by
Steve Pierson
on July 21, 2008
in assets, polls and transport
. 55 Comments

A poll on TV1 shows that Kiwis overwhelmingly support the Government move to bring rail back into public ownership. Despite a question that explicitly states the cost of Kiwirail but none of the benefits, respondents still voiced very strong support for the purchase- 68% in favour vs 24% against.

The Government has acted in a way that makes economic and environmental sense. The only opposition has been from the ‘free market is always right’ lobby and National. Their childish comments about buying a train-set have fooled no-one.

I think this issue and the growing questions around John Key’s leadership qualities, including his broken promise not to use Crosby/Textor, have been the catalysts for Labour’s resurgence in the polls. The 90 Day No Rights policy and ACC privatisation, despite National’s attempt to release on the quiet, have also gone down very badly with the public but they were released too recently to affect the latest polls. That may mean more bad news for National in the next round of polls.

Will you vote for higher levies?

Published
by
Steve Pierson
on July 21, 2008
in ACC, election 2008 and national
. 20 Comments

If National wins the election, it will privatise the Work Account of ACC (and maybe other ‘profitable’ accounts). We know that this may have negative effects on coverage for workers but the problems go further – taking out the Work Account may compromise the whole ACC system.

Every year, ACC needs to run a surplus so that it can add to its reserves to close the gap between reserves and liabilities. Much like the Cullen Fund is a way of saving up to fund future superannuation payments with present tax, ACC’s reserves is a way of saving up now for higher claims from an aging population in coming years. If it does not, it will mean higher levies in coming years. As you can see, removing the Work Account slashes that surplus to nearly nothing.

Insurance companies would make $200 million in profit, most of which goes overseas, and the rest of us will be left with a financially criplled ACC, which will need higher levies to survive or will collapse.

Voting National means profits to Aussie insurers, which we will pay for in worse work coverage and higher levies

Taxing choices

Published
by
Steve Pierson
on July 21, 2008
in election 2008, national and tax
. 85 Comments

There are four options open to National regarding the tax expectations it will deliver large tax cuts ($20+ per person a week = $3 billion+ a year) additional to Labour’s.

a) fail to meet those expectations by offering small cuts. Who would vote for a one-trick pony that won’t do its trick?

b) cut taxes funded by cutting government waste. There simply is not waste on the scale needed; National’s waste-o-meter stands at just $3.3 million.

c) cut taxes funded by cutting spending. National has not announced any spending cuts it would make and, by my count, has already guaranteed to maintain or increase 90% of spending. Unless National breaks its promises (which it could do by tricks like keeping spending at the same nominal level, letting it fall after-inflation and population growth.), it can’t fund tax cuts from spending cuts.

d) borrow to pay for tax cuts. National has already signalled it will increase debt to 25% of GDP. That means increasing debt by about $10 billion, which would cause huge inflation. Problem is, the public doesn’t like government borrowing. There’s a way around that though – have the SOEs borrow and pass on the money in dividends to the Government. That wouldn’t make the government’s debt increase, it would show up in the books as lower asset worth. Another trick is using public-private partnerships: these are just a fancy form of borrowing – the government gets captial up front and the private moneymen make the profit from rents in the longrun.

Which option do you think National will choose? I’m picking them to fund lower than expected tax cuts by increasing debt (one way or another) while arguing that the money is coming from cutting waste.

Would Nats introduce work-for-the-dole?

Published
by
Steve Pierson
on July 21, 2008
in john key, national and workers' rights
. 183 Comments

Judith Collins, who has made it her mission in life to attack benefits at every turn, has been meeting with Mission Australia, the largest private ‘work-for-the-dole’ scheme provider in Australia. This is a clear indication that, in contrast to the moderate, modern approach Key says he espouses, National will be returning to the failed policy of work-for-the-dole.

Work-for-the-dole was introduced in the dying days of the last National Government. It was cancelled by the incoming Labour-led Government in 2000. A report on the scheme concluded it had failed unemployed workers by shortening the length of time they had to find suitable work before either losing their benefit or being conscripted into work-for-the-dole. Work-for-the-dole resulted in higher unemployment than it otherwise would have.

Proponents of work-for-the-dole argue it helps long-term unemployed get off benefits. There’s no proof that’s the case, it’s all ideology. Moreover, the number of long-term unemployed is tiny and has fallen in recent years, not due to work-for-the-dole but because of a full employment policy that invests resources into getting people into decent work.

(source)

Work-for-the-dole is a nice sounding slogan but it doesn’t work in practice. As with ACC and the 90 Day No Rights policy, National is following ideology, rather than doing what makes sense.

[for those who will inevitably claim Labour has moved people from the UB to sickness benefit - the facts]

Oram’s Ides of March

Published
by
Dancer
on July 20, 2008
in articles and election 2008
. 53 Comments

Rod Oram can nearly always be relied upon for insightful analysis that takes debate a step further. In the SSTimes today he asks:

“are we being realistic about the current state of the nation? Each person will have his or her own view. But if, as individuals and a society, we’re gloomier than the facts warrant, we will undermine ourselves. We will fail to acknowledge and build on what we have achieved, fail to be confident and ambitious about the future. Then our worst fears will become reality….

By any realistic measure the economy today is far stronger, more flexible and resilient than it was then; conditions at home and abroad are much better; and New Zealand’s opportunities in the world far greater.

Failing to believe that will lead to three tragic outcomes: companies will sharply cut their investment in themselves, they will stunt their development; as a result, they will make the recession deeper and longer, they will be weaker when the upturn comes; and we will fulfil our worst fears about the New Zealand economy. Thus, now more than ever, this is a time for realism, confidence and ambition.”

With the political hothouse of Parliament returning this week, and Labour looking to convince the electorate that they can offer an agenda for change (whilst maintaining stability), let’s see whether they can also be convincing that we have room for optimism even in the depths of winter.