social spending in New Zealand increased by 22%…
Let’s put that in context:
(i) Could certain Christchurch events between those two dates have affected total social expenditure, do you think?
(ii) The GFC also struck NZ between those two date ranges.
So an increase in total expenditure does not translate into a per capita increase for those that need it.
(iii) In that OECD summary, your quote appears under the heading Strong increase in the share of population that cannot afford to buy enough food, which seems at odds with the cheerleading tone otherwise adopted, and suggests some serious problems with the economic indicators chosen for comparison.
They need to focus on identifying ways to depict the Key government as dirty, crony-capitalists. It really isn’t that hard since that’s what they are.
Here’s a possible start: “For the price of a shipload of sheep to Saudi Arabia, you could instead get x number of doctors.”
The trick is to convince people that Govt spending in itself isn’t bad, but rather where their tax dollars go to. The term "fiscal chickenhawk" comes to mind.
Whatever happens, the Opposition can’t just wait for something like a housing bubble burst or a Watergate-level scandal to sink the Key Govt. I’ve said it before, but a well-organised Opposition sets traps for the Govt of the day to walk into. And it also makes voters aware of what it stands for, rather than what it stands against.
because of debt maturing exceeding projected additional debt.
Why yes of course, how could I be so silly. The debt we will owe exceeds what we think we may owe so is less.
Like if I borrow $10 from you with $5 of that debt projected as future debt then we are quits, yes?.
On the other hand, the one with sleighter fingers, I defer payment of debt on the $10 and forward $5 of the loan on maturity you will owe me $15.
As long as we’re discussing credibility of National’s governance and the world’s eyes seem to be staring towards Greece, is today’s news about the apparently very big stockmarket problems in China likely to have much of an impact on New Zealand?
The graph almost makes the % of Debt to gdp look cyclical however the last three numbers are pretty much flatline. So a pretty big increase from the GFC and the National Party.
Greece is running at 170% debt to gdp so we are relatively safe from the IMF for the time being.
It seems the Chinese stock market "tanking" is merely market correction after a 150% rise it has dropped by 30%. Some people have been burnt and things are cooling but it isn't a disaster.
To your third point, the preceding sentences in the summary also say,
"New Zealand has an average annual disposable household income above the OECD average, and the poverty rate is somewhat lower than the OECD average. Poverty rates among older people fell by 11 percentage points from 2007 to 2010, while the poverty rates for children increased by 1 percentage point."
To your first two points, While the GFC had an impact the increase was significantly higher than for the rest of the OECD most of which had tougher time than NZ. In the GFC our recession lasted 6 quarters and unemployment stayed significantly lower than other countries. Christchurch also had an impact but once again the impact on social spending was relatively short with unemployment falling because of the demand for workers. If you look at the Treasury graphs on social spending - health, education, welfare - the trend is up and steady over time. I think my original point stands. The idea that National has somehow gutted social spending is wrong.
No, that makes no sense at all. The debt is falling because the amount being paid off is greater than the sum being borrowed.
And it also makes voters aware of what it stands for, rather than what it stands against.
Helen Clarke said on Q&A that Labour has to appeal to the centre as well as its base - and groom its leader. Politics it too "political". I want a Labour Party to crusade on the things it believes in: justice, integrity, equality, a caring society, free education, care for the environment. It isn't economically reckless and it has the moral high ground. There have been some truly horrible right wing outbursts (by Key supporters?) lately which show the ignorance the privileged display about how society works. Labour and the Greens are or should be seen to be on the side of the angels.
the amount being paid off is greater than the sum being borrowed
Steve’s point was that that you originally said something quite different, as “maturing debt” is debt that is coming due for payment (or contract renegotiation), not necessarily debt that is being paid off.
Hmm, read this interesting post and thought, you seem to be arguing that Labour has been campaigning as National-lite, and that this is a sure-fire way to continue to lose, and that they should revert to their principles. I think.
Whilst I am a Labour/Green voter myself, thats simply not how I see it. I see the role of a major political party as primarily to have enough relevance to win elections in order to enact progressive change and govern. I've not seen any signals or evidence in the last three elections that there is a latent and growing majority constituency of 'left-of-centre' (to use the parlance) voters who have not been voting for Labour because they regard them as too 'centre'.
I think the electorate has moved. And the nature of political persuasion has changed. If Labour believes they can drag a majority of voters 'left' through persuasion and through the abilities of great political leadership, awesome. I fear that way lies more electoral pain however. In the same way that Republicans are painting themselves into a demographic and constituency corner, my concern is simply that Labour are appealing to less and less people, in the name of principles that sadly no longer seem to be relevant to many NZers, and that gaining broader appeal needs to be the highest priority.
I’m saying it’s not the only option, which you claimed when you said.
For any government that wishes to provide significant services to its public taxation is the vast majority of its income.
Yes there are other forms of income, but if you want to provide services you need to tax the population.
Your arguments against that statement are simply arguments for the sake of argument. You continue to argue for user-pays without ever acknowledging that it essentially replaces taxation of those who can afford it with demands for payment from those who can't.
4 Have a look at the US dollar when they started printing money furiously. What printing money does is put more cash into the internal economy, which for a large internal economy has some positive effect but for all exports and imports has no effect at all because the value of the dollar drops exactly in step with the amount printed. For New Zealand with an almost insignificant internal economy printing money would be an utter waste of time and suggesting it as an alternative to taxation is pointless, except for the sake of argument.
Quite simply none of you arguments makes convinces me that we have any option in NZ other than to increase taxation - unless of course you are happy to see the poor of NZ slip deeper and deeper into the mire.
So, more specifically, you’re arguing for a more progressive tax regime.
I agree. If the main problem with National’s management is wealth redistribution from the poor to the wealthy, then a progressive tax is the most obvious remedy. It would be hard or impossible to direct the other revenue streams suggested by Ben in the same way: e.g. currency devaluation is effectively just a flat rate tax; and bonds are only guaranteed to work progressively (in effect, as a tax on disposable income of investors) if they actually make a loss (which would rather defeat the purpose).
you’re arguing for a more progressive tax regime
Well yeah. I'd hardly consider more regressive taxation as reasonable. Hence my objection to user-pays which is regressive as well.
Essentially my point is that Labour needs to accept that there is a contract between the voters and the government.
The government provides services that we want and it's up to Labour to show the voters what they can provide and convince them that it's worthwhile. I'd suggest free education, quality housing, healthcare and social welfare.
But on the other hand there must be an equal acknowledgement that it will cost money and that money really should come from more progressive taxation.
If you look at the Treasury graphs on social spending – health, education, welfare – the trend is up and steady over time. I think my original point stands. The idea that National has somehow gutted social spending is wrong.
Tinakori: you might be right. If anything it's been redirected to the already loaded.
Hence my objection to user-pays which is regressive as well.
Yet somehow when user-pays applies to those at the top, it suddenly becomes a 'tax on hard working Kiwis'. Think proposals for congestion pricing in Auckland to relieve traffic.
If the main problem with National’s management is wealth redistribution from the poor to the wealthy, then a progressive tax is the most obvious remedy. It would be hard or impossible to direct the other revenue streams suggested by Ben in the same way: e.g. currency devaluation is effectively just a flat rate tax; and bonds are only guaranteed to work progressively (in effect, as a tax on disposable income of investors) if they actually make a loss (which would rather defeat the purpose).
It doesn't get more progressive than a financial transactions or Tobin tax, which neatly address the Double Irish Dutch Sandwich issue. But as I've said before, they would need international backing to function properly, and the usual suspects who profit from shifting the goalposts will stop at nothing to resist them.
I think the electorate has moved. And the nature of political persuasion has changed. If Labour believes they can drag a majority of voters ‘left’ through persuasion and through the abilities of great political leadership, awesome. I fear that way lies more electoral pain however. In the same way that Republicans are painting themselves into a demographic and constituency corner, my concern is simply that Labour are appealing to less and less people, in the name of principles that sadly no longer seem to be relevant to many NZers, and that gaining broader appeal needs to be the highest priority.
The other possibility remains that cynicism and disillusionment (common nouns) are much harder enemies to fight than the NACT bloc (proper nouns). The 'missing million' remains a tough nut to crack - even the Greens & InterMana couldn't capture it, and the Alliance officially disbanded earlier this year.
My computer seems to be going backwards
The calculation of our National debt has many variables, one of which is the fact that we do not borrow in NZ dollars. Other factors include foreign investors, who expect to make a buck or five, "income" from the Chch insurance claims from overseas re-insurers, expected income from foreign investments, which may be defaulted on. Did we loan to Greece?
If you ignore one or two of these variables we could seem to be getting ahead but when you look at the big picture it all starts getting wobbly but the main thing to take into account is that it is geared to wealth creation and that wealth is in US dollars and it ain't our wealth.
The other possibility remains that cynicism and disillusionment
Don't forget fear, fear of having to cough up some of your "Hard Earned Money™" like a tax on the capital gain of your property portfolio or having to pay proper wages to the workers of your cleaning company that services your nice little Govt. contract.
Fear leads to selfishness, survival if you like and this lot will try to survive by all means fair or foul.
Labour's job is to rally the workers support by supporting the workers, the people that do the work that profits armchair investors. The hard part is proving that National is scaremongering when it says "Labour has no policy and the policy they have is wrong", which should be easy as National lie about most things but when you tell a lie often enough....
Need I say more?.
a financial transactions or Tobin tax, which neatly address the Double Irish Dutch Sandwich issue
How? Companies will just book their financial transactions through a non-participating state, using a contract for differences or whatever if they need to. And a transaction tax has to be levied at a fairly low level, or it'll make imports expensive and exports uncompetitive.
I reckon the Tobin tax concept is a scam by the financial world on the ignorant and innumerate - instead of a tax that is collectable (like one on personal wealth and deemed business profits) they propose one that's avoidable to the point of being voluntary.
I quite like this man's overview of the political and financial situation in which we find ourselves - http://www.theguardian.com/commentisfree/2015/jul/07/greece-financial-elite-democracy-liassez-faire-neoliberalism?CMP=ema_632
Your arguments against that statement are simply arguments for the sake of argument.
No they're arguments for the sake of thinking about things, rather than stating strong unjustified opinions as if they are facts to shut down debate. If we are forced to think inside your framework then the range of options for progressives is incredibly limited. It's a prison you choose to live inside. I don't.
Have a look at the US dollar when they started printing money furiously
You're presumably referring to quantitative easing, which is a whole different thing. I'm not suggesting allowing the banking sector to print the money, the way our current economy does actually work.
Furthermore, a dropping dollar is by no means the horror of horrors that you seem to think. It is something that an export economy literally begs for on a daily basis. Even done badly, like it was in the US, it can do good to have your currency drop. So using that as an excuse to not even consider an option is just silly.
For New Zealand with an almost insignificant internal economy printing money would be an utter waste of time and suggesting it as an alternative to taxation is pointless, except for the sake of argument.
I'm sorry, but you really don't know what you're talking about. Perhaps it's because you're addressing me as a straw man, I'm not sure. But I have given no specifics of how the money printing could work because there are literally limitless options. Some of them are so progressive as to make progressive income tax a horrendously conservative option by comparison. The way in which the printed money enters the economy can be done entirely progressively as distributions made directly to the most needy. The main losers are people who have substantial assets in our currency, which is almost by definition NOT the needy. It is also something that can be done on a very small scale, not just a very large one. And everything in between. It can be done on a "try it and see" method. I'd hope a scientist might see the appeal of that in a field sadly lacking in opportunities for experimentation (economics).
If the main problem with National’s management is wealth redistribution from the poor to the wealthy, then a progressive tax is the most obvious remedy.
It is. But it’s by no means the only one. It is also what we already have, something offered by all parties except those of the most extreme right. It offers no distinction to the Left whatsoever. The amount of difference between the kinds of progressive taxes that they routinely offer are considerably less than other income options the government actually has. You don’t have be suggesting the eradication of progressive income tax to suggest that other ways in which revenue can be generated exist, and could even be progressive. You just have to think about it with a brain, instead of blindly following the economic path we’ve been led down for so many years now, and wondering why it’s so hard to get back into government with the brilliant idea of raising taxes. Like no one ever thought of that before.
It would be hard or impossible to direct the other revenue streams suggested by Ben in the same way: e.g. currency devaluation is effectively just a flat rate tax; and bonds are only guaranteed to work progressively (in effect, as a tax on disposable income of investors) if they actually make a loss (which would rather defeat the purpose).
It’s hardly a flat tax rate to devalue currency. It’s a capital tax, something entirely different. It doesn’t tax earning at all, it taxes wealth. That’s if you have to see it as a tax, even though it’s quite different really. And what you do with the tax can be as progressive as you like.
I’m not particularly committed to bonds as an idea, I just raise them to show there are many options out there. Usually they’re something you do only in extreme circumstances.
As for user pays being non-progressive, that’s not something you can generalize about. Or rather, that only makes sense if you totally overgeneralize about it. You can design user pays to be progressive. Labour originally designed tertiary fees that way. It was National that made the poor kids pay for tertiary, not Labour.
ETA: Oh, and progressive taxes aren't as progressive as they sound. It's a perennial problem that the richest people on the planet don't pay them. They're middle class taxes. If you want to understand why the middle class is hollowing out around the developed world, perhaps looking at the way in which they get massively taxed, but inheritances, property and capital don't would be good start.
quantitative easing, which is a whole different thing
No you are wrong Ben, quantitative easing is in fact printing more notes and putting them into circulation. Yes it is possible to specifically hand those new notes to specific groups.
However, every dollar you print in NZ will instantly change our exchange rate by exactly that proportion. That is the reality of living in a tiny country with absolutely no economic pressure on the rest of the world. That instantly means that if you import more than you export, your country will become poorer - that currently is the situation in New Zealand - and has been for a long time.
So while we can spend many hours "discussing" what printing money might do - no government in their right mind will do it in New Zealand for very very good economic reasons. That is why I completely dismiss it as a relevant way of raising money for the government.