Scoop Election 08: edited by Gordon Campbell

On the lead-up to the Budget

May 17th, 2011

Illustration by Tim Denee – NZ Budget 2011
Illustration by Tim Denee – www.timdenee.com

Throughout his government’s first term, the role of Prime Minister John Key has been to be the bringer of good news, the guy who carries the ‘times are tough but the future is rosy’ message – while Finance Minister Bill English has been the bad news bearer, underlining the need to tighten our belts, for eternity.

Hopefully, both of them remember the last time that National launched an austerity Budget, and Ruth Richardson sent the economy into a near-death spiral. Evidently, Don Brash retains no memory of seeing “The Mother of All Budgets” before, and he’d like to play it again and see how it ends.

The Key vs English contrary impulses are set to collide on Thursday when the bad times are to be painted as being so dire as to justify cutbacks in some big ticket public schemes (Kiwisaver, Working for Families) and require further job losses among public servants – but without snuffing out the recovery that Key keeps telling us is just around the bend and beyond the hill once the combo of high commodity prices, Rugby World Cup spending and insurance money for the Christchurch rebuild begins to work its magic.

Key is used to decking the same objects in wildly different garb, depending on context. Routinely, the level of government debt is touted in overseas contexts by Key as one of the jewels in the crown of the New Zealand economy at only 34% of GDP while – domestically – the same figure is portrayed as a scandal that needs be pared back below 30% as soon as possible.

In essence, Thursday’s Budget will be a collision between ideology – its always a good time to shrink central government and try to drown it in the bath – and a reality that doesn’t square convincingly with the austerity message. At the post-cabinet press conference on Monday, Treasury forecasts – which have about the same predictive accuracy as your daily horoscope – were wheeled out to justify the need for continued vigilance on spending. On Thursday, Health, Education and Justice are to be the only areas to be spared the Zero Based Budgeting freeze on public spending.

Most of the media attention will be focused on how severe the cuts will be to the $2.8 billion Working for Families scheme and how these cuts will be structured. In the NZ Herald this morning, Simon Collins has an excellent piece setting out the four likely options facing the government as to how the tighter targeting of the WFF scheme might be achieved.

These options entail either (a) lowering the income threshold at which the credits abate, and the point at which they cut out completely (b) raising the clawback rate (c) putting a cap on the family size that qualifies for support (d) removing the provisions recognizing the extra costs associated with teenage children. None of these options, it should be pointed out, tidily target the legendary band of well-off WFF recipients who allegedly don’t need their current dollops of taxpayer largesse. Can the Treasury snipers pick off the undeserving, without inflicting collateral damage on the middle class battlers and the deserving poor ? We shall find out on Thursday.

The changes to Kiwisaver are likely to be more brutal, if only because the rationale is even more threadbare. True, WFF is a flawed scheme, one that abandons the families of beneficiaries, but at least it does attempt to compensate for the yawning gap in income inequality in New Zealand. In similar fashion Kiwisaver has been a belated attempt to address our lamentable savings record. The Budget will be seeking to offload more of the related costs onto employers and employees without capsizing the scheme.

On one level the changes are likely to entail a 180 degree reversal of the cuts to employer contributions that the same government recently introduced. How can this zigzag possibly be rationalised? Simultaneously, Key hinted at this week’s press conference that employers may be able to treat Kiwisaver contributions as being at least partially in lieu of wage increases to employees. In other words, the changes are shuffling the shells under which the government is hiding a shrinking number of beans.

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For anyone who missed out on last week’s John Key interview on the BBC Hardtalk programme, here are the links:


Outside the Beltway, I’ve found it alarming how many people seem unaware of this interview. Not so long ago, this sort of encounter would have been re-screened in prime time, on public television. It is a measure of TVNZ’s abandonment of its role as a public broadcaster that we now have to rely on such news being uploaded to YouTube by a member of the public, and promoted by word of mouth.

At times, the interview does look like a very large cat (interviewer Stephen Sackur) playing with and batting around a seriously stressed mouse. It is also a model of how rewarding it can be to watch a polite, persistent and well researched interviewer engage with a public figure. Good television, all around. Shame that such programmes are now an extinct species in this country.

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    1. 15 Responses to “On the lead-up to the Budget”

    2. By Sean on May 17, 2011 | Reply

      At times, the interview does look like a very large cat (interviewer Stephen Sackur) playing with and batting around a seriously stressed mouse.

      Yep. No wonder John Key claimed not to be able to remember that interview – he must have been dazed when Sakur told him a scientist’s report isn’t an ‘opinion’, rather it is a report of someone who investigated measurable facts.

      Not something a New Zealand journalist would have pointed out.

    3. By richarquis on May 17, 2011 | Reply

      A Facebook friend had posted the video, and some of his friends were actually defending Key with the phrase “It’s totally unfair that the interviewer ambushes him with questions like that.” Not only does the emperor wear no clothes, but anyone who points it out is a predator, and must mend their ways. Appalling. The interviewer was actually pretty damn soft with him, and only asked him to answer straight and stick to the facts. His supporters want him to be respected as a leader? Very well, when he can stand up and act like one, perhaps we’ll accord him that. But when he can’t defend his position and must turn to spin and talking points to try and evade simple concepts, he is, quite simply, unworthy of the position, and even more so of the title.

    4. By Hamish on May 17, 2011 | Reply

      Pity when the interviewer mentioned wikileaks he didn’t mention the one when Key kept asking about a visit to meet Obama. He practically pleaded to be able to visit Washington. Seems to me Key just likes to meet world leaders and enjoying being PM

    5. By Stuart Munro on May 17, 2011 | Reply

      It may seem a little tough, but ‘standing up and defending your position’ isn’t quite there for me either. I’d kind of like the New Zealand prime minister to actually do a good job, which might include a bit more in the way of measureably successful economic interventions, and a bit less of asserting the government and treasury is doing a grand job, as the economy disappears down the plughole.

      Sackur made mincemeat of him, and he wasn’t even trying.

    6. By Elyse on May 18, 2011 | Reply

      Sadly, the Hardtalk interview exposed for the whole world to hear (BBC4 radio has millions of listeners worldwide) the phoniness of our country’s clean and green image.
      Key’s ignorance /denial of the reality was embarrassing. He needs only to drive around to Cox’s bay in his home city of Auckland to see the warning signs that any kind of water activity would be hazardous to the health. NZ is at a tipping point and Key is correct in saying that the increase in population has had an effect. Kiwis are in denial about our environment and hate being told what or what not to do, hence the outrage before the last election when the Greens suggested conserving water. How dare they tell us how to save money while helping the environment? Time for kiwis to wake up and notice the smog that hangs over Auckland, among other obvious signs that we are no longer 100% pure.

    7. By Elyse on May 18, 2011 | Reply

      Here’s the link for the HARDtalk website.
      Not a program where a PM from a country with a phony advertsiing slogan can get away with his usual spin.

      http://news.bbc.co.uk/2/hi/programmes/hardtalk/default.stm

    8. By Pete on May 18, 2011 | Reply

      Key’s “smoke and mirrors” was truly exposed. Sackur was nice to Key. Too nice. It becomes obvious that the robust leadership we need is missing and decisions are made without being based in facts and proper research. Let’s hope our country wakes up and sees what is happening before it is too late.

    9. By Kerry on May 18, 2011 | Reply

      Good post, Gordon.

      I’d resisted watching that interview, having seen it posted and reposted all over FB and several other places referring to it. Very LOL.
      The interview really points up how sycophantic TV journo’s are in NZ, and how completely the business interests control what media outlets will print/broadcast. One does begin to wonder if some highly paid broadcasters are backers of Mr Key’s Auckland campaigning.

      Sackur is an intelligent, urbane and thoroughly well-researched interviewer, as one would expect of the BBC. Key comes across as someone who really doesn’t know his own stuff, without the nous to do his own research beforehand into what kind of set-up he was walking into.

      As I read in the comments on another blogsite, ‘Just what were his minders thinking? They should never have let him near the guy!’ – which pretty much sums it up. At the very least his Exec PA should have been preparing better figures than that.
      It comes off as arrogance and manipulation, especially the way he tried to fob off questions repeatedly. Looks like Crosby Textor aren’t so good at media advisory to the PM as they make out.

    10. By Robert M on May 18, 2011 | Reply

      Sackur essentially asked Key what is your vision for New Zealand. Muldoons answer was, reduce the population to two million and don’t change anything. Paternalist, elite rule by the civil servants and political classes has taken the country down. An elitist Foreign Affairs and trade can see other option but lamb, beef and cows.
      The Political classes, bureacracy and medical profession see the aim of government as to keep the ordinary people happy by making ordinary people the priority and not promoting anything that would frighten the horses.
      The essence of the problem is that real change did not happen in NZ in the l950s and l960s until l967. By that time the group A baby boomers born between 46 and 54 had been shaped and beaten down by an insulated, insular isolated anti sex fortress NZ. You see it in the views of Trotter and Laws-they actually think the sort of East German communist society that was NZ until about l980, had merit.
      There is no political option for change in NZ. Banks and Act are the problem not the solution.

    11. By Joe Blow on May 18, 2011 | Reply

      1. Public Debt

      Firstly, public debt is not at 34%. Even after the Christchurch earthquake it was projected to reach 34% of GDP in 2015. We’re no where near that screwed yet. Careful Gordon! Even you’re starting to wrongly publicise their fearmongering!

      I don’t think we’re going to see drastic cuts in spending during an election year. That will come later…

      2. Hardtalk Interview

      Key did better than I expected. Except for the 100% pure probe. Anyone in NZ would have had a hard time defending that trademark! It has been around for 10 years and no one ever questions it in God’s own… Still it really shows just how little effect the opposition is actually having on the current government. Where are the hard questions? Goff can’t ask them because it was the same under Labour? As for the media. I thought that this demystification of our debt situation by Brian Fallow rocked:

      http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10725316

    12. By Joe Blow on May 18, 2011 | Reply

      As an after thought, why have the Greens only attacked the 100% pure logo until now? The only articles they have written on their website up until this interview were:

      “John Key to sell “100% Pure” brand for $36″ refering to the plans for mining in 2010 and more recently “100% Pure not 100% Coal”. I get their point but it’s hardly an indictment for using the logo in the first place. Were even the Greens too afraid to step on this hallow ground…? I think we needed an outsider to point out the obvious. The best bit is that it happened to Key…

    13. By Daveo on May 19, 2011 | Reply

      Simultaneously, Key hinted at this week’s press conference that employers may be able to treat Kiwisaver contributions as being at least partially in lieu of wage increases to employees.

      They already can. My employer did until I negotiated a better deal but for everyone else at my work it didn’t just come out of wage increases, it came out of wages. There was a line on my payslip that read: “kiwisaver employer contribution.”

      You’ll find just about every non-unionised private sector employer does this.

    14. By martin on May 20, 2011 | Reply

      gosh he’s rejecting a lot of propositions isn’t he.

      More ‘gotcha eyes’ on the wage gap with Australia.

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