‘NZ Not for Sale’ campaign to oppose trade agreement

Media release New Zealand Not For Sale Campaign

The New Zealand Not For Sale Campaign will be formally launched in Christchurch on November 11, in conjunction with the launch of Professor Jane Kelsey’s book on the Transpacific Partnership Free Trade Agreement.

The NZ Not For Sale Campaign has been set up to oppose the Transpacific Partnership because it is against New Zealand’s best economic, environmental and social interests.

“The trade agreements we already have are linked with high international debt, job losses, asset stripping, risky speculation, increasing sales of land to overseas owners, running down public assets and services, and loss of tino rangatiratanga and national sovereignty’’, says the Campaign Secretary, Dr Christine Dann.

Climate Activists to Dairy Summit: ‘Get a real job on a real farm’

Camp for Climate Action Aotearoa

Media Release: 9th November 2010

Camp for Climate Action Aotearoa invites the corporate farmers of the World Dairy Summit to get a real job on a real farm

In response to yesterday’s Federated Farmer’s press release telling protestors of the World Dairy Summit in Auckland to “Get a real job like farming” Camp for Climate Action Aotearoa suggests that Federated Farmer’s listen to their own advice.

Camp for Climate Action Aotearoa spokesperson Gary Cranston says “we support the actions of small scale farmers all over the world who are already living sustainably, feeding their communities and defending their climate-friendly farming practices from mega-scale agribusinesses.”

“As a stream of greenwash spews from the World Dairy Summit into our rivers small-scale farmer’s livelihoods are not only threatened by climate change, they’re also threatened by industrial agriculture itself and the kind of money-making false solutions that the world’s agribusiness giants are pedalling at the UN climate negotiations and through John Key’s Global Research Alliance on Agricultural Greenhouse Gases.”

Hillary Clinton comes bearing poisoned chalice for NZ

By Murray Horton

CAFCA 

As if 2,000 earthquakes haven’t been enough punishment for Christchurch, now we’re going to have Hillary Clinton visiting us (and Wellington) this week.

A major focus for her NZ visit  will be the negotiations which are well underway for the US and a number of other countries to join an expanded Trans-Pacific Strategic Economic Partnership (currently comprising NZ, Chile, Brunei, and Singapore, and known as the P4 Agreement), with 2011 as the target to seal the deal. This will be used as the backdoor means to secure a US/NZ Free Trade Agreement.

Savings? That’s a laugh

By Peter de Waal

On 27 April this year the 6pm TV3 News reported:

  60% earn under 40,000 per annum

  88.1% earn less than 70,000 per annum

  6.8% earn 70,000 – 100,000 per annum

  5.1% earn over 100,000 per annum

The average rent for a two bedroom house in Auckland is $400/a week or $20,800 a year. For the “average” worker (see above) earning $45,000 per annum before tax, $20,800 a year represents 46% of gross income in rent alone.

Once you deduct income tax at 33%, and the extra 10% tax paid for your Student Loan on top of that (the uneducated seldom earn $45,000 per annum) what’s left for food, power, phone, car payments, etc?

International guidelines say any rental or mortgage payments over 33% of gross family income constitute true poverty and hardship. Who can raise a family, pay the vastly inflated rents or mortgage and have any money left over at the end of the week on figures like those?

Most people’s earnings are 25-50% of what they were 25 years ago in inflation-adjusted terms. So it’s a bit rich for Mike Heath – the wealthy banker from Rabo Direct, to chide workers for “failing to save” when people like him have spent the last 25 years grinding down wage and salary earners incomes in order to save the capitalist system from itself.

South Canterbury Finance: ‘A lot of bets in the casino paid off big time today.’

It’s popular both in the “blogosphere” and on the Left to pan the mainstream media (MSM) for their often crappy reporting, bias in favour of the rich and powerful and so on. And most of the time this is right and true.

At the same time, bloggers often depend on “real” reporters to dig out and even explain news that we wouldn’t otherwise know about. The following article from the Herald is a good example.

It’s these “bargain hunting” speculators that the Tax Justice campaign is targeting with our call to “Tax Financial Speculation”.

Thanks to Peter, for forwarding this. Here are his comments:

$1.3 billion of government money paid out today to the speculators for Hubbard’s worthless South Canterbury Finance shares and bonds. Break out the $900 bottles of bubbly! Great news for the parasites, too bad for everybody else who happens to need a pay rise such as those pesky radiographers and teachers.

This will also be paid for by all those unemployed people having their entitlements chiseled away and disabled people being hammered by the ACC and WINZ. Maier’s face says it all...

Speculators reap fat reward as finance firm fails

from NZ Herald

Bargain hunters who bet against South Canterbury Finance in the NZX debt market will be rubbing their hands with glee today with the guarantee covering the failed financier’s listed bonds plus interest.

The Timaru-based finance company called in the receivers today, triggering the government’s retail deposit guarantee which will pay out the face value for the firm’s debenture and bond holders.

Prices for the company’s listed bond maturing in 2012, after the extended guarantee, fell to a deep discount earlier this year, with the yield reaching 40 per cent in March.

That meant audacious punters could buy them cheap and get paid out in full if South Canterbury failed.

“There will be a lot of money made in the listed bonds with prices up to 20, 30 and 40 per cent, which was all paid today,” chief executive Sandy Maier said in a conference call.

“A lot of bets in the casino paid off big time today.”

Sandy Maier

The yield had abated in recent weeks, and was last at 24 per cent before trading in the security was suspended.

The government will have to pay-out $125 million on the bonds.

Maier said the guarantee, which many commentators claim distorts the market, gave him confidence to accept money from “widows and children” as he sought to save the company from collapse.

The failure of the finance sector has seen a number of low-ball offers for debenture stock, and prompted the Securities Commission to warn investors to make an informed decision before accepting bids significantly below face value.

Hubbard’s ‘bad bank’

By Jenny*

While National MPs claim there is no money to pay teachers or doctors, the government prepares to hand over, up to half a billion dollars to private investors who bet on a lemon.

The lie is, that this must be done for the good of the economy.

It didn’t make any difference in the US and it won’t make any difference here.

Sinking deeper and deeper into recession, the American example shows that the idea that private sector bailouts are good for the economy is pure unadulterated bull. The only ones to benefit from public bailouts of private investment companies and bad banks, were private investment companies and bad banks, their overpaid managers and fat cat shareholders.

The US government and the country at large were impoverished by multi- billion dollar bailouts of bad banks and investment companies.

While wealthy investors were looked after, tens of thousands of average Americans who had their jobs and homes taken from them, due to the malfeasance of these same finance companies and bad banks – were shown no such largesse.

Why can’t New Zealand learn from what has what happened overseas?

The truth is that saving the economy is not what private sector bail outs are all about.

Taking care of the well off, at the expense of everyone and everything else, including the economy, is what it, is all about.

Yesterday, Liam Dann the Herald’s business editor, described how the National government has deemed Alan Hubbard’s “Bad Bank” as a New Zealand’s version of “too big to fail”.

Liam Dann on Hubbard:

Put the probe into his personal financial entities to one side. The real story is South Canterbury Finance – the $900 million liability hanging around the taxpayer’s neck…..

Hubbard lost control of that company earlier this year after it had breached its trust deed.

He was removed from the board and given the sentimental title of President for Life

By that point the Government had already effectively decided the company was too big to fail.

And:

The bad loan “bank” is up to its neck in $600 to $700 million of debt on assets that may yield as little as half of that when they are realised.

When it is euphemistically said that South Canterbury failed to “stick to its knitting” it is the bad bank that people are talking about.

For people on suffering the pain of minimum wages barely enough to pay the rent, without the luxury of spare savings to invest in high finance. It’s a bitter irony that wealthy and middle class investors should have their speculative losses made up by a government that viciously opposed raising the minimum wage. What do these people know about hardship?

While the government continues to do nothing about joblessness and low wages, the question is, how many more millions of dollars will they uselessly throw investors way, as the recession deepens and more finance companies go under?

*First published as a Guest Post on the Standard, submitted by the author to UNITYblog.

The debate on this and other posts on the Standard is worth checking out for those wanting to get their heads around this issue.

NZ–tax haven for the international rich

By Peter de Waal

The conservative UK Sunday Times newspaper recently published a survey of countries with a comfortable western standard of living wealthy tax-exiles could consider escaping to.

This article [only available online for a fee], published on July 11th 2010, described New Zealand’s 2010 budget as “the most radical change to taxation in 25 years.” Compare this to Key’s local attempts to downplay the importance and impact of the 2010 budget.

For a British boss or money speculator making £150,000 a year, Switzerland will take only £40,000 a year, yet “socialist” New Zealand is next cheapest tax shelter with just £50,000 of income taxes.

For this, the wealthy ex-pat gets access to a free world class health system, cheap housing conveniently out of reach for 90% of the population, anti-labour union laws such as the 90-day “fire at will” law that makes the setting up of a tax-loss generating “business” simple and relatively risk-free, and much more.

The cost of these gifts to the transient wealthy is a massive destruction of citizenship rights for Kiwis, with swingeing cuts to ACC entitlements, access to education, health rationing, the protection of union membership, GST rising to 15%, etc. Key’s austerity policies for the poor and working class are costing some their lives and making survival near-impossible for many families.

John Key sold himself to the electorate on the basis of tax cuts, but many didn’t realise that these cuts are biased towards the ultra-rich top 2% of the workforce. Key has transformed New Zealand into a tax-exile destination and articles such as this one in Bloomberg are here to sell the results of these decisions to the world’s rich.


‘Smiling assassin’ targets rich immigrants

By William Mellor 

Bloomberg via NZ Herald

Wednesday Aug 25, 2010

Business news agency Bloomberg takes an outsider’s look at where it thinks New Zealand and John Key are heading.

Prime Minister John Key promoted New Zealand on David Letterman’s Late Show last year. Photo / AP

New strategy from NZ union leaders

by Grant Morgan


Last week, the NZ Council of Trade Unions released a second draft of their Alternative Economic Strategy.

Sound boring?

Actually, the CTU’s document could flag a major leftwards turn by the peak leadership of our union movement.

After a quick read of their revised strategy paper, here are some of my initial thoughts:


HOLISTIC ALTERNATIVE

The CTU is looking to embrace a holistic alternative to neoliberal capitalism, which is exploiting workers and nature to breaking point.

And their alternative vision seems to be growing more staunch over time. In the eight months since the CTU’s first go at crafting an Alternative Economic Strategy, its content and tone have become stronger.

For instance, the CTU has zeroed in on financialisation, the central pillar of neoliberal capitalism. The CTU is now calling for the immediate reduction and gradual elimination of GST, the introduction of a “financial activities tax” and other measures to curb the power of the speculators.

The second draft still contains structural weaknesses which flow from the CTU opposing capitalism’s neoliberal agenda without rejecting capitalism as a system.

Such weaknesses, however, should not obscure the positive potential of the CTU’s Alternative Economic Strategy. A finished manifesto is scheduled for signoff by CTU affiliates within the next month.

Top union leaders appear to be equipping themselves for a strategic showdown with neoliberalism.

That may well herald a historic break with the CTU’s past practice of ducking a frontal battle against neoliberal orthodoxy despite grumbling about market extremism and skirmishing around specific issues.


POPULAR DISCONTENTS

Two days after the 2010 budget’s hike in GST, Socialist Worker and the Alliance launched a tax justice petition. Calling on Parliament to axe GST from food and tax financial speculation, the petition is already drawing wide support.

Our crowded street stalls allow me and other petitioners to hear the voices from below.

What do we hear? Rumblings of discontent over belt tightening, rising prices, lowly status, community breakdown, corporate greedies, unfair laws and deaf politicians.

These popular discontents indicate the broad constituency for change that could be mobilised by a CTU showdown with market extremism. The union movement would start to regain a central role in New Zealand society.

And the CTU’s strategic shift has the potential to reshape New Zealand politics in ways that benefit the multitudes, such as:

    •    Bolstering the Labour Party’s network of left activists and sympathetic MPs.

    •    Eroding the Labour Party as an institutional barrier to mass political action.

    •    Growing the institutional basis for a broad left party that fights neoliberalism.


JOINT EFFORTS

So will the CTU’s new words be followed by inspiring deeds? We cannot know for sure until after CTU affiliates endorse the Alternative Economic Strategy and CTU leaders have the chance to make it fly.

Meanwhile, there’s plenty the rest of us can do to help the CTU rise to the occasion.

For instance, the CTU’s revised strategy paper recognises that tax policy is becoming a key social battleground.

To fund tax breaks for the rich, John Key’s government is hiking GST to 15%. This unjust imposition on modest income families has been damned by the CTU. How about telling the CTU that you back their stance, and ask them to lead protests on 1 October when the rise in GST takes effect.

The Labour Party’s recent Auckland regional conference voted unanimously for GST-free food and a financial transactions tax. That internal party pressure, itself fueled by public sentiment, led a reluctant Phil Goff to say that Labour in government might consider removing GST from fresh fruit and veges. How about telling Phil, and other Labour MPs, that you want much more, for sure.

A Maori Party bill to remove GST from healthy food will soon get its first reading in Parliament. How about telling Labour and Green MPs that you expect them to vote for this bill, no ifs, buts or maybes.

Socialist Worker and the Alliance are fronting a tax justice petition that’s in harmony with the CTU strategy. How about telling the CTU that you support our petition, and ask them to promote it hard. Likewise with MPs from the Labour, Green and Maori parties. And how about you joining our team of petitioners.

Joint efforts to remove GST from food and tax financial speculation will undermine financialisation, the heartless heart of neoliberal capitalism. That’s got to be good for the grassroots. And for the success of the CTU’s Alternative Economic Strategy.

CTU: Alternative Economic Strategy – final draft

An economy that works for everyone

NZ Council of Trade Unions

26 May 2010

Introduction 

People are the heart of the real economy. People work to produce the goods and services, innovate, save and invest. And it is for people that the economy should work to provide our needs. It should enable us to create better lives in terms of our welfare and happiness as individuals, community and wider society. 

But the New Zealand economy has failed to do this in crucial ways. 

Workers are not receiving the benefits of economic growth in their wages.

Poverty is blighting a society that produces enough for everyone but fails to share it fairly.

The economy is failing to thrive and is badly unbalanced.

The ever more visible limits to the Earth’s resources and the misuse of our natural resources highlighted by global climate change are unsustainable.

And the economy fails to make best use of the skills and experience of its workforce by excluding most of them from meaningful participation in the decisions that shape their work, industry and economy.

Capitalism has never been fair nor cared for the environment. But under the neoliberal policies followed in New Zealand for the last quarter of a century not only have these conditions got worse but the policies have failed in their own terms. 

 Those policies are rooted in the idea that less government is better government and that “the market” if left to itself will lead to faster economic growth and better outcomes for society. New Zealand has had slower growth rates and has failed to keep up with the rest of the world.

The policies have enriched a small number of people, and have accelerated the migration of New Zealanders overseas. The economy has growing imbalances of household and international debt, of investment based on speculation rather than production, and of interest and exchange rates at levels that worsen rather than resolve these problems. 

The GST rise big story of the Budget

By David

The GST rise is definitely the big story of the Budget, even Greenpeace’s press release focuses on it.

Although, disappointingly, they call for the “strengthening” rather than scrapping of the ETS pollution market, and offer an endorsement of the UK’s new Tory leader David Cameron, who allegedly possesses “some forward-thinking and visionary ideas.” (Which is news to me, as I was under the impression he was just another Margaret Thatcher / Tony Blair corporate clone... rather like John Key.)

The focus on this regressive tax increase, rather than the cuts in income tax is bad news for National and a another sign that the public mood is turning against the Government.

In their official statement, the Maori Party did their best to accentuate the positive, by listing all the little projects that got funding, and asking their supporters not to focus on GST:

“We know that the biggest challenge will be in encouraging our constituency to look broader at the whole picture of the budget – rather than focusing on one measure in isolation.”

But such a focus is unavoidable. As Maori Party MP Hone Harawira put’s it:

“GST hits poor people the hardest because nearly all of their money is spent on things that you pay GST on – food, petrol, electricity – so any increase is going to really hurt them.”

That extra 2.5% will be increasing the impact of every peak oil petrol price hike, and every world commodity market induced rise in cheese or bread.

Harawira’s personal statement against the GST rise, and his request to party leaders for permission to vote against the increase, have earned both praise and criticism.

Marty G at The Standard urged Harawira to “have the courage of his convictions” and cross the floor to vote against the Budget even with out his party’s permission. In the event, Harawira’s vote, along with those of the five other Maori Party MPs went for the Budget.

Comments on the post have suggested that voting for the Budget makes Harawira a wimp, a sell-out or a blowhard. But while I would have applauded Harawira had he crossed the floor, I think it would have been a tactical error for him to go against the wishes of his party leaders, at this time.

The right wing of the Maori Party have already tried to force him out, for the trivial offence of using offensive language when pointing out the crimes of Pakeha parliamentarians in a private email. To break ranks over this issue would only given them another excuse.

Maori Party co-leader Tariana Turia had the support of (and was under pressure from) a hikoi of tens of thousands before she broke with Labour over the foreshore and seabed act. Who does Hone Harawira have? How many people took to the streets against the GST rise?

The only thing coming close is the few dozen of us who went out today to launch the Socialist Worker – Alliance petition calling for GST to be removed from food and financial speculation to be taxed.

Picking pick-pocketing suits

With the main points of the Budget known well in advance, the main point of interest for me was looking at the reactions.

Apart from Hone Harawera’s statement, my favourite was from the Maritime Union’s Joe Fleetwood, whose press release “National budget an attack on working class” says:

“rather than increasing GST it would be easier for workers just to hand over a $5 note every time they saw someone walk past in an expensive suit, because this was the actual effect of the GST increase.”

I thought about this when I was in town today. At first I only saw a few men in suits, but there were more when I passed near the court.

Of course I didn’t actually offer any of them five bucks. For one thing I didn’t have than much money, but more importantly, I realised that I have know idea how to pick the expensive suits from the cheap ones.

Was this man a high-paid corporate lawyer, or a common criminal dressed up in his court-appearance best? And how do you tell the difference?


National budget an attack on working class

Press Release: Maritime Union of New Zealand
Thursday, 20 May 2010, 3:24 pm

The Maritime Union of New Zealand says today’s budget is an attack on working class New Zealanders.

Maritime Union General Secretary Joe Fleetwood says the increase in GST to 15% was taking money from the pockets of workers to pay for tax cuts for people like John Key, who had so much money they would have trouble knowing what to do with it.

He says rather than increasing GST it would be easier for workers just to hand over a $5 note every time they saw someone walk past in an expensive suit, because this was the actual effect of the GST increase.

“It is a wealth transfer from low to middle income earners to the wealthy.”

GST was a regressive tax that would hit struggling New Zealand families hard.

Mr Fleetwood says that a major problem for New Zealand is growing inequality of wealth.

Inequality leads to social breakdown and long term economic and social problems, as international research has shown, and National’s budget was making inequality worse.

He says the idea promoted by John Key that only high income earners contributed to New Zealand’s economy and society was both offensive and wrong.

“If we are at the stage where New Zealand is being held hostage by a tiny minority of the super rich, maybe it is time to question whether we still live in a democracy?”

Mr Fleetwood says that the international evidence shows that excessive wealth was being accumulated by a few at the top end of the wealth scale, while the majority of workers were squeezed by rising costs and static incomes.

“John Key is rewarding the big business, finance sector CEO types who are the backers of the National Government, whose greed knows no limits.”

He says the obsession with tax cuts was leading New Zealand down a dead end road as tax was essential to pay for hospitals, schools, infrastructure and other vital public goods.

However the tax burden was increasingly falling on low to middle income earners rather than the wealthy, which was the wrong way around.

ENDS

The CTU’s Alternative Economic Strategy – a way forward for workers?

Bill Rosenberg [pictured], author of the Council of Trade Unions proposed
 Alternative Economic Strategy, will be speaking on the reasons the 
Strategy was written, what it says and its potential as an 
organising and campaigning tool for the union movement.


Also speaking will be Socialist Worker National Chair, Vaughan
Gunson, who will discuss whether the Alternative Economic Strategy 
can be the basis of a broad left campaign against neo-liberalism.



A Socialist Worker Forum



Tuesday April 27, 7pm


at the Socialist Centre

86 Princes Street, Onehunga

For more information, or to organise a lift to the venue, phone Len
: 634 3984.

Water: ‘When Federated Farmers asks, the Government listens’

by Pat O’Dea


Wondering what is behind the sacking of the Canterbury Regional Council over the control of Canterbury’s water resources? When Federated Farmers ask, the Government listens.

New Zealand’s biggest business pressure group put out their wish list in early February. Since then the Government has been ticking the boxes one by one.

Visions of a people-centred economy

These are the notes for a talk given by UNITYblog editor David on the subject of ‘Transitioning to a human-centred economy in Aotearoa’ at the Marxism Alive conference in Auckland, 27 June 2009. New Zealand is the world’s biggest exporter of dairy products, not because we produce more dairy products than any other country, but because unlike other countries, we produce much, much more than is used here. We are all now becoming increasingly aware of the environmental costs of producing all this “surplus” dairy produce for export: the pollution of our waterways, the drying up of streams, the greenhouse gas emissions from the belching cows. So why do we do it? Why keep producing so much more than we need if the costs are so high? Why the continuing push for even more dairy farms? Obviously the answer is that the dairy farmers and their investors want to make more money. We have a profit-centred economy, not an ecology-centred economy.

Continue

More neo-liberalism or an alternative?

The just released Treasury report aimed at influencing the National government advocates a new round of neo-liberalism: cuts to government spending, tax reform (including raising GST and lowering company tax), privatisations of state-owned enterprises, etc. Rather than "closing income gaps" it will of course increase them, and will most likely worsen the economy. A very different prescription from the CTU's Alternative Economic Strategy. Is there potential for two opposing ideological and political responses to the economic crisis to square off against each other, not just on paper, but in the real world?

Tax reform needed to jump-start economy by Brian Fellow from NZ Herald 23 November 2009 Far-reaching reform of the tax system and a much tougher approach to Government spending than the Budget foreshadowed will be necessary if New Zealand is to narrow the income gap with Australia and other developed countries, the Treasury says. The economy is seriously under-performing, it says in a report to ministers titled "Getting Started on Closing the Income Gaps". Both Government and private consumption has run well ahead of income, while business investment has been relatively modest. Debt levels are high, and land and house prices probably unsustainable. The Budget was underpinned by an expectation that the recession would trigger a process of rebalancing which would put the economy on a more sustainable path, but that is not panning out. Instead of the expected 25 per cent fall in real house prices, they are heading back above their 2007 peaks, aided by strong net immigration. The reorientation of the economy away from consumption towards production and exports is likely to be slower and weaker than had been hoped and that would mean overseas debt reaching even higher levels than those the Budget had forecast (over 100 per cent of GDP) and which the Treasury doubts are sustainable. "At best our current medium-term economic prospects appear to be fragile, unbalanced growth. There is little in the current policy mix that would make a material difference in terms of closing the income gap." What would, the Treasury argues, is a combination of ambitious tax reform and "front-loaded fiscal consolidation" - code for belt-tightening in Government spending that goes well beyond the $1.1 billion cap on new spending adopted in this year's Budget. "You have the opportunity for once-in-a-generation reorientation of the tax system," it told ministers. "If the opportunity is embraced, far-reaching tax reform could make a powerful contribution to jump-starting a process that, over a decade or two, could close the income gaps." The less ambitious the approach to other taxes like GST, land tax and capital gains tax, the harder would be the required choices about where to concentrate income tax reductions. Structural reform could not begin and end with tax, however. Also in the Treasury's sights are privatisation of state-owned enterprises, pricing not only carbon emissions but water, and a greater role for external capital in the dairy and meat processing sectors. Since 2002, New Zealand has had the fifth-highest rate of increase in Government spending in the OECD. The report is clearly talking about a significantly more demanding track than the Budget, which envisaged a decade of deficits even with a much lower cap on new spending.Significant and well-foreshadowed cuts in Government expenditure would limit the need for official cash rate increases by the Reserve Bank, it says, which in turn would mean less pressure, all else equal, on the exchange rate. The Budget had relied on fiscal drag - the process whereby inflation pushes people into higher tax brackets - to reduce deficits over time. "Fiscal drag sounds innocuous. In fact it would mean that by 2022/23 the average wage earner would be paying the top marginal tax rate." The Budget's priorities had been supporting the demand side of the economy through a recession, while averting a credit rating downgrade. "Having dealt with that initial situation, some more significant adjustment is now warranted." A combination of spending cuts and tax reform, the report says, could deliver an economic scenario which looked like this: Materially weaker consumption relative to income and lower house prices, materially stronger investment and employment in the export sector, a materially lower exchange rate for several years, interest rates and a cost of capital more in line with international norms and a materially stronger fiscal position with scope for tax cuts in the future.

Latest terms of trade confirms NZ is a wealthy country

NZ’s terms of trade, as reported in the NZ Herald, is the best for 34 years. The terms of trade, which measures export values versus imports, rose 4.1% over the last 3 months, and in the year previous to that 11.3%. The growth is mainly due to soaring prices for dairy products exported overseas, and increasing costs of imports due to rising oil prices.

As the NZ Herald put it “the increased purchasing power of the export dollar makes New Zealand a richer country”. Fundamentally NZ is a wealthy country. In 2007 national income rose 5.1%. There's been sustained economic growth since 2000. The wealth, however, has not been shared around. The rich have been gorging themselves while the relative wealth of middle to low income earners has stagnated or fallen. There are real signs that the economy is heading for problems, as a result of the global economic crisis and the bursting of NZ’s housing market bubble. The wealthy elites now want workers and other grassroots people to tighten their belts and be "realistic" about what the country can afford. This would be injustice heaped on injustice. There should be no poverty in NZ today, and we should be rushing to fund public solutions that will cut greenhouse gas emissions. Finding the $400 million a year needed to make tertiary education free should be no problem at all. That's why the demands being put forward by RAM are simply common sense:

• Remove GST tax from all our food.
• Mobilise for climate security, like public transport funded by road budget.
• 2% interest state loan for a first home.
• Lift minimum wage to $15 per hour & legalise workers’ stolen rights.
• Free tertiary education & student living allowance to stop the ‘brain drain’.

Campaigning to achieve them will be taking it to the rich in this country and will be a step towards shifting the power balance.

Tax cuts will not eliminate poverty -­ Maori Party

Budget reaction 22 May 2008 The Maori Party says a $10.6 billion tax-cut package is a drop in the bucket, when there is much more to be done to address inequalities and need. "The tax cuts barely relieve the huge pressures on many families, and we really wanted to see a much greater emphasis on eliminating poverty," said Co-leader Dr Pita Sharples. "There is a negligible cut for those on less than $10,000, and a slightly bigger cut for the next group earning up to $20,000. But the biggest cut is for those between $60 ­ 80,000," said Dr Sharples. "So while someone living in poverty will get an extra $10-15 per week, a person on $80,000 will receive around $55 per week. "It will take two years to feel the full effects," he said. "And what is worse, discrimination continues against those who rely on benefits." "We need to recall that it is not just unemployed people who need help with feeding their families, but also those in part-time work and on low pay rates. "Of the 1.8 million people struggling to make ends meet, ten percent are children whom the Child Poverty Action Group has revealed are living in severe and significant hardship. "The Maori Party has called for food to be exempt from GST, and for people on incomes of less than $25,000 not to pay income tax. "These changes would have an immediate impact on people who cannot make ends meet. The tax changes announced today will not eliminate this poverty in the midst of plenty," said Dr Sharples.

RAM challenges Cullen to debate GST on food in front of Auckland shoppers

RAM - Residents Action Movement Media release 22 May 2008 Michael Cullen has delivered a budget that fails the majority of New Zealanders, says Oliver Woods, Auckland Central candidate for RAM - Residents Action Movement. "Food prices are skyrocketing, factories are closing all over New Zealand and home interest rates are crushing family budgets. Labour and National aren't listening to grassroots New Zealanders," said Oliver Woods. RAM, a political movement in the process of registration with the Electoral Commission, was formed into a parliamentary party just three months ago. Already the new party has more than 2,200 members, giving it a bigger membership than three of the parties currently represented in parliament (United Future, the Progressives and ACT). In the 2008 general election, RAM will be contesting electorate seats around the country (including upwards of a dozen in Greater Auckland), as well as the party list vote. Its aim is to provide a strong broad left voice. "RAM is offering a simple alternative budget. Our party has started a petition to remove GST from food which has received 10,000 signatures in just six weeks. By cutting this unfair tax from food, we will be saving Kiwi families thousands of dollars each year for ever more, thus giving far more relief than incremental income tax cuts," said Oliver Woods. "Yet Michael Cullen has ignored the thousands of GST-off-food petition signatories, and hasn't responded to RAM's invitation to debate GST on food in front of an Auckland supermarket. Is his government scared of the people they're supposed to represent?" "I take this opportunity to renew RAM's invite to the finance minister to debate GST with us out on the streets," said Oliver Woods. "RAM is proposing a practical set of solutions that can bring hope to ordinary Kiwis. We believe tax cuts should focus around low-to-modest income households, not the already rich. The government is offering subsidies to the racing industry, yet precious little to people facing escalating mortgages and rents." "RAM wants 2% interest state loans for first home buyers. We want a $15 minimum wage to put more money into the pockets of hard-working Kiwis. We want free tertiary education and student living allowances to halt the brain drain to Australia. There should be a shift away from unfair taxes like GST towards a financial transaction tax that targets the corporate money speculators." "RAM stands for common sense policies that put people before profit. That's why I am standing for RAM in Auckland Central. We need a positive, well-supported alternative to the LabNat political twins. Ordinary Kiwis are sick of being 'invisible people' ignored by the politicians." "RAM has heard the people's call for GST to be removed from food. We will be circulating our GST-off-food petition right up to the election campaign. We intend to make GST a big election issue that won't go away, no matter how much Labour and National both try to hide from it," said Oliver Woods. For more information, contact: Oliver Woods 021 072 4647 oliver.woods@gmail.com

Tax cuts locked in, but social services and wages still matter - CTU

CTU MEDIA RELEASE 

22 May 2008 

“Workers are feeling the pinch with high food prices, rising petrol costs and high rents and mortgage payments, and tax cuts announced today, targeted at low and middle income earners, will clearly be welcome for many workers,” Council of Trade Unions vice president Richard Wagstaff said today.

“But tax cuts can’t patch up for low wages, and with workers having some certainty now on the size of tax cuts, the acid is now on employers to lift wages.” 

“The wage gap with Australia cannot be closed by tax cuts. It requires ongoing wage rises for New Zealand workers and it does not help workers or the economy if employers try to avoid decent pay rises because take-home pay has gone up through lower tax.” 

“This Budget shows that even reasonably modest tax cuts still cost a lot of money. About $2.7 billion a year is needed to deliver tax cuts that start at $12 to $28 a week and rise to $22 to $55 a week.” 

“This means less money is available to build on the improvements in social services we have seen in recent years. Unions are therefore concerned about the long term impact of these tax cuts on the social spending.” 

Richard Wagstaff said that the focus on the Budget is mainly about personal tax cuts but the CTU also welcomes the earlier increase to family tax credits worth $275 million a year, the $168 million over 4 years for language, literacy and numeracy, broadband investment and funding to reduce the class sizes for new entrants to one teacher per 15 pupils.

Council of Trade Unions (CTU) Report on Budget 2008

(minus tables)  

Introduction This is a brief report on some of the Budget highlights. There has not yet been an opportunity to analyse all aspects of the Budget so this report does not attempt to provide a full commentary. You will see that funding increases are often stated as over 4 years and we also need to factor in demographic changes as well as an inflation adjustment before we can assess real increases.  

Key Points The main focus of the Budget is personal tax cuts. A $10.6 billion package over 4 years delivers tax cuts that start at $12 to $28 a week in October this year and rise to $22 to $55 a week in April 2011. In addition there is $275 million a year being added to family tax credits. Other key issues are a broadband package of $500 million, $168 million over 4 years targeted at language, literacy and numeracy initiatives and funding to reduce teacher/pupil ratios for new entrants in primary schools to 1:15.  

Fiscal Outlook The Budget is showing an operating surplus for 2007/08 of $2.6 billion compared with a forecast of $6.4 billion. The cash position for 2007/08 is forecast to be a surplus of $0.9 billion. The OBEGAL (Operating balance before gains and losses) is $5.2 billion compared with the forecast of $6.6 billion. The forecasts over the next 4 years are for large cash deficits for the Government of around $3.5 billion a year. And the allocation for new spending in future budgets has been reduced from $2 billion a year to $1.75 billion.  

NZ Superannuation Fund The New Zealand Superannuation Fund is forecast to be $14.5 billion in June 2008 rising to $29 billion by 2012.  

Tax Cuts Tax cuts will start from 1st October this year. From then the 15% rate on income below $9,500 changes to 12.5% on income up to $14,000 and the tax thresholds change from $38,000 and $60,000 to $40,000 and $70,000. The thresholds rise by 2011 to $20,000, $42,500 and $80,000.  

Family Tax Credits The Family Tax Credit, which is based on the number and age of children, will increase from 1 October 2008. The inflation adjustment due next year has been brought forward. All 371,000 families who qualify for Working for Families will benefit from this change. The family income threshold will also be increased to take account of inflation. This means that at any level of income above $35,000, there is an extra $7 per week boost to Working for Families tax credits. The Government has said that a two-income family on $65,000 a year with two children gets an extra $42.65 a week in October this year due to the combined impact of tax cuts and improvements to Working for Families.  

Health Health spending has been allocated $3 billion in Budget 2008 ($750 million per annum). This represents again one of the largest budget allocations. The most significant allocation is the $2 billion inflationary adjustment to DHBs for increased costs in goods and services. DHBs also received $172.3 million of financial incentives to realise efficiencies and progress health targets. There is $160 million, over four years, for elective surgery to reduce waiting lists was announced earlier in the week. A somewhat unexpected but welcome announcement is $60 million “to build a better workforce”: $37.6 million to provide staff training including GP training, $10.4 million to extend the Pacific Provider Development Fund and $12 million to improve the capability of the Maori nursing workforce. The Primary Health Care Strategy has had $80 million allocated over the next four years, which includes reduced co-payments of prescriptions sourced from secondary care facilities, for people enrolled with a PHO, and prescriptions sourced from out-of-hours doctor visits. There are number of health conditions and projects that have been allocated funds to make up the bulk of the $3 billion allocation. The largest of these is the $164.2 million, over four years, for a major immunisation programme to fight cervical cancer. $28 million has been allocated over the next four years for programmes that focus on ensuring higher-quality care and quality improvements.  

Public Sector There is some additional funding for the Department of Conservation. Also there is $216.3 million capital for the replacement of Mt Eden Prison, $205.4 million for research and development on top of the $700 million for the NZ Fast Forward Fund, $91.7 million to recruit additional probation officers, $6.3 million over two years to address the pressure on Auckland courts, $23.8 million is provided to increase the services of the Maori Trustee, $5.3 million to assist the Office of Treaty Settlements to meet the 2020 settlement target, $10.9 million for Radio New Zealand, and $4.4 million for the NZ Symphony Orchestra.  

Skills, Industry Training and Tertiary Education There is $168 million over 4 years to support the Unified Skills Strategy which is a partnership between the CTU, Government, Business New Zealand and the Industry Training Federation. Most of this new spending is on language, literacy and numeracy initiatives – mainly for workers. Industry Training Organisations get an extra $32.6 million over 4 years – in line with CPI. The budget has made investments into training, infrastructure and research in the tertiary sector including $591 million over five years and $15.5 million capital for universities and polytechnics.  

Compulsory Education The 5% increase in school operational funding, effective from January 2009, was announced pre-budget. This increase includes the component to assist schools with the cost of Information and Communications Technology (ICT). It therefore doesn’t deliver on expectations and hopes for increases and targeting of school-support staff which will be a major concern for education sector unions. The 2005 commitment to reduce the Year 1 teacher/pupil ratio to 1:15 has been met with $182 million in operating funding and $33.5 million in capital funding. $1.8 billion over five years is identified in the Budget ($619.1 million in Budget 2008 and the remainder from Budget 2007 and Budget 2009) for teachers’ wage settlements and key collective agreements.  

Early Childhood Care Education An increase to the early childhood education (ECE) annual cost adjustment brings this sector in sight of delivering on promises to meet staffing levels and salary increases for early childhood education teachers. $63.6 million has been allocated over four years in operating funding. This will increase the ECE funding subsidy, Free ECE and equity funding rates to reflect services’ costs increases; increases in the provisionally registered teachers support grant to reflect salary increases, and; includes funding for limited attendance centres.  

Student Allowances Access to student allowances has extended with an increase of 10 percent to the parental income threshold. Students whose parent’s combined income is less than $50,318.22 per annum will be eligible for a full allowance from 1 January 2009. 

 

Home Insulation Over the next four years $6 million will be allocated for 32,000 insulation fit-outs in the homes of low-income families (on top of the $22.4m announced for fit-outs in state houses last week). A further $5 million is committed to an interest-free loan scheme for middle income families to fit out their homes.  

Housing Following the $35 million announced last week over the next two years to be invested in a shared equity scheme, there will be $37.8 million spent over the next three years to develop the Hobsonville site in Auckland and a $220 million fund set up to help Wellington City Council modernise its affordable rental housing over the next decade and a half.  

Superannuation Reduction in personal tax rates will increase fortnightly superannuation payments for a married couple by $45.88 and $23.84 for a single superannuitant living alone.  

Community Organisations In February $446.5 million was announced to fully fund contracted essential services delivered by community organisations.  

Broadband There is additional $325 million of operating funding over 5 years and $15 million capital funding in the coming year to support the rollout of high speed broadband. This includes the setting up of a $75 million contestable fund over five years for rural broadband. 

Financial Education There is $7.8M for financial education in the workplace over the next four years.  

Contingencies The Budget refers to a number of new or changed quantified or unquantified risks. Examples are $105 million capital on border management, impact of Schools Plus, up to $84 million a year for school property, restructuring the rail industry, not-for-profit housing, funding for Courts in Greater Auckland, and five year action plan for out of school services.  

Summary This Budget is about personal tax cuts – and not a lot else. It shows that tax cuts even of this magnitude are costly - $2.7 billion a year. The forecasts show that the Government will run large cash deficits over the next 4 years, and the room for significant increases in social spending is constrained by lower revenue increases than previous years, and the tax cuts.