Jacinda and Grant are heroic when it comes to big calls in the midst of crisis, but when it comes to actual progressive reform, they are as Bernard Hickey points out, still peddling tinkering rather than transformative change…
The global response to Covid-19 has turbo-charged this doom loop with over US$26tn of fresh government spending and central bank money printing, most of which went directly to corporates and asset owners in the form of grants, much higher asset prices and lower borrowing costs.
The numbers are just as obvious here. The Reserve Bank has printed just over $52bn to lower mortgage rates, which has lifted the value of property assets by more than $400bn. The government handed over $16.6bn to businesses during Covid to convince them not to sack staff. It worked, but it also meant businesses have banked an extra $20bn over the last year. Many businesses were backed by government guarantees, policy changes and subsidies, including for aviation, freight, selected tourism businesses and banks.
But repeated calls to increase welfare spending in line with the Welfare Experts Advisory Group’s recommendation for a permanent $5.2bn per year increase in benefits has been brushed away by Ardern and Robertson, who argue the nation can’t afford it. The same could be said for new infrastructure and state housing spending, which is set to be less than 5% of GDP and well short of what America and other developed countries are talking about.
Ardern and Robertson have prioritised debt reduction and are now at the fiscally conservative end of the advanced economy spectrum. New Zealand’s public net debt is barely 32% of GDP, less than a third of the average of developed economies with similar credit ratings. That’s despite interest costs falling at the same time as rising debt, which is the exact opposite of the pre-GFC orthodoxy that believed lower government debt would be good for economies and avoid higher interest rates.
…(where I disagree with Comrade Bernard Hickey is in allowing our debt to blow out. With the looming hyper inflation tsunami, an ocean of debt will end up swamping us. I think we should grow revenue through taxes that hurt the richest most like a Transaction tax rather than racking up more debt in this current ominous economic climate.)
But Bernard makes the point that Grant and Jacinda are too timid to make the real changes necessary.
I have argued that Labour won by accident in 2017 and Covid overshadowed 2020 so none of them have any real reform platform for the Public Service which allows the neoliberal public service to call the shots.
The great Unionist Robert Reid said it best…
…our Public Services are supposed to be the bastions of egalitarianism which are essential for a progressive liberal democracy progressing. Instead, spiteful zealots mutate it into the cruelest of torture devices used by the State to keep the poor too terrified to fight back.
Just like Oranga Tamariki stealing babies, Housing NZ evicting tenants, Motels housing the homeless, Corrections miscalculating Prisoner sentences and sparking prison riots– all of them don’t care about the actual welfare of the people they are supposed to care about and the neoliberal Wellington Bureaucratic elites have no intention of allowing a Party elected by the people to interfere with them running the country.
Housing, inequality, poverty and mental health are not getting better because the neoliberal Wellington Bureaucratic elites want it that way!
Labour have spent so much time saving NZ from Covid they have had no transformative vision as to what to do next, luckily this isn’t the first time a Labour leader was forced to be transformative.
The left love Michael Joseph Savage. Every Labour MP who wishes to push their left wing credentials have photos of him hanging in every electorate office and Minister’s room.
Savage is lauded as the creator of the welfare state in the wake of the Great Depression.
He was swamped when he went into public as NZers gushed over how he had saved them all.
The most hilarious reality, provided by insights from John A Lee who served in Savage’s Cabinet and was the anti-Phil Twyford of his day, (in that he actually built Houses) paints a very different picture from the mythology the left have given Savage .
The truth is that Savage was incredibly centrist and not a radical at all. Backed up by the neoliberal Walter Nash and conservative manipulator Peter Fraser, Savage did all he could to stop transformative change, it was actually Savage’s Caucus who forced his hand repeatedly to be transformative.
The exact same dynamics are at play inside Jacinda’s Labour Government.
When there is a crisis, the Prime Minister shines, but when it comes to domestic policy, she is super cautious to the point of being timid and she is stymied by a Wellington Bureaucratic elite who are more interested in protecting their fiefdoms than serving th people.
Luckily for Jacinda, the Right are in meltdown.
As National have floundered, ACT have looked stronger.
The problem is ACT are so right wing…
- Cut and freeze the Minimum wage
- Interest back on all student loans
- No Kiwsaver subsidy
- Cancel winter energy payment
- Dump all climate crisis legislation
- no more best start payments for families with new borns
- cut welfare payments
- no tax credits for research and development
- cuts to working for families
- $7b a year cut in public services
- Abolish Maori seats
- Abolish Human Rights Commission
…that the idea of a far right ACT+National Government will spook all those new found 45+ woman voters Jacinda picked up to sticking with her.
Labour will hold the middle classes in 2023, but the Greens have an opportunity to take the desperate voters Labour have betrayed from Labour and snooker Jacinda into being reliant on the Greens for a majority.
It will be a Labour+Green Government in 2023 with ACT cannibalising National vote. The real ideological battle will be 2026.
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