Saturday 23 May 2015

Let Them Eat Scraps: Bill English's Budget Outflanks The Left By Mollifying The Conscience-Stricken Centre.

Never Mind The Quality, Feel The Love! Bill English's seventh Budget may be weak in terms of economic effectiveness, but politically it's a genuine sand-kicker. Labour's Andrew Little is still rubbing his eyes.
IT’S BEEN 43 YEARS since a National Party finance minister rose to deliver a Budget in which real increases to social welfare benefits were announced. In 1972, the then finance minister, Rob Muldoon, increased government spending by a whopping 16.2 percent – and much of it went to beneficiaries. Of course, the level of welfare spending in 1972 was considerably less than today’s. The unemployment rate, for example, was well below 1 percent and there was no Domestic Purposes Benefit. New Zealand’s generous superannuation scheme still lay in the future. Even so, 1972’s was a particularly generous budget. “That’s it,” Muldoon cheekily informed his non-plussed Labour opponents, “I’ve spent the lot!”
Muldoon’s cheery admission should alert us to just how different the world was 43 years ago. Economic thinking was still dominated by the ideas of John Maynard Keynes, and, as Muldoon would later quip: “Most New Zealanders wouldn’t recognise a deficit if they tripped over one in the street.” Forty-three years later, the National Party Finance Minister, Bill English, has, with considerable reluctance, increased government spending by 2.5 percent – not quite enough to keep pace with the projected rate of inflation and population growth. New Zealand’s economic performance may be one of the best in the OECD, but nobody in 2015 would dream of increasing state spending by 16.2 percent!
All of which gives the lie to those who, like former finance minister, Sir Michael Cullen, insist that John Key does not preside over a neoliberal administration. Because, what Bill English has given with one hand he has ruthlessly snatched back with the other. In 11 months’ time, the poorest New Zealanders will receive a $25.00 per week increase in their benefits – just enough to keep them from the clutches of utter destitution. But, as of 2:00pm on Thursday, 21 May 2015, the Government’s $1,000 kick-start grants to new Kiwi-Saver accounts ceased.
Which is not to say that this budget isn’t a highly successful exercise in political mollification and repositioning. In the run-up to last year’s general election, pollsters were reporting that one of the few questions registering a strong lead for Labour was about which party had the best response to the problem of child poverty. Even among National Party voters there was a clear and rising level of concern over the number of Kiwi kids living in need, and the Government’s response was generally acknowledged to be inadequate. Bill English’s budget measures will, almost certainly, have mollified these conscience-stricken voters of the Centre. At the same time they have blocked-off one of the very few remaining avenues into National territory. Labour will now have to find another way of reaching what it still insists are “soft” National voters.
But how “soft” are these voters, really? Bill English may have surprised the commentariat by increasing benefit levels, but he was careful to ring his $25.00 bounty with new and tougher obligations on sole parents. From the age of just 3 years, beneficiaries’ children are expected to be enrolled in early childhood educational institutions, while their parents go out to work for a minimum of 20 hours per week. Nothing “soft” about that!
Indeed, it was to avoid the charge that they had gone “soft on beneficiaries” (as in “soft on communism”) that Labour, for nine long years, steadfastly refused to restore benefit payments to the levels they were at in July 1991, when Ruth Richardson, in her “Mother of All Budgets”, slashed them by the equivalent of $43.00 in today’s money. No matter how many statistics the academic husband and wife team of David and Liz Craig assembled and presented; no matter how dire the evidence of real and growing hardship among beneficiary families; or even of the alarming spikes in poverty-related diseases recorded by the nation’s public hospitals; the Labour-led government of Helen Clark remained unmoved. It’s neoliberal advisers in Treasury and the Ministry of Social Development insisted that the “incentivising” gap between benefits and wages be maintained – and it was.
By 2015, however, the size of that gap had grown to such proportions that even Treasury was prepared to acknowledge that it might be time to relent – just a little. And, God knows! $25.00 per week is not a lot! Still, no one should be under any illusions that English’s minimal adjustments will do anything to loosen the bars of the cruel poverty trap in which as many as a quarter-of-a-million New Zealand children remain imprisoned.
Many years ago now, at a swanky Auckland restaurant, I found myself seated next to a well-known right-wing journalist. Not surprisingly, we ended up arguing about Rogernomics and Ruthanasia. I asked her this question: “What would you do if you were told that in order to go on receiving all the good things you currently enjoy, you would first have to consent to a person being chained up in a dungeon and fed your scraps?” Well, she hummed and hawed for a while, and then offered me this quite extraordinary reply. It would be alright, she said, because, as she became richer, she’d make sure the prisoner received more food, and that his chains were loosened, “so he could move about a bit”.
If you can be reconciled to that way of thinking, then you will have no difficulty whatsoever in both understanding and endorsing Bill English’s 2015 Budget.
This essay was jointly posted on The Daily Blog and Bowalley Road blogsites of Saturday, 23 May 2015.


pat said...

telling anecdote....sadly many to the right would be perplexed in your recounting the experience

Patricia said...

I guess whether or not the $25 increase is called an increase depends on how it is worded but I heard that for every dollar increase in a beneficiaries income the rent subsidy goes down a dollar. If that is the case then there is no increase. And this requirement for a person to work 20 hours a week! Even if there were jobs, it would take most people at least an hour to get to work, an hour back, (that includes taking and picking up a screaming toddler from child care) all to keep your benefit. What a cruel society we now have. I think I would have another baby!!

Guerilla Surgeon said...

You can say what you like about about Bill English's increase in the benefit, but Labour's attitude towards beneficiaries since Roger Douglas has been a disgrace. It was Douglas who quashed the whole idea of giving beneficiaries enough to actually take part in society, and Helen Clark who refused to let beneficiaries in on the so-called 'working for families' scheme, which was an outright sop to the middle classes, largely because some woman on about twice the average wage wrote a letter claiming she couldn't cope, and was taken up by the media. Now English may have given with one hand and taken away with the other, I'm not sure I know enough to comment on that – but he has raised the benefit.

Funny they always do it a year from today though. Is there a technical reason for this, or is it just another method of postponing the increase in expenditure?

greywarbler said...

Loved your caption. Never Mind The Quality, Feel The Love!

There is a point to consider about parent beneficiaries or law wage workers. In a virtual slave job market - a low job numbers, insecure job, low-age job, abuse of time and anti-social hours job, few rostered hours job. anti-family job market - to drop the threshhold age of child to 3 years is irresponsible and harsh by government. At that age - only just walking, very mother-dependent - it's against the best interests of the child, the mother, and the country. A harsh and stupid policy.

Then, also, to raise required hours to 20, while offering a bit more child care payment is still denying the mother and child the help that they deserve and need.

Mothers and fathers should have to attend parenting classes that they can enjoy and learn useful tips - on what to do when your baby wakes you every two hours, every night, vomits a lot etc.
It is hard yakker coping with a helpless tiny person, and can reduce an adult to a sort of ghost drifting around the house on automatic mode, but actually half asleep, and at their wit's end.

Our inbred charity-based social welfare approach has never fronted up and given parenting the respect it deserves. Parenting classes and home management and practical skills should be what young parents, especially single or solo (divorced), spend their time on with private-public partnerships in providing a few hours of part-time entry-level work to ensure they have knowledge of the workplace, and skills, for when the children are older.

That's what practical and thoughtful politicians would set up if they were committed to having a modern, participating, vibrant, sharing democracy with opportunity for all for social mobility and good living standards. Building that with young parents, not imposing both unreasonable conditions and demands on their heads, crushing and degrading their lives would be the correct action.

Unfortunately we are gripped in a misanthropic miasma of distaste and disdain for those 'who dan't make it'. Inequality is good, fairness and effective organisation in the nation is bad. Too bad for those left standing after the scramble for the reducing number of musical chairs. It's just a game with winners and losers for wealthy players and others with no personal integrity, and they tilt the playing field to their benefit.

aberfoyle said...

The shame of this corporations budget is the manipulation of our social care as a society.We have given a affordable rise to solo Mums and Dads,who will have to seek work after their child turns three years of age.Social engineering by a corporation that when in their first year of chancing and winning control won a election on their fear of the nanny state controlling your being.Social engineering is the caveat of their $25 care for the disposed,has it turned your heads to see that or just that!s the way it is.

Anonymous said...

Not being a parent, I'm unfamiliar with the cost of the "early childhood educational institutions" in which these hapless three year-olds will be enrolled for at least 20 hours per week, but intuitively $25 doesn't seem to be nearly enough...


Anonymous said...

Delightful at the last comment Chris. If we could only remember what our great grandparents were up to we (oh so(too) pragmatic) NZers would all be as staunch as MJSavage: that the govt of a democracy should be a clenched fist for demo-cracy.

pat said... may berate the Clark government for not applying the Working for Families tax credits to beneficiaries but I would submit the "moral hazard" was real.....having been one of the many in that position at the time I will vouch from personal experience that most of the few positions I was offered during that period left me financially far worse off than being on a can argue the prospects of long periods on a benefit and all that that entails but the fact is the vast majority in these situations are living hand to mouth and they do not have the luxury of such philosophy.

Guerilla Surgeon said...

Pat – I'm not sure if you misinterpreted my post all I can't understand yours. Perhaps you could elucidate? All I'm saying is that people who were actually in work got some form of benefit one way or the other through tax credits or whatever, and perhaps some of that money should have gone to beneficiaries. Whereas it went to people who actually had an income, and were complaining that they couldn't cope on it. Some of these were nice middle-class people who it seemed couldn't cope because they had too many children. Or a stay-at-home mother. I was quite surprised because the right regard that sort of thing as "choices".

pat said...

GS "It was Douglas who quashed the whole idea of giving beneficiaries enough to actually take part in society, and Helen Clark who refused to let beneficiaries in on the so-called 'working for families' scheme, which was an outright sop to the middle classes, largely because some woman on about twice the average wage wrote a letter claiming she couldn't cope, and was taken up by the media".....dont believe I have misinterpreted comment was a defence of Clark govs position....will also note that although this may be the first base rate increase in benefits in x amount of years the implementation and subsequent enhancement of the Family Assistance policy did far more for beneficiaries than this programme ever will....and slowed an exodus en masse of skilled workers to Australia

Guerilla Surgeon said...

"Funny they always do it a year from today though. Is there a technical reason for this, or is it just another method of postponing the increase in expenditure?"
From Scoop.

"Because by waiting till April next year Bill English and John Key get to deliver on their promise to get NZ back into surplus on the largely artificial OBEGAL (operating balance excluding gains and losses) basis. They are now forecasting a $176 million surplus for the coming financial year to June 30 2016 - which is roughly what it would cost to increase benefits now and not wait till April 2016."

Someone knows :-).

Guerilla Surgeon said...

"implementation and subsequent enhancement of the Family Assistance policy did far more for beneficiaries than this programme ever will.."


pat said...

How?...the average family on a benefit had an increase of $2550 pa in the first year of introduction (remember these are 2005 dollars)....compared with a little over $1100 pa in 2015 this time round and there was no corresponding tightening of eligibility a la the punitive benefit system there is associated with this regime....

Anonymous said...

First: Has anyone noticed the irony here: a couple of weeks ago Tim Barnett of Labour was recommending benefit cuts to our poorest (of lets say $25 per week) if they didn't enrol (to vote labour), last week Andrew Little was suggesting means testing pensions - ok its not exactly hurting the poor but it creates a poverty trap for poor pensioners who manage to do a little work to make ends meet. And this week National increase benefits by $25 per week and hold fast on the pensions. I'm not sure how anyone can say anything except Labour suck arse how can anyone except the most mindless tribal labourite vote for them.

Second: Chris when are you going to stop whipping the old neoliberal dead horse - its been 22 years since Jim Bolger shot it in the head, in addition to the apostate Cullen declaring it dead we also have Brian Easton:
and Dnyl Mac of the dim post who puts it most eloquently:
I’ve been saying for a while that ‘neoliberalism’ – ie a belief in the efficacy of free markets, the distortionary evil of taxes and benefits and the minimalisation of the state – is dead. There are still a few adherents drifting around the fringes of politics that truly believe, but this budget seems like a good time to mark that in National the doctrine is obsolete.

I guess CHris its just you, Martyn Bradbury and Eleanor Catton who are fighting the rear gaurd battle against the evil neoliberal oligarchs, much like Hiroo Onoda who fought the evil americans for 30 years after the end of world war 2 in some lost islands off the Philippines - good work Chris keep the flame alive.

Davo Stevens said...

Typical Billy Boy Budget; Give with one hand, take with the other. For every $ given to beneficiaries 78c will be taken off their accommodation allowance according the the statistics from WINZ. If their figures are correct it's hardly a gain for them as most beneficiaries need an accommodation allowance to survive.

Chris Trotter said...

To: Anonymous@14:51

If you really believe that Neoliberalism is dead, I challenge you to answer the following questions:

1. Did the Budget foreshadow the repeal of the Reserve Bank Act?
2. Did Bill English signal his government’s intention to resuscitate organised labour?
3. Did he announce New Zealand’s imminent return to trade protectionism?
4. Did he raise the top marginal rates of income tax?
5. Did he abandon his goal of returning the Government’s accounts to surplus?

The answer to every one of these questions is, of course, a resounding “No.” There is absolutely no question of this National Government abandoning the neoliberal settlement of the past 30 years.

For your benefit, however, let us briefly enumerate the key features of that “broad policy consensus”:

1. Price Stability.
2. Labour Market Flexibility.
3. An Open Competitive Economy.
4. Broad-based, Low-Tax Structure.
5. Government Surpluses and Debt Repayment.

To strengthen those key features, successive neoliberal governments (both National and Labour) have pursued at least one – sometimes all – of the following policy goals:

1. The steady elimination of progressive taxation – to the advantage of the wealthy.
2. Permanent downward pressure on both the size and scope of the public sector.
3. Continued privatisation of state assets.
4. Creating incentives for beneficiaries to move off benefits and into training and/or work.

Rather than relying on Cullen, Easton and the Dim-Post, I would urge you to read Philip Mirowski's "Never Let A Serious Crisis Go To Waste: How Neoliberalism Survived The Financial Meltdown." (The first chapters have been written especially for people like you.)