There is no surplus

Radio NZ reports:

Tax cuts could soon be on the way with the Government opening up its books today revealing Crown accounts are tracking along nicely.

“We’ve always said, if economic and fiscal conditions allow, we will begin to reduce income taxes,” Finance Minister Bill English said.

In Year Eight of this National government, the idea of a budget surplus is a joke (and not just because it’s been completely engineered by the catastrophic Auckland housing bubble). They’ve promised it for nearly a decade. They’ve fiddled the books to make the numbers come out OK. They even declared a surplus in the middle of the financial year – that’s how desperate Bill English has been to pretend that everything’s going along just fine in New Zealand.

The truth is, there is no surplus.

When Housing New Zealand says it simply cannot build the houses we need for families who are living on the street and in their cars, how can we have a surplus?

When District Health Boards insist that they cannot afford to deliver safer rosters for junior doctors, or new equipment, or decent pay rises for support staff, how can we have a surplus?

When public schools, built on the promise of free education for every Kiwi kid, have to demand “voluntary donations” from parents in order to keep operating, how can we have a surplus?

When sick people have to run public campaigns ask for donations to fund the medicine they need, because Pharmac has to prioritise which life-saving treatments it subsidises, how can we have a surplus?

When the people who clean the ministerial toilets in the Beehive aren’t paid a living wage, how can we have a surplus?

If you aren’t providing the services you are contracted to do – in this case, maintaining the public services and promoting the welfare of New Zealanders – and declaring a profit, you’re not running a successful business. You’re running a Ponzi scheme.

This surplus isn’t a success for our government. It is a sign of their failure. It shows they do not understand what their job is: to look after the people of this country. To govern us – not bean-count. It shows they do not understand what success looks like, because success should never be measured on a spreadsheet while children are dying of preventable diseases in mold-ridden houses.

There is no surplus – not if you care about people more than money.

Escaping the beartrap: good policy costs money

I wrote a while back about Metiria Turei’s 2016 state of the nation address, and my reservations about the idea of an “independent” policy costings unit. I said:

I want to like the idea of a policy costing unit. But we have to let go of the myth Treasury is an independent, non-ideological body. Look at the endless arguments about how we measure unemployment, poverty, economic growth. “Objective truth” doesn’t exist in politics.

What this means – even if you could get half-a-dozen economists in a room who could actually agree on a simple numerical breakdown of policy cost, even if money were the only thing that matters in policy – is that a central policy costings unit would have zero real effect on political debate. And as long as we’re bringing “my facts are the best facts” to a “my leader is the coolest leader you’d have a beer with” fight, we’re going to lose.

But there’s another fundamental issue at stake (which is why I’m not feeling too awkward raising this weeks later, when the policy has already made its ripples and been drowned out by the TPPA, Waitangi Day, and yes, that novelty cock-and-balls.)

This is the great millstone around the neck of the left: we keep buying into the idea that money is the most important thing in the political debate. So we keep making reassuring noises about balancing the books and delivering a surplus and careful management of the economy.

How’s that working for us so far?

Labour’s tertiary education policy is “fiscally neutral”. That was emphasised in its announcement. Did that stop the first question, from every journalist, being “what will it cost?” No. Does it mean that we would only be getting two years’ free tertiary education if the numbers didn’t add up? I hope not.

We’re trying to avoid the bear-trap of being labelled profligate spendy lefties without realising it’s already got our legs, it’s had them for thirty years, and it’s not letting go. And yet we drag it along, agreeing with National that public spending must be reasonable and public servants mustn’t be allowed nice things like a bit of pounamu or a hair straightener in the bathroom.

When we attack any “overspend” – staff gifts or Christmas parties, new fixtures in the bathrooms – we may grab headlines, but we also reinforce in the public mind that government spending is wasteful.

People don’t hang around to get to the second part of the argument – this spending is ridiculous because of the context in which so many public services are being ground away into nothing.

They’ll accept that letting health funding stagnate is a bad thing. Everyone knows we need more doctors and nurses. Everyone has a hospital horror story. But as long as we’re waving hair straighteners in their faces, all we’re saying is: the rest of it is rubbish. We’re not showing that what’s needed is a massive increase in public spending – on health, on education, on social support, on infrastructure.

“Just take away the hair straighteners”, they’ll say. And the Tories will cackle into their merlot as we make it even easier for them to say “right, public servants don’t get pay rises or hot water, gotta tighten those belts some more” next time they’re in power. (Shortly followed by, “we told you the public service was useless; better privatise the police force!”)

But it’s not sustainable. You can’t keep slapping duct tape on the broken waterpipe forever. It might hold for a while, it might save you in the costs of a replacement for now, but eventually the whole thing has to be properly fixed, and it only costs more the longer you wait and the more damage you let happen.

So we have an difficult decision to make. We can smash the beartrap. We can start making the argument that public spending is a public good. That the only downside of massively increasing our health and education budgets is that Kiwi kids will be a healthy little pack of nerds and the accountants will get sulky. That we might put the books in the red, but that’s because we have to repair the foundations to rebuild the New Zealand we all dream about.

Or we can keep doing the same thing. We can try to reason with the beartrap, telling ourselves that if only we show it enough graphs about Labour government surpluses it’ll change its mind and let us go, and the nation’s political editors will stop yelling “tax and spend!!!” every time we blink.

You know what I’d pick. I’m all about bold, unapologetically leftwing politics. How ’bout you?

The surplus lie

Andrew Little delivered his pre-Budget speech in Wellington yesterday, and the pullquote everyone’s talking about was some seriously no-nonsense stuff:

…[National’s] promise was clear. Their good economic stewardship would see us in surplus.

And now they’ve abandoned their promise.

National’s talk now is about how achieving surplus was an “artificial target” and that getting a surplus is “like landing a 747 on the head of a pin.” A lot of effort has gone into glossing over the broken promise. But I see it for what it is – one of the biggest political deceptions in a lifetime.

You can quibble the semantics, of course – is it not really a lie if Treasury figures predicted we’d be in surplus? Or is it still a lie because Treasury’s predictions are often laughably optimistic and wrong (when National is in power, anyway)? But come on, whose word can we rely on regarding the Budget if not Treasury’s?

The room to quibble is what makes it a lie.

Balancing a government budget is nothing like balancing a chequebook, and not just because ordinary citizens can’t print their own money at will. There are so many moving parts, so many tricks, so many points which can be manipulated ever so slightly

That’s why it was ridiculous for Bill English to say even a $1 surplus would count as “significant“. When you’re managing nearly $100 billion in revenue and spending, there’s infinite room to tinker. You can make all kinds of assumptions about how much tax will be collected. And we’ve seen the tinkering: the delay in lowering ACC levies. The interest-free “loan” to the NZTA which conveniently counts as an asset, not spending. The assumed cuts to EQC’s insurance liabilities.

The lie isn’t really about whether-we-achieve-surplus or whether-we-don’t. The lie is everything that National’s constant promises of surplus implies: that a surplus is objectively good; that a surplus proves their superior economic management abilities (but a deficit is all Labour’s fault; they had nine long years to deliver surpluses for Bill English); that a surplus proves things are back on track, the economy is doing fine, things can’t be that bad – so obviously inequality’s a myth, there’s no housing bubble, Christchurch is hunky-dory, we don’t need state houses or workers’ rights or any of that rubbish, and if you’re very, very good you’ll get jam tax cuts tomorrow.

A surplus proves National are right about everything.

That’s the lie we’ve been sold, time and time again, by this government. And given the harm it has done and is doing to the New Zealanders who can’t afford a first home, much less an investment property, who can’t find secure employment or buy the kids a new pair of winter shoes, who are living in cars and queuing for foodbanks at 3am – I don’t think it’s too strong to call it one of the biggest political deceptions of our lifetime.

John Key’s weird “gotcha” moment on ACC

Andrew Little was pushing the Prime Minister today on the fact that he’s ripping off workers and businesses to the tune of $350 million in ACC levies in order to generate his much-promised, never-delivered budget surplus.

Desperate to throw mud any way he could, Key took this patsy question from Tim MacIndoe:

 

Here’s the release in question.* That’s right, folks: apparently Andrew Little is a hypocrite because in 2009 he said levies were being raised unnecessarily high in order to prop up National’s political agenda, and in 2015 he’s saying levies are being kept unnecessarily high in order to prop up National’s political agenda.

Breathtaking, isn’t it? A real knockout punch, from the OTT reactions of Macindoe and Ross sitting behind him.

But maybe that does sound like hypocrisy to someone like John Key, to whom going back on his previously-held positions is second nature, whether it’s promising to resign over mass surveillance of New Zealanders, promising to apologise to victims of sexual assault, or promising he hasn’t had contact with Cameron Slater.

The surprising thing is what a terribly weak attack line this is. Since Key and his office lost Jason Ede it’s like all the pizzazz has gone out of the dirty politics machine.

*And no, there’s no conspiracy in me posting that link; it’s the top result when you google “andrew little acc levies epmu”, so calm down, Chaos & Mayhem.

Little: ACC levies need to come down

Most of the attention on today’s episode of Q&A focused on the two biggest issues in NZ politics at the moment – the Northland by-election and Nicky Hager’s most recent GCSB revelations.

But in Andrew Little’s interview with Heather du Plessis-Allan – amongst her blatant, failed attempts to get him to say “I’m telling people to vote for Winston” and “I support 90-day trials” – he raised another issue which highlights some of the weird hypocrisies of our present government.

Labour has an independent report which estimates that business and workers are being collectively overcharged about $350 million every year in ACC levies. ACC is currently running robust reserves, much of which is invested overseas. If some of that unneeded cash were returned to the pockets of people and businesses, it would create enough economic activity to generate 700 new jobs.

For workers at the bottom of the heap, or small businesses running on tight margins, even a few hundred dollars extra per year could be a significant factor in keeping their heads above water.

The irony is this: the Government’s repeatedly had advice – from that well-know communist thinktank, the Treasury – that ACC levies are too high. They’ve taken baby steps towards it, with cuts totalling about $115 million coming into force in April.

This is the National Party – the party which slashed the top tax rate during a recession so its wealthy backers could buy more investment properties, the party which campaigned hard on the idea that Labour wanted to introduce “FIVE NEW TAXES!!!!” – refusing to cut an unnecessary cost which would actually help families, businesses and the wider economy. Purely by coincidence, those unnecessary levies (as Grant Robertson did back in February) are probably helping to keep the Government’s books in surplus.

It kind of tells you everything about their priorities, doesn’t it?