MUST READ: “This is a state of emergency” – New Zealand at the Turning Point

By   /   February 19, 2018  /   33 Comments

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This is a state of emergency. If only piecemeal measures are contemplated and if the structural underpinnings of wealth polarisation are not recognised, our county`s future is bleak . Slums on the edges of our major cities, prison riots, civil unrest and a secluded one per cent contributing to charities but secretly blaming the poor for their plight.

The title of this article comes from  `New Zealand at the Turning Point: Report of the Task Force on Economic and Social Planning `(1976). Chaired by Sir Frank Holmes this task force subsequently produced numerous booklets on macro-economic direction, industry policy, agricultural policy, social policy and taxation `reform`.

These were not openly ideological documents.

Indeed the very idea that the country could plan for its future now seems quaint. However, the general tenor was clear – the then way of doing things was unsustainable, the New Zealand economy would need to restructure and the general population would need to `tighten their belts`  and `live within their means`.

By the time of Labour`s 1984 election triumph the official rhetoric had sharpened – since 1935,  supposedly, runaway regulation and state interventionism had stifled the economy; deregulation and market forces were logically necessary.

This diagnosis and prescription was easy to sell at the time because the rejection of  regulation was  equated with the demonization of Muldoon.

The push toward deregulation and market forces was , initially, obscured by David Lange`s oratorical declarations about new beginnings and national consensus.

Now, in 2018 we have reached a real turning point, not just an ideological version of one advanced to justify the unequal impacts of economic restructuring.

A raft of recent indicators on economic inequality, child poverty, housing unaffordability, declining real  wages and increasing incarceration rates  points to a breakdown of society.

Our newly elected government half understands this.

Prime Minister Jacinda Ardern  intuitively  grasps the brute realities of child poverty and struggling families .  She and her Ministers will have read the Salvation Army`s State of the Nation report (Kei  a Tatou   It is Us) along with the recent New Zealand housing stocktake report written by Alan Johnson, Philippa Howden –Chapman and Shamubeel  Eaqub.

So far, though,  I don`t see much joined up thinking.

What is the connection between different economic and social indicators? On the basis of such evidence what does our society look like?  And, what will be our future if comprehensive countermeasures are not forthcoming?

Let’s start with the latest Oxfam report released on January 22nd.

In 2017  28 per cent of  all wealth created in New Zealand went to the richest one per cent of the population . Correspondingly, one per cent of that wealth  went to the poorest 30 per  cent.

These are indicators of extreme wealth polarisation rather than just social inequality.

Meanwhile , a recent New Zealand Herald story from Jamie Gray  revealed that in 2017  the major banks delivered their largest profits in 30 years.

Together, the ANZ, BNZ, Commonwealth Bank of Australia and Westpac produced a $451 million increase in net profit from 2016 to 2017.

Similarly, over the same period the Bank of China in New Zealand increased profits by 136 per cent.

For the China Construction Bank and the Industrial and Commercial Bank of China these figures were 138 per cent and 139 per cent  respectively (NZH `Bank profits the highest in 30 years` Feb. 14 B 1).

As  Brian Gaynor has noted most of these profits are repatriated and are reflections of growing inequality  in New Zealand society.

For example, in 1989  75 per cent of the ASB was sold to the Commonwealth Bank of Australia for $252 million, they purchased the remaining 25 per cent for $560 million in 2000. The sale proceeds were used to fund the ASB Community Trust, which donates to  arts and culture, health, learning, recreation and sport .

However , Gaynor remarks (as he did at the time), that ASB ` donations would be far, far greater if it had maintained control of the bank`   ( NZH `Fletcher`s Norris  a victim of his own success?` Feb. 17  C3).

Today Australian banks benefit enormously from the residential property boom, especially in Auckland.

Large and medium sized investors routinely use substantial bank borrowings to build portfolios ,buy properties and flip them in order to profit from a rising market.

Tax deductability loopholes provide further incentives for such practices.

This a major driver of housing unaffordability, alongside the declining availability of state housing and the costs of renting (the Accommodation Supplement is a subsidy for landlords).

According to the housing stocktake report mentioned earlier,  house price inflation nationwide  has increased by around 30 per cent over the last five years, income rises were about half this rate.

In Auckland the figure for house price increases was 65 per cent. Worsening  homelessness  also reflects declining job and income security.

Of  all New Zealanders fifteen or over,  approximately 16 per cent  live precariously – as unemployed, temporary employees and/or  beneficiaries. This amounts to 606 000 people  out of an adult  population of  3.53 million.

Although these are 2014 figures the general social picture is inescapable – huge segments of the population cannot sustain a decent existence.  These and other related findings can be found in Shiloh Groot et al  `Precarity :uncertain,insecure and unequal lives in Aotearoa- New Zealand` (Massey University Press 2017). T

he cultural dimensions of wealth polarisation are stark ,in 2013 of the estimated 529 500 Maori 15 years and over ,120,500 were in the precariat , a ratio of 22.8 per cent.

These statistics correlate, disturbingly, with a rising prison population which is predominantly Maori.

The numbers presented here, and their  basis in authenticated research, points to the necessity for a  social democratic reconstruction of our society.

This is a state of emergency. If only piecemeal measures are contemplated and if the structural underpinnings of wealth polarisation are not recognised, our county`s future is bleak . Slums on the edges of our major cities, prison riots, civil unrest and a secluded one per cent contributing to charities but secretly blaming the poor for their plight.

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33 Comments

  1. CLEANGREEN says:

    Wonderful article very well researched again Wayne thank you for this, we need labour to come out of the closet as we see them scarred of cost of health costs now, as they appear more concerned with ‘bean counting’ and money firstly like the national Party was, so they appear to be not caring for our health or even distribution of our commonwealth.

    I agree with your summary here,
    “This is a state of emergency. If only piecemeal measures are contemplated and if the structural underpinnings of wealth polarisation are not recognised, our county`s future is bleak . Slums on the edges of our major cities, prison riots, civil unrest and a secluded one per cent contributing to charities but secretly blaming the poor for their plight.”

    .

  2. Sam Sam says:

    These austerity measures and the need for tightening the belt is said to be sacrifices for the future. Not only might that be wrong but your children and your children’s children will have less. And then we must pick the right people for promotion out of this talent pool. Children want so many details that no one can some it up. And then there is an education system where you get summed up an given a frame work that restricts current projections, and those projections are controlled by unelected lobbyist. But there needs to be fair indications of what kind of people kiwis can possibly be.

    Supply and demand settles most arguments. If you have money then you will get it. If you have no money there could be all the goods and services in the world but you won’t get any. So the key is get the economy going again and the how is in getting rail going again, ports, roads, airports. Because logistics hubs move goods and services around plus manufacturing and that will pay for what we need. And if we can pay for what we need we can care for the things we want.

    The biggest equaliser is currency + official exchange rate + the people = PPP (purchasing power parity) that will decide New Zealand’s standard of living.

  3. Afewknowthetruth says:

    The bulk of the populace has been brainwashed into thinking that mainstream economists know what they doing: they don’t! (well not in terms of appropriate planning for the future and the wellbeing of the populace).

    Modern economics is primarily concerned with maintaining the banking Ponzi scheme for as long as possible and converting fossil fuels into life-threatening waste for as long as possible, in the service of ‘the owners’ of NZ.

    Governments are characterized by constructed ignorance (not just lack of knowledge but deliberate avoidance of information that challenges mainstream dogma), by cowardice (complete failure to address the fundamental defects and mutually exclusive concepts of industrial societies) and deceit (pretending that policies generate improvements when in fact they generate superficial improvements in certain areas whilst generating ongoing deterioration of everything that matters.

    In the above respects the Adern government is no different from any that has preceded it.

    Wise citizens recognize that government (both central and local) is the major source of problems (actually now severe predicaments) and can never be the solution, and act accordingly.

    However, the bulk of the populace will remain ignorant of their predicament and its causes right till the very end…..as required by ‘the owners’, who control the bulk of the information flow and all the ‘official’ institutions.

    • garibaldi says:

      You are dead right ,as usual, afewknowthetruth ,especially your last paragraph! It is such a pity that we are in an echo chamber.

  4. Castro says:

    Prison riots? The prisoners can be freed to fight in the coming civil war, that is a matter of when, not if. No mention of polarisation along national as well as lines there, Dr Hope? Truly, the NZ Wars II are an absolute certainty.

  5. Johnnybg says:

    The appropriate (patriotic war footing) response to our state of emergency would be to install a broad based, revolutionary, national salvation government. We all know the problems, it’s up to each & everyone of us to stop moaning & blaming & get off our butts, unite & make this happen!

  6. countryboy says:

    With the utmost respect @ Dr Wayne Hope.

    Yeah, well, duh?

    How many fingers is required to point to the corrupt elephant in the room?
    I left school at the child-age of 15. I thought I was adult enough and did many work-like adult things. Like drive tractors, heave heavy things here and there, weld, dig holes, wrangle sheep, ( Trust me, they’re not as harmless as they appear to be. ) etc and blah, blah, blah. Interestingly, when I look at a boy the age of fifteen these days, I see a child. A kid. I was just a kid and that shocks me still.
    The bnz stole our farm off my ailing and infirm father, my mum, who really was the farmer on our farm, and myself. After a localised and polite swindle initiated by the manager of the Timaru branch of the bnz who capitalised on an anomaly then allowed my fathers mortgage ( a mortgage he vehemently denied he signed. ) gather interest for more than seven years to a point where my father owed the bnz $310,000.00 dollars against a $48,000.00, and bitterly disputed, debt. The latter few years saw interest rates pushed as high as 22% if my memory serves me well. ( A moments silence for don brash. )

    Our legal system is entirely counterweighted in favour of the banksters. Our insurance industry profits greatly from the banksters efforts at inducing, ( and forcing) us into debt.
    The solution is simple and bitter. Bitter for the cadre of swine who have their trotters in the trough. Simple for us to fix. Cut the banksters off. Blockade them at our borders and write off all mortgage debt.
    I know ! Crazy right? Crazy as allowing them to ravage then tank our economy, imprison our fabulous indigenous people and entirely fuck our societies.

    • Andrea says:

      I have a recollection of a story where someone in Don Brash’s family had been farming, sold his farm for a princely sum ( a lot less than a hundred thousand dollars). Thought he was set up for a comfy retirement in town after a lifetime of slog.

      Then the interest rates began to rise… 10% then 12 and on. Second mortgage? Yep: that 22% sounds familiar. And his retirement sum dwindled into less than a fairly basic annual salary. (Oh those Lucky Baby Boomers and their Lucky Parents!)

      Not even our credit unions are free from the claws of the banks.

      Now – how do we bell the cats?

  7. Andrewo says:

    Anyone can point out the imperfections of our country, but you don’t offer any solutions.

    Tell me – what do you propose? Some detail please!

    • CLEANGREEN says:

      Go back to the last real depression to see what they did in 1937 to get rid of the sinking economy and massive loss of jobs and flow of consumer funds moving again through the economy.

      They did embark on massive public funding of essential services, health, energy,transport, infrastructure and other “essential services” along with building massive office towers (USA).

      What was then termed “the new deal” was the kick start that got the real economy moving then, as they had been through “the roaring 1920’s with there fixation of the same sort of ‘speculation ‘ as we have now feeding our overheated false economy which is about to implode very soon from the worse public debt cycle ever seen in our history.

      Over leveraged we are doomed now since the banksters have feed us on false hopes and cheap money till now we are entering the mother of all corrections that we will see in our lives.

      So you ask “Tell me – what do you propose? Some detail please!”

      You will learn in your life time ANDEWO.

      • WILD KATIPO says:

        And that which you are talking about was the economic theory developed by John Maynard Keynes.

        It was a response to not only the Great Depression but the failures of the Laissez-faire of the Americans and the Austrian school of Economics under Friedrich Hayek , – which has its counterpart in the Mont Pelerin Society and the Chicago school of Economics.

        Keynes theory was so efficient it brought ALL of the European nations that accepted it out of the red and into the black in 6 months. America rejected it at first believing it to be ‘ too simple’,…but one year later , they too adopted it with the same results, – in 6 months they cleared the fall out from the Great Depression.

        Neo liberalism , and its ancestors, – was only ever designed to do one thing , – to concentrate wealth into the hands of a rich elite and create a poverty service / working class .

        This is why neo liberalism is so destructive and certainly has no place in any country that aspires to egalitarian ideals.

      • Andrew says:

        Actually it was WW2 that ended the depression.

        Six million British men went from the dole to the army.

    • WILD KATIPO says:

      @ ANDREWO

      Are you too lazy to do some research yourself ? , – or just deliberately being pig shit ignorant of political and / or economic history because the alternative would shit all over your jaundiced Americanized political/economic far right wing fanatical views.

      I suspect you are not even a New Zealand born citizen but an import from the USA.

      And even if you are not , – my advice to you would be to lay off the MacDonald’s.

      That shits bad for your health , – both body AND mind.

    • Jono says:

      Andrewo go to Whaleoil where you belong. Your type seem to hang out over there…

    • Well, AndrewO, for starters: look at your own values and beliefs. Everything starts from what we, as individuals, think are desirable for a fairer society.

      You demanded to “tell me – what do you propose? Some detail please”, without a change in your mindset. So then it’s obvious any response offered by Wayne Hope will serve only to be a target for your pre-set ideological views.

      You’re not looking for solutions – you’re looking at something to shoot down.

  8. Zack Brando says:

    Well … if you’re not willing to help yourself and vote TOP, why complain?

    • Sam Sam says:

      I was more interested in the Green infrastructure fund. But the regional infrastructure fund will do. More jobs is good right? Can’t really complain about that.

    • Strypey says:

      “This [neo-liberal] diagnosis and prescription was easy to sell at the time because the rejection of regulation was equated with the demonization of Muldoon.”

      … and still is. Even in the comment thread on this blog we see people claiming that the only alternative to Rogernomics was to continue with Muldoonism, and that if we stray from the neo-liberal prescription now, the result can only be an Aotearoa that looks like it did under Muldoon. Is it ignorance or willful propaganda to claim that carless days happened because Muldoon was PM, rather than because of the oil shocks of the 1970s? Is it ignorance of willful propaganda to claim that there’s no other way of moving people around that fossil fuel powered cars?

      • Sam Sam says:

        The Australian wind surfing industry fund out that to start up the industry from nothing its important to have a surfboard manufacturer in close proximity to a sound/speaker factory.

        The how to transform New Zealand’s transportation network could be to have electrical engineering schools in close proximity to manufacturing hubs. And a lot of good luck. By good luck I mean patience and understanding of the people involved and the resources as well as having the talent to be able to ruthlessly exploit opportunities as they present themselves. This is by no means a guarantee New Zealand can transform its transportation network into something else but we will never know if we don’t try.

        • Andrea says:

          Glanced at a promo for UBCO electric bikes. So far, they look pretty good.

          But are they all round affordable? Environment, fuel supply, roading adaptions, up front lay out and ongoing costs.
          And if we converted people to that sort of transport can we persuade places of employment to have drying rooms for wet days, somewhere to hang helments and wet weather gear, somewhere to change into day clothes?

          If you’re a biker of any sort you’ll know what I’m on about.

          • Sam Sam says:

            I keep all my junk food in my mud room next to the garage with all my shows and jackets. But most people would keep it as a 6th bedroom.

      • CLEANGREEN says:

        100% STRYPEY So right.

  9. Andrea says:

    “(T)he cultural dimensions of wealth polarisation are stark ,in 2013 of the estimated 529 500 Maori 15 years and over ,120,500 were in the precariat , a ratio of 22.8 per cent.”

    Is this some sort of malicious trope that’s going the rounds?!

    That low hum paternalism and virtue signalling. Ick.

    On those figures a SHOCKING 77.2% are NOT in the precariat. Are doing about as well as the rest of us – from bumping along and barely making it, to doing pretty damn’ well, actually.

    And among the missing figures: how many stay stuck there? Of any ethnicity.

    Lies, damned lies and statistics shaping the conversation, and not in a good way either. Remember 77% are working, bringing up their kids to be decent folk, taking care of their culture, being good neighbours.

    I wonder how they do it? And I also wonder: why aren’t you asking them how to pass on these skills if these numbers are so disturbing?

    We could do with some practical answers instead of ever-changing excuses provided by people who benefit from the persistence of the situation.

  10. Q: how to fix the problem?
    A: go back to using social credit to fund the running of our country instead of borrowing money from the private banking sector.
    nga mihi nui

  11. Marc says:

    What a damned timely post by Wayne. I totally agree. I am dismayed at Jacindamania and all media whipped up BS we get. I live in Auckland, I may have to move soon, into a new rental, I looked at the ‘offerings’, gosh, 500 bucks a week for a 2 brm unit in an average area, per WEEK?

    FFS, we had a change of government in name, but NONE else. We need actually a resolute action program, radical measures, and it is time to hold the wealthy, including the upper middle class property peddlers, to damned account.

    I had the damned guts full, I had enough, but I meet pathetic people, resigning to ‘flatting’, in over crowded conditions. We are becoming a little Hong Kong version, not what NZ used to be like.

    People better bloody wake up and stand up, and DEMAND right now, better conditions, or we may as well dig our early graves, that is especialle so when it comes to the fossil fuel addiction of our stupid ‘economy’.

    Lazy and brain farted government is NOT the solution, be bold now, the brake in government is sadly NZ First, I reckon, Winston that is, or else we may move somewhere soon.

    I agree with Shamubeel, we need 500 thousand new homes in the coming years, not 100 thousand, the landlords and real estate agents are creaming it, while Labour and NZ First are scared to do what is needed.

  12. Marc says:

    If renters had any guts in this country, they would join tenancy unions by the droves, squat in properties, and refuse rent increases, and cut rents, if the standards are not up to it.

    Reality is, NZ is largely a country of GUTLESS individuals, who care only about their selfish little ‘opportunity’ ahead of others, thinking, hey, I better not upset the landlord or boss, as she/he may punish me, I better play by the rules.

    So it goes with jobs, with anything, it is mass cowardice, based on selfishness, individualism and consumerism. And instead of foregoing stuff, many are lured to the banks to seek those loans, to buy stuff on credit, as they feel they better keep up with the Jones’, so not to ’embarrass’ themselves for their ‘poverty’.

    Damned gutless and DUMP, that is what I call the majority of people in NZ Inc, I have no hesitation to call it so, as all excuses are just not valid anymore.

    • Nobody says:

      It isn’t cowardice, it’s the nature of precarity. When you are just hanging on by your fingernails, you dont let go to scratch your nose, no matter how much it itches.

      It is a paradox, but Workers need to be lifted out of abject poverty just enough to allow them the leisure to develop political consciousness *before* they will fight for their rights. Until then, it is simply too dangerous to do anything, because the slightest mistake could be your last. Miss a day of work to attend a protest, loose your job. Lose your job, lose your house. Lose your house, lose your spouse. Lose your spouse, lose your kids, and so on it goes.

      It’s easy to call precarious workers cowards if you yourself are not a member of the precariat. And it is even easier still to bleat that the government should do something while people starve, and fail to see the futility of complaining to the wilfully deaf.

      We need to take a cold shower and realise a few hard truths;

      1. This Labour govt knows everything said in this article is true, and worse, but will do NOTHING since they invented NZ Neoliberalism and are sworn to uphold it.

      2. Relying on the govt or any govt elected under the current system to fix poverty when their entire political philosophy relies on the continuance of poverty is not only a fools errand, but shows a serious lack of understanding of how corporatist govts work in the 21st century.

      3. If any change is to come it will only come by people organising to provide alternative systems that work without regard for, or even in defiance of the current (rigged) system.

      The radical crypto currency ecosystem provides a model for the future; a decentralised financial system owned by no one, which is located everywhere and nowhere, which openly and overtly has as it’s aim the complete overthrow of the existing, corrupt banking system, and which progressively co-opts more and more support simply because it is a better alternative to the crap system we have. It is unstoppable, uncensorable, and will eventually replace all existing banks and currencies. This is the model of the future.

      Understand what is on offer here; you can complain all you want about banks, year after year, to no avail, or you can read a book, play with some software, and say goodbye to the banking system forever using crypto currencies. And what can be done to replace the banking system can be done to subvert any other toxic, corrupt or disfunctional monolithic institution, using the same strategic approach.

      One strategy, “the govt oughta do something” is doomed to fail while the other, “We oughta make a new one”, demonstrably has a future.

      This is the way forward – using the model of “disruptive obviation”, a fancy term for making the old system redundant by creating a new and better system is the only hope we have.

      If the government insists on taxing us, but refuses to feed or house us, then at a certain point we must decide to free ourselves from dependence on the present system by creating a better system ourselves. We must create our own economy. We must create our own cooperative food, housing and power, we must create our own governance systems, and let the old exploitative systems whither and die for lack of support.

      Right now, that sounds completely impossible. But in 2009, when Satoshi published the Bitcoin whitepaper, trillions were being spent to bail out banks, millions were made homeless, and the only people going to gaol were hapless digital currency experimenters like the inventor of eGold. Today? Nine short years later, Crypto Currencies are worth half a trillion dollars, millions of people have been liberated from poverty and there isn’t a banker alive on Earth who hasn’t felt the frisson of existential crisis.

      See beyond the old paternalistic paradigms; State Socialism, whether it is instituted for the poor, as we have known it in the past, or State Socialism as it exists now for the rich, both are doomed. It’s a race to the finish, and there can only be one winner; either we will make our Ruling Class obsolete through use of these new technologies, or they will grind us to dust by their remorseless greed.

      Think.

      Decide.

      Act.

      • Johnnybg says:

        Nice one. To some extent you hit the nail on the head. Creating alternative built environments & evolving new ways of life & systems parallel to the world as we know it will crucial to shaping a truly 21st century, post-globalisation world. See the ‘Ayvangard’ website for a locally dreamed example.

  13. Afewknowthetruth says:

    Well, we know the answer to the question posed by the mainstream media. It’s only the timing we are unsure of.

    ‘is the global economy facing a financial Armageddon?’

    https://www.msn.com/en-nz/money/news/is-the-global-economy-facing-a-financial-armageddon/ar-BBJjlYd?li=AAaeXZz&ocid=spartandhp

    (By the way, is the Daily Blog still naming storms? because the next monster is not far away……perhaps Cyclone Banksters.)

  14. Jono says:

    I bet some of the wealthy 1% are shaking in there boots as they know what could be coming for them as inequality gets worse. The only way out for them will be the gated communities and these will become commonplace sooner or later in our society. It would not surprise me if the security people running these communities will get legal permission to be armed with automatic or semi weapons. A bit of money greases the wheels well…

  15. Jono says:

    I also think our cops cannot control our society anymore. I think this was on purpose to create a society about money without a safety net. Unless of course you have money to defend yourself. This is reason why there is so much violence out there. I think our 1% will start disappearing behind thier gates very soon.

  16. Much of what Wayne has written is backed up by information I’ve come across in the years I’ve been blogging.

    One point to remember is that unemployment is actually much, much higher than official Stats NZ figures show (https://fmacskasy.wordpress.com/2016/08/20/national-exploits-fudged-statistics-nz-unemployment-figures/). The numbers have been artificially reduced by strict definitions of what is/isn’t considered unemployed.

  17. countryboy says:

    A good friend suggested that we, all of us who bank, put our money in only NZ banks. All of it. And everyone.
    NZ Banks?
    Hint.
    Run ad campaigns to entice investors away from foreign banks by pointing out what runts they are.
    My personal choice would be as an act of parliament and ban all retail banking that wasn’t wholly NZ owned.
    After all, any foreign owned bank will always serve their off-shore investors first. How does that help NZ? It doesn’t, is the short answer. And clearly obvious.
    Example: Levels of homelessness/poverty rise equal to foreign owned banker profits. I mean…duh?
    The foreign owned banks have to go. They’re the very pointiest point of the ponzi scheme they run here to suck our money ( thus time spent ) away.

    The Ponzi Scheme.
    https://en.wikipedia.org/wiki/Ponzi_scheme