NZ elections - National under pressure

Bill English battles for his job at Queenstown debate

TV3,

27 August, 2013

There was a full house in Queenstown last night for the ASB Great Debate as Finance Minister Bill English faced off against four men who want his job.

During the sometimes feisty debate some of the nation's top political leaders tackled big issues such as economics and social policy.

Host Duncan Garner was joined by Mr English, Labour's David Parker, as well as Green Party co-leader Russel Norman, Conservative Party leader Colin Craig and Act Party leader Jamie Whyte.

Mr English confirmed he will release details of tax cuts before the election, though he said they would be modest.

Watch the full debate HERE

The Queenstown meeting was lively, even rowdy as English had to face pesistent questioning about “Dirty Politics' and about the secret TPP negotiations.

To say that English was uncomfortable and faltered, seems to me to be an understatement

English was interviewed about tax cuts and about contradictions between statements between himself and the PM.

He sounds uncomfortable and shifty to me and is obfusicates.

An establishment economist interviewed opined that there is currently no place for tax cuts.

English hints at 'moderate' tax cuts

Finance Minister Bill English has given his strongest indication yet about the level of any cuts should National be returned to government.

Radio NZ,

27 August, 2014

At a debate for the various party finance spokespeople in Queenstown last night, Mr English was also asked to defend his party's integrity in the light of the Dirty Politics allegations.

Mr English and spokespeople from the major political parties fronted up for the debate but New Zealand First's Winston Peters refused to show because Colin Craig from the Conservatives was there.

Labour Party finance spokesperson David Parker, ACT leader Jamie Whyte and the Green Party co-leader Russel Norman joined Bill English on his electorate home turf.

Mr English hinted that any tax cuts under National would not be large, and middle- and lower- income workers might expect to benefit.

"We'll look at moderate tax cuts for low and middle income earners and the amount of money available for that is likely to be relatively small. So if people are expecting some kind of package that says you'll get twenty bucks a week, we're not going to be announcing anything like that before the election."

The audience wanted to hear Mr English account for allegations made in the Dirty Politics book about National Party staff accessing the Labour Party computer system and removing private data.

Mr English said he did not condone that sort of behaviour.

Green Party co-leader Russell Norman launched an attack about the Trans-Pacific Partnership negotiations, suggesting the talks were secret because New Zealanders will hate what is in it and that it will undermine the country's democracy.

Asked whether the government should release the position held by New Zealand in the talks, Mr English told the audience the government could not release those details while negotiations were underway.

David Parker called Mr English irresponsible because of his position on superannuation. Mr Parker said paying retirees will cost the country more than the education and social welfare budgets in 30 years time.

But Mr English said he was comfortable with the numbers and the Prime Minister's stance at the previous election that he would rather resign than put up the retirement age.

He said that position remained going into this election, and the only way the National Party's view on superannuation would change was if there was a change in the leadership.

Mr English told Radio New Zealand's Morning Report programme this morning there was no room to afford large tax cuts.

He said National would not be stating specific plans for tax cuts before the election, but the broad parameters of its future plans would be announced.

Slash-and-burn for Britain

This will be nauseatingly familiar to anyone in New Zealand. In the meantime debt levels increase exponentially... the destruction of civil society

George Osborne slashes welfare and extends austerity in autumn statement

Cuts in corporation tax, higher infrastructure spending and delay to fuel duty rise among measures announced by chancellor

the Guardian,

5 December, 2012

George Osbourne has announced deep cuts in welfare and Whitehall spending after admitting Britain's malfunctioning economy had left him unable to meet the government's targets for repairing the public finances.

The rating agency Fitch responded instantly to the chancellor's news that his austerity programme would be extended until 2018 – well into the next parliament – by warning that the UK was at risk of losing its coveted AAA credit rating.

Osborne announced cuts in corporation tax, more generous investment allowances for business, higher infrastructure spending and the scrapping of next month's planned 3p fuel duty increase in response to heavily revised-down forecasts from the independent Office for Budget Responsibility (OBR) that the economy will contract by 0.1% in 2012 and grow by just 1.2% in 2013 – the weakest post-recession performance in Britain's postwar history.

But the chancellor said limiting benefit increases to a below inflation 1% (saving £3.75bn), a fresh £31bn squeeze on government departments after 2014 and tax increases aimed at the better off, were unavoidable if Britain was to cut its borrowing. He sought to soften the blow by raising the tax-free personal allowance on income by £235 to £9,440.

"It's a hard road, but we're getting there. Britain is on the right track – and turning back now would be a disaster. We have much more to do," the chancellor said.

Fitch expressed concern at Osborne's decision to put back by a year to 2016-17 the date by which Britain's national debt will start to fall as a proportion of gross domestic product. "In our view, missing the target weakens the credibility of the UK's fiscal framework, which is one of the factors supporting the [AAA] rating," the ratings agency said.

Although two years of zero growth will mean that the government's budget deficit next year will be almost double the £60bn predicted in Osborne's first budget in June 2010, the chancellor said progress was being made. By including the expected £3.5bn proceeds of the auction of the 4G spectrum he was able to say that the deficit was coming down in each year of the current parliament.

The OBR predicted that it would take until late 2014 for the economy's output to return to its pre-recession level in early 2008 and that borrowing would be higher in each of the next four years than it expected at the time of the budget in March as a result. But while warning that job losses in the public sector will top 900,000 by 2018, the OBR backed the chancellor's view that the 2012 downturn was caused by factors beyond the government's control and would not increase Britain's structural budget deficit.

Osborne said the cut in welfare spending was justified because those in work were seeing their incomes rise more slowly than those on benefits.

But Julia Unwin, chief executive of the anti-poverty thinktank, the Joseph Rowntree Foundation, said: "Austerity is here to stay, and growth is as elusive as ever. That is tough for everyone – but hardest for the poorest. The uprating of benefits by 1% will increase poverty. Poorer people are facing destitution, perhaps a decade of destitution, felt by future generations."

In a shaky Commons performance the shadow chancellor, Ed Balls, said: "Growth down, borrowing revised up and the fiscal rules broken: on every target they have set themselves, they are failing, failing, failing. They are cutting the NHS, not the deficit; they are borrowing £212bn more than they promised two years ago; and they are cutting taxes for the rich, while struggling families and pensioners pay the price – unfair, incompetent and completely out of touch."

Facing what the Conservatives clearly intend to turn into a wedge issue, Labour refused to say whether it would back the three-year squeeze in welfare benefits – including jobseeker's allowance, tax credits and child benefit – when the government puts the issue in the form of a bill to a Commons vote early next year. Labour claimed 60% of those expected to suffer the squeeze are not benefit scroungers but people in work, including 3.7m on child tax credit.

Balls said Labour will assess whether to vote for the squeeze when it has seen the government's legislation, but the opposition claimed the welfare changes meant that in 2013-14, along with all other changes to taxes and benefits which are set to take effect in April 2013, a one-earner family on £20,000 with two children will lose £279 a year. Osborne also faced an attack from the right for dragging about 400,000 more people into the 40p rate of income tax and reducing the amount of tax relief those on higher incomes receive on pension payments.

Despite the welfare squeeze and the failure to persuade Osborne for the second time in a year to back the mansion tax, the Liberal Democrat leadership embraced the autumn statement as a joint enterprise. The party's deputy leader, Simon Hughes, said: "We specifically won our battle to get the tax threshold raised, that was in our manifesto last time and out of all the policies that was our biggest commitment." On welfare he said: "We fought our corner for people on lower incomes and won considerable battles."

Vince Cable, the business secretary, said: "The worst thing to have done would have been to impose more austerity, more cuts now, in the middle of a very difficult period of slow growth. So we're spreading it out over a longer period, rather similar to what the Labour party are arguing, though of course they now criticise us."

The need to extend the point at which austerity ends to 2017-18 has required Osborne to set out further spending cuts worth over £31bn between 2014 and 2018 or a real-terms cut of 19% if health, schools and international development continue to be protected. The Social Market Foundation predicted that the budget for the Home Office and Ministry of Justice would be more than 40% smaller in 2018 than they were in 2010.

The Fiscal Cliff

What Fiscal Cliff? Obama Planning Another "Tax Cut" Fiscal Stimulus 

 

Zero Hedge,

28 October, 2012

Since it would appear that QEternity has ostensibly failed in its main goal of pushing the stock market higher (and mortgage rates lower), the White House seems to be scrambling. Obama administration officials have concluded that the economy, while improved (apparently), is still fragile enough to warrant another bout of stimulus. The same old kitchen sink is being thrown at the problem as they are now resorting to the same fiscal stimulus that has also failed time and time again (as we noted here). As WaPo strawmans reports the White House is discussing the idea of a tax cut that it believes will lift American's take-home pay and boost a still-struggling economy (citing people familiar with the administration's thinking).

Once again we expect 'economists' to come up with counter-factual forecasts.

We can't help but get the terrible feeling of deja vu here (paging Christine Romer). Electioneering? for sure; Will we hear "We have a plan"; of course; but in reality for this to make any sense (in the debt-deleveraging balance sheet recession that we find ourselves in), we must wipe from our minds for one moment the looming fiscal cliff (that our politicians seem stuck with irreconcilable differences), the debt-ceiling/deficit/AAA downgrade debate, and the utter failure of linear-Keynesian model forecasts for stimulus effects in the past.

Via Washington Post:

The White House is weighing the idea of a tax cut that it believes would lift Americans’ take-home pay and boost a still-struggling economy, according to people familiar with the administration’s thinking, as the presidential candidates continue battling over whose tax policies would do more for the country.

Obama administration officials have concluded that the economy, while improved, is still fragile enough that it may need another bout of stimulus. The tax cut could replace the payroll tax cut championed by President Obama in 2011 and 2012, which was designed as a buffer against economic shocks such as the financial crisis in Europe and high oil prices. It expires at year’s end.

...

The administration’s work on the proposal comes as each presidential candidate is under intense pressure to demonstrate he has the better tax plan.

...

Any new tax cut would require congressional approval after the election. Administration officials have said in the past that the payroll tax cut should be allowed to expire at the end of the year, and the White House has not said publicly whether it is considering an alternative.

A growing number of voices have been calling on the White House and Congress to extend the payroll tax cut, which has meant about $1,000 in extra take-home pay annually for the average family. These supporters include Harvard professor Lawrence H. Summers, formerly Obama’s top economic adviser, and Rep. Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee.

“If we’re going to look at anything, we should be looking at a payroll tax cut or other measures that have a similar effect,” Van Hollen said in an interview.

The White House declined to confirm whether it is exploring a new policy, with an official saying late Friday only that “there’s no specific new proposal such as this one at this time.”

The payroll tax cut... is considered particularly effective by economists because it shows up in every paycheck.Economists say it may have boosted economic growth each year by about 1 percent, helping create hundreds of thousands of jobs.

...some lawmakers, particularly Democrats, don’t like the idea of using a tax that ordinarily goes to fund Social Security. Any lost revenue as a result of the payroll tax cut has been offset by additional taxpayer money. Still, powerful interest groups such as the AARP have criticized using the payroll tax cut for short-term stimulus.

The administration is looking to replicate the effect of the payroll tax cut without relying on Social Security revenue, sources said. The people familiar with the deliberations declined to be named because the discussions are ongoing.

One option is to have employers reduce how much in federal taxes is withheld from employees’ paychecks, up to a certain amount per year.

This was precisely the type of tax cut provided in the 2009 stimulus bill, which sought to jolt the economy out of recession through $831 billion in increased spending, aid to states and tax cuts.

...

The tax credit was limited to individuals with an adjusted gross income of $95,000 or less and couples with an adjusted gross income of $190,000 or less. Economists say that low- and moderate-income people have the greatest propensity to spend any additional income.

...

Obama is calling on lawmakers to immediately renew the Bush tax cuts for families earning less than $250,000 per year, while allowing the tax cuts for those making more to expire. Republicans refuse to decouple the tax cuts.

Read that again - and we dare you not to laugh! This is Keynesian-based Einsteinian madness at its very best...

One report that apparently has scared the administration into action is the following from the National Association Of Manufacturers - Fiscal Shock.

Fiscal Shock Conclusion:

The inaction and stalemate in Washington will continue to weigh heavily on consumer and business confidence as the year winds down. Even if the Administration and Congress resolve the uncertainty before the end of the year, economic growth already has sustained significant damage. The short-term fiscal contraction set for 2013 will trigger long-run durable losses to GDP, productivity and real income.

Even under the best-case scenario, it will take almost a decade for economic activity and employment to reach the levels they would have reached without a fiscal shock. While the spending cuts and tax increases reduce the federal deficit and debt, the substantial negative consequences of not addressing the end-of-year fiscal crisis before it happens will be devastating.

Fiscal Shock

News on New Zealand government

  Secret changes to labour rules

Prime Minister John Key says changes to industrial relations laws being considered by the Government are minor and won't affect the vast bulk of New Zealanders

Stuff,

14 May, 2012

Fairfax Media has revealed the Government intends to go further with its changes to labour laws than outlined in National's election policy.

In a new move, Labour Minister Kate Wilkinson wants employers to be able to set the agenda for collective contract negotiations, raising concerns they will be able to walk away from bargaining if unions reject unreasonable demands.

The Government's concerned there is a perception that the current 20-day head start unions are given to launch negotiations creates an imbalance in bargaining.

But Labour's industrial relations spokeswoman Darien Fenton said it was important unions began the process because it set the terms for negotiation and who was covered.

"The first thing unions will have to deal with is an initiation notice from an employer which perhaps excludes half of their members. That's going to create far more disputes than there are already."

Key this morning refused to comment on the details of the changes, saying Cabinet had not yet had an opportunity to discuss them.

"We have had some early discussions but no decisions have been made yet," he told Newstalk ZB.

The Government wanted to make sure New Zealand had a "flexible" labour market, he said.

"If you have a look at our track record on employment relations, we've been at the modest end in terms of adjustments. We haven't gone out there and done hugely radical things.

"The most arguably controversial (change) has been the 90-day probational period but that's been very well received and highly successful."

Changes signalled in National's election policy also to be considered by Cabinet include that: employers will not have to conclude collective bargaining; non-union employees will no longer have to be employed on a collective contract for the first 30 days of their employment; employers will be able to opt out of multi-employer bargaining; and workers will be able to ask for flexible work arrangements without having to wait until they have been employed for six months.

The Government also wants employers to be able to deduct the wages of workers who undertake partial strikes and the papers show new provisions which would allow them to be paid at less than the minimum wage.

Council of Trade Unions president Helen Kelly said the changes would affect all workers as they would drive down wages.

There was no need for them as labour laws were working well and strike action was declining.

However, Business New Zealand chief executive Phil O'Reilly said some employers faced endless bargaining which made businesses less productive.

Fenton said if the Ports of Auckland wharfies and Affco meat workers would have been replaced with lower-paid contractors if the changes had been in place.

BY THE NUMBERS

- 13 per cent of the total workforce was employed on a collective agreement last year, made up of:

- 9 per cent of the private sector, or 120,600 workers.

- 58 per cent of the public sector, or 177,800 workers.

- Over the past 20 years strike action has been declining.

- 17 work stoppages were held in 2010, including -

- 5 partial strikes.

Greens say figures reveal $2b hole thanks to taxcuts

The Green Party says the Government underestimated the cost of the 2010 tax cuts, which reduced the top tax rate from 38% to 33% and cut the company rate.

Radio New Zealand,

14 May, 2012

At the time, Finance Minister Bill English said the cuts would be fiscally neutral, because goods and services tax (GST) receipts would rise.

But Greens co-leader Russel Norman told Radio New Zealand's Morning Report programme on Monday that government figures for the period since the tax cuts were implemented show they cost $5 billion compared with GST receipts of $3 billion.

"When the Government introduced the changes they assured us at the time, because we were quite critical of it, that it would be broadly fiscally neutral - but they were completely wrong.

"In fact, it's been broadly very, very expensive and we are now borrowing $2 billion in 18 months to fund tax cuts."

Dr Norman believes it has been a reckless move.