And Now A Housing Crisis Is Looming ....

Real leadership involves more than just turning up for photo opportunities. When times are hard you can actually see true character coming out. We saw it in Mr Key’s treatment of Ohorere School and now over this past fortnight we have again seen the real character of this Government.
For the first time in 13 years we have just had a double credit rating downgrade.
This was doubly damaging for National given Mr Key’s measuring of the success of the 2009 budget by the fact that an alleged possible downgrade was apparently avoided. Evidently credit rating agencies do not think highly of Mr Key’s performance.
Then Mr Key was caught out being slippery when he claimed that Standard & Poors said a downgrade would be more likely under Labour. His defence was weak in the extreme and consisted of providing an anonymous email that did not back up what he alleged.
The Government was also caught out on the emergency video surveillance legislation with its claim that the legislation must have retrospective effect otherwise compelling evidence would be lost. This was untrue. Section 30 of the Evidence Act allows courts the discretion to admit improperly obtained evidence in any event.
And then the Rena shipwreck happened.
The Government has been hamfisted and slow in its response. Four days of good weather were wasted as the Rena slowly oozed oil so that now an environmental tragedy is inevitable. Where was Mr Key?
The day after the wreck, there was a picture of our smiling PM in the Herald, pretending to put up a campaign billboard for his Hamilton candidate.
When real pressure is applied this Government is not up to scratch.
When the Government raised the GST tax to 15 per cent, accompanied by a major tax cut for the wealthy and small change for everyone else, it was obvious that the move was grossly unfair.
The Treasury report confirms that the gap between the lower paid and the highly paid widened as expected. Further, we now have the admission that the GST didn’t pay for the tax cuts to the rich, as Mr Key claimed and, in fact, cost us more than $1.1 billion – this makes Mr Key’s competence and management suspect.
In essence, this move of the Government’s was one that New Zealand couldn’t afford. It has seriously depleted the Government’s coffers and led to cuts in services and jobs and added to Government debt. Labour warned about this at the time and we now see that these concerns were justified. The Treasury report has revealed that the tax switch has pushed up the cost of living, dramatically increased income inequality, and failed to stimulate the economy, not to mention the gaping hole it has created in Government accounts.
The Government has had to face many challenges such as the global financial crisis and the Canterbury earthquakes. But they have also made some poor policy choices that have made it even harder to cope with the crisis and the earthquake.
And the irony is that although many of their policy choices have been on the basis that we must not lose our international credit rating or the cost of borrowing on the international market would rise steeply, our rating has just been downgraded. That will send interest rates up and will dramatically increase the cost of mortgages. Add the proposed trebling of house insurance costs, and we have a looming housing crisis to add to the mix.
Labour is going into these elections with a tax policy that will help correct that basic inequality which is now crippling the country; tackling youth unemployment, reducing cost of living pressures, taxing capital gains, retaining our national assets as a vital income source – no tax on the first $5000 of income and a tax increase for those who earn more than $150,000.
Under National’s watch, the gap between the rich and poor continues to grow. Unemployment has increased and the cuts will continue.
Time and time again my encounters with the people of the Wairarapa while out doorknocking, brings home to me that many people are struggling to make ends meet. Some of the stories I have heard on the doorstep have left me appalled. Those stories come from almost every area within each of those towns, in an electorate that has been neglected by the Government.
National has a commitment to ‘‘Building a Brighter Future’’,the slogan they used three years ago!
Labour has a carefully costed plan for fixing the underlying problems that are holding us back. Forget the slogans – go for the detail. As a gentleman’s tailor would say ‘‘Never mind the width, feel the quality’’.

Published in the Wairarapa News, 19 October 2011

You Can’t Run the Economy on BMW’s

“You can’t run the economy on BMW’s alone” according to respected US investor Jeremy Grantham. “If the average person is in a pickle, how do you have a healthy economy?” he asks.
Time and time again my encounters with the people of the Wairarapa while out door-knocking brings home to me that many, many of you are struggling to make ends meet. I’m not ashamed to admit that some of the stories I have heard on the door-step have left me appalled.
Take the story of Victoria and Troy of Dannevirke. Troy has been unemployed for three years, and has applied for a massive 200 jobs, without success. This winter they couldn’t even afford to buy firewood. It wrenches at my heart to think that as a society we can turn away from these folk, and blindly follow a political leader who has about as much depth as a caravan site. I believe a Government focused on beneficiary bashing and public service cut backs in these difficult times is greedy, arrogant and out of touch.
My deep concern for folks like Victoria and Troy fuels my passion to be selected as your next Member of Parliament. I will devote myself to making the Wairarapa a better place for everyone – from hard working families, young people, to businesses and pensioners alike. I believe Labour’s policies strike a balance between caring for folks like Victoria and Troy, and putting policies in place that will help the economy to prosper.
The US investor’s comments were made in the context of looking at the soaring gap between rich and poor. The top 10% of U.S. workers currently receive about half of the nation’s total income, with half of that going to the top 1%. Grantham is shocked, noting that the last time the US had a wage gap so extreme was just before the 1930’s Depression. He says that income inequality at these levels takes a real toll on ordinary workers and society as a whole, and I totally agree. To narrow the gap and improve the lot of ordinary workers, Grantham suggests investing in education, training, and changing the US tax structure to make it fairer – ring any bells anyone??
Ideas like these are at the heart of Labour’s policy. The trouble we face under a National government is that they have put extra money in the hands of the people at the top of the heap, but they are either saving it or, as Grantham says, “buying BMW’s”, which does nothing for the economy. I firmly believe that we would all be much better off by putting more cash in the hands of those who will spend it – and this would benefit the whole economy, promoting economic growth instead of choking it off.
We are constantly reassured by National that the economy is doing well – this may be true compared to the basket case countries of Europe, but NZ’s rate of economic growth nose-dived to 0.1% in the June quarter – it’s great to have the Rugby World Cup to enjoy at the moment, but the news that the economy has choked got buried.
Fortunately the gap between the incomes of the rich and poor in New Zealand is not as extreme as the US, in no small part due to schemes Labour introduced like Working For Families. This was brought in after the gap between incomes blew out during the 1990’s.

The amount of our wealth held by the top 10% in NZ is very similar to the US, at around 50%. Grantham is appalled that in the US the top 1% hold 25% of the wealth. In NZ the Department of Statistics puts the figure held by the top 1% at 16%, not so very far behind. The NZ data available is very old though, (from a survey done in 2003/4) – heaven knows what it would be now. I can say however that the richest people in NZ increased their wealth by 20% over the past year, to $45.2 billion. That translates to an amazing 35% of NZ’s yearly GDP owned by 150 people. But we didn’t have 20% economic growth in 2010. We didn’t even have 2% growth. So where did all their extra wealth come from?

With 8 weeks to go until the election on 26 November, I am determined to put in the hard yards on the campaign trail. I am burning up the shoe leather in my determination to meet as many of you as I can. You can look me in the eye and see my resolve to work tirelessly on your behalf to make the Wairarapa a better place for everybody.

Bott: National’s flip-flop over Ohorere a disgrace

Labour’s Wairarapa candidate Michael Bott has slammed the National Government’s flip-flop over the future of Ohorere School in Masterton in light of John Key’s comments that the school will have no last minute reprieve (Wairarapa Times Age 30 September 2011).

“It’s an absolute disgrace that National promoted Ohorere School as a success story in their election campaign in 2008 and have since stabbed our community in the back by completely cutting the school’s funding”.
“Hayes and Key used that school and those kids in their "Ambitious for NZ" DVD in 2007, now they are in power they pull the rug from under the school and actively work to shut it down. This is a disgrace. The school has an 85% success rate in getting last chance kids back into mainstream education. “

“At $150,000 a year to run it is as cheap as chips compared to paying $100,000 per year to lock and inmate up in one of our prisons - which is where kids often end up if they drop out of school."

Bott says “Ohorere is an important school for the community which gives at risk young people a chance to get back on track in their lives and the funding cuts to the school is bad for the entire community.”

“John Hayes has done nothing to save the school. For that I say shame on him, he has let the community down.”

“Yesterday I met with South End School Principal Rod O’Leary, he told me about the important role Ohorere School plays in the community, John Hayes hasn’t bothered to ask what the experts have to say. What kind of local representative is he? No wonder his face isn't on his party’s hoardings, I'd be ashamed too if I used Ohorere and those children like National has."

Bott says he will lead a strong fight to save the school. ""Far from closing Ohorere down, we need more of them. Wairarapa can be proud of its support for Ohorere."

“Labour have committed to keeping the school open and enhancing alternative education in New Zealand. We need to build a fence at the top of the cliff, not pay for ambulances at the bottom. I will fight hard to keep this school open and I ask the community to get in behind me."

Building A Brighter Future

There was a ray of hope for a while. It was when John Key announced that it was National’s plan for New Zealand wages to match those of Australia. This would stop the skill drain across the ditch and set New Zealand on a path to a brighter future.
As I travel through the northern part of the electorate (where local body by laws allow for earlier election advertising than is permitted in the south) I am confronted by National advertising placards, with John Key’s smiling face and the slogan “Building a brighter future”.
Good idea John – we all want one. The trouble is that we don’t know what he means by that. I guess we just have to decide for ourselves. For my part I go back to the original idea of wages that match those of Australia. That would indicate that the government had really got it right.

But it was an empty promise – a goal with no steps in place to actually get there.

First of all, he set up a group to flesh out the plan, headed by Don Brash, and that was the end of that. Their report indicated that the group had no idea how to achieve the aim and it disappeared into the bowels of the Beehive never to be seen again.

Then Deputy Leader Bill English stated that New Zealand’s lower wages were our competitive advantage –lower wages will lead to our that are our brighter future – (shades of Roger Douglas and Ruth Richardson?)

When a government sets up a goal like “incomes that match those of Australia”, it’s a good idea if everything else they do isn’t in head-on conflict with the plan. So where are the steps that will lead us to a brighter future?

One would expect them to be positive changes; there’s no way that cuts are going to lift the economy. I would start with putting money into early childhood education. Giving our youngest people the best possible start is certainly forward looking. Then I’d make sure that families with young children are fully supported in their difficult role of caring providers and income earners. Then I’d make sure that all school leavers were fully equipped to enter the world of work and are either immediately employed, or are in a training programme or further education. I’d make sure that government was providing the support and resources and services that are needed in a complex modern economy. I’d boost wage rates by making it illegal for any worker to be paid less than $15 an hour. And finally (although this is far from a complete list) I’d make sure that everything possible was being done to increase the productivity of New Zealand. That is a vital step. It is the step that makes the rest of the plan affordable.
It is the very opposite of what the National government is proposing.

Frequently when talking to people in the Wairarapa electorate, I hear comments suggesting that the party policies are the same – the tweedle-dum and tweedle-dee principle. This couldn’t be further from the truth. What I have outlined above is Labour policy. National’s policy is to cut spending on early childhood education; to reduce family support; to blame and punish people who can’t find a job, when there are no jobs out there; to limit the bargaining strength of unions so that wage increases are rare, and to leave it to employers to build the skill base of New Zealand when employers are struggling to survive.

The weird thing about National’s response to the recession is that it has reverted back to the failed free market logic of the 1980s and 90s hence a prescription of asset sales, deregulation, free market dogma domestically to counter a global economic recession caused by that very same deregulated free market dogma that fuelled the recession in the first place.

I would avoid, at all costs, cutting public spending on the grounds that the private sector can do it better. Public spending is a driver of economic growth. Take infrastructure for example. Private companies do not invest in infrastructure. The road and transport system, the electricity system, the telecom system, the postage system, the water and sewerage system, all have been built up through public spending. The failure of rail under private ownership is the perfect example.

Then there is the secondary infrastructure of any civilised society; the public services such as the health system, the libraries, the universities and polytechs. The stuff that supports the growth and development of people and supports and generates a highly educated and skilled work force. As economies grow, the demands become more complex and more expensive, but the services needed to support the new economy become more and more essential. Cuts in public spending are entirely justifiable when there is waste, but when they are cuts because of an ideological stance that public provision is bad and private provision is good, the result, as we have seen twice before in recent times, can mean economic collapse.

We can have an economy that is strong enough to pay our people well, and to stop the exodus of our most skilled workers in both the public and private sectors. We can build our productivity by a planned approach that I would expect a government to pursue actively. And it would include free education and quality education at every level and most importantly, it would not include selling our money earning assets to private interests.

It won’t be a brighter future if we can’t afford to turn on the lights.

Income Inequality Increasing

National’s strategy to lift us out of recession is creating high unemployment, low wages, few jobs, and no vision of a future that might lift our spirits. Labour will lift businesses, families and workers out of recession as we have done before.

Sadly since the current Government has been in office the number of families who can’t make ends meet on their income has increased and the number of families that need to go to a food bank continues to increase.

Last week I was invited to Super Grans in Masterton with Labour leader Phil Goff. We both were impressed at the dedication of the women we saw teaching young people how to prepare a nutritious meal from a food bank parcel.

The Salvation Army says it gave about 35,000 food parcels in the first six months of this year, compared to 53,000 for the whole of last year. Every week I am out listening to people in the Wairarapa and I continually hear stories of families below the poverty line desperately seeking help. The facts are out there on the streets, and at the social services agencies who are at the front-line in helping those most in need.

This reliance on the food bank to make ends meet also accompanies a growth in inequality between those who have grown in wealth and those who now have less. Inequality reduced from 2001 under Labour and continued to reduce throughout Labour’s last term, mainly as the result of Working for Families, but it’s returned sharply since the end of last year. A change of government has seen policy veer sharply away from active redistribution and the recent changes to income tax have favoured the better off.

The wealth of the 150 richest people in New Zealand increased by more than $7 billion last year, and every one of these people got at least a thousand dollars a week in tax cuts. The truth is that a small number of New Zealanders hold 50 per cent of our total wealth.

Massive income inequality was a factor in the great depression and was also a principal feature leading to the financial collapse of 2008. The high level of inequality created the opportunities that made it possible for many to get rich. They made decisions that they knew or should have known were dangerous and destructive to their institutions and the economy, and of course to themselves once the crash happened.

When the fruits of growth in productivity go disproportionately to a small part of the population, the result can only be disaster. In 1914, Henry Ford of Ford Motors doubled the wages he was paying to $5 (US) a day. He said he wanted his workers to be able to afford the cars they were making. He saw them as part of the population Ford was selling to. Today any company can make more profit by driving down the wages they pay but the result is economic disaster – and it is one which I see reflected in the Wairarapa electorate – the lowest paid electorate in the country. The trouble is that the workers of the Wairarapa are also the purchasers and consumers of the Wairarapa. They are the heart of the local economy.

High levels of inequality mean an increase in poverty and growing health and social problems - worsening mental health, a rise in addictions, obesity, teenage pregnancies, higher imprisonment, less trust, more murders and violence, worse social mobility, and the list goes on.

Professor of Public Health Philippa Howden-Chapman, from Otago University, recently showed that New Zealand's infant mortality rate before the mid-1980s was comparable to Denmark, but was now almost twice as high as Denmark. This is linked to inequality. As Professor Howden-Chapman says, "The period when our income inequality started to rise very rapidly ... there's a strong association with the way this terrible disease [meningococcal disease] took off in New Zealand. It should not occur in a developed country."

Labour is working hard to correct the imbalance created by National. Borrowing millions each week to fund tax-cuts, the bulk of which go to the top 10 percent of income earners in a recession is madness. Our undertaking to remove the tax on fresh fruit and vegetables is not just about lowering food costs. It’s about healthy food. It’s about good quality school lunches. It is part of Labour’s wider programme of support for families with young children.

The promise to make the first $100 of income each week tax free is also one part of a wider programme – some of which can be seen in the announced plan for a tax on capital gains. There will be a shift away from National’s tax benefits for the top elite. Income above $150,000 a year will be taxed at 39%.

Increasing the minimum wage to $15 has huge implications for our economy. It is a simple and obvious move which has a major effect on the local economy of every town in the Wairarapa electorate. $15 an hour is still close to the poverty borderline but the effect is not just on the wage earner, but also on the local economy. Small businesses are going broke because customers don’t have the money to spend. Any wage increase can lead on to an economy that supports jobs and growth.

If you’re in a hole... You don't sell your ladder!

The official period of the election campaign began on 26th August – three months before election day. Now you will see bill boards and TV promotions and information about issues that will help you decide.

I’m happy to say that many of the billboards you will see show my smiling face, with a big tick for Michael Bott. I have already had a few digs in the ribs about the tie I am wearing – pink. Perhaps it should have been red but there is nothing wrong with “passionate pink” for an image.

The other billboards coming your way include a promise to remove the 15% tax on fresh fruit and vegetables; to make the first $100 a week of you pay tax free; and to increase the minimum wage to $15 an hour. My favourite is the billboard against selling our state owned enterprises like the power generators : “When you are in a hole – don’t sell your ladder”.

The trouble with electioneering is that we have to get messages down to no more than the few words that will fit on a bill board. So my job in the run up to the election is to flesh out those billboards so that they mean more than what you get from the first hit; as I am constantly doing at meetings and at peoples front doors.

The undertaking to remove the tax on fresh fruit and vegetables is not just about lowering food costs. It’s about healthy food. It’s about good quality school lunches. It is part of Labour’s wider programme of support for families with young children.

The promise to make the first $100 of income each week tax free is also one part of a wider programme – some of which can be seen in the announced plan for a tax on capital gains. There will be a shift away from National’s tax benefits for the rich. Income above $150,000 a year will be taxed at 39%.

Increasing the minimum wage to $15 has huge implications for our economy. It is a simple and obvious move which has a major effect on the local economy of every town in the Wairarapa electorate. $15 an hour is still close to the poverty borderline but the effect is not just on the wage earner, but also on the local economy. Small businesses are going broke because customers don’t have the money to spend. Any wage increase will benefit not just the earner.

The National government’s strategy to lift us out of recession is creating high unemployment, low wages, few jobs, and no vision of a future that might lift our spirits. Labour will lift businesses, families and workers out of recession as we have done before.