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NZ POLITICS DAILY: A dismal balance sheet

A tough budget for families, smokers, kids in paid employment, farmers and students

Bryce Edwards
Fri, 25 May 2012

New Zealand is a tougher place to live in because of the government’s latest Budget.

There are plenty of losers and few winners, leaving a balance sheet that is pretty dismal.
Those badly affected by Bill English’s latest decisions include families, smokers, kids in paid employment, farmers and students, and today there are literally hundreds of articles detailing their losses. Tracy Watkins sums up the bad news nicely: ‘Bill English's fourth Budget pinches the pennies, raids nearly every piggy bank and even plunders the Government's rainy-day fund. No-one, it seems, is safe – even kids with an after-school job have been frisked for extra revenue to help fill Government coffers’ – see: Budget 2012: Cough it up. Similarly, TV3’s Duncan Garner puts it like this: ‘It's the penny-pinching, paper boy Budget.  A million here, a million there. No one walks away from this budget without getting hit in some way.  No matter how small – we've all gone backwards’ – see: Robbing the paper boys to pay the Bills
Details of the bad news can be read in items about the early education cuts (Claire Trevett and Nicholas Jones’ Freeze on funds a 'cut by stealth' to strained centres), clampdowns on farmer finances (Budget targets tax-dodging farmers), school kids losing more of their earnings to tax (Young workers out of pocket), school budget cuts (Stacy Kirk’s Budget brings 'national disaster' for schools), the rising price of cigarettes (Tom Hunt and Andrea Vance’s 10pc a year not enough for Turia), health spending still being inadequate (Matthew Backhouse’s Health spending boost not enough – doctors), more bad news for the housing crisis (Simon Collins’s Non-govt social housing sidelined and Matthew Backhouse’s Government cuts back housing scheme), and overall austerity for all (Claire Trevett’s Small cuts hit 'the poor and middle class).
But the important question is this: Faced with a global economy in a perilous state, could the Government have done much else in this Budget? What and where are the other options? The reality is that responses from opposition parties haven’t exactly been inspiring either, reflecting the fact that while the Government has been criticised for delivering a mean-spirited Budget, all parties recognise that they are constrained by larger economic forces. The global financial crisis is very real, and capitalism is no longer providing the ground for improvements in people’s lives at the moment. If you accept the parameters of global capitalism, then austerity would seem to be the only approach on offer.
Austerity is certainly demanded by economic lenders and ‘the market’ in general. So, did the Budget ‘keep capitalism happy’? Probably. Jamie Gray reports: NZ markets snooze through announcements (which, by the way, is seen as a good thing) and credit rating agency Standard and Poor's has reaffirmed New Zealand’s favourable credit rating. 
The Budget was certainly a bland one and most of the analysis has focused on labelling it as such. For more on this see my Herald online Budget day extra which surveys the ways commentators described the Budget, most of them emphasising its beige or grey qualities. For another take on this, see Mark Blackham’s blogpost which labels it a Plain Pack Budget, because ‘it appeals to the unambitious austerity of the times.  There is no National branding, but everyone knows what is inside; no new money and awkward spending shifts that many people will notice’.
In the wake of yesterday’s budget there are very few politicians, parties, or commentators advocating anything bold or positive. Chris Trotter, in his column today, points to the lack of boldness and bravery saying ‘our present finance minister lacks his predecessor's fervent belief in New Zealanders' ability to make big decisions and absorb big changes’ – see: Bill's bigoted Budget of low expectations. Trotter’s complaint is that everyone’s economic and political horizons have been lowered, which prevents progress being forged. A similar argument is made in today’s Southland Times editorial, So sensible means stark?, which starts off by saying, ‘It wasn't a doom-and-gloom Budget. Just gloom. Utterly gloomy’. The editorial complains that politicians aren’t living up to their promises of being creative and visionary: The public ‘need their elected representatives to put all the expertise the state has at its disposal, and all that visionary problem-solving that we kept hearing about during the election, to use and to come up with at least some of the answers.  It's a glum task scanning the Budget for any sign of that. Even the highlights make pretty stark reading’.
Low horizons also feature in Fran O’Sullivan’s column, A delicate balancing act. Analysing the Budget, she titles it the 'Suck it up Budget' because so many people are negatively affected by the pursuit of the return to surplus. But she says there will be little resentment as ‘the Government has so well conditioned New Zealanders to believe that getting back into surplus should be a 'national' target that there would be little sympathy for bleating by any welfare beneficiaries, smokers, and wage and salary earners who claim to be hard done by through the Budget measures’. Her main complaint about the Budget is ‘that there is no clear economic growth agenda’.
There are some genuinely useful criticisms being made of the Budget by opposition parties. But the alternatives being proffered differ little in political or economic nature from the status quo. Labour’s call to reduce entitlements to retirement income offers something of a point of difference with the government, but at the same time this proposal actually reinforces the logic of austerity. Their proposal is gradually gaining greater approval amongst political players but, again, if Labour gets it’s way, New Zealand will simply be an even tougher place to live in as a result with people spending even more of their lives working.
That Labour’s Superannuation policy is gaining momentum can be seen today in the following items: David Farrar’s National's Super problem, Nadine Chalmers-Ross’ Budget timebomb ignored, and the Dominion Post editorial reports that ‘Mr English now seems to be openly admitting that the entitlement age for national superannuation will need to rise 10 or 15 years down the line’ – see: The Paperboy Budget is a wasted chance.
Some of those opposing the Budget are getting out and protesting – see Student blockade of street ends which is all well and good, but, as with last year’s Occupy movement, there seems a strong reluctance to actually provide alternatives. Similarly, Laila Harre asserts that ‘A zero Budget does not mean zero alternatives’ – see: Returning to the failed policies of the 1980s. Harre says that ‘There is an emergence of new voices and visions. Already future governing parties – Labour and the Greens – have developed common ground around public ownership, capital gains taxes, and interventions for higher wages’. But Harre too seems to gloss over any detail about how this would provide a genuine difference to yesterday’s Budget.
Other useful or interesting items today about the Budget include: Gordon Campbell’s On the Bu
Bryce Edwards
Fri, 25 May 2012
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NZ POLITICS DAILY: A dismal balance sheet