Scoop Election 08: edited by Gordon Campbell

Keeping The Good Life Going For The Middle Class

October 29th, 2008

Gordon Campbell on National’s welfare plan for the middle class unemployed

On Friday, the National Party will unveil the details of its plan to pay the mortgage and living expenses of those middle-income earners who may lose their jobs next year because of the economic recession Reportedly, the money to do it will come from the fees paid by lending institutions for the government’s bank deposit guarantee scheme . (Ummm. So shouldn’t that money be being kept aside and invested for that purpose ? Just in case like, its needed ? )

Strange days, for sure. State compensation for the mishaps of the free market is usually called socialism. Little did we realise that National’s hidden agenda included John Key’s secret ambition to become the Hugo Chavez of the South Pacific. Think about it. Think about it if you have been getting by on a low wage, or (if you could afford one) trying to pay off a mortgage. That plight has never sparked much compassion before in Key – who once famously described the DPB as “breeding for a business.” No emergency blueprint was rushed from the drawing boards in response to the CPAG Report earlier this year that showed 200,000 New Zealand children are currently living in poverty.

Yet now, on the eve of an election, and in the face of yet-to-be realized job losses among the middle classes, an Action Plan is being developed by National.To help out middle income people who had unwisely – and/or unluckily – chosen to over-commit themselves in the belief that a rainy day would never come. When poor people act similarly they are called feckless or irresponsible – and they tend to be subjected to mandatory conditions under pain of the loss of their entitlements. Since the scrapping of the Special Benefit, those in need have found it harder and harder to access any support to tide them over.

Choice is, of course, a favourite centre-right term. It usually has the twin dimensions of opportunity, and responsibility. Not so much anymore, it seems.

On Friday, we should get from Key the full details of his scheme. We will learn who is deemed eligible for support and for how long, how the scheme is to be funded and how it is to be paid back. In the meantime, something already exists to help the vulnerable and the unlucky through a recession – it is called the benefit system. People who lose their jobs can access it. Rather than create a ‘business class’ category of state dependents curtained off from the hoi polloi, Key could simply increase benefits, and make them more flexibly available. Such a sensible and inclusive response however, would probably be ideologically unacceptable to National’s base.

Outrageous. As Sue Bradford of the Greens has pointed out. Key could start by abolishing the stand down period for the dole. He could lift the abatement level at which extra income reduces the benefit, to above the $100 cut-in period that National is currently proposing. He could raise benefits to ensure that every family without a job during the recession gets adequate support for their living expenses, and he could re-establish the discretion formerly held by WINZ staff to provide a Special Benefit – and which was removed by Labour under the harmfully rigid Temporary Assistance Support scheme that replaced it. These are simple, quick and tangible things that Key and Helen Clark could both be promising to do right now, in the face of the recession. Why aren’t they?

With startling speed, the financial meltdown and the recession have changed the entire social welfare environment. As recently as August, Key was preaching a tough line on benefit entitlement, driven what he called by an “unrelenting focus” on work. Those jobs are now disappearing at warp speed. Back in August, National promised to enforce mandatory work requirements for (a) those on the DPB once their youngest child turns six (b) at least 5,600 current sickness and invalids beneficiaries, and (c) on the long term unemployed, who would be forced to accept whatever ‘ suitable” job offer is made to them, or else have their benefit cancelled.

Now however, the likely loss of jobs in the recession seems to have motivated Key to create a special compensation package for the middle class unemployed. He can’t have it both ways. If the recession is going to bite in the way he is anticipating, then this is plainly not the time to introduce the punitive August package, and he should now abandon it.

Conversely, if he retains the tough line on beneficiaries regardless, he surely can’t make a credible case that people who earn more – and whose children are not ( yet) living in poverty – are somehow more deserving of emergency state support than families who have been living in poverty throughout the recent boom, let alone in the current recession.

A disproportionate number of those families currently living in poverty are Maori. What does Taraina Turia think of the plans by her new friends in National to enforce tough welfare conditions on her constituents, while rushing to the aid of the middle class ? She better get used to it. This is the sort of thing she may well have to rationalize over and over again, during the next three years.

My own hunch? Key is likely to try to square the circle. He is already saying the support offered will be in the context of “a wider framework of getting people back into work”, and that those who lose their jobs in the recession will receive support for only a limited period of time.

That rings a bell. The National Party has long wanted to impose a term limit on benefit entitlement. This election, are we going to see a punitive term limit policy enacted for everyone on a benefit – yet introduced under the guise of compassion for the victims of the recession? Indeed, Friday’s announcement will be an interesting one.

Gerry Brownlee, meet Winston Peters.

Yesterday, there were two competing stories in play about ethics, abuse of power and conflicts of interest. One was about Winston Peters ( again!) and the other about National Party deputy leader Gerry Brownlee. Such things do have a habit of emerging in pairs. Last time round, Peters was hammered over his evasions and convenient bouts of forgetfulness over the Owen Glenn donations, while John Key got off virtually scot free for his evasions and convenient bouts of forgetfulness over his Tranzrail shares.

Well, déjà vu seems to be happening all over again. Peters, judging from the official MFAT papers released yesterday, did support Glenn in his quest to become honorary consul in Monaco. So much for Peters’ comments to reporters in February about his role : “ The minister doesn’t get in before the process has even started and give his view. What sort of ministry do you think I am running? The best thing that Peters could say was that the timing seems a bit off. The efforts revealed in the MFAT documents – if they were supposed to be taken as a quid pro quo for the Glenn donation were made in late 2005 – while the inquiries in the official papers date from August 2007.

Circumstantially though, it adds to the pile of evidence that Peters’ actions in this affair were willfully misleading, and reprehensible.

So what then are to make of Gerry Brownlee? Like his leader, did over Tranzrail, Brownlee seems to have abused parliamentary powers to seek information and a response by government, over matters in which he held a pecuniary interest, undisclosed. The Standard website broke the story on the weekend, citing these examples of parliamentary questions asked by Brownlee, while he held an (undeclared) stake of Contact Energy shares:


Gerry Brownlee: In the light of that answer, why has Contact Energy put on hold its combined-cycle gas plant planned for Otahuhu [Hansard,8 Oct, 2002

Here is another from 2003

Gerry Brownlee: Can the Minister confirm that the Government is considering establishing a systems operator who will buy and sell all generated electricity, doing away with the market and destroying all incentives for investment in new generation that we desperately need?

And one more from 2003 :

Gerry Brownlee: Is the Minister aware that similar comments from the Prime Minister last week wiped millions of dollars off the capital value of Contact Energy; can he tell us whether he has discussed those threats with the Minister for State Owned Enterprises; and can he also tell us how bringing generators to their knees helps the current crisis?


That last question in particular, does sounds like the lonely wail of a shareholder in pain, not like a parliamentarian working for the common good. Surprise, surprise though – only one of these two politicians has received front page, head of the bulletin attention – and it wasn’t the big, chunky guy who sat in judgement on Peters in the privileges committee.


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    1. 15 Responses to “Keeping The Good Life Going For The Middle Class”

    2. By James on Oct 29, 2008 | Reply

      Good show Gordon! Entertaining, objective and factual as usual. Especially the former…

      “State compensation for the mishaps of the free market is usually called socialism. Little did we realise that National’s hidden agenda included John Key’s secret ambition to become the Hugo Chavez of the South Pacific.”

      THAT one got a belly laugh out of me. Thanks, much appreciated.

      Let us all pray that Brownlee doesn’t get his grubby hands on power once again. How ironic National’s campaign has been, so desperately trying to paint Labour as “corrupt” and “untrustworthy” over minor issues like speeding and painting, when they have been engendering such serious conflicts of interest as commenting on companies in parliament they own shares in – Brownlee and Key both.

    3. By Jane on Oct 29, 2008 | Reply

      “are we going to see a punitive term limit policy enacted for everyone on a benefit – yet introduced under the guise of compassion for the victims of the recession?”

      Thank you, Gordon, for bringing to our attention the Orwellian double speak of National. They always have a hidden agenda. It’s the only thing about them we can trust.

    4. By Brian Marshall on Oct 29, 2008 | Reply

      How’s this for a novel idea….
      Let’s give something back to those who paid taxes in their hour of need!
      It may be radical like increasing government funding to private schools, (oh no I hear you cry – Let those rich pricks pay twice)….
      As for 200,000 children living in poverty, that is socialist claptrap based on children in families earning less than a percentage of average income. There is only minimal real poverty in NZ. “Poverty: 1.The conditional of being without adequate food, money etc” (Collins english dictionary)

      As for Gerry Brownlee’s shares in contact. I imagine he has a varied share portfolio and in NZ there is only one private power company on the sharemarket. He shareholding isn’t very large and your examples of his questions are not very likely to influence the price of the shares or the company’s profits one iota.

      It’s time you fessed up about your MAJOR leftwing bias and gave up your pretension to being impartial. (For example, are you a member or former member, or have worked for any political party??). Then people can judge you and your collumn with that in mind.

    5. By Dave McArthur on Oct 30, 2008 | Reply

      Good column Gordon.
      In my latest blog I discuss the fundamental drivers of the credit collapse.

      In brief I apply a few fundamental principles of physics to our uses of resources. I quote NYU economist Nouriel Roubini description on how the million dollars invested by a wealthy person with a prime broker is leveraged off to create $100 million dollar investment. I then point out how this delusion is based on an even greater delusion, which is that “energy = mineral oil gas”. Most of the original million is derived from wasteful uses of mineral oil and it is converted into air pollution.

      In this context it is easy to see that if current policies such as the ETS, KiwiSaver, car/airline investment and the recent bank deposit guarantee scheme continue then the average person in New Zealand is going to experience a very long and deepening recession. Without a major change in policy then it almost certain our money traders will be calling on the taxpayer for even more billions of dollars in subsidies to stay afloat. The guarantee scheme funds will simply not be there for John Key to pour even greater subsidies into the pockets of the higher income groups to sustain their current lifestyles. Except, of course, if he sells off our few remaining assets and severely cuts back our investments in education, health and other civic systems.

      If his idea of “economic growth” is an extension of the Labour Administration’s approach, which has been to build McMansions on scale and encourage overseas folk to buy up NZ large, then the rest of us will be out in the same gutter as a whole generation of our young people now find themselves in. We can start packing our bags as we get priced out of homeownership too and are forced to make way for wealthy refugees fleeing the devastation they have created in the UK, the USA etc.

      And of course the policies of the last two decades mean we are now directly in line for an IMF takeover and can expect interest rates at least matching that of the 1980s (18%) that we experienced after the 1979 upwards blip in the price of mineral oil.

      Interesting that Contact Energy should feature in this article too. We can avoid an extended economic depression if we start investing in intelligent community uses of our local electrical, carbon and solar potentials. Unfortunately the Electricity Industry Reform legislation forbids this and it cannot happen while corporations such as Contact Energy are given dominance over our decision-making processes. Such a pity. Inflation, poverty and social conflict are not much fun.

      Declaration of interest: I have owned Contact Energy shares and was a Contact Energy customer until I realised what a devastating impact this corporation model and supporting legislation is having on the well-being of New Zealanders.
      Other declaration: I have voted for both the Labour Party and the Green Party in the past. Their endorsement of the Emissions Trading Scheme with its vast degradation of our stewardship, sovereignty and equity means neither party receives my vote this election. If you need to put me in a box, then know I firmly believe in the Principle of the Conservation of Energy and the need for each of us to accept our role as a steward of our resources.

    6. By brian marshall on Oct 30, 2008 | Reply

      Well done Dave for declaring your interests, even if I disagree with your reasons for the credit crunch.

    7. By James on Oct 30, 2008 | Reply

      Brian Marshall you have no grounds whatsoever to call bias on Gordon Campbell based on what you mentioned. His statistic about children in poverty is based on a CPAG report, which says 185,000 NZ children in 2004 were in families on benefits in “significant hardship”. Dismissing damning statistics as this as “socialist” is callous, and does much more show your bias than Mr Campbell’s.

      As for Mr Brownlee… I don’t believe I need say more than that this also says more about your bias. Mr Brownlee failed to declare a clear conflict of interest, just as Mr Key did, simple as that.

      Your claims of bias are simply laughable when stacked it against the massive pro-Natinoal party bias displayed every day by most media sources. They have been sensationalising the “dirt” on Labour dug up by National and Act for the past several years. Now is hardly the time to cry foul when the tables are turned.

    8. By Ed Spark on Oct 30, 2008 | Reply

      Why ignore the biggest rip off I have ever seen. All Kiwisaver contributors will lose six figure amounts.
      This is scam that will take away retrospectively the contractual rights of those who have joined Kiwisaver under the current conditions.
      What does the “key” change mean on retirement?
      You are all arguing about the tail of the elephant yet cannot see the whole animal.
      The following figures are what a 30 year old will get on their savings at retirement (65).
      Income $30,000 Age 65 Labour $247,642 National $114,674.
      Income $40,000 Age 65 Labour $283,560 National $167,122.
      Income $50,000 Age 65 Labour $341,550 National $199,099.
      Income $60,000 Age 65 Labour $399,540 National $228,751.
      Income $70,000 Age 65 Labour $457,530 National $258,276.
      Never will so many be ripped off by so few!
      It is sad that so many are deceived by the words Tax Cut. Snake oil? You betcha!
      Part of the wage gap with Australia is in part caused by their employers paying 9% into workers superannuation there. Against that 2% is laughable and 4% is not much better.
      The National Party once more is seeking to reduce real wages to give NZ employers another advantage.
      Do you not think that to change the scheme for all existing holders goes against the practice of changes only applying to new entrants?
      This has been the case with other schemes I have had experience with.
      If let them do this any scheme or benefit can be changed at will.
      On top of this The National Party seek to direct money held in other Crown funds according to their wishes.
      This our money held in trust for when it is required!
      Managers of these funds at the moment are required to get the best return.
      Who stands to benefit? Ordinary New Zealanders? I think not. The wealth of this nation is about to put back in the hands of a few.
      Be afraid, be very afraid!

    9. By Margaret Swift on Oct 31, 2008 | Reply

      John Key calls Labour desperate, what is this, if it’s not desperation. he’s donkey deep in it.
      Howcallous totry to win votes by ignoring the low income workers who really need help.
      I am also a firm believer that the world is now in the dying stages of this Patriarchal, money is king, 30 year saga.
      Nothing is going to break down, life will go on as usual but the free markets have not worked, even America, the greatest free market of all has become a socialist government, the people now own the banks, who would have thought that.
      Moderation is the key(sic) word now and Micheal have that under control. Why put it all at risk.Why risk something thats strong and healthy for something that has already had its day and is now having it’s last dying gasp.
      Labour’s the way ahead for a more inclusive caring society where people look out for each other instead of onlycaring for oneself then complaining that those who you do not care about have not cared enough to make this the kind of society you want to bring up your family in.

    10. By brian marshall on Oct 31, 2008 | Reply

      A simple look at the Gordons opinion pieces over the last 6 months show a very anti National bias.
      A balance approach should include any good points and bad points and then makes an opinion.

      Say like that John Key’s employer contribution changes may reduce savings, but also reduces the payroll tax on employers and may reduce the finacial costs that employers face when employing new staff and may lead to more jobs being created.
      Point of facts people. It’s EMPLOYERS, NOT WORKERS who are having to make contributions for NO return. Employers don’t get to keep their money.

      James, That report quoted defines poverty in a socail engineering way, not REAL POVERTY as defined in the dictionary. The definition of poverty that has North Korea as having less poverty than any other state in the world because there is less income inequality is fundimentally flawed.

    11. By James on Oct 31, 2008 | Reply

      An “anti-National bias” if compared to say (representing most of NZ’s major newspapers), who take the National line on just about every story, using headlines parroting what Key says, and giving National the last word on any Labour-related policy. A recent prime example is this “H-bomb” rubbish, repeating Key’s line that this “bomb” Labour was going to “drop” has “backfired” (poorly mixing metaphors), is “naughty”, “dirt digging” etc. All those words in quotes are used, and all are from Key.

      Nowhere is it mentioned that Labour has not actually announced or released ANYTHING about this investigation, the only actions towards the press has been Mr Key jumping on it and calling Labour names. Nor is it mentioned that it actually might be a GOOD idea that we know something about the business related past of this man who seeks to be Prime Minister, and we deserve to be well informed. Bias with your tea anyone?

      By comparison, Gordon Campbell is reporting the facts far more effectively and impartially.

      Your compassionate passage about Kiwisaver repeats the word “may” an awful lot. Employers don’t get NO return, they get satisfied employees who have good working conditions. I also note we still have record low unemployment in this country. With current economic conditions this is bound to change of course, but I don’t see this 2-4% contribution to Kiwisaver being slashed by National as being a major factor in employment.

      As for “social engineering”, that’s your words and I see no evidence of it. “significant hardship” is not something to be taken lightly or belittled. The fact is that from 85 to 05 the poverty gap has been getting bigger, and this is a major problem for New Zealand.

    12. By pinky on Nov 1, 2008 | Reply

      National’s employment contract proposals are being kept very quite . Workers should remember just what happemed last time the Nat’s were in. Key’s money dealing past is shady to say the least , was he not resposible for the sacking of thousands of workers by signing an
      agreement that mafe him millkions of dollars.
      WSedo not ned a banker and money dealer for our PM. They have done enough damage over the last few months.

    13. By Sonya Swift on Nov 2, 2008 | Reply

      I agree with Margaret!

    14. By brian marshall on Nov 3, 2008 | Reply

      James, you must live in a happy little country if you don’t think Labour were digging for dirt. That country can’t be NZ since if you looked at what Labour have been doing since last year. (Trevor Mallad calling out H fee in the debating chamber for example), Sending a undercover spy to secretly record various national party members at the conference earlier this year (which the media reported as making out that National had a hidden agenda but the comments didn’t actually say anything that contridicted with existing policy and okay I have no proof it was a labour party member but it could equally been a unionist activist).
      Oh and the Labour party president flew to Melbourne to revisit papers which had already shown John Key as not associated with the H fee transactions 20 years ago in the final stages of an election???

      How’s this for a couple of hidden agenda and Social engineering laws, Gay marrage & anti smacking laws. I don’t recall having been asked for my opinions at the ballot box.

      We need a change of government. One that is free from the corruption and isn’t into taking robbing Peter to pay Paul.

    15. By Kate on Nov 5, 2008 | Reply

      Has John Key and the National Party made any indication that they will repeal the repeal of Section 59 (aka the i-can-beat-up-my-kids-if-i-want-to section of the Crimes Amendment Act)? Will they abolish civil unions? No I don’t think so because these laws are fair.

      Also, digging for dirt is one of the jobs of opposing politicians – i think in other days they call it “keeping them honest”. Who else has the time to do credibility checks on politicians. Journalists are supposed to, but I doubt they are given the time, freedom or money to follow up potential dead ends these days.

    16. By Leaked tapes on Nov 7, 2008 | Reply

      I heard that the person who did the stealth taping at the National Party Conference was actually a long time National faithful who has turned due to finding out the real motives of National. To obtain the centre vote to get in, and then do whatever they had planned, they will use ACT as excuse to pass extreme right wing policy. This person also reportedly said, that he realised, National voters only think of themselves, and Labour voters think of themselves and others, that’s the difference.

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