General Debate 26 April 2009

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Viking2

NZCPR Mid-week Politics
Sir Roger Douglas MP
16 April 2009
How the Labour Government Robbed You Blind
(with a little help from their friends National)

Introduction

Labour and National Governments between 1996 and 2009 robbed New Zealanders of more than $30 billion. That is the transfer that has taken place from the private sector to the Government. This increase was in marked contrast to the preceding period, which had actually seen a reduction in the burden of Government.

The graph below sets out per capita Government spending in today’s dollars:

When I became an MP in 1969, the Government had just started to spend $1 billion in today’s terms. Today, they spend over $80 billion!

Was it worth it?

The increase in Government spending over the last thirteen years is today costing every man, woman and child in New Zealand $7,567.63 a year. For the average family, the increased size of Government amounts to $30,270.53 every year.

Not all Government spending is bad. But think about it, what have you got for your $30,000? Were any of the pet projects really worth it? What have you got that is tangible?

Most taxpayers are not really sure what they have got for the increased size of Government. But what have you missed out on? If that $30,000 had been left with you, perhaps you would today have no mortgage, perhaps your kids would be going to an Independent school, or perhaps you would have health insurance that enabled you to get medical care when you needed it, rather than waiting in a queue.

Some people seem resigned to increases in Government spending. Between 1984 and 1996, the burden of Government spending borne by individuals actually decreased by $300. Did you notice the difference when the Government didn’t rob you of your hard earned wages? Economic growth during that period was strong, and income was on the rise.

But It Gets Worse

Unfortunately, that is not the only cost that increased Government spending has had on the ordinary family. A growing Government sector has slowed the economy.

Lower levels of productivity growth have slowed the rate of wage growth. A decade of big Government has made the productivity differences stark:

Small changes in productivity growth materially affect how much you earn in wages over time. For example, a difference of 2% in productivity growth over ten years would have cost the average wage earner $10,000 every year. In other words, in addition to the increased amount of tax paid, the average family also lost $20,000 in lost income. That’s several family holidays to Australia, enough to pay for several years’ university tuition, or a new car.

When you add the loss of income that would have occurred to the increase in Government spending, the average family is today $50,000 worse off than they would have been without the increase in Government spending. That difference is so great, and yet the increase in the amount of Government services has been minimal.

It is a sad fact that Government waste has swallowed so much of the money that could have been used by individuals and their families.

Too Good To Be True?

Some of these figures will seem unbelievable.

Because of the current taxation system, the average cost of Government spending is mostly borne by those who earn higher than average incomes. A family on $80,000 is paying relatively high tax. The issue is how you want to deliver the savings made if we do not increase Government spending. If we share the savings equally, then we will all be better off in the short term, but growth rates will be only marginally higher, perhaps 2% per annum. If we allow those who currently pay the overwhelming majority of tax to benefit more from expenditure reductions, then we can boost growth by 3-4% per annum. That will ultimately make us all better off.

No Free Lunch

Whenever the Government spends a dollar it first has to come from your wallet. There is no free lunch.

Government spending costs you. In addition, every dollar of Government spending affects our productivity and economic growth. Some Government spending increases our wellbeing, by spending money on things that we could not buy privately, such as the police force. But the growth in Government spending has mainly been on transfer programs – stealing from Peter to give to Paul – and other goods and services that could be privately provided. These costs are hidden, but very real.

I believe that Government spending is destroying the ability of those with low incomes to get ahead. We are punishing success, and stifling entrepreneurship. At the same time we are locking people into welfare dependency. Government spending has made some believe that we can spend our way to wealth.

What We Need To Do

The first thing we need to do is get spending under control. In the same way that households cannot just start spending more money, I believe that we need to cap the amount of money that Government can spend.

That cap should allow for increases to accommodate for inflation and population growth. Any other increase in spending should need to be accepted by a referendum.

The second thing we need to do is look at ways to cut Government spending. We need to cut unnecessary departments and programs. The Charities Commission, the Families Commission, and subsidies for the racing industry could all be removed immediately. In the longer term, I believe that if we give the money back to those who earn it, then we can rely on them to provide for their own healthcare and welfare services. Having seen with my own eyes the magnitude of Government waste, there is no doubt in my mind that individuals spend their money far more carefully than the combination of politicians and bureaucrats can ever achieve. We need personal responsibility and low taxes.

The third thing we need to do is to improve productivity in the public sector. Under Labour, the productivity of medical staff in hospitals declined by 15 percent. That means there were fewer operations, fewer checkups, and shoddy service. We need to get rid of duplication in public services – it is ridiculous that in a country of only 4 million we have 24 District Health Boards. We also need to get rid of the central planners, who lack the information to adequately plan for us all. If we allow people to innovate and develop practical solutions, then we will see productivity rise and output increase. That means fewer traffic jams, no threat of electricity blackouts, and internet access that a wealthy country deserves.
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April 26, 2009 9:23am
TimG_Oz

Hi All,

On Friday I attended a luncheon with Kevin Rudd, Prime Minister of Australia. The lunch was hosted at one of Melbourne’s largest function centers, by the Australia-Israel Chamber of Commerce, with approximately 1200 guests. There were multiple large screens so that gustes could see a close up of the PM.

The luncheon was opened by Peter Cosgrove, former chief of the Australian armed forces, who discussed the General Sir John Monash Award – and presented one of the eight winners to speak. This is an award for Australia’s best and brightest – each of the 8 winners had multiple university degrees in firts class honours, spoke several languages, had worked overseas in high profile posts, and performed high profile volunteer work. In their spare time, several of them run marathons! The prize is a scholarship to complete a PhD at any University in the world. The award was a worthy investment in the future of the country – and the award winner noted she had been issued a challenge. During Kevin Rudd’s speech he later announced that the federal govt was giving $720,000 towards the 2010 prize (enabling 4 extra winners).

Sir John Monash was credited with being the first to commerate ANZAC day, in 1916. Much was said to honour him as a great Australian and very much a people’s leader within the armed forces.

Kevin Rudd opened his speech by reaffirming himself as a lifelong friend of Israel. He also publicly stated “I condemn the anti-semitic comments and sentiment made by the leader of Iran”. An interesting contrast to NZ’s Grant Robertson. He stated that Australia decided to pull out of Durban II, only when it was plainly obvious that Israel was going to be singled out in the conferences findings.

He then talked at length about GFC, and the local stimulus package.

At the G20 Summit, the 1929 depression was discussed – at that time it was noted that countries decided not to work together, but to try and protect their own interests, which made the depression longer and harder, ultimately culminating in the great war. The resolve for G20 was made for countries to work together such that each provided their own stimulus packages.

For Australia, he talked of the stimulus packages here as an investment for the future. By Upgrading Schools across the country, they intern stimulated the economy now, so that when recovery came, they would have the infrastructure to cope with the future’s demands.

A lot of Australian’s will take these statements with a grain of salt. I was not a citizen at the last election, nor do I have political affiliation, but I was very impressed by the speech. I will try and find if a full transcript is available.
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April 26, 2009 10:08am
Murray

So this is where we post our press releases then?
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April 26, 2009 10:10am
TimG_Oz

Sure. It seems to be where the NZ Press get all their local breaking news from anyway ….. 🙂
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April 26, 2009 10:16am
Murray

Kiwiblog = UP:Unassociated Press.

Of course once they have stolen it and printed it they want to claim they “own” it as well then use time travel to sue DPF.
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April 26, 2009 10:18am
side show bob

And it goes on Viking2. Yesterday, ANZAC day one of the lead items in our local rag was how government and the justice department (should be injustice department ) plan to run credit checks on those receiving fines. It seems many millions are being lost every year because some will not or can not pay their fines. Suggestions from the justice department are to check credit ratings before fines dished out. It seems those with good credit ratings will receive a fine will those with a bad rating will not be chased up as it is not cost efficient . At our ANZAC service the local priest read a letter out from an airman in world war 2 to his parents. He was fighting for their freedom and against tyranny, I would suggest that if the evil bastards can get away with this sort of shit then the lives of many thousands who die in wars fighting tyranny will have been in vain.
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April 26, 2009 10:22am
francis

swine flu outbreak tracked on google maps: http://maps.google.com/maps/ms?ie=UTF8&hl=en&t=p&msa=0&msid=106484775090296685271.0004681a37b713f6b5950&ll=32.639375,-110.390625&spn=15.738151,25.488281&z=5
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April 26, 2009 10:59am
village idiot

Swine flu, bird flu, climate change – everybody here KNOWS it’s all a con. RELAX!
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April 26, 2009 11:34am
reid

Loved Bruce Sheppard’s comment in The Herald re: shareholder reaction to Watson’s $1m 50th party.

But criticism of Watson’s party failed to find favour with New Zealand Shareholders Association chairman Bruce Sheppard – who last November expressed disgust at Hotchin’s Fiji bash.

He said Hanover investors had essentially agreed to give the two directors a five-year interest-free loan when they agreed to the rescue package.

“Their time to be upset and pissed off was some time ago. I went to the meeting and I had a whole bunch of really useful questions and they wouldn’t let me ask them, so they can go **** themselves.”

Too right.
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April 26, 2009 11:36am
thedavincimode

v idiot – is it really?

how else do you explain borker?
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April 26, 2009 11:38am
Redbaiter

Good article on John Key in The Australian-

http://www.theaustralian.news.com.au/story/0,25197,25383012-5013404,00.html
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April 26, 2009 11:52am
baxter

VIKING:::::::::I can’t debate Sir Roger’s figures but the few examples of waste he mentions must be apparent to all, as well as many other examples, yet so far National who promised to cut it back seem to have done very little and indeed some ministers seem to be intending to extend the wastage.

SIDESHOWBOB: said”Suggestions from the justice department are to check credit ratings before fines dished out. It seems those with good credit ratings will receive a fine will those with a bad rating will not be chased up as it is not cost efficient .

This seems to already be the practice in my area according to punishments for drunken drivers. Young unemployed get token community service which they don’t bother going to. Small businessmen on the other hand seem to get slammed with large fines and disqualification despite invariably being less over the limit than the losers. Our local paper collates the penalties monthly and the disparities are very obvious.
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April 26, 2009 12:08pm
PhilBest

There was an extremely good essay in “Quadrant” in March:

“The Dangerous Return To Keynesian Economics” By Steve Kate

http://www.quadrant.org.au/blogs/qed/2009/02/the-dangerous-return-to-keynesian-economics

Other nations got out of the great depression much quicker than the USA did, with balanced budgets and small government.
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April 26, 2009 12:15pm
billyborker

And which nation got out first, Phil? I may be wrong, but I think it was Hitler’s Germany. I suppose we could emulate that success, couldn’t we? But never, ever forget – it was a command economy that defeated Germany.
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April 26, 2009 12:43pm
thedavincimode

“he often calls me fugley, when in fact I am quite handsome”

you good looking devil you

tell me more
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April 26, 2009 1:07pm
adam2314

Potrugals economy was stimulated by Alves dos Reis and it ruined their economy for many years after..
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April 26, 2009 1:07pm
Viking2

And today Rudd has copied Key.

Government pledges billions for roads, rail

April 26, 2009
Article from: Australian Associated Press

THE states and the territories have signed up to the largest federal roads and rail investment in Australia’s history, which will see $26.4 billion of funds for projects including upgrades of the Pacific and Bruce highways.

The agreement, which was foreshadowed at the February meeting of the Council of Australian Governments, includes federal funding for 120 road and 26 rail projects over six years.

The key projects include the Pacific Highway, NSW, ($2.5 billion), the Bruce Highway, Queensland, ($2.2 billion) and Western Ring Road, Victoria ($900 million).

“We are spending more on rail in 18 months than the previous Government spent in 12 years,” Federal Infrastructure Minister Anthony Albanese told Channel 9.

Meanwhile, Mr Albanese said he would enjoy announcing $2 million of federal funding for a $7.3 million sporting pavilion to be built in Opposition Leader Malcolm Turnbull’s own electorate.

The funding will be made available for the Waverley Park pavilion under the government’s $800 million community infrastructure program.

Mr Turnbull is attending the announcement.

“The hypocrisy of Malcolm turning up to Waverley Park for this announcement – $2 million from the commonwealth contributing to a $7.3 million project in his electorate that he voted against,” Mr Albanese said.

“That is I think something that stands for itself.”
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April 26, 2009 1:27pm
gladstone

what? where? who? how the !#@?!!
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April 26, 2009 2:46pm
Komata

Concerning Sir Roger Douglases plans for the economy, it seems to me that there is a very slight problem with what he proposes, namely:

What does he intend to do about those who are laid-off from the ‘streamlined’ government departments that he is so assidiously advocating?

The last time he went through this process (and for the same reasons) there were (surprise, surprise) large numbers of UNEMPLOYED former civil servants who had nowhere to go, and no jobs to go to, a situation made worse by the arrival of new technology (the advent of widespread computerisation into New Zealand) at the same time.

(Companies, you may remember, didn’t take on new staff because a ‘computer’ was both quicker and cheaper!!).

Sir (then just plain Mr – he got a knighthood from a ‘grateful Party – Labour wasn’t it – before he ‘jumped ship’) Roger Douglas didn’t address the problem then, and, if the press release supplied by Viking2 is to be read correctly, he doesn’t address the problem now – 20 years on, and with essentially the same scenario – a depression, not much money and companies laying-off staff.

We’ve been there before, and ‘Rogernomics’ has now entered the national vocabulary as a result.

I would have thought that employment was a priority in these times – some job, ANY job is to be held onto, yet, once again, the ‘Douglas-plan’ makes no allowances for ‘tough times’!

It seems to me that the following message needs to be sent to Sir Rodger (although I doubt that he would read it – it’s only from an ‘average’ New Zealander and they don’t seem to count for much in his world – economic efficiency is all!!)

Sir Roger, trim by all means, but DON”T deprive hard-working Kiwi’s of work – or, if you ARE so-determined to follow-through with the policies you subscribe to, THEN AT LEAST GIVE THOSE YOU MAKE UNEMPLOYED SOME WORK – and not just ANY work, but work that fulfills and satisfies – just like they were doing before you ‘cut’ them!!

DON”T destroy the lives of the average Kiwi Sir Roger, as you so delibrately did last time you were in office, then go and sit in your all-paid-up, fully-pensioned and luxurious home and think good thoughts about how all you did – because you actually DID’NT!!

You effectively destroyed a whole society and opened the door to Jenny and Ruth who made things worse, and who in turn, perhaps inevitably, led to Helen and Co, and 9 years of absolute misery, and the destuction of our way of life.

We’ve beeen here before, and, quite honestly, Sir Roger, there are a lot of us who don’t want to go through the whole sorry exercise again.

Plan and prune by all means, I’m sure you can find all sorts of justicfications to do so, , BUT GIVE THE VICTIMS OF YOUR LARGESS WORK TO GO TO.

If you CAN’T do that, then please, Sir Roger, go away – we’ve seen the results of your ‘good works’ and economic policies before. . .
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April 26, 2009 4:26pm
thedavincimode

PhilBest says:

“Other nations got out of the great depression much quicker than the USA did, with balanced budgets and small government.”

Yes, but you can’t look at solutions based on a snapshot in time or that reflect the extreme boundaries of an approach. That’s what the US appears to have done. We are often left with the impresssion that this is the way in which economists approach such debates.

We also have to consider NZ on its on terms today, and not benchmarked against economies of far greater size and a time when the global economy had nothing like the mobility of resources that we now see.

Lack of capacity and mobility of domestic capital has been one of the greatest restrictions on our economy in recent years (in addition to that other well known restriction). We might be able to debate the merits of the infrastructure options that government choses, or the balance, but the great positive will be preservation of productive capacity (skills and labour) in the domestic economy for the time we start to recover. If those skills buggar off, we’ll never get them back. And if that happens, then also consider the impact on the personal tax take. We are now enjoying the fruits of Hullen giving the relative higher income earners the pricker so that they buggared off. A $600m drop in revenue before redundancies actually started. Again, economists, and most certainly Labour politicians, often seem to gloss over the fact that swapping an emmigrant for an immigrant is inherently inefficient. The RMA revision will assist with domestic mobility of capital. This is really only the message that Key has been pushing – ie make the environment more efficient so that there are no unncessary impediments to recovery. And deliver value for the taxpayer spend.

We either risk having lost capital and resources offshore by the time we start to recover (behind the rest of the world upon which we are dependent), or we go balls out on skills retention and harden up on (cut) service delivery and wind up with a lot of people sleeping under hedges. I haven’t seen any numbers on how we can balance the books without winding up with a homeless family moving into my letterbox. So maybe I’m wrong about our ability to do that without a level social of disruption that many of us wouldn’t find acceptable. Would be interested in knowing if someone has a link.
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April 26, 2009 4:31pm
Komata

It is ever so slightly difficult to edit a post when one receives the following mechanical message when hitting the ‘edit’ button:

‘You do not have permission to edit this comment’

Thought all you might like to know . . .
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April 26, 2009 4:33pm
thedavincimode

… and by the way, someone get gladstone a drink … quickly
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April 26, 2009 4:35pm
Banana Llama

Germany nearly went bankrupt numerous times during rearmament as well Billy, if it wasn’t for Hjalmar Schacht and useful idiots like yourself they would have, so do us a favor and look up MEFO before making statements about Germany being the first to recover.
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April 26, 2009 4:45pm
getstaffed

Komata, I agree with your passionately presented view that people need to be employed in fulfilling work. This is part of living a happy life to be sure.

However my view is that it’s not the minister of finance’s (or any other government minister’s) job to ‘provide’ that work — it’s up to the individual to identify their own passions, their strengths and interests and then find work that delivers the right combination of fulfillment and income.

Your passion is in an area where your skill is lacking? Get training. Local demand is low for your skills? Relocate. Have big ambitions? Be prepared to start at the bottom and work hard. None of this is rocket science. It’s just takes determination and effort. Any anyone, yes anyone, regardless of age, race, enthicity, gender or political leaning can choose to be determined and hard working.

Anyone who demands fulfilling work be handed to them on a plate goes to the bottom of the CV pile, or in the bin if I have anything to do with it. I’ve employed 100’s of staff in my own IT business, and can ‘smell’ entitlement syndrome on a CV. It’s rather squiffy.
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April 26, 2009 5:06pm
goodgod

Sir Roger, trim by all means, but DON”T deprive hard-working Kiwi’s of work – or, if you ARE so-determined to follow-through with the policies you subscribe to, THEN AT LEAST GIVE THOSE YOU MAKE UNEMPLOYED SOME WORK – and not just ANY work, but work that fulfills and satisfies – just like they were doing before you ‘cut’ them!!

NZders have spent a hundred years insulating themselves from reality with government (tax) money. And not just the money they contributed, by the stuff their grandchildren are yet to contribute.

Life isn’t always fair. It just isn’t, but sometimes it can be good for a long time – lets not get all tragic about it. But look, the biggest problem with NZ culture that I can see is that generally people stop “growing” at about 23 years old. Our culture is almost infantile in a lot of ways.

As late as last century, the big thinkers of our time would keep human skulls in their studies, on their office desks as a symbol: Momento mori – be aware you are mortal, forget your vanites, our life is precious. Use every moment you can constructively, further your ambitions, or not, but stay realistic.

I see no constructive realism in the handing out of similar work to people who cannot start again, from the bottom if circumstances dictate, or in another field, and achieve more faster than they ever had. I see no courage, no virtue, no goodness in that plan.

When the skipper of Luna Rosa was asked what he wanted to do with his life, he replied “To make a bigger cow.” Instead he became an unforgettable and skilled member of the yachting world. Life great like that. Don’t cry for too long over what you lose in circumstances beyond your control.
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April 26, 2009 5:38pm
Glutaemus Maximus

“God grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.”

The Untitled prayer.
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April 26, 2009 5:59pm
baxter

PHIL;;;;;;;;I read the Quadrant Article, The text seems at variance with the figures if a Bloomberg definition of a depression being reached at 12% un-employment is accepted, indeed the height of the depression was reached in 1933 but recovery was a long time after. In 1936 my father to be left the NZ depression to try his luck in Aussie. He went from top to bottom seeking work where he could find it. Conditions were better there mainly because of the weather. He wrote home regularly and I have the letters. He travelled by jumping on a train or hitching a ride. There would be seldom less than a hundred like him riding free on each train. I doubt the last depression ended much before the buildup to the second world war.

KOMATA:….I agree before any legitmate Public servants are sacked the Goverment needs to deal with the bloated bludgers and political appointees that fill the numerous Commissions and Boards of Enquiries. They could then take a look at the salaries of the heads of Departments.For example $600,000 plus perks hasn’t provided us with very good Police Commissioners. How many hours do the Judges on our replacement privy council put in for their massive recompence.
`
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April 26, 2009 6:02pm
Glutaemus Maximus

From the NZH,

“Rich lister Eric Watson has enjoyed a lavish two-day birthday bash in Turkey – angering investors in his collapsed finance company Hanover.

Watson, who co-owns Hanover with Mark Hotchin, enjoyed a party worth an estimated 500,000 Euros ($1.16 million) in Istanbul, Turkish publication Milliyet reported.

Among his 300 guests were hotel heiress Ozlem Onal, American political royalty Kerry Kennedy and her cousin Caroline, Greek shipping empire heiress Tina Livanos and former Miss Italy Arianna Novacco.”

What a complete and utter Wanker.

I think that the whole Hanover Story is actually a Criminal Episode. Who is actually to balame, and whether any one will be brought to account is anybodies guess.

Designer Sunglasses muggings on old vulnerable folk.
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April 26, 2009 6:15pm
gladstone

(wipes mouth with back of hand) thanks !!
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April 26, 2009 6:41pm
thedavincimode

no probs. you needed it. i hate that when it happens to me,
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April 26, 2009 6:43pm
Komata

Fellow posters

Thank you for your positive rsponses to my posting concertning the ‘Douglas’ plan.

The point that I was trying to make (retropect poorly, I now see), was that there is little point in putting large numbers of people out of work in the name of ‘efficiency’ if you haven’t got anything in place to either re-train them or provide new employment for them, which, in essence, was the result of the last Douglas-implemented ‘streamlining’of the civil service.

Such training as was available was effectively swamped by the numbers laid off (and this is no criticism of the agencies who tried to help), which, combined with the advent of new technology meant a lot of unnecessary hardship for those involved.

And yes, agreed, the ‘fat cats’ should always be the first to be ‘slimmed-down’ – with cuts from ‘the top down’, rather than the sadly traditional, last-on, first-off from the bottom-up.

However, Fat cats, I’ve observed, always look after themselves – or have ‘friends in high places’ who can ‘help’ them to avoid the ‘consequences’ of their actions.

It is after all the ‘minions’ who are ‘expendable’ , , ,

(Have another cigar, a glass of port – anyone?)
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April 26, 2009 7:20pm
Redbaiter

Lying Democrats, lead by the cowardly charlatan Al Gore, are frightened to death of Lord Monckton’s views on the fraud of climate change.

http://www.climatedepot.com/a/429/Report-Democrats-Refuse-to-Allow-Skeptic-to-Testify-Alongside-Gore-At-Congressional-Hearing
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April 26, 2009 7:46pm
Viking2

http://www.crocodile.co.nz/sites/default/files/nbr/watson-istanbul.pdf
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April 26, 2009 8:17pm
big bruv

Have a look at who is now posting at the Labour party and EPMU funded blog..

http://www.thestandard.org.nz/mount-albert-labour-goes-active/#comments
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April 26, 2009 8:50pm
PinkGina

Phil B – good Quadrant article

The 1930’s depression started a worldwide retreat from capitalism and fostered a belief that the future lay in government management of the economy, not in freer markets.

Let’s hope that the reforms that get us out of the current mess are at least democratic.
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April 27, 2009 12:47pm

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