Dr Liz Gordon: Options for Christmas and beyond

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Chris Trotter has just written a must-read article on, well, capitalist constraints on government.  While it is a depressing read (in the penultimate paragraph, all the ‘old Marxists’ give up and head for the bar), it begins with discussions of the ‘Christmas bonus’ given by Labour Governments in 1935 and 1972 to beneficiaries.

Several times during the pandemic, there has been a suggestion that the government should provide a payment, either targeted or universal, to citizens, to provide one-off relief from the physical, social and psychological costs of the pandemic.  I was opposed to this, thinking that any such bonus should be targeted at the bottom 30% of income earners – those living on or below the poverty line, not for all.

But the question is whether some kind of meaningful Christmas bonus might be a good way to relieve the pressure on beneficiaries and low-income workers and offer some hope for the future.

We all know, and have known for years, that the ‘Ruthanasia’ slashing of benefits by one-third in the 1991 budget was the most pernicious and harmful policy of the whole generation of neo-liberal policies. Probably pretty well tied with the Employment Contracts Act (before y’all remind me). For those of you too young to remember, the purpose of that move in the ‘mother of all budgets’ was to reduce benefits to allow wages to fall, as benefit levels were seen to be holding up the wages of people at the bottom.

I cannot even begin to document the harm this policy caused.  Perhaps a few gins at the pub with some old Marxists might be the appropriate place to talk about that. The struggle of poverty, the loss of hope, disengagement from society, family harm, imprisonment… as a social researcher, I know it would take years to accurately gauge the effects of that single, cruel policy (a good project: “Quantify the harm caused by neoliberal policies”).

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What is more astounding is that, as beneficiaries fell further and further behind, nothing was done to correct the harm, year on year. The average single parent with one child ended up, by the time National (NOT Labour) provided a one-off $25 per week correction in 2016 (I think), around $220 per week worse off than they would have been.

All of that money went as a social bonus, through tax cuts and so on, to the wealthiest 10% of New Zealanders, who are the only ones to come out in the black in the neo-liberal era, as Max Rashbrooke has shown.

It has taken an awfully long time, but there is no doubt that a groundswell now exists for this government to right the wrongs of the past. Of course the government has done several things to improve the incomes of beneficiaries: indexed the benefit to inflation (from next year), given a permanent $25 per week increase and begun (very slowly) raising the benefit abatement thresholds so that beneficiaries can earn more before a clawback occurs. But these are small changes that do not rescue families from poverty.

Would a one-off payment for, perhaps, the bottom 30% of families in income terms, constitute an effective approach at this time?  It is an attractive thought, although I am sure it would be much more likely to be used for debt reduction (the loan sharks have well got their claws into these families) than having a nice Christmas.  That lovely element of hope – that frisson of belief that things might get better – would be very welcome. It would send a strong signal, currently lacking, that this government intends to make things better for the enduring victims of neo-liberalism and for our society as a whole.

But there is no point in having the gesture unless it is followed up. Hope, once aroused, can easily be depressed again, leaving the hopers psychologically worse off than before.  So while the idea of a happy Christmas bonus is a very good one, I think that the government are going to need to focus on a very strong programme to lift benefits, which also means lifting wages and pushing employment opportunities. Such a programme would then lead the economic recovery we are all hoping for post-Covid.  Such a programme will be expensive and there may be no room for a Christmas bonus to signal ‘government kindness’ among neo-liberalism’s many victims.

The various movements – anti poverty, union, justice, social groups and so on – who have been pushing for urgent action by this government are all clamouring for some aspect of the above programme to lift employment, increase wages and pay all families a living wage.  Being bold now and providing a global reset around these matters would do a lot to set up New Zealand for a post-neoliberal future.  And begin to heal the harm.

Everyone knows that the best way to get an economy moving is to raise the wages of the poorest in society, because they spend all their incomes. While such a solution does not solve the problems of capitalism that drive the old Marxists to the pub, it can do much to heal the harm of the past 30 years.

For this Labour government, the task should not be to ignore and withstand the increasingly strong demands for change, but to plot a path to achieve it. This is your mission, should you choose to accept it.  This message will self-destruct in jolly quick time, if the moment is lost.

 

Dr Liz Gordon is a researcher and a barrister, with interests in destroying neo-liberalism in all its forms and moving towards a socially just society.  She usually blogs on justice, social welfare and education topics.

29 COMMENTS

  1. If Duncan Garner is calling for an increase in benefits, and the Government is dallying on the issue, that perhaps the Government is sitting on the wrong side of history…

    • Garner is only say those things because the tories that run his station have seized on this as an opportunity to play wedge politics, with the biggest victims of what he has been a highly visible pundit for over the last couple of decades… I sincerely doubt that The wilted salad Garnish actually thinks this is a god idea… His lack of intellect, or empathy, precludes him as a humanitarian..

      • Stefan – Duncan Garner publicly endorsed the great Sue Bradford’s heroic efforts to stop adults from physically hurting children, and that was a pretty humanitarian thing to be doing, especially when the majority of Kiwis responding to the referendum, wanted to retain the rights to do so, and to be protected by the law when they did. Our children are our greatest taonga, and Garner was on the right side, the side of the children.

        So there may be a consistency here, but whatever his motivation, he is on the right side
        again, and that is the most important thing.

  2. Re Para 4 in this article
    Following on from Roger Douglas slashing tax rates; this combination of policy during the time I was an MP, made the biggest contribution to raising productivity this country has ever had.

    Bring back Roger
    Bring back Ruth

    • The problem with that is where the benefits of that increase in productivity generating an increase in the nation’s wealth ended up. Many global studies confirmed that it wasn’t to the people who contributed to it.

    • Perhaps the formatting is different on a hand-held device . On my laptop paragraph #4 concerns the social devastation wrecked by ‘Ruthanasaia’, beginning with:

      “We all know, and have known for years, that the ‘Ruthanasia’ slashing of benefits by one-third in the 1991 budget was the most pernicious and harmful policy of the whole generation of neo-liberal policies”

      Perhaps Ross you are referring to this passage, a little further on in Liz’s post:

      “All of that money [generated through social benefit cuts] went as a social bonus, through tax cuts and so on, to the wealthiest 10% of New Zealanders, who are the only ones to come out in the black in the neo-liberal era, as Max Rashbrooke has shown”.

      If so I have an issue with your take on it Ross: is it ok to drive productivity at the expense of the most vulnerable in society?

      That seems to be your logic. But I guess it’s not surprising since you were in bed with Ruth’n’Roger at the time. Has not the passage of time offered an opportunity for reflection? Clearly not, unless you are the master of irony.

    • This is just not true, Ross. New Zealand’s productivity levels during the 80s and 90s saw us fall further and further behind Australia and other countries that did not pursue the neo-liberal path. Not only was neoliberalism extraordinarily painful on low and middle income earners, it made us forever poorer than we should be.

      • Hmm
        One Re: E C Act
        The capture of labour by unions e.g, Riggers Register – pre E C Act had a crippling effect on productivity.

        4 workers to install a free P&T phone – all added to the tax paid by we workers.

        Re Tax
        I had a secondary job early seventies – detective on my days off driving a truck
        But the secondary tax was in the 60% as I recall.

        Discussing with Prebble the outcome of 1987 labour Govt reduction in tax – consistent with the Laffer curve theory; the tax take actually went up.

        Re Logic.
        Give an electrician or plumber more cash in hand for longer hours, – logic outcomes in most cases.
        Additional spending power re-circulates in the economy – generating jobs
        And in many cases; access to additional income amongst e.g. young tradies; will result in them taking a mortgage over the house to take the risk to start his/her own business- and because of the commitment which follows, invariably another job is created
        NOT a govt job which is funded by higher taxation.

        Delighted to address the issue and not the individual Liz- which regrettably seems to be the only response some have to a contrary view.

        Note: I do acknowledge her validity of your point that the period of SOE and privatisation impact, did have substantial adverse effects – but I would argue; in the short term.

        Respectfully
        Ross

        • “The capture of labour by unions e.g, Riggers Register – pre E C Act had a crippling effect on productivity.” Which required a full frontal assault on the whole workforce? And so, a union, or unions, take advantage of laws written in another age, for another political reality, becomes the excuse for a general assault on the living standards, and opportunities for the bulk of the “working class”…
          There are no excuses that justify this type of shallow, partisan lawmaking .. Considering the billions of dollars that it is costing councils, homeowners, and the few builders who didn’t go broke soon enough, to repair the biggest example of political corruption seen in this country for decades… Then All the E C Act did was bollox everything up, and forcibly took back the power of the “traditional owners” of our country..
          No disrespect intended Mr Meurant, as I generally agree with, and find your commentary illuminating, but I lived through this period until finally leaving to go overseas to make a living…

        • Dr Liz
          Where we may well find some synergy is:
          https://www.nzherald.co.nz/nz/iross-meuranti-officers-in-charge-of-weapons-are-culpable/6I5O5GNUPFUV5N5TRS67HKIAIY/
          and
          https://www.nzherald.co.nz/nz/ross-meurant-the-case-for-decriminalisation/DO3J7EI6CYH5A3GILOD4PZB52Y/
          and
          https://www.youtube.com/watch?v=kIfCLAg57kA
          And as an MP I voted for gay rights and abortion on demand and against hanging.

          All above views may be regarded as Left of Centre- and have cast me to a life of perdition in the view of many conservative Natz.

          But where it comes to economic affairs; I reckon its fair to conclude that I am Right of Centre,

        • Delighted to address the issue and not the individual.
          Yet you do “I had a secondary job early seventies – detective on my days off driving a truck But the secondary tax was in the 60% as I recall.”
          Roger and Ruth made you and Prebble rich; the rest of us, not so much.
          We know how much their policies effected us. We lived through it. The businesses my husband worked for went bust – 3 in a row. So we didn’t get paid and then had to rely on a reduced social welfare benefit.

          Incidentally, the first Labour government didn’t pay employees and for public works from taxation but from government created credit.
          It seems there’s much you don’t know. Do some research on the first labour government and the present Japanese government and learn how a smart governments manage the economy.

        • Deregulation had a crippling effect on productivity. How many car assembly plants closed because of unions? None. They closed because governments thought it a great idea to import cheap vehicles at the expense of ordinary working kiwis. All car manufacturers productivity was lost with the mistaken belief your money would go further. Unions serve a purpose to counter business corruption. I remember Andrew Little addressing the car plant closures and it surely wasnt him holding a gun to our heads.

        • Ross
          “young tradies; will result in them taking a mortgage over the house to take the risk to start his/her own business- ”

          Is that a sick joke. Young tradies have to buy all their own battery powered and main powered tools, pay for their own transport to jobs that may shift from week to week, and on begging wages pay for that and save for a deposit on a $750K house and need two incomes just to pat the interest.
          Get a bit of reality into your thinking.
          It would be an extremely rare and privileged young tradie who would own a house that he could then mortgage to finance a business.
          I also paid 67% of my wage in tax when much younger but so did the corporate earners. For a secondary job the high tax rate was often not significant when end of year tax assessment gave back any excess tax paid through secondary employment.
          So tell the whole story Ross.
          How many young tradies could buy a home on one income. That was possible 50+ years ago.

    • Productivity?

      Do you mean how quickly we convert finite resources into waste using finite energy supplies whilst overheating the only planet we have to live on?

      Methinks yet another fool, trapped in the Matrix and believing the bullshit generated by the Matrix’s mind-control systems

      • Productivity that is not bullshit, chew up the planet capitalism, is labour attending to growing and nurturing plants some of which can be the food source, and others to provide renewable resource.

        An allied productivity may be educating the young to do the same and forming cooperative groups to support community where all activities are shared to provide grown food, shelter and education.

        Building of community shelter using just earth and organic materials without environmental harm or use of Non Renewable Natural Resources. Humans have done it before and thrived that’s is why you are here.
        Today’s so called “productivity” is bent on wiping us and most other species out. A folly of the foolish.
        The answers are there but most are too blinded to see them.
        A head in the sand behaviour provides little oxygen for life.

    • A rise in “productivity” is not a rise in wages.
      Productivity has steadily increased independent of duglarse and richardson but wages have stagnated
      Things are better productivity has risen – Yeah Right!

  3. The new government needs to make sure they aren’t just going to tick boxes better to have a long term comprehensive plan to make the many changes necessary. The changes needed aren’t going to be liked by many particularly those that have benefitted the most and continue to do. We cannot go back to what many call normal cause that is why we have inequalities and so many haves and have not.

  4. It is electoral suicide for a center left party to help beneficiaries. This is why Helen Clark left them out of WFF and this is why Jacinda Adern won’t go near it either. To understand this is to dig into the ugly side of human nature and strike of vein of malevolent and irrational hatred towards beneficiaries across working and middle class NZ. Anecdotally this hatred is strongest amongst the working class many of whom are closest to the unemployment lines themselves.
    Here is a short Eastern European fable that – to my mind – explains this electoral dilemma perfectly:

    Vladimir’s Choice is based an Eastern European fable. In the fable, God appears to Vladimir, a dreadfully impoverished peasant, and says to him “Vladimir, I will grant you one wish. Anything you wish for shall be yours.”
    Vladimir was naturally excited with this promise however, as Vladimir started to turn over the myriad of possibilities in his head, God added one small caveat, by going on to say “Anything, I grant to you, I will give to your neighbor, Ivan, twice over”. On hearing this Vladimir paused and thought deeply in silence for some time as God waited for his answer.
    Finally, Vladimir said “OK, God, gouge out one of my eyes”.

    Many voters (particularly working class) will vote against their own interests if it means someone else will be worse off – immigrants or beneficiaries in particular. Think Brexit and Trump or any center right government – they will often pick on a group in society that has no power or ability to fight back and this consistently delivers electoral rewards.

    • “Last Place Aversion” is what academics called this phenomenon after studying why some low paid US workers did not support raising the minimum wage.

    • That attitude is taught and MSM, Hollywood and many who are well supported financially by their working community use subtle denigration of the not so well off.
      If your family has a member who is not so well endowed with skills, mental ability or is handicapped, then does your family victimise that member by feeding them less and not sharing the sociability of the group and inclusion.

  5. Richardson and her followers will only be remembered as a blight on New Zealand history, in the same category as the Christchurch mosque shooter. Maybe her parents should have been subject to Paula Bennett’s forced sterilisation, at the least it would have rid the world of one more psychopath interested more in money than community.

    • The Mont Perelin Society that our two stooges (rd & rr) were members of, morphed from a mixture of political philosophies to a much less representative group following the calls of Ayn Rand.
      Karl Popper would turn in his grave.

  6. Here’s an idea…?
    Fuck Christmas.
    How about that?
    Take a couple of days off and get pissed and stoned.
    Lets face it. It’s what Jesus would have wanted.

  7. For workers, casual or full time, compulsory unionism, for those who are plenty supported by our social care, a living wage entitlement. Oh! cry yous capitalist profit lookers, taxation and F.T.T. WITHOUT GREEDS THREAT of we are not coming back, of course they will,they are Greeds Taxations Avoiders, FROM THEIR HOME LAND, and what percent ours to say.

    • NZ was pulled out of poverty by Socialists many of whom had been in the NZ communist party.
      Those Socialist were the first Labour govt and we still enjoy benefits they put in place.

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