I have just spent the weekend with a team of Labour volunteers listening to the concerns of the people of Masterton. A repeated remark was, “no matter how hard I try, I just can’t get ahead”. One hardworking mum from Columbo Street has not bought a block of cheese for her children for months and a leg of lamb is a long remembered luxury. A couple of pensioners told me how they get two hours home help a week and are struggling to get by. These people are not alone. For the majority of people it seems again and again that those at the top of our economy are creaming it while the rest of us are taking the biggest hits.
Hearing these people I remembered back to May last year when the Government with much fanfare announced a tax reform package to “stimulate the economy and take us out of recession.” The goal was to reduce the budget deficit and transform New Zealand into a savings focused powerhouse.
The theory was that by cutting the top income tax rate from 39 per cent to 33 per cent middle income earners would pull themselves up by their boot straps and achieve higher incomes as they would keep more of what they made. And those at the top of our economy could afford to save their extra income, thus kick-starting our economy with the hoped for increase in our New Zealand savings rate.
These cuts were to be balanced by an increase in GST (effectively making the tax cuts self-funding). This increase was supposed to discourage consumption and encourage saving. Company tax was to be cut. This was all meant to act as a draw card for companies to invest and employ more workers. Labour warned at the time that these tax cuts were not affordable and any increase in GST would hit middle and lower kiwis and chew up any tax cuts. The ability to save for most kiwis would remain a fantasy.
Eleven months on, Labour’s warnings have been proven, unfortunately right. On top of rising food and petrol prices, the shock of GST has meant that average kiwis have even less money in their pockets, and any tax cut is spent on just getting by. Pensioners and lower income kiwis have been hit hardest. Business after business are either closing down or cutting staff.
The tax cuts for those on higher salaries has not been saved and invested in job-creation. Instead, it is being geared up with yet more foreign-supplied debt. The latest March figures released by Barfoot and Thompson for property sales in Auckland show those on higher salaries are grabbing expensive properties again with sales of properties worth more than $800,000 rising by 40 percent from March last year. Lower priced houses barely rose in price.
Meanwhile the Government is pushing ahead with its plans for asset sales. Hocking off our assets to foreign buyers and slashing spending is a return to the failed right wing policies of the past. Middle and lower New Zealand are being ignored by this Government and they will be the ones to suffer even more if our nation’s assets are sold off. We are facing cuts to health and education and now if this Government gets a second term we’ll be paying even more to heat our homes and drink water as power companies and public utilities are sold off to wealthy foreign investors. Selling state assets to foreign corporations, will drive up the current account deficit, send profits overseas and drive up costs for Kiwis.
In 2008 this Government campaigned on closing the wage gap with Australia. Now the gap has widened to 30 percent and Bill English is in the embarrassing position of trying to say that this is a good thing as we can make goods cheaper here than in Australia. It appears that Bill English wants us to become the Mexico of the South Pacific.
The Government constantly tells us that the cupboard is bare and we must all tighten out belts. Yet they can:
- Borrow $120 million monthly to fund tax cuts two thirds of which go to the top 10 percent of the population;
- Provide Mediaworks (a company previously owned by the Minister of Broadcasting) with $43 million loan at a rate they couldn't obtain on the open market;
- Find $1.2 billion dollars to bail out private speculators in SCF;
- Find $2 million dollars to build and gift a plastic boat to the Government’s political friends;
- Find $6.8 million to buy themselves a fleet of BMWs to be chauffeured around in.
These things sit awkwardly with not only me but also with the hardworking families and pensioners of the Wairarapa. At a time when ordinary people are struggling to pay grocery bills and weighing up whether to have a warm home or give their children a healthy meal, life under National is very comfortable for those at the top.
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