Saturday, 9 December 2017

Warning Signs: The Briefings To Incoming Ministers Reveal A Country Gripped By Multiple Crises.

 Ominous Warnings: The Briefings to Incoming Ministers, released this week, paint a bleak picture of the previous government's consistent under-funding of public services. The veteran political journalist, Richard Harman, puts it like this: “What the Government is confronting is two separate pressures on its spending – one deferred spending from the austerity imposed by the last Government as a response to the GFC in 2008 and a new force in the form of a rapidly growing, ethnically diverse population.”

THE BRIEFINGS TO INCOMING MINISTERS (BIMs) have laid bare the accumulated failures of nine years of National Party Government. In sector after sector senior civil servants paint a grim picture of incompetence and neglect. The clear message which emerges from this sorry record is that New Zealand has been the victim of a nine-year austerity programme that nobody – other than the poor – seems to have noticed. Taken together, the BIMs offer stark proof of just how deep the class divisions in this country now run.

The veteran political journalist, Richard Harman, puts it like this: “What the Government is confronting is two separate pressures on its spending – one deferred spending from the austerity imposed by the last Government as a response to the GFC in 2008 and a new force in the form of a rapidly growing, ethnically diverse population.”

One of the reasons the three parties making up the present government were able to secure the votes necessary to win power was because the National-led Government was no longer able to confine the effects of its austerity programme to the poorest – and brownest – working-class communities. The effects of prolonged underfunding were beginning to be felt in New Zealand’s leafy suburbs as well as in its meanest streets. More and more people shared in the common agreement that something must be done.

An understanding that a great deal more money would have to be raised and spent, should have been at the heart of that agreement – and Labour should have been the party that put it there, imbuing it with the moral and intellectual force required to overcome the Right’s inevitable resistance. This had been the strategy of the Labour Party in the early 1930s, and it succeeded brilliantly. Labour took power in 1935 with a comprehensive and progressive manifesto, backed by the irresistible weight of an informed and impatient public.

Sadly, this was not the case in 2017.

Rather than build a broad consensus around the need for a substantial increase in public expenditure, funded by an equally large increase in taxation, Labour set out to convince voters of the exact opposite. No increase in personal income tax contributions were necessary, they were told, not even from the very wealthy. Corporate taxation, similarly, would not need to rise. The rate of the Goods and Services Tax could remain fixed at 15 percent. There would be no Capital Gains Tax, Land Tax or Inheritance Tax. Labour was at pains to let people know that it intended to cleave faithfully to the broad fiscal and economic settings bequeathed to it by the outgoing National Government. Gusts of rhetorical stardust notwithstanding, the new Finance Minister, Grant Robertson, was determined to run a tight fiscal ship.

In essence, Robertson’s strategy was the same as Steven Joyce’s, his predecessor: keep the middle-classes happy. National had done it with rock-bottom interest-rates, and by allowing the value of their personal assets to soar. Labour hoped to keep them happy with promises of free tertiary education and affordable homes for their kids; decent pay raises for teachers, nurses, hospital doctors and civil servants; and the gradual upgrading of New Zealand’s ailing infrastructure as and when finances permitted. For the working-class and beneficiaries there would be lots of smiles and hugs – and bugger-all else.

But, as Harman puts it on Politik: “There is a subtle but strong message running through the Briefings to Incoming Ministers […] which comes near to putting a price that the Government is going to have to pay to implement its promises.”

Unsurprisingly, given the neoliberal predilections of senior Treasury officials, the price envisaged is a capitulation to the idea of opening-up the renovation of New Zealand’s public services and infrastructure to private investors. Robertson’s principal advisers are steering him, very quietly, in the direction of Public-Private-Partnerships. In this they will be greatly assisted by Robertson’s personal aversion to unorthodox economic ideas, and by his determination to stay within the bounds of his “Budget Responsibility Rules”.

No matter that New Zealand is short 75,000 houses, or that 700,000 Kiwis cannot be sure of the purity of their drinking water. Too bad that there aren’t enough beds for the mentally ill, and that the prisons are full-to-overflowing. Unfortunate that our courts are so under-resourced that justice is being denied by trial delays of up to 18 months. Labour will continue to resist the rising clamour for increased spending via the tax rises essential to the maintenance of a civilised society.

The grim picture painted in the BIMs is the consequence of National’s class-driven programme of austerity. Labour’s seeming helplessness in the face of the multiple crises they reveal, is the direct consequence of its refusal to accept that the wounds of austerity can only be healed by applying the sovereign remedy of substantial increases in state spending – facilitated by a radical expansion of the tax base.


This essay was originally posted on The Daily Blog and Bowalley Road of Saturday, 9 December 2017.

28 comments:

Guerilla Surgeon said...

So instead of putting the facts before the public, being honest and transparent and letting the chips fall where they may – they simply squirm.

bsprout said...

A good summation.

Polly said...

A good article,
much of what you say can only be remedied if the winnie party wants the remedies to be implemented.
Labour seems to be in a bind.
Should Labour veer to far left then winnie will vetoe their agenda.
The secret coalition document which Labour and its partners have agreed to, needs to be made public.
New Zealand deserves full knowledge of all coalition agreements that tie, bind and hold our government in place.
Apparently winnie is open to the release of the coalition agreements.
Labour by remaining secretive about what they have signed up to, is doing the Country and themselves a disservice.

Kat said...

Govt capital intervention and efficient management of sectors such as health, education and housing are required before any broadening of the tax base. For example when the blood sucking insurance industry is out of the health sector and there are no longer any waiting lists for any type of operation or palliative health care then taxes can be appropriately raised. Simple reason is New Zealanders don't like paying twice, even in the meantime.

John Stowell said...

Yep, we need a tax take up around 50% of GDP not 35% if we are to run a country fit for all citizens.

greywarbler said...

And Labour is damaged by class divisions as much as National - by the snobbery of the nouveau riche children of the erstwhile strugglers-made-good parents.

They were once workers but now admiring of the plutocrat lifestyle gained on the back of non-physical skills in the financial hothouse of the money sea, and its instruments and derivatives, developing into the cashless society. We are travelling in a mental space without milestones, without anchors or reliable abseiling gear or a set destination, drawing ever more into the esoteric, from the simple realities and basic morals held as worthy to the poor, now disdained.

I hope it won't be so but do not notice much awareness of the way we are being dragged slowly onward as shown by the sublime indifference that is shown by Labour of whom many have apparently reached their nirvana and want to nestle or wrestle there. Either provides complete satisfaction as their horizon sinks from sight to which once they might have lifted their eyes for direction and inspiration.

Our future is perilously near paralleling Cold Lazarus by Denis Potter.
https://en.wikipedia.org/wiki/Cold_Lazarus
https://www.youtube.com/watch?v=JfEgdCu5RSM

Dennis himself-
https://www.youtube.com/watch?v=lnVrK38xI-A
(https://www.youtube.com/watch?v=ZWpNgAX_9w0
(https://www.youtube.com/watch?v=J1oaPfmL6_M

Cold Lazarus:
(https://www.youtube.com/watch?v=wJNtRPFrBY0

Jens Meder said...

But does not a radical expansion of the (income) tax base also impose some more austerity on the wealth creators, potentially to the point of not making the wealth creative efforts and risks not worth while ?

JanM said...

What I'd like to know is where have the journalists, who are paid to be our eyes, ears and researchers, been for the last 9 years? Not digging, delving, doing their homework and keeping us all informed, that's for sure! Without their cynical collusion and/or laziness and cupidity the previous government would not have got away with this treachery for so long!
We definitely need some public service journalism happening here (if anyone is left who can remember what that is, of course!)

Unknown said...

Absolutely right Chris, both in your analysis (austerity now hurting the middle classes who are unhappy consequently) and prescription (increased taxation.) I though do NOT favour a rise in GST without also making the first $50,000 or thereabouts personal income tax free - thus reversing the regressive effect of GST on low income earners. (Re GST amount I am sure a govt statistician could figure out the point where the loosers become winners, given there ARE any statisticians left in the public service.)

greywarbler said...

For the working-class and beneficiaries there would be lots of smiles and hugs – and bugger-all else.

Well they have released Shane Jones onto the problem with a snarl, and hopefully a bark worse than his bite. But it may be due to him and his robust approach that will see movement on this, and hopefully as soon as he can point to improvement, there will be a rise in the benefit, particularly for training, transport and adequate childcare, and also a continual rise in the minimum wage.

peter petterson said...

NO P P Partnerships.

Patricia said...

Every sovereign country has a a Money Tree - a printing press. It is how that money is used which determines whether such printing is good or bad. I could go on and on but just ask yourself how was it that a country with a population of around 1.5 million was able to build a national railway, a national shipping service, hydro dams, state housing, roads and a myriad of other things through taxation. It wasn’t. Today austerity is the name of the game. They talk of budget responsibility for god’s sake as if running a country was like running a household. They are all mad.

Nick J said...

I recently moved out of town and took to commuting on the train. In two months there have been 6 major delays due to mechanical breakdown. This is deferred maintenance due to lack of investment, and outsourcing contracts to run the service that essentially assert strip.

The train doesn't go fast, the railbed needs $90 million spent, again deferred maintenance. Meanwhile billion dollar roading projects are funding the private sector roading companies.

We also had a strike for better wages and conditions that cut services for a day.

This is the reality of National for 9 years, the tax cuts would have paid for this. Yet the sheep on the train just put up with it. We are a sad country. Let's hope Winston demands Robertson changes tack.

greywarbler said...

'They talk of budget responsibility' and revel in not being on a tight budget personally. 'Jam for me' say the heads of whatever, and austerity for most of you, If you try you can move up to where we are, if we leave the ladder in place. Otherwise you can fulminate; you are too ignorant to know what the word means, but you do it so well there in the mosh pit, while 'we' watch you from the gods.

Kat said...

@Patricia

The country had a MINISTRY OF WORKS that acted in the national interest. Today we have a diffused, diluted and deregulated conglomeration of works infrastructure and consultants that act in the interests of private corporations. Julius Vogel borrowed millions of pounds from Britain to build the railways. It was subsequent taxation that kept the rail rolling along with other govt infrastructure. Then taxation became a dirty word and a convenient political football and the rest is history. Richard Prebble has the bible on neolib experimentation.

Guerilla Surgeon said...

"But does not a radical expansion of the (income) tax base also impose some more austerity on the wealth creators, potentially to the point of not making the wealth creative efforts and risks not worth while ?"

No. It's not really worth more than a straight no, but I will say – they have surveyed CEOs in the US, and almost without exception they say that if they are given a tax decrease, they will not use it to create more jobs. They will simply use it to buy back their shares, and therefore increase their share value and consequently their bonuses. They are not by now wealth creators, but largely wealth hoarders.

David Stone said...

I don't believe that Robertson has any understanding of the job he has taken on.
Raising corporate taxation and higher income taxation will cause capital flight as international investors shift their money to lower tax jurisdictions. He knows that. So without borrowing more he can't spend more on services and housing initiatives etc.
This situation is never going to be put right without recovering the powers and controls that neoliberal globalisation has passed on to international finance. The mechanisms that the '35 government had along with all other nations in that era, to control and direct the nation's economy have been relinquished to international private interests. He can't do as they did back then without breaking multitudes of agreements, let alone making more that will further compromise his options.
They are completely out of their depth. Not to suggest that this distinguishes them from the Nats.
They need to approach someone like Varoufakis for some now unconventional guidance, but guidance from someone who really knows what he's talking about.
D J S

Polly said...

David Stone; 10 Dec, 1633
Well said.

pat said...

With M.Cullen behind G.Robertson's shoulder we have no need to doubt his understanding unfortunately that does not remove the risks (political and financial) of a step away from the current economic narrative...unlike the 30s.the world is now more immediately connected and the power of the sovereign reduced.....perversely this is why it is so important that the riddle is solved.

greywarbler said...

What Guerilla Surgeon 16.25 and David Stone at 16.33 say!

The facts about the economic mantra that has been broadcast and become gospel to the wealth-worshipers from GS should be tattooed somewhere prominent. (Are there political slogan stick-on tattoos to broadcast intervening ideas? Is there a line in NZ t-shirts for the politically aware to get their point over in some amusing, ironic way?)

And the idea of talking to Varoufakis - great. Dotcom brought Snowden and Assange into our midst. Are Labour and friends ready to actually do something rather than just follow the primrose path of previous NZ low-flyers and listen to a smart and thoughtful speaker. Varoufakis could be our leader showing us the way to new feeding grounds which once sighted, we could frequent and so boost the strength of our small unique, thinking, population which is in danger of extinction. We would follow his advanced thought flocking behind and rising and veering on a new path, and exchange leaders to share the load and experience but always staying on track and together for the great journey.

countryboy said...

Part #1 of #2.

It's taken awhile but I'm beginning to realise just how big a pile of shit we're in.
National represent the bold face of greed and dishonesty eagerly supported by greedy liars in our society. Accountants, cops, lawyers, investment experts, bankers, ACC, IRD and any and all executives of what were once our services and amenities, services and amenities stolen from right under our very noses.
Our primary industry is deeply creepy. Farmers pretend nothing's wrong when, in fact, everything's wrong. The small towns that service our primary industry are ugly, boring, greedy little things and have become so for a lack of stimulation from a diverse population coming and going. And that's because neo liberalism ( AKA Cadre of crooks and deviants ) have sucked out the good people to feed into the big city's financial abattoirs. Those who remain in those smaller, rural towns are so dumbed down and alcohol damaged they couldn't make a fist without a complex set of instructions. Doing skids in shitter cars and wearing gumboots to the super market are about as close to entertainment as they dare skirt in case they over excite themselves and those rural morons are responsible for all of our well beings. And at voting time? Remember that quaint custom? They drive in stakes in a paddock and put up posters of their abusers to convince other morons to vote for them... because electrolytes dumbasses! Makes grass grown an' shit.
Labour is the Zombie Party. It's dead but it can't figure out how to lie down. Bend the knees Labour! Labour is a book with a promising cover but when you open it up the pages are blank. Labour has been terminally poisoned by neo liberalism ( AKA crooks doing crooked things while normalising their crookedness by abstracting the media, changing acts of parliament and so confusing us that they have us believe it is OUR fault that they stole our shit while they continue to get away with it.)
Greens. There's always a vegetarian hippy at the barbi making everyone feel guilty for eating the sausages. In this case however, the hypocritical hippy says No, no, no ! To sausage eating while gnawing on a cow leg. A dreary little lot that we should all pray we don't get marooned with on some desert island. Direct action achievements? None. Angry, active following? No. Only Greens member to show some true grit? Her colleagues spat in her face then kicked her out then 44% of voting Kiwis voted National, the cow party. Is that irony? ...

countryboy said...


# 2 of #2

...ACT? The 1%er’s pornography. The 1%er’s must leer at Plasti-dave seemore while fiddling with their diddles as they sniff their money( AKA the money of others). ACT show there is a level of shallow that's between below and above. ACT have dragged vulgar and crass to subatomic levels of vile and we should all shudder to think, that, that's the way they like it. They’re sickly money fetishists and bother us with their warped beliefs like brian tamaki’s blank-space followers on half price, brushed polypropylene’s day. ACT is so certain that their criminality is righteous that they flaunt their crooks like brash, douglas etc at every opportunity while we, their victims acquiesce to them as if they were somehow necessary albeit unpleasant.
TOP ? For fucks sake! Money fidders huh? Yet he did get a few votes. No doubt the castrated few 1%er’s that couldn’t quite cut the ACT mustard and are happy to que up at the $1.00 brothel.
Maori Party. You’re people of the Land right? Then why are you not trying to court our primary industry away from the Natzo’s? You do know that our primary industry is agrarian right? You do know that ‘ farms’ are that land just beyond the suburbs?
Imagine the power you’d have if you had NZ Farmers on your side as a lobby group?
Because without money Baby, you aint got a snow balls chance in Hell of achieving anything other than getting thin lip service from your abusers. They’ll just run you around and run you around and run you around until you’re giddy then when your head stops spinning you’ll see ever more Maori in prison or begging in the streets than ever before while the likes of peter theil throws a few $million around then walks right past our immigration office like he owns the place.... Oh? Wait?
Yep. I think we’re more fucked than we think we are. We still pretend that what we say and what we think and what we do is somehow making a difference. It isn’t. In fact, things are far worse and will get worse still. The solution? At this point, I'd say there isn't one. Just keep pretending that everything’s just alllll riiiight and take another pill and swipe that credit card and remember, that homeless person you walk briskly past of an evening at the opera? Serves him/her right. It's his/her choice. What ever it takes to survive in this sadistic and narcissistic Kiwi freak show.

countryboy said...

I forgot to mention NZ First. Is that the same NZFirst-winnie who was busted taking more than his Super An' entitlements then hurredly paid it back when sprung? He's our deputy Prime Minister now, right? And a lawyer?
I see.
Ever heard kids playing that annoying game whereby they simply repeat what the other kid says? That's what Winnie does. He just blows out whatever gas is fashionable.
I've heard it said that he's agressively anti neo liberalism. Is that so?
I see.
He was pig muldoons right hand minion so why didn't he bark up large, to use a common parlance when he must have later seen neo liberalism coming? Pig was national, douglas was labour, Winnie was like a Trump-esque wall between the truth and us poor bastards. He was all-a-yap at the winebox enquiry and nothing promptly happened to anyone. Oh, except a jaw dropping tanking of our economy, a spike in poverty within a wealthy country and kids going to school hungry from freezing cold winter houses, because? l-user pays.peters is a whitewash expert and he has everybody bullshitted. He's as useless as peter elworthy was as Head Poo Bah of federated farmers. Most farmers think elowrthy was amazing, wonderful, fabulous, stupendous, exceptional, marvelous etc. The problem was he did nothing for farmers, achieved nothing for farmers, left an, as usual, uncertain future for farmers and yet got a knighthood.
I see.
One would have to ponder why it is that it's seemingly so vital that the dubious status quo must be maintained?
National. "Delivering for NZ". Labour. "Lets do this". Countryboy. " We're fucked".

Patricia said...

Kate
Yes we did have the. Ministry of Works and yes Vogel did borrow but income tax did not come into force here until around 1910. All that was done did not depend on taxation nor overseas borrowings. John A Lee’s book Socialism in New Zealand explains how things were done and would be a good primer for our current MPs.

Jens Meder said...

countryboy, if "we're fertilized", then is that not the normal and essential condition for growth to occur ?

Kat said...

@Patricia
Just so you don't get the wrong impression I go along with your frustration. However Julius Vogel did borrow large amounts of capital to fund the public works schemes and that built the railways. Thats fine. My point is, taxation in the following years was generally accepted as an erstwhile contribution by the electorate because they were seeing, breathing and enjoying the benefits. This govt just needs to change the narrative from Tax & Spend to Create & Contribute.

countryboy said...

And it all ties in and not that off-topic.

Ever wonder why this writer gets itchy and scratchy re agriculture?
Here's one of those reasons and much more eloquently expressed than I could ever hope to do.

https://www.theguardian.com/commentisfree/2017/dec/11/mass-starvation-humanity-flogging-land-death-earth-food

"Whoever controls food production, controls the world" Said someone learned.

One of the reasons we have a Fonterra Freak show isn't entirely about cowsploitation, handing millions to an insignificant little bald boss-man to show he's in control when really? He's a stage prop for a larger production and polluting our water for shits and giggles. ( I really don't know what that means )
I think it's about testing a model. Testing mass food production systems so as to then reign them in to cause hardship and suffering to maintain control for a dollar and a stiffy.

One of the many reasons why we city people are trained, coerced and hyper normalised to hate on our farmers is that individual Kiwi farmers are, or at least were, highly efficient and to be so needed to farm holistically. As a consequence of their envied individualism, they were hard buggers to keep in a box so we city people are used as part of that control mechanism. Banks play the largest role in controlling farmers. They bury them in debt that can never be repaid because inflated capital value against low production returns.
Now? They get brainwashed by mercantile firms into believing they must over fertilise, over stock and over borrow to be good and proper farmers to keep working tirelessly and if you must suicide? Do it quietly and out of sight. Don't want to make a fuss now do we?

Charles E said...

Hogwash, the thesis and the reaction above too.
Of course the bureaucracy paints a bad picture to the gullible new government, which means..... guess what .... ? Loads more money for their department and its pet projects please... plus more staff.. .. and most important …more power to them over the ordinary citizen. All the 'nice to haves' will be on their lists as 'essential' you can bet.
You guys need to get out more, not just in this thriving country but abroad. You will find the entire world needs upgrading, needs more and newer infrastructure and many things we already have in abundance here, like water. NZ has more pure water than any country on the planet, except Bhutan. The reason it is often untreated so sometimes at risk, is precisely because it is so good. But now we (you) want higher safety standards so it will have to be treated almost everywhere, except CHCH.
Not sure if ever more paranoid safety regulations is always progress.