Standard & Poor’s just sabotaged Simon Bridges’ tax bribe announcement
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Poor Simon Bridges.
Since becoming Leader of the National Party, he has been dogged by embarrassing leaks (which appear to be ongoing even after Jami-Lee Ross’s departure from caucus); a once-trusted MP turned feral; another MP accused of bullying her staff; allegations of a culture of sexual harrassment in the Party; travel expenses that make him look profligate with taxpayers’ money; assorted bed-hopping; and a potential contender for his job breathing down his neck as his poll ratings continue to languish in single figures.
Never mind “it’s not easy being green” – being Blue right now is positively diabolical for Simon Bridges. The only thing missing is a National MP who is revealed to be an agent for a foreign power. Oh…
With indications that the Tax Working Group will shortly be making it’s final report back to the Coalition, and with expectations that it will recommend a Capital Gains Tax on property (excluding the family home), National has launched a multi-media campaign on taxation. Twitter, Facebook, as well as the msm have all carried National’s announcement to cut taxes (dressed up as “tax adjustments” to deflect criticism that National is once again planning to cut taxes for the rich).
It was revealing that Bridges decided to give his speech out-lining plans for tax-cuts-dressed-up-as-tax-adjustments at the Canterbury Chamber of Commerce, in Christchurch. He would not dare make such a speech at the Child Poverty Action Group, foodbank, or community hall in a predominantly state housing area.
He made his pitch at the Canterbury Chamber of Commerce because those are the people who would – yet again – benefit from tax-cuts-dressed-up-as-tax-adjustments.
As well as offering the bog-standard tax-cut bribe, Simon Bridges also alluded to National’s so-called reputation for being a “prudent fiscal manager“;
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To which one couldn’t help but reply;
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But worse was to come for Simon Bridges.
A day later, international credit ratings agency, Standard & Poor’s, up-graded New Zealand’s sovereign outlook from “stable” to “positive”. The S&P report noted;
“Accommodative monetary policy, population growth, higher wage outcomes and higher government spending” and a decline in the New Zealand dollar, was continuing to support growth, it said.
“We don’t believe trade tensions between New Zealand’s major trading partners will currently have a substantial impact on the country’s economy and external performance, particularly given that key exports are imported for domestic consumption in China, rather than for re-exporting.”
It was capitalism’s vote-of-confidence in a left-wing government with overtly left-wing policies.
Which stands in stark contrast with the credit-rating down-grade New Zealand experienced in 2010 and 2011 – under the right-wing, Key-led National government;
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New Zealand went from “stable outlook” in 2009 to “negative” by November 2010. By September 2011, we had dropped from AA Positive to just AA.
In fairness, a sound explanation could lie with the fallout from the 2008 Global Financial crisis and Great Recession that followed.
But no. National compounded the fall in tax revenue resulting from the Recession by cutting taxes in 2009 and 2010, which reduced the tax-take even further. That meant only one recourse for then Finance Minister, Bill English: borrowing. Massive amounts of borrowing..
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National will fast track a second round of tax cuts and is likely to increase borrowing to pay for some of its spending promises, the party’s leader John Key says.
But Mr Key said the borrowing would be for new infrastructure projects rather than National’s quicker and larger tax cuts which would be “hermetically sealed” from the debt programme.
In opening remarks to the party’s annual conference in Wellington today Mr Key said National would incorporate Labour’s October 1 tax cuts, bring forward a second round to April 2009 – a year earlier than Labour – and a third round to April 2010.
Labour’s planned third round would not take effect until April 2011.
National is yet to explain how it will pay for the promised larger cuts.
But deputy leader and finance spokesman Bill English told delegates National was prepared to borrow more to fund infrastructure.
He said New Zealand had one of the lowest levels of debt of any developed country and “additional borrowing” for infrastructure would boost economic growth.
Even after Treasury released a report predicting a $30 billion deficit, then National leader (and subsequent PM), John Key, was not prepared to abandon his party’s planned taxcut bribe;
John Key has defended his party’s planned program of tax cuts, after Treasury numbers released today showed the economic outlook has deteriorated badly since the May budget.
The numbers have seen Treasury reducing its revenue forecasts and increasing its predictions of costs such as benefits.
Cash deficits – the bottom line after all infrastructure funding and payments to the New Zealand Superannuation Fund are made – is predicted to blow out from around $3 billion a year to around $6 billion a year.
Mr Key said National anticipated that the figures would be bad but thought “even Michael Cullen could do better than this”.
But he said his party would proceed as planned with the announcement of their tax strategy on Wednesday and he said there would be tax cuts.
By mid-2009, National realised that spending cuts to social services would have to be made. The public were being “softened up” to the inevitable.
Despite drastic spending cuts to social services; ceasing payment to the NZ Superannuation Fund, and redundancies in the state sector – it was all futile and insufficient to meet the duel cost of reduced revenue due to recessionary pressures and the – now obviously unaffordable – taxcuts.
By May 2011, the National government was borrowing $380 million per week. Debt stood at $71.6 billion.
National’s crazy borrowing had been exacerbated by tax cuts that we could ill-afford. This is why Standard and Poor’s took alarm at National’s tax-cuts and borrowings, and downgraded our credit outlook to “negative”. It could be said that New Zealand was ‘Going Greek’ in the South Pacific.
So when current National Party leader, Simon Bridges boasted that New Zealanders “trusted National with managing the economy. You know we’ll be careful with your money” – people with long memories reacted with justified derision.
Make no mistake – and let me spell it out with crystal clarity: there is no such thing as a ‘free school lunch’ or tax-cuts without consequences. School lunches (which are a social necessity) are usually paid for by taxpayers. Tax-cuts will be paid by all of us, if sufficient numbers of voters buy into Bridges’ tax-cut bribe.
Expect National to cut spending on vital social areas; sell remaining state assets (by stealth, if they can get away with it); stop contributions (again) to the NZ Super Fund; and increase user-pays government charges. Bridges may even go so far as to raise gst again.
As well as promising de facto tax cuts, Bridges has also made other, expensive promises;
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It is difficult to understand how National will pay for it’s promises with all those taxes abolished. And what does Bridges mean “in our first term“? What, exactly, are they planning for a second term?
We have heard this terrible “tax cuts” song before. It will not sound better the second time around.
I hope New Zealanders have better sense than to fall for this fiscal sleight-of-hand again.
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References
Radio NZ: Bridges – National caucus didn’t leak travel expenses
Otago Daily Times: More National Party leaks
Fairfax/Stuff: Another alleged recording of phone call between Simon Bridges and Jami-Lee Ross is leaked
Radio NZ: Maggie Barry bullying claims – Ex-staffer speaks out
Mediaworks/Newshub: National to conduct independent review into party culture
Radio NZ: Simon Bridges defends $113k expenses bill
Noted: Parliament’s star-crossed lovers who crossed each other
Otago Daily Times: Could Collins become National’s new leader?
NBR: Bridges clocks lowest Newshub-Reid poll rating of any National leader for a decade
Newsroom: Newsroom Investigation – National MP trained by Chinese spies
Mediaworks/Newshub: Capital gains tax set to be biggest political scrap of the year
Twitter: Simon Bridges
Facebook: Simon Bridges
Fairfax/Stuff: National promises three-yearly income tax cuts in first major speech of 2019
Fairfax/Stuff: Improved S&P outlook ‘underlines’ position of NZ economy, says Grant Robertson
The Treasury: Credit Ratings
NZ Herald: Nats to borrow for other spending – but not tax cuts
NZ Herald: Key – $30b deficit won’t stop Nats tax cuts
Fairfax/Stuff: Labour Budget pledges face axe
NZ Herald: Govt borrowing $380m a week
Fairfax/Stuff: Government debt rises to $71.6 billion
Twitter: Simon Bridges – 30 January 2018 2.44pm – abolish taxes
Additional
The Atlantic: Tax Cuts Don’t Lead to Economic Growth, a New 65-Year Study Finds
Other Blogs
Greater Auckland: What happens if you get rid of the Regional Fuel Tax?
The Daily Blog: Yawn – Simon Bridges promises less than a weekly Big Mac Combo in tax cuts
The Standard: Show us the money Simon
Previous related blogposts
“It’s one of those things we’d love to do if we had the cash”
The Mendacities of Mr Key #3: tax cuts
The consequences of tax-cuts – worker exploitation?
Plunket and the slow strangulation of community organisations
The cupboard is bare, says Dear Leader
An earthquake separates John Key and ‘The Iron Lady’, Margaret Thatcher
The Mendacities of Mr Key # 19: Tax Cuts Galore! Money Scramble!
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= fs =
Downgrade after gfci and earthquake. You guys have short memories. Labours had nothing of this scale to deal with yet. The small ones they have such as kiwibuild they are failing.
This is a hangover from what national left labour.
You must’ve missed this bit Infused:
Frank wrote: “In fairness, a sound explanation could lie with the fallout from the 2008 Global Financial crisis and Great Recession that followed.
But no. National compounded the fall in tax revenue resulting from the Recession by cutting taxes in 2009 and 2010, which reduced the tax-take even further. That meant only one recourse for then Finance Minister, Bill English: borrowing. Massive amounts of borrowing..”
So he DID acknowledge the GFC/recession. Then he pointed out, with considerable evidence, that National made recessionary effects worse by making taxcuts we couldn’t afford. Did yiu not read how much the Nats were borrowing each week?
I checked his citations, they stack up. You should do likewise.
And to add further proof to you information INFUSED, National were able to get through the GFC and CHCH earthquakes thanks to the hangover left by Labour, low debt!!!
‘Infused’ – I believe I addressed that point above, if you re-read my story. In any case, ‘Mjolnir’ has explained it sufficiently not to waste any more time going over this point.
INFUSED ? CONFUSED!
Recent history shows us anyone who trusts National’s tax cut bribe needs their head read. New Zealanders pay more in user pays every time they cut taxes. And that hurts the lowest paid in our society.
Bridges is not to be trusted.
The decreased tax take also forced the nats into robbing other sectors, such as by increasing the dividend to the government from Housing New Zealand…. thus further gutting HNZ at the very time that a housing crisis was escalating.
I’m not sure about voters remembering… we seem to forget the bad stuff quickly and national party voters are in denial most of the time anyway.
Speaking of Simon; on The Project last night they invited Simon to appear, and when he said that he would still be leader in a year’s time, people in the audience laughed out loud. Oh dear.
And they gutted the funding from DHB’s. Oh to be a heart surgeon on Bridges operating table.
Cutting biosecurity funding…. M Bovis, anyone?
Indeed, Steve. A point which I addressed here: https://fmacskasy.wordpress.com/2012/05/12/bugs-and-balls-ups/
and here: https://thedailyblog.co.nz/2018/06/15/special-investigation-mycoplasma-bovis-foot-and-mouth-national-party-and-other-nasty-germs/
My first story on cuts to bio-security was written in May 2012, where I predicted;
Our luck ran out with m. bovis. And National is yet to take responsibility for cuts to bio-security.
Careful with our money?
That’s a laugh.
Three words: South Canterbury Finance.
Government bailout: $1.6bn
Yes Frank,
Simple Simon just cant get it right can he?
Recently Simon Bridges said there would be no ‘new taxes’. That would ONLY mean ONE thing and that is there would be an increase in EXISTING taxes eg GST going up to say 17%.
Perhaps National thinks that increasing existing taxes especially upon the low income workers in deliberately kept low income NZ will usher in prosperity for everyone.
Sir Winston Churchill once said this: “For a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
Taxing even the low paid will not ensure prosperity amongst the low paid workers. There will probably be the Trickle Up effect instead ie. money to to the wealthier people and staying with the wealthier people. And these are the very people National will prefer to court for donations.
Recently Simon Bridges claimed a National government would increase the ‘average wage’. In my opinion the ‘average wage’ is somewhere in the $50,000 bracket. There are a greater number of low income workers who are on say $29,000 to say about $39,000per annum. These low income workers can hardly be addressed as being on the ‘average wage’.
And so Bridges saying that and the mainstream NZ media who are in the NZ National Party pocket will manipulate the comment as much as possible. And so those actually on the Average Wage will be better off but the low income workers and especially beneficiaries will again be kicked in the guts by the National crowd.
Looking at the past National government of spend-thrift on ego-quests and vanity projects whilst also double dipping and demeaning low income NZers at the same time indicates to me that I wouldn’t trust a National Politician as far I as would like to throw him or her.
They are nothing short of a bunch of self-serving, self-loving, ego-driven hypocrites most of whom have hardly dealt with poverty.
But it does seem they(National) firmly believe they are a trustworthy, honest and dependable lot when most NZers can see through their lies and manipulations.
I don’t believe National MPs think they’re trustworthy, honest or dependable. A brief period of observation would put paid to that notion, and believing such would make them delusional. I do believe National MPs think they’re better than other people — more insightful, cultured, smarter, vastly more successful (particularly if your benchmark for success is the number of properties you own and your overall wealth), and overall “the right sort of people” to be manipulating the levers of power. Most of them are utterly clueless with regard to the lives of those at the sharp end of poverty, disability, long-term unemployment or other similar misfortune, and the level of condescension, condemnation, and callousness routinely on display makes it painfully obvious.
People like Aroha Ireland of McGehan Close were used as convenient tools to perpetuate a narrative of ‘compassionate conservatism’, and it was all a sick facade. You exist to further their agenda. You’re a useful idiot. A prop. As Aroha’s mum said of Key, “[I like him] as a person but [politically] he’s an arse-hole. He’s just looked after the high-income people and abandoned the low-income.” And that’s National’s problem. They’re fundamentally dishonest and self-serving, and unless you’re a member of their tribe, they’re quite prepared to throw you to the wolves. Under a National government, you better be sure you can look after yourself, because National sure as hell won’t help you. (Unless there’s a photo-op in it for them, and even then, once the camera crew leaves, all bets are off.)
“Recently Simon Bridges said there would be no ‘new taxes’. That would ONLY mean ONE thing and that is there would be an increase in EXISTING taxes eg GST going up to say 17%.”
They’ve done it before, Justme.
Despite that nice Mr. Key promising us he wouldn’t.
“National is not going to be raising GST. National wants to cut taxes not raise taxes.”
Oh, really, John? Really? You fucking charlatan.
+1
I wonder what promises Bridges will break should he win in 2020?