Grant Robertson’s “Mini Budget” Presents Progressives With A “Maxi-Problem”

By   /   December 15, 2017  /   33 Comments

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IT’S OFFICIAL – there is now no prospect of this government living up to its promises of introducing “transformational” change. Thanks to Grant Robertson, the Labour-NZ First-Green Government will, with one exception, be fundamentally indistinguishable from the Clark-Cullen ministry of 1999-2008.

IT’S OFFICIAL – there is now no prospect of this government living up to its promises of introducing “transformational” change. Thanks to Grant Robertson, the Labour-NZ First-Green Government will, with one exception, be fundamentally indistinguishable from the Clark-Cullen ministry of 1999-2008.

The exception? After its initial “Free Tertiary Education” and “Families Package” spending splurges, the Ardern-Robertson ministry intends to keep new spending at levels well below those of both Clark-Cullen and Key-English. Robertson’s fetish for paying down Crown debt and amassing government surpluses will limit this government’s options to doling out some extra cash to beneficiaries and the working poor; increasing public servants’ pay; and making a handful of modest improvements to the nation’s infrastructure.

Now, don’t get me wrong, all of these things are “nice to have”, but we must be very clear about the sort of economic policy Robertson’s “Mini-Budget” is locking-in. Essentially, what we have is a new government offering to be – at best – a slightly more generous version of the government it replaced. At worst, we may be looking at an initial burst of generosity followed by years of the most flinty-faced parsimony. Very much a case of “meet the new boss, same as the old boss”.

Conservative politicians and commentators are forever telling us that problems cannot be solved simply by “throwing money at them”. This simply is not true.

If a business is failing to grow; if it’s employees are being lured away by promises of higher wages; if the technology in use is out-of-date and prone to breaking down: what does the business owner do? If he’s smart, he borrows additional capital and ploughs it into the business. With the additional funds he buys new technology which, in turn, allows him to employ fewer staff at higher wages. The resulting uplift in the business’s productivity generates higher profits, out of which he repays the borrowed capital sum.

Throwing money at problems works a treat. If it didn’t, Capitalism would never have gotten off the ground.

Unfortunately, Robertson does not appear to grasp the critical fact that if New Zealand is to be “transformed” then he, as Finance Minister, is going to have to lay his hands on a very large sum of money. But, not only is Robertson averse to increasing the level of Crown Debt (even though it has never been cheaper for governments to borrow money) but he is also absolutely determined not to use the most important tool which governments – and only governments – possess: the ability to raise “capital” by levying taxes.

Raising taxes is important not only because it would allow the government to accumulate the financial resources necessary to do more than deliver a one-off lift in the incomes of the poorest New Zealanders, but also because a significant increase in the taxes of the wealthiest New Zealanders would begin to undo the transformation that the neoliberal policies of the past 30 years have already accomplished.

The transformation I’m talking about is the transformation which brought an end to the humane and generous social-democratic society for which New Zealand was renowned internationally, and which, in its place, erected the brutally competitive and grossly unequal society the vast majority of New Zealanders are required to live in today. If that society is to be transformed into something more decent and caring, then a substantial redistribution of wealth and power will have to be accomplished.

That could have been the brief of the much-ballyhooed “Tax Working Group”. (On the subject of which I penned a small political fantasy for The Daily Blog back in September.) But, once again, Robertson erred on the side of caution – not transformation. The Tax Working Group, chaired by Robertson’s mentor and political patron, Sir Michael Cullen, has been given a ridiculously narrow brief, whose less-than-transformational outcomes will not come into effect until after the 2020 General Election.

By when, of course, it will be much too late to rescue this government from its all-too-evident parsimony and political gutlessness. Robertson’s tight rein on spending can hardly fail to set the coalition partners at each other’s throats. And as for that “Hallelujah Song” of emancipation and transformation, which Jacinda Ardern somehow convinced Winston Peters of Labour’s willingness to sing. Her ruthless finance minister will, long since, have truncated its stirring verses to a few discordant bars.

There will be some who take umbrage at my uncompromising pessimism. To them I say: “It is only because I have been here before.” I remember another inspirational Labour leader who put an end to nine long years of National Party rule by promising to take New Zealand “up where we belong”, and who then allowed his Finance Minister to wreak havoc on the expectations and aspirations of his party’s electoral base.

David Lange’s was a “transformational government” and no mistake. As transformational in its way as the First Labour Government. Except that, the transformation Labour wrought was not the transformation the people who’d voted for it were expecting.

“Rogernomics” was able to destroy New Zealanders’ humane and generous society because the political resistance to it was too little, and came too late. If the members and supporters of this government similarly fail to act immediately and decisively against the give now/withhold later policies of Finance Minister Robertson, then the best chance New Zealanders have had in 30 years to heal the harms of the neoliberal “revolution” will be lost.

Not that you’ll hear the National Party and their friends complaining. The low debt and large surpluses bequeathed to them by Grant Robertson will be more than enough to fund yet another round of generous tax cuts – for the rich.

The right-wing transformation of New Zealand will continue apace.

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33 Comments

  1. XRAY says:

    In case you missed it, National made a lot of hay out of pretending/lying that they were better masters of the economy than Labour.

    And if you also missed it Joyce’s $11 fiscal hole lie almost turned a sure defeat for National into a victory, such is the distrust of Labour.

    Like it or not, as you don’t, Labour and others have to walk a very fine tightrope with the deep held, almost religious belief of voters that fiscal prudence is all that matters.

    Baby steps are what matters right now, not a bull in a china shop.

    And I would have thought the announcement of pouring tax cut money that was destined for the well-off, into struggling families and kids is worthy of high praise, not bitching and moaning.

    No pleasing some people!

    • phillip ure says:

      it’s called neoliberal-incrementalism – they have been given a mandate for transformational-change – this ain’t it…

    • Louis says:

      Well said Xray, you have got that so right. In particular…

      “Baby steps are what matters right now, not a bull in a china shop.”

      You’re the only one on here talking common sense.

      • phillip ure says:

        ‘“Baby steps are what matters’ – an alternative definition of neoliberal incrementalism..

        giant steps are what is needed – not a timid shuffle..

        that is the ‘commonsense’..

    • CLEANGREEN says:

      Yes Chris,

      We agree; – we need to ‘increase taxes’ – but do this is the right way as national did. (sarc’)

      National lied and secretly slipped taxes on us afterwards.

      National lied every time after they quietly slapped on new taxes following an election, so why not Labour nopw?

      National quickly slapped on unannounced extra taxes, like GST (from 12.5% to 15%) and then they increased incremently over three years increased fuel taxes!!!!!!

      So we think Labour now must increase the RUC (road users charges) rate on HPMV (High produuctivity motor vehicles)

      Since these new higher weighted trucks are clearly responsible for the 45% increase in road maintainence costs incurred on the road users over the last three years .

      The Minister of Transport Phil Twyford confirmed that the road costs had increased over 45% in the last five years in Parliament this week.

      Lets go back to the ‘user pays model’ again.

      The rail will show better value even than they are now showing in the “new found National Party hidden report” on “the value of rail in NZ” produced for the NZTA in 2016.

      http://www.kiwirail.co.nz/news/506/78/Study-highlights-rail-s-value-to-New-Zealand.html

      Study highlights rail’s value to New Zealand
      27 November 2017 9:09AM
      Rail is delivering up to $1.5 billion a year to New Zealand in hidden benefits, according to a study prepared as part of a joint KiwiRail/NZTA team looking at integrated transport planning.
      “That far exceeds what the taxpayer is spending on rail,” KiwiRail Chairman Trevor Janes says.

    • Andrea says:

      “almost religious belief of voters that fiscal prudence is all that matters.”

      And which voters would these be, then?

      This voter, and I haven’t missed one voting round yet, is more interested in accountability and results for the money spent.

      I watch with amused awe as people airy waft about ‘blow-outs in budgets’ of several hundred million – yet totally fail to say precisely what blew out – and why. Repeatedly.

      Failure of this nature is NOT an accident.

      Which is why I’m not yet interested in ‘taxing the rich’ or even allowing that bunch of fiscal imprudents in Parliament to have any more money from the hoi polloi to play with and splash about.

      They’re fad-driven to an almost religiously fanatical level – whatever colour the rosette. And we don’t need any more of that, or perks for the lads, thanks.

  2. Castro says:

    Quite right. The Transnational Capital Party and the Wage Slave Labour Party are not left-wing parties. However, they sow the seeds of their own destruction. The right-wing destruction of No Zealand will be halted by a counter-revolution; it will be armed, and it will be violent.

    • im right says:

      “it will be armed, and it will be violent”…almost daily you post this civil ‘uprising’ Castro, care to put a timeline on it? You are adamant it will happen so go on and tell us all when you believe it will happen, or does that spoil your fantasy when you have to actually put line in the sand so that we can see when this will happen!

      • CLEANGREEN says:

        Yes Chris,

        We agree; – we need to ‘increase taxes’ – but do this is the right way as national did. (sarc’)

        National lied and secretly slipped taxes on us afterwards.

        National lied every time after they quietly slapped on new taxes following an election, so why not Labour nopw?

        National quickly slapped on unannounced extra taxes, like GST (from 12.5% to 15%) and then they increased incremently over three years increased fuel taxes!!!!!!

        So we think Labour now must increase the RUC (road users charges) rate on HPMV (High produuctivity motor vehicles)

        Since these new higher weighted trucks are clearly responsible for the 45% increase in road maintainence costs incurred on the road users over the last three years .

        The Minister of Transport Phil Twyford confirmed that the road costs had increased over 45% in the last five years in Parliament this week.

        Lets go back to the ‘user pays model’ again.

        The rail will show better value even than they are now showing in the “new found National Party hidden report” on “the value of rail in NZ” produced for the NZTA in 2016.

        http://www.kiwirail.co.nz/news/506/78/Study-highlights-rail-s-value-to-New-Zealand.html

        Study highlights rail’s value to New Zealand
        27 November 2017 9:09AM
        Rail is delivering up to $1.5 billion a year to New Zealand in hidden benefits, according to a study prepared as part of a joint KiwiRail/NZTA team looking at integrated transport planning.
        “That far exceeds what the taxpayer is spending on rail,” KiwiRail Chairman Trevor Janes says.

  3. phillip ure says:

    i agree with every word trotter says..

    my sense of dismay is as wide as it is deep..

    that the neoliberal-incrementalists in labour are back in control..

    and that really s.f.a. will happen..

    that they will just keep the seats warm for return of the tory neoliberal-incrementalists.

    (of course the other dismay-causing realisation is that nothing really transformative will happen to cannabis prohibition..

    all they are promising to do is what dunne/dung tried to do for so long – to give control of a new/lucrative market to big-pharma..

    w.t.f..!..)

  4. Sam Sam says:

    I hate it when you’re right.

  5. SpaceMonkey says:

    As much as I don’t want to… I agree. Grant Robertson hasn’t a visionary bone in his body. He is a Mandarin following a well rehearsed script.

  6. David Stone says:

    Listen to the words again Chris, ” It’s a cold and it’s a broken Hallelujah”. The political/fiscal prospects fit perfectly with Cohen’s theme. It’s a lament not a celebration, for all it’s exquisite beauty.
    It always seemed to me that apart from presiding over a boom time in dairy prices Cullen’s /(Clark’s) financial success derived from the mass sell-off of NZ farm land esp the iconic, and the mass sale of NZ citizenship, carried on but not increased by the Nats. Jacinda has moved to curb both as the electorate has had about enough of it, which leaves them with few options to make ends meet. If they tax the high income earners and companies more they will just move headquarters and profits overseas, or sell to corporations already based elsewhere and the profits will go with them. Within the framework put in place to establish globalisation of commerce and finance they can’t do much different, and they certainly won’t be doing anything transformational in the near future.
    It will be interesting to see what happens in the UK when the next government comes in though. It might not be for four years or so , but those guys might shake things up and show the way.
    D J S

    • WILD KATIPO says:

      { If they tax the high income earners and companies more they will just move headquarters and profits overseas, or sell to corporations already based elsewhere and the profits will go with them. }

      ……………………………….

      1/ Classic fear tactic of the far right ( not saying you are Far Right , David Stone – far from it ! ) to like to wave this big stick.

      2/ Profits ALREADY move offshore , – Australian banks being just one classic example. Free water to be bottled for Chinese consumption is another more recent one , – albeit not quite in the strict sense of profits but rather a natural resource.

      3/ Interesting that before neo liberalism , – NZ successfully traded with , and set tariffs on trade with foreign country’s , – as well as developed , owned and produced for overseas consumption massive state owned ( paid for by us , the taxpayers ) programs such as the Kinleith mill and the Kaingaroa forest . We also owned our own Post Office , Rail and Telecommunications systems to name but a few. And thousands were employed on good wages because of them.

      As you know , – this all changed when the traitorous Roger Douglas set about the destruction of our society on behalf of his Mont Pelerin Society mates.

      New Zealand Forest Products – Wikipedia
      https://en.wikipedia.org/wiki/New_Zealand_Forest_Products

      New Right Fight – Who are the New Right?
      http://www.newrightfight.co.nz/pageA.html

      The very things that Jeremy Corbyn advocates are NOTHING MORE than what this country operated under as a matter of course from around 1938 – 1984.

      And that was a time of relative wealth and expansion to which the Labour party under Michael Joseph Savage capitalized on and ushered in the most prosperous era this nation has ever seen.

      And it is precisely THAT WEALTH that the greedy eyes of the Mont Pelerin Society and their puppets in New Zealand like Roger Douglas and the Business Roundtable viewed to be plundered.

      Greed has a way of having no principles. And the threat of losing profits means that we , – the New Zealanders , – have a very large point of leverage over those who habitually like to threaten us with the ‘ up stakes and take their business elsewhere’ routine.

      In fact , – if this govt wanted to , – it could buy back all those previously sold off SOE’s( that were sold for a song anyways ) , develop more massive projects employing thousands that would turn a handsome profit to be reinvested back into our economy. Our massive fishery’s which we have never taken full advantage of is just one of them. Having a ‘ Silicon Valley ‘ in the South Pacific is another. And dare I say it – out trillion dollar iron sands as well – carefully monitored by govt officials for environmental impacts rather than piratical private interests. It could , – if it wanted to , – even mint its own currency. Interest free. Think about that !

      THERE ARE NO EXCUSES.

      We are not some impoverished backwards nation with no natural resources, – but we have become a passive people. And we have let unscrupulous opportunist’s get a foothold in our political system that have no interest whatsoever in serving the NZ public at all.It is all for what they can take from us.

      I would say when Jeremy Corbyn wins , – not ‘IF’ , – there will be a collective remembrance here in NZ. And there will be a growing unease and finally , – a large disgruntled outpouring against the lies and theft that has been the 33 years of neo liberalism with its degenerative effects it has had on our society.

      Pity the govt in power on that day that still thinks it can carry on like its still 1990.

  7. Im right says:

    As soon as the greens and labour signed up to the fiscal contract to be no more than a certain %age agreed upon, that put an end to most of the left voters ‘wish list’ of changes they wanted implimented. So no big surprise at Trotters piece as no doubt this was drafted just after the new govt was announced and just needed to add in the mini budget info and press send!

    • Sam Sam says:

      You’re forgetting one thing. Labour, NZFirst and The Greens get on a lot better than any one of them would get on with National. It’s just The National Party lie way to much and that’s undermined all attempts at a coalition with National. For this reason a clean out of the front bench and promotion of more woman to Nationals front bench would change the National Parties legislative and coalition fortunes. And the same should be said for any party globally because voter participation is poor right across the board.

      • CLEANGREEN says:

        Yes sam, and Imright is a real ‘right’ winger that always spouts his flawed ideas and no-one takes it seriously best to ignore him.

  8. C G Smithcg says:

    what to do? What to do? I knew this would happen with the Labour party still being run by Neo-Liberals. Jarcida needs to show some real leadership and change the finance minister.

  9. WILD KATIPO says:

    { Raising taxes is important not only because it would allow the government to accumulate the financial resources necessary to do more than deliver a one-off lift in the incomes of the poorest New Zealanders, but also because a significant increase in the taxes of the wealthiest New Zealanders would begin to undo the transformation that the neoliberal policies of the past 30 years have already accomplished.

    The transformation I’m talking about is the transformation which brought an end to the humane and generous social-democratic society for which New Zealand was renowned internationally, and which, in its place, erected the brutally competitive and grossly unequal society the vast majority of New Zealanders are required to live in today. If that society is to be transformed into something more decent and caring, then a substantial redistribution of wealth and power will have to be accomplished. }

    ………………………………..

    100% Mr Chris Trotter.

    And for those who would like an accurate chronological historical record explaining just who , when and how please read this :

    New Right Fight – Who are the New Right?
    http://www.newrightfight.co.nz/pageA.html

    Some would say it was the borrowing done by Keith Holyoake during the 1960’s ( to which Rob Muldoon reluctantly had to carry out at the time ) that had to be paid back at a selected time that became one of the excuses for the neo liberal ‘ reforms’ , – but it wasn’t that because NZ had adopted a Keynesian economic approach long before then. Around the late 1930’s , in fact.

    And some would say that the country cant afford to try to reconstruct what New Zealanders had prior to neo liberalism.

    Poppycock.

    It was , after all Mr Robertson , … a Labour govt led by Michael Joseph Savage that implemented the massive state house building program and many , many other social benefits , – AND the wealthy paid their fair share towards the running and upkeep of infrastructure and public amenities , – unlike today.

    THERE ARE NO EXCUSES.

    It was all done before in a far less technological age than we live in now and it elevated NZ people to being around the 6th wealthiest per capita nations in the world , – just behind Denmark and Norway , – and ahead of Australia!!! . We were the envy of many with our welfare programs and social democratic system .

    Unlike now whereby not so long ago we were compared to places like Estonia and other East European nations – and were ranked 32nd in wealth per capita, – behind Mexico !!!

    THAT ,…. is the lie and the damage of neo liberalism for you.

    THAT is why New Zealanders were cynically described as ‘ Mexicans with cell phones’ at one stage.

    In other words, – cheap labour , easily bullied into accepting poor wages , poor living conditions, inferior legal representation due to social class , lack of adequate health and education etc etc etc…

    NO.

    You do NOT enact those sorts of things here in New Zealand and expect to gain the approval of the populace. We are not yet ,… that cowered down that we will not punish a govt for creating the above conditions and inflicting them on us.

    The recent National Govt was voted out EXACTLY BECAUSE of these things , Mr Grant Robertson ,… and my advice to you ,… is to think very , very carefully about what you do and to always remember … that in this country New Zealand ,….

    NO government is indispensable.

    • CLEANGREEN says:

      100% Wild katipo.

      National raised taxes AND SOLD ALL THE ASSETS THEY COULD so when they point the finger at Labour for raising taxes it has a rather holloow sound to it doesn’t it?

  10. Aaron says:

    This is exactly what I was afraid of before the election – a part of me was hoping that National would get a 4th term and screw the country up so badly that the public would be in the streets demanding some Jeremy Corban style leadership by the end of it.

    Instead we’ve got a government that will manage neoliberalism competently enough to keep a lid on public anger for quite a but longer.

    It could be a minimum of 2 election cycles before the popular mood for change comes back.

    It’s crazy to say it but our only hope is for a worldwide economic crash which might, hopefully, force them to do something different.

    • WILD KATIPO says:

      { It’s crazy to say it but our only hope is for a worldwide economic crash which might, hopefully, force them to do something different. }

      That would do it.

      It was the 1929 Wall Street crash and the run on the banks that precipitated The Great Depression.

      The problem is , of course – the massive loss of life ( degradation of public health systems etc ) mass poverty of so many , the ill health of the general populace that follows in its wake. I get angry when economists talk blandly of a ‘ correction’ .

      When in fact that ‘ correction ‘ in lay mans terms for the average citizen means severe and chronic suffering. Unlike the cushioned wealthy class who whined and bitched because they lost a few million like they did during the ‘Global Credit Crunch ‘- millions they could never missed nor have spent anyways in their own lifetimes. And then had the utter and monumentally colossal gall to hold their hands out for taxpayer funded bail outs – playing along willingly with the mantra ‘ Too big to fail’ .

      Aresholes they were and still are.

      But it will take something along those lines to shake off this gaggle of ignorant , comfortably greedy political bastards who seemed to have been enabled to infest so many govts around the globe.

      The main motivator for many of them is fear. Fear of the populace, – which until now seems to be strangely lacking.

      And never forget the power of mass demonstration : when thousands converged on Aucklands streets to protest the TTPA, when hundreds booed Key off the stage at the Big Gay Out,… it was a magnificent display of unanimity of the people rejecting any more of Keys bullshit.

      And he knew it.

      Be under no illusion , – it will take more than a Brexit or a Trump victory , – it will take a global melt down where none but the bravest with the servants heart will be endorsed by the peoples around the globe to lead.

      But we can rest assured , – that the win of Jeremy Corbyn will be as a lightning rod in the west for change. We have only a small time to wait. And its on its way.

    • Marc says:

      Same here, a one term government of small steps, handing over again to the Nats in 2020 is what we can expect.

  11. DS says:

    I assume you all want much higher taxes. Here are the Dutch rates. Keep in mind there is health insurance on top of this lot plus wealth tax inheritance tax etc.
    GST 0% 6% and 21%
    Income tax
    Up to EUR 19982: 8.9%
    EUR 19,982–EUR 33,791: 13.15%
    EUR 33,791–EUR 67,072: 40.80%
    EUR 67,072+: 52%
    Having worked there its a pretty level society which I lked. They do however give expats 30% tax free else nobody would work there.

  12. Andrewo says:

    …and the Key government was fundamentally indistinguishable from the Clark Cullen government.

    When reality bites….

  13. Afewknowthetruth says:

    Betrayal is the byword of the age we live in.

    We just get betrayed by different people as time passes.

  14. CLEANGREEN says:

    ‘When reality bites….’

    I forcast this Labour coalition will realise they have been played by the corporate media pressure for “fiscal pudence” and again take the proper steps to revert to 1937 ‘Michael Joseph Savage’ monetery tactics of create and share the comonwealth again to win the heart and minds of the public for their second term.

    Time will tell iof this is reality of just a dream of past glory.

    We need to remember that there are many ‘new radical members on the left now in this new government just looking for “real change” also.

    So PM Jacinda Ardern needs to be aware that she will have a problem on her watch if she fails to accomplish the stated promises.

    Most important are those promises made of “real Government that is warm, gentle caring, inclusive transperant, & fair.”

    This will need to be accomplished to make for a “real change” and not; – ‘just a National lite’ version of the ‘last draconian, austerity loving, brutal, agendist, arrogant right winged National government.

    • Afewknowthetruth says:

      We are in for some very real changes -but not the kind most people expect or want.

      Between 2016 and 2020 global extraction of conventional oil declines by about 10 million barrels a day, from about 66 million to 56 million according to the International Energy Agency.

      http://crudeoilpeak.info/does-the-iea-try-to-hide-the-conventional-crude-oil-peak-in-its-2017-world-energy-outlook

      New Zealand is extremely vulnerable to the global oil crunch (actually the end of the entire system) having had self-serving liars and clowns as government ministers and bureaucrats for decades, and no preparations whatsoever having been made for the massive discontinuity that is now upon us.

      Indeed, successive governments have done their best to INCREASE New Zealand’s dependence on imported oil (which buggers the environment anyway, via airborne pollutants and CO2 emissions): Talk about sabotage! It’s been going on for decades, and will undoubtedly continue under the Adern government. After all, all we hear about is so-called development which is totally dependent on imported oil (we sell the small amount of reasonably good oil extracted in NZ and buy cheap shit to run the transport fleet because we are a ‘clean and green’ country).

      The writing has been on the wall for 20 years (Colin Campbell and Jeanne Lehurere, Scientific American, ‘End of Cheap Oil, 1998), and all we have had from governments is denial, denial, denial -totally ignoring the most important factor in economics of the whole lot, the energy supply that makes modern economics possible!

      It is much like the situation with respect to Abrupt Climate Change….. we are, after all, now wrecking the stable geochemistry of the planet at a rate about a thousand times faster than during any previous Mass Extinction Event.

      In the lecture Arithmetic, Population and Energy, Albert Bartlett brilliantly explained how the laws of mathematics trump politics and economic every time. And he was ignored too, of course.

      Pity the children, born into a world run by idiots who wreck everything they touch. And all of the insanity is for the short-term sake of the international bankers and local opportunists.

  15. Denny Paoa says:

    Fuck Chris! Whatever it is you’re smoking or drinking! I want some!