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.

A Gangster's Charter: Bill English's "Social Investment" Budget.

A Gangster's Charter: Just think about everything that lay behind Tony Soprano’s cynical description of himself as a “waste management consultant”, and you’ll have a pretty good grip on what Bill English's 2015 Budget is all about.

 

NEXT THURSDAY, 21 May, is Budget Day. No, don’t yawn, because if the veteran political journalist, Richard Harmon, is right, then “next week will be a defining moment in the third term of this government and a critical point in its campaign to retain power in 2017.”

 

That “defining moment” will mark the commencement of the next great campaign in Neoliberalism’s thirty years war against collectivism and the public sphere.

 

Some will call it privatisation but that’s not really what this next phase is all about. If John Key and Bill English really wanted to privatise the provision of social welfare they would simply shut down the Ministry of Social Development, close all the Work and Income offices, and sell off every one of the country’s 60,000 State Houses to the highest bidder. The public schools and hospitals would suffer a similar fate.

 

No doubt most of the Decile 10 schools would be snapped-up at a good price. The big public hospitals in the main centres would, similarly, attract plenty of interest. But all those Decile 1 schools? Who would want to pour good money into them? And provincial hospitals? Not much scope for profit there.

 

No, what Bill English is planning is something very different from a straightforward reversion to the “night-watchmen state” so beloved by the followers of Friedrich von Hayek and Ludwig von Mises.

 

In any case, it’s doubtful that such a radical step would save the government all that much in the way of expenditure. Casting adrift the poor on such a massive scale would necessitate huge increases in Vote Defence, Vote Police, Vote Courts and Vote Corrections. Much of the money saved by shutting down the welfare state would end up being spent defending whatever replaced it from the ravages of tens-of-thousands of desperate citizens with nothing left to lose.

 

The “Better Public Services Programme” that Bill English launches on Thursday (almost certainly under a new and catchier name) won’t be about relinquishing all state responsibility for the poor, the sick and the young, it will be about funding private entities to provide the services which, hitherto, have been provided by public servants.

 

In English’s own words to the Institute of Public Administration on 19 February 2015: “Testing for spending effectiveness will be core to this process. If we can’t measure effectiveness, it won’t be funded through social investment. We’ll be systematically reprioritising funding to providers that get results.”

 

To anyone who’s been following the commissioning of the new privately-run prison at Wiri, south of Auckland, all this talk of “social investment” and “providers” will sound very familiar. The taxpayers have spent millions on the construction of the Wiri facility, and the Government has just announced the laying-off of close to 200 prison officers from around the country in order to supply it with a core of highly-trained staff, but the actual running of the prison has been contracted-out to the multinational firm, Serco. For the next quarter-of-a-century a private entity will be permitted to extract a substantial profit for the provision of “services” for which the state has, quite rightly, accepted responsibility (without seeking a profit) for the past 200 years.

 

How has it come to this? Why is the National Government preparing to pay (with our money!) the private sector for taking over the provision of services the public sector is still perfectly capable of providing? In essence, the answer is: because in mature capitalist economies like New Zealand there’s bugger-all new profit-making opportunities available to the private sector. Hence its growing interest in “social investment”, a new kind of venture which promises to pay the private shareholder a handsome dividend without the necessity of massive capital outlays for plant and machinery – all of which is supplied up-front by the generous taxpayer.

 

This isn’t capitalism in any accepted sense of the word. It is, however, instantly recognisable to any enterprising gangster as an officially sanctioned opportunity for skimming-off-the-top.

 

A public body contracts a private institution to supply a much needed social service. The latter offers a price – which includes a hefty chunk of cash for its trouble – and then proceeds to utilise every possible means of cutting corners and short-changing its “customers” so that it can (in the unlikely event of being asked) present the public with a passable facsimile of the service it undertook to provide.

 

Just think about everything that lay behind Tony Soprano’s cynical description of himself as a “waste management consultant”, and you’ll have a pretty good grip on what Bill English and his government’s “defining moment” is all about.

 

This essay was originally posted on The Daily Blog of Saturday, 16 May 2015.