TDB told you the next budget cuts would be deep while RBNZ readies for economic crash

By
Martyn Bradbury
-
21
650

TDB told you the next budget cuts would be deep. Bernard Hickey for the win…

Cutting even deeper against the grain
Willis planning $4.4b of extra cuts over next four years, tightening fiscal policy against the grain of loosening monetary policy & recessionary headwinds;

The true devastation of this budget is the effective freeze on keeping up with population and age increases so National can claim to be investing billions, it doesn’t;t keep up with the actual growth of the population!

The cut in the 2025/26 operating allowance to $1.3 billion means there is nothing left to pay for the usual inflationary pressures from wage increases and population increases in the coming year. That’s because $1.4 billion of the original $2.4 billion had already been committed by December of last year.2

Adjusted for inflation and population growth, the allowance revealed today is the lowest since the notorious ‘zero’ budget unveiled in May of 2012 by then National Finance Minister Bill English. Combined with the introduction of loan to value ratio restrictions by the Reserve Bank in 2013, GDP growth was slower than expected over 2012 and 2013 at barely over 2%.

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Here’s something funny.

Last week Nicola Willis was ‘see no Trump’…

Willis ignores new Global Financial & Trade Crisis

…this week when she needs to justify her steep ideologically driven public service cuts it’s ‘blame Trump’…

A $1.1b cut to the government’s new spending comes after Trump’s trade trafiffs

Finance Minister Nicola Willis says her axing of a billion dollars from the government’s operating allowance is a response to “the times we are living in” and pointed to US President Donald Trumps trade tariff’s which she called a “seismic global economic event”.

…how convenient.

While Trump certainly represents an existential crisis for the Free Marketeers, what is driving Nicola Willis’ amputation is ideological fervour, not just geopolitical uncertainties.

She is wanting to roll back Orr’s capital thresholds for the banks while the RBNZ prepares for a crash…

Reserve Bank makes whopper trade to boost its ability to intervene in the currency market during a crisis

…these are austerity budgets that are fattened up with borrowed tax cuts held together by very weak regulations!

The Public Services have been hollowed out (except for Police and the Military because when you are causing this much social carnage, you better have a strong thug force to keep the rabble in line), while tax loop holes for the wealthiest landlords continues to take taxpayer money!

The key question is whether debt is actually spiralling and whether markets are losing confidence. That’s not evident in bond auction results since covid. They are solidly at healthy levels of three to four times the amounts being offered. And the interest costs on Government debt of barely 2% of GDP are less than a quarter of the levels referred to by Willis in her speech as dangerous.

Yet Willis remains afraid of the debt and is prioritising its reduction over investment in health, housing, transport and education infrastructure.

This is an ideological experiment in free market dynamics regardless of the social carnage it creates.

Now National are pushing to stop prisoners from voting as if that is a crucial issue right now!

Prisoner voting ban to be brought back – Paul Goldmsith

This Government’s policies will see up to 13 000 more kids pushed into poverty!

This Government’s cut backs are seeing 1000 at risk kids with no OT support…

Oranga Tamariki: No social workers assigned to more than 1000 at-risk children as reports of concern rise

…all while Public Health is purposely underfunded!

This Government’s agenda is culture war revenge fantasies held together by deregulation deals for their donor class.

Once the enormity of what these cuts represents start getting out, the public’s mood will turn very angry and watch NZFist start to pull back.

Now Trump is officially part of the discussion, it begs the question, how do NZ Political Parties save us from the Free Trade neoliberal collapse they spent decades building?

The image below is the reality no one in NZ politics wants to admit – the spectrum of Political Parties economically are all very free market and right wing…

…The true demarcation of power in a liberal progressive democracy is between the 1% richest + their 9% enablers vs the 90% rest of us.

The richest protect their wealth from any new taxes and our social and physical infrastructure suffers.

The political project of the Right is to starve the State of revenue so there is nothing to redistribute in the first place.

The Māori Party identify this and have put together a Tax Policy that is as close to Socialism as we are going to get!

Te Pāti Māori’s tax policy

Tax rates

    • $30,000 and under – 0% tax
    • $30,001 – $60,000 – 15% tax
    • $60,001 – $90,000 – 33% tax
    • $90,001 – $180,000 – 39% tax
    • $180,001 – $300,000 – 42% tax
    • $300,001 and up – 48% tax

Currently the top tax rate – for earnings over $180,000 – is 39%.

The party would also:

    • Remove GST from all kai and regulate the ability of supermarkets to hike prices
    • Increase the company tax rate from 28% to 33%

And introduce:

    • A net wealth tax
    • A foreign companies tax
    • A land banking tax
    • A vacant house tax

The enormity of what the Māori Party are espousing here can not be ignored.

Labour is here to manage under regulated capitalism (and let the free market do the rest), the Greens are here to try and add the cost of pollution into the price (and let the free market do the rest) while the Māori Party are actually here to disrupt capitalism!

Normally the wealthy can rely on the fecklessness of the Greens or the cowardice of Labour to do nothing meaningful on Tax Policy, currently Labour are trying to smother a CPT and a Wealth Tax so as to be as meaningless as possible and the Greens aren’t really sure how their Wealth Tax will work!

How do NZ Political Parties save us from the Free Trade neoliberal collapse they spent decades building?

As Trump shits on Global Trade,  where are you free market Gods now?

 

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21 COMMENTS

  1. Thats what you get when you slash income .Tax cuts for everyone then handouts to land lords and big business such as the smelter and Methanex to keep them afloat while they pay no tax .So now the economy is tanking because her revenue base has been reduced by the stupid tax cuts and sacking of 100k workers in the last year who all paid tax but are now being paid by the government .So a double whammy of less tax income and higher payouts to more unemployed ,does not make economic sense .
    People say we cant tax to prosperity ,but on the other hand we cant run any sort of government by lowering tax income and having 250k unemployed or under employed and low pay rates that are the result of those two things .We all know if our house hold income takes a hit then we cant spend like we did last week which means someone else is taking a hit as well and the down ward spiral continues .
    The government needs to remember it is elected by the people for the people to serve us all not just the few .Every day we see that this government has forgotten that basic rule and is focused on serving the few at the top of the heap .Very soon the 99% will have nothing left to be taken so what will the greedy folk do then to grow the cash pile and the government will also be broke so no free cash to give them .

  2. Where would you Te Pati Maori on the graphics above?

    I think they need to be added/updated, especially WRT their tax policies that you are highligjting?

    • Perception wise they would be around the Greens, in reality I think they would be where the Greens are currently placed and the Greens should be shifted to the right of centre.
      You can’t support the current neolib agenda (even allowing for the imposition of pollution costs) and be considered left of centre.

  4. Read the story on News room this morning about the $470 million the government has donated to them over the last few years and the $70 million dividend they paid to their share holders while paying no tax in NZ .Then we can understand why NZ is in deep shit which is getting deeper by the day .$70 Million to the smelter every year and then there is a never ending list of other support for failing businesses which probably adds up to billions per year including the subsidies to land lords and employers through rent subsidies and working for families .

  5. Neoliberalism: Read. Knowledge is power.
    The Invisible Doctrine by George Monbiot and Peter Hutchison review – neoliberalism’s ascent
    https://www.theguardian.com/books/article/2024/may/29/the-invisible-doctrine-by-george-monbiot-and-peter-hutchison-review-neoliberalisms-ascent
    Neoliberalism is a disease and roger douglas and his adherents gave it to us.
    Please, I’m serious. Please read the book. Neoliberalism is like family abuse. You don’t know that what you’re experiencing is abuse until you leave then look back to understand what you’ve been subjected to from a different perspective. Read their book. Know your enemy.
    Every single thing that’s graphically wrong, and getting worse, about our beautiful AO/NZ is as a direct result of neoliberalism but what’s perhaps even more chilling is that those few who sold us neoliberalism knew what they were doing and they knew of the consequences of their actions. Hungry kids, dying public infrastructure, rotting urban environments, obscene wealth for the very few.
    Youtube
    The Invisible Doctrine. Trailer
    https://youtu.be/OeLNRzqCpCE?fe ature=shared
    George Monbiot on Neoliberalism: “A self-serving racket”
    https://youtu.be/UuMntvVwwWM?feature=shared

  6. Concentration on the money is a distraction. Goods and service require inputs of capital plant and equipment, material resources, human labour, and energy in varying proportions. Money, a representation of debt can be created. Focus on reality.

  7. A tax system closer to socialism than what Te Paati Māori proposes would be to give every adult resident a nontaxable UBI of $500 a week (and under-18s something less), and introduce a flat 48% tax on all income to pay for it.

    • There’ll be bugger all people staying in NZ wanting to pay 48% tax. All our high earners (which do include people worthy of commanding high incomes – e.g. doctors) will head off to where the grass is greener…

  8. This analysis by Gordon Campbell.

    ” According to RNZ this morning, that role is about to be turned over to business, and to household spending.

    If so, such expectations are doomed to fail. Reason being, Willis and her colleagues have also been pursuing a low wage economy and job insecurity. Inevitably, this job insecurity has put the frighteners on household spending. The bogey that Willis is invoking to justify her austerity drive is the alleged “need” to reduce borrowing. Huh? This warning is coming from the same person who borrowed $14 billion for her tax cuts ”

    https://werewolf.co.nz/2025/04/gordon-campbell-on-our-austerity-fixation-and-canada-staying-centre-left/

  9. Increase taxes at the middle to high levels and pay the debt now instead of leaving it for the grandkids .Most of the middle and high income people were happy to take the covid spend and go crazy shopping till they dropped so might be a good idea if they paid it back .Problem solved inside 5 years .But that will never happen because like the PM they are entitled .

  10. More from Gordon Campbell regarding tax and why Parker resigning is another loss to a more progressive approach.

    ” : Until Willis and her mates took an axe to the tax reform work being done by the IRD, keep this in mind: The IRD’s analysis of 311 of the countries’ wealthiest families found they were paying an effective tax rate of only 9.4% – which was less than half the 20.2% rate being paid by the average New Zealander.

    In direct response to that work, the then-Revenue Minister David Parker reportedly led the design of a wealth tax that would have required couples with more than $10 million in assets to pay an annual levy of 1.5 per cent. It was estimated that this tax would have raised $3.8 billion in revenue. This would have been enough to fund income tax cuts for almost everyone, including a zero tax rate on income below $10,000.

    Too bad that Labour’s right wing faction led by Chris Hipkins torpedoed that proposal. Still, it remains the case that there is roughly $3 billion in revenue to fund a more socially equitable version of tax reform any time that Willis chooses to pursue it. Plus, instead of reinstating a $2.9 billion tax cut for landlords, think of the uses to which the public health system could have put that money.

    https://werewolf.co.nz/2025/04/gordon-campbell-on-our-austerity-fixation-and-canada-staying-centre-left/

  11. I guess removing the vote from prisoners gives Goldstein the motivation to lock up the governments political opponents, hence a need for greater spending on the military and police to quell dissent and remove opposition.
    Will be interesting to see what the increased spend on the spooks will be.

    • Rangi
      How many of those people even voted .Sadly most are too busy surviving to be bothered .However its a sad day when the right to vote is taken away from any member of the population .Being that the majority are Maori would have been the real motivation as white people get home detention so are not classed as prisoners .

  13. What is the excuse for bringing in swingeing cuts by ‘female’ finance ministers?They could be influenced by dominatrix trends. Hormone treatment for balance would perhaps be appropriate, also some understanding of what national finance serves and whether it can just be the same as international.

    This is educational.
    Dominatrices are popularly known for inflicting physical pain on their submissive subjects, but this is not done in every case. In some instances erotic humiliation is used, such as verbal humiliation or the assignment of humiliating tasks. Dominatrices also make use of other forms of servitude. Practices of domination common to many BDSM and other various sexual relationships are also prevalent. A dominatrix is typically a paid professional (pro-domme) as the term dominatrix is little-used within the non-professional BDSM scene.
    https://en.wikipedia.org/wiki/Dominatrix
    and – What Is BDSM? Fundamentals, Types and Roles, Safety ..Everyday Health
    https://www.everydayhealth.com › … › Sexual Wellness
    BDSM is an acronym that stands for bondage and discipline, domination and submission, sadism and masochism.

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