Gerard Otto Facebook: National’s Five Point plan to tackle the cost of living crisis debunked

Not long ago Ryan Bridge asked Christopher Luxon how much rents would go down by if National reversed the removal ( phasing out ) of interest deductibility on rents.

Luxon was caught off script and his mouth gaped as he automatically deflected and blindly pivoted to alternative memorised spin about another topic to avoid the answer.

The truth is rents won’t come down by a single cent if National reverse the phasing out of a property investor’s ability to deduct interest between 1 October 2021 and 31 March 2025.

Not one cent shall be returned to tenants in the form of a rent decrease.

Sorry generation rent – nothing for you from National reversing these changes.

The wider point I am really making is – removing costs from a business won’t bring prices back down ( market forces like competition or an over supply might ) – but adding costs to a business will often result in higher prices being passed on to the consumer.

Step one of National’s five point plan is to stop adding what they call unnecessary costs to businesses and employers.

By this National mean scraping proposed redundancy insurance and Fair Pay Agreements – both which can make a worker’s life ( the proletariat life ) a little better.

National ( the bourgeoisie ) would scrap proposed redundancy insurance which would cover 100,000 New Zealanders who lose their job each year through no fault of their own. The proposed insurance might pay 80% of a workers wages for seven months and is funded by levies on wages and salaries, with both workers and employers paying an estimated 1.39% each.

National see this 1.39% as an unnecessary burden on businesses who might pass on the cost in higher prices ( or not ).

With regard to Fair Pay Agreements – National think some businesses should be free to compete for contracts by reducing wages or employment conditions. National don’t like the Government creating an environment where businesses compete based on better products and services, rather than some trying to compete by driving down wages and conditions.

Notably when a Fair Pay Agreement applies to a sector – the government will contribute $50,000 to both sides of the bargaining process and we are talking about stopping workers being utterly exploited here.

So far National Party thinking all seems unfair enough ( lol ) until you consider the wider context.

According to the Annual Enterprise Survey New Zealand Business income increased $25.3 billion (3.5 percent) to $757.5 billion​ from 2020 to 2021 – while in the same period total business expenditure increased only $96 million (0.01 percent) to $654.4 billion​.

Yes NZ Businesses earned $103.3 billion in surplus before income tax – up $24.5 billion (31.1 percent)​.

If Nicola Willis was to include that factual background landscape in her pleadings New Zealanders would see the real picture about business profits.

National want to remove some piddling tiny costs to save us all from very small price increases which don’t have to happen anyway because most businesses are overall making a tidy profit at a growing rate in New Zealand.

There are not too many bankrupt businesses across all industries in NZ in 2022 – in fact there were more in 2019.

Yes there’s a good deal of fat cat profit in the margins which National prefer not to discuss in their simplistic five point plan because the truth is National are defending unnecessary wealth and greed baked into motives to get rich off the back of a worker’s labour.

The second step in National’s Five point plan is to reduce the so-called bottlenecks that are holding back growth.

Average annual GDP rose 5.1 percent through the year to March 2022 but now growth is slowing down all around the world as we fight inflation and flip monetary policy from stimulatory back to dampening demand in the economy.

As part of step 2 – National say they would tackle workforce shortages through better immigration settings and moving people from welfare into work. Notably the Reserve Bank warns that we are currently above sustainable employment levels already so National’s plan ( social investment to get people off the job seeker benefit ) may just pour fuel on the fire and be at odds with Monetary Policy.

Something Christopher Luxon has said is a no no when it comes to the “small beer” effect of Grant Robertson’s new spending in Budget 2022.

In other words Luxon is a hypocrite.

It’s worth considering what the Government has already done when it comes to worker shortages :

“The Green List includes 44 occupations that allow eligible migrants to apply for work visas from July 4, and residence visas from September. The occupations are mainly geared towards the construction, health care and IT industries and include roles such as civil engineers, surgeons and other medical practitioners, food technologists and software engineers. The Green List also lists another 16 occupations which will allow migrants to enter the country on work visas and apply for residence visas after two years. These include medical roles such as laboratory technicians, occupational therapists and registered nurses and other jobs such as secondary school teachers, electricians, mechanics and dairy farm managers.” – Interest.co.nz

So how are things going now with worker shortages?

“The latest figures from the Ministry of Business Innovation and Employment show that 5682 working holiday visas were approved in June, up from 2862 in May and 2331 in April, making that group the largest within the work visa category in June. This means the number of working holiday visas approved in June was higher than it was pre-pandemic, with 5223 working holiday visas approved in June 2019. The next biggest group were 2328 skilled workers followed by those obtaining their visa on the basis of a relationship (1401). Altogether, those three groups accounted for 85% of the 11,000 work visas approved in June this year.” – Interest.co.nz 18 July 2022

Yes our new Immigration settings are a solution that is working really well already and although it’s still in progress there’s nothing National have spelt out that they can prove would make much of a difference in categories where there is a world wide shortage of workers.

Just meaningless rhetoric from Nicola Willis.

Step 3 in National’s Five Point plan is to restore discipline to Government Spending.

This means tearing apart the public service and selling the notion to the public that anything that is not front line is bad.

Pretty vacant and Trump like really.

The blind rhetoric repeated ad nauseam by Christopher Luxon about 14,000 new bureaucrats in Wellington since 2017 and none of them being front line workers – is verifiably factually incorrect and stupid at the same time.

National have bet that misrepresentation is a risk worth taking as long as they have a compliant media who will allow any old lie to stand unchallenged from the Opposition.

National have decided that backroom staff like IT and communications staff are unnecessary and that despite increased work scope with many more projects to do – head-counts should remain static.

There’s a huge long list of white elephant spending ( mostly by MBIE ) associated with National’s nine years in government and the myth about National’s financial prudence is based on false perception.

Austerity won’t make anyone rich except slave owners.

National may understand the rigour built into Budget processes and all the financial responsibility rules observed by any Government in New Zealand but they are prepared to ignore all this to sell a myth in a few soundbites with a couple of anecdotes to justify cuts to services that will make ordinary lives suffer.

I personally see this bullet point in National’s plan as a code for a wealth transfer mechanism in step four.

Step Four in National’s Five Point plan is to give tax relief so kiwis can keep more of what they earn.

$2 a week is all anyone earning $45,000 would get from National while we all remember Tova saying to Christopher Luxon…

“If you got rid of the $180k tax threshold, your tax cut as CEO of Air New Zealand would be $270,000”

As Gordon Campbell pointed out :

“According to IRD estimates, this scrapping of the top tax rate would cost the country $2 billion in revenue annually. It would involve a huge wealth transfer upwards, to the already wealthiest group in this country. That money will no longer be available to spend on social services. But hey, it would help the top 3% to get back on the ski slopes of Chamonix and Aspen, now that the borders are finally re-opening.”

Yes National would have to underinvest in social services to afford this grotesque wealth transfer to the most wealthy who least need it – which is why National have sold the notion of “fiscal discipline” being a solution and “government spending” being an absolute villain.

Gotta fool the public somehow.

New Zealand simply cannot afford to allow National to rob us all like this.

In addition tax cuts would just pour more fuel on inflation working against Monetary Policy right now.

Step Five – refocus the Reserve Bank on price stability.

Despite ANZ Chief economist Sharon Zollner repeatedly reminding media that the Reserve Bank are already very very focused on Price Stability and how there is a very definite hierarchy in priorities being followed by the Reserve Bank – her words cannot penetrate the thick skulls in DumbTown.

The Reserve Bank would raise the OCR in exactly the same way with or without the additional remit to support maximum sustainable employment.

Maximum sustainable employment’ (MSE) or full employment means the level of employment at which the job market is tight, but not so tight that inflation is rising out of control.

National really don’t care about MSE and are actually seeking to depose Adrian Orr and replace him with their own puppet and to forget about people’s employment welfare.

This step will not solve anything for people in a cost of living crisis at all.

SUMMARY

National’s five point plan to solve the cost of living crisis is a house of cards on shifting sands.

Step 1 hides the strong profits made by New Zealand businesses already and relies on very easily absorbed tiny costs for workers wellbeing being mistaken for significant downstream price increases.

Step 2 Is a vague solution that does not really articulate anything significantly different from the current immigration settings.

Step 3 Is a justification for Step 4 built on myth.

Step 4 Is an unaffordable wealth transfer to the most wealthy

Step 5 Is redundant and really about political appointments.

National’s Five Point plan to tackle the cost of living crisis debunked

G 🙂

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