Heat on National over accumulating problems

It’s normal for an incumbent governing party to accumulate problems, especially when well into their third term.

And it’s normal opponents to keep highlighting these problems and keep hammering the Government with them. As Greg Presland has done at The Standard in National’s terrible deal making.

John Key’s reputation as a formidable wheeler dealer deal maker is clearly mythological rather than real. And a series of deals have been completed based entirely on a prejudice that private enterprise does things better than the state.  But the reality does not match National’s ideologically blinkered view.

Attacking Key on one of his claimed or perceived strengths.

These deals include the following and there are multiple posts on The Standard on each one.

  • Novopay – the go live decision that has cost us $45 million was signed off by English, Joyce and Foss despite the awareness that there were multiple faultswith the system at the time.
  • Tiwai Point and Rio Tinto – where a foreign multinational corporation exploitedthe Government’s insistence of partially privatising our power companies and was paid $30 million dollars to continue in business for a short period of time.
  • Warner Brothers – a threat to move filming overseas when clearly this would not happen resulted in $30 million tax credits, rushed legislation and some manufactured news for John Key.  Irish Bill’s analysis here is compulsory reading if you want to understand the extent of the duplicity that National engaged in.
  • Saudi sheep – where we have the payment of a failed bribe, a sheep farm in a Saudi desert where most of the lambs died, negotiation of a MOU with a foreign state where National’s behaviour has been described as duplicitous and an active attempt to avoid legal and bureaucratic oversight.
  • Trans Pacific partnership – where we are giving up our sovereignty, Pharmac’s effectiveness and opening up our Government being sued whenever it acts in the public good all for the possibility of a minuscule increase in overseas markets for milk we currently produce at a loss.
  • Sky City – where the Government has sold legislative provisions, engaged in a contractual process described as banana republic stuff without the bananas and created future increased problem gambling and misery for a convention centre with hopelessly optimistic predictions of job creation and economic activity.
  • Serco – it has become abundantly clear that the so called innovative approach does not exist and Serco’s profits depend on cutting prison officer numbers and allowing the gangs to take over.  Inmate deaths, the hiding of violent incidents because they affect the bottom line, rampant drug taking and prisoner violence appear to have become the norm.
  • Charter schools – where instead of closing a failing charter school as recommended Hekia Parata gave that school more money.

And National’s economic strategy?  It appears to be a combination of trust private enterprise, multiple dairy conversions, a cycleway (remember that?), building holiday highways, an Auckland real estate boom and precious little else.  National clearly lacks the skills to create a modern economy and a modern state.  Without heavy borrowing and the Christchurch rebuild our economy would be in tatters.

It is not only the lack of substance that is becoming increasing clear.  It is also that National’s and Key’s style in creating a media narrative that does not match reality is now being increasingly clear.  About time.

I don’t think all of those should be much of a problem on their own. It’s easy to surmise Labour would have done something to rescue Tiwai Point, while one Charter School has severe problems others seem to be doing ok and Warner Bros/The Hobbitt have helped New Zealand’s tourism industry substantially – see Tourism set to overtake dairy as largest export earner.

But Novopay was a debacle, Sky City has looked shaky if not shonky at times and the Saudi sheep – what happened and how National have handled the issue over the last month – looks awful.

So accumulatively the heat is on National.

They are going to have to be seen to sort some of this stuff out or the voters will sort them out in 2017.

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20 Comments

  1. Mike C

     /  9th August 2015

    Over the past seven years, there have been many times that I have thought that John Keys Government couldn’t possibly dig themselves out of one hole or another, but every single time, John Key has done it 🙂

    John Key is a long term planner who is also capable of adapting and changing direction at short notice, which I think is one of the major driving forces behind his success.

    I have no doubt whatsoever that John Key is already figuring out how to turn most of the above problems around.

    Reply
  2. pdm

     /  9th August 2015

    Wasn’t it Labour that set Novopay rolling?

    Reply
  3. Labour via its “we’re not Labour” mouthpieces trying to push a barrow of National incompetence.

    If this is the extent then its a pretty poor attempt at undermining Nationals governance of the Country from Late 2008 to now.

    My main criticism of National is they haven’t done enough to cut back on the never ending Social Welfare state taxpayers are yoked to…

    Novopay – ministers agreed to it going live on advise from the ministry. Pretty simple really the Ministry cocked up. And the contract was let by Labour. People forget when Datacom delivered on the Education Payroll system replaced by Novopay it wasn’t pretty either to begin with

    Sky City the deal of pokies for Convention centre was sounded. Joyce floating kites about kicking cash in was stupid in the extreme… particularly when Sky City had just paid out 120 million in dividends on free cashflow of 110 million. They where taking the proverbial asking for taxpayers dosh

    Serco? This is more about the Corrections Association trying to protect their patch… Rangi Kemaras piece on Spring Hill underlined that

    Frankly I shudder to think where we would have been under a Labour government if they had held on in 2008. Goof for PM? Shearer? Cunliffe? The mind reels from the disaster that could have been

    Reply
    • My complaints of National.
      State asset sales, NZ investment culture is aimed at the real estate market, “mum and dad investors” is a false euphemism, in reality it will mostly be owned by kiwi saver schemes and foreigners.
      Manufacturing a crisis of funding at ACC, this effected me personally.
      The Defence White paper, – boy did that cause an exodus.
      reducing top tax bracket, – or at least refusing to look at raising it post ChCh quakes to reduce deficit.
      failing to look at Super
      complaining about Labours budgeting skills, when theirs is far worse, See National Debt clock, and

      Failure to have a meaningful strategy on Emissions.
      Lack of urgency , plan or clue on diversifying the economy, Im not Anti Dairy, but those farmers could do with a side business right now……

      Charter schools, – just no, it results in Creationism being taught.

      But at the other end, I look at the Labour party, its like they had a brain transplant when Helen left, So I have to agree with Daves last sentence.

      Reply
      • Shane..

        Debt clock. What was the alternative in terms of cutting spending so debt wasn’t incurred from 2008 while dealing with the economy already in recession and then the GFC hitting? Everyone bashes English for borrowing but no one offers an alternative in terms of cutting spending. What would you have done?

        Charter schools: creationism. Really? We already have religious schools integrated or special character. If charter schools lead to those currently failing getting a chance I don’t have a problem with them

        I’m a “Dad” and I participated in the Asset Sales. I know a few mums and dads who did. If you want diversification away from residential bricks and mortar you need solid, boring dividend yield stocks like utilities listed on the stock exchange. Floating 49% of the energy companies was the right thing to do for that objective.

        Super is affordable if you cut things like WFF but needs a rationale cross party plan about what the future is for it. Its a nightmare planning for retirement not knowing whats going to happen with it….

        the economy is diversified – we are not a dairy farm and nothing else. Other agricultural sectors are doing well, IT is growing rapidly, tourism is going well and will expand further with currency devaluation. Our media are loving some gloom to roll in – bad news sells, but it ain’t all bad

        I note Labour have declared Dairy is in crisis. Given their track record of turning things when declaring them a crisis I am rapt. i will only get worried about the economy if I see the US going backwards quickly… otherwise things are trending ok from my perspective

        Reply
        • Howick Boy

           /  10th August 2015

          If Income & company tax had not been cut, then NZ wouldn’t have had to borrow so much. $100 Billion is costing us about 3 Billion each year (approx 1.5 % GDP). Drop in GDP from 2007 to 2009 was “only” about 2 % each year (Res Bank figures)
          Asset sales – privatise the profits, socalise the losses eh?

          Reply
          • Alan Wilkinson

             /  10th August 2015

            You want to socialise everything. Get off your butt and make something yourself and stop whinging. Then if you don’t pay enough tax give your excess to people who need it. Or are you just a loud mouth?

            Reply
            • Howick Boy

               /  10th August 2015

              As usual, you attack the person not the comment.
              Where do I say I want to socialise everything? I worked for multi nation companies in management positions for over 40 years so have paid a fair bit of tax. I do support agencies like the Salvation Army & other charities.
              I don’t normally call people names but I’ll make an exception for you. If you want to see a loud mouth, just look in a mirror.

            • Alan Wilkinson

               /  10th August 2015

              If you want to see socialised losses look no further than NZRail. Or you could look at this assault on the taxpayer from Labour and the Greens: http://www.kiwiblog.co.nz/2015/04/what_did_the_labourgreens_power_policy_cost_the_taxpayer.html

              Higher tax during a recession could only have produced more bankruptcies, business failures and loss of jobs. Heavens knows what you managed if you don’t realise this.

          • @ HowickBoy….the tax cuts put money back in the economy when it was recessionary stimulating demand. and frankly 39% in the dollar top rate is a disincentive to work another hour. I personal favour much lower flat tax rates on income, with a relatively high thresh hold before the first tier of income tax is triggered, say 30K. of course that would mean less government spending – and again frankly that would be a good thing as Govt spending is inherently wateful from my close observations of the SOE and Govt Department I have worked for briefly

            As for asset sales – yes that is a standard Left wing comment. But it has validity. Its why i personally am against non repayable bail outs. if your in business its risk and reward – you should wear them both….

            As for the borrowing how much is to cover Christchurch rebuild and for Keynesian style infrastructure builds like roads? i personally would have favoured the English model of cut backs a bit more but then I am a cold heart fellow.

            Q: Apart from not cutting taxes when National did what would you have done to plug the deficits they inherited from labour via the WFF rort and the impacts of the GFC enhanced recession hit to tax receipts??

            Reply
            • Howick Boy

               /  10th August 2015

              Fair comments. The Govt could have put the money they received from tax back into the economy. Like you I would increase the thresh hold b4 tax is allocated but I’d increase GST to cover this. The reason is a lot of people can escape paying tax by not declaring income. A take away shop near us had an undeclared income of $1 million over 5 years. (8 month’s home detention was the sentence.)
              I’d cut back on WFF to $80 K & two kids.
              For CHCH, I would have levied at a rate of $1 per K of income up to 100K & $2 above this, Like the Oz Govt did for the Queensland floods.
              Not sure how much the tax receipts decreased from 2007 to 2009. I’d increase alcohol tax to cover this which would decrease govt spending on Courts, Police, gaols, hospitals etc.
              Thank you again for your fair comments as opposed to another poster.

  4. So the word is – time for a change, no 4th National Government etc. What a load of illogical clap trap. Think of the alternatives? Where is the leadership, business acumen, Economic success delivery, slow bu sure amelioration of the welfare problems etc etc. NZ First, supported by Greens and Labour remnants? You have to be joking. The MSM is still living in the past. Our future lies in managing our Economic, Foreign Affairs and Defence relationships with China, Japan, Australia and the USA. Anything else is playing with the problem and the geo-polltical facts of life. Stop dreaming.

    Reply
  5. @Howick Boy – sorry the nested reply function seems to have expired.

    Raising GST in my mind is a two edged sword. Yip captures the black economy cash flow very nicely, BUT it is a regressive tax hitting those on lowest incomes hardest as they tend to have little discretionary spend – i.e every pay packet goes out the door, so all there tax home dollars bar Mortgage/Rent and Rates are GST taxed.

    But yes I understand your concept of high income thresh hold before Income tax coupled with off setting higher GST rate as a revenue gathering tool. And it has some merit as it places more disposable income in the low paids hands for them to make spending choices without crippling revenue gathering [may even see more saving with a delayed tax gather via RWT on interest as a bonus?]

    Agree re WFF – capped at 2 kids and lower the upper bound markedly.

    Re CHC – I was open to the idea of a small tax with a 2-3 year duration to help fund the rebuild when the event occurred. One of the few ideas Mr Norman floated I had time for!

    My key issue around the rebuild and government spend is the free riders who didn’t but House and Contents insurance being bailed out as they have been – but a separate discussion really

    Alcohol tax? Frankly it won’t cut back on consumption – it will just drive more home brewing and illicit commercial scale distilling in my view. People like their drugs and will pay for it, you make it too expensive via taxation and it creates a niche for an entrepreneur to operate a business on the wrong side of the law…

    Reply
  6. Howick Boy

     /  11th August 2015

    “Higher tax during a recession could only have produced more bankruptcies, business failures and loss of jobs.” Yes, That’s what happens in a free market but in this case, the Govt has the money & can direct it to where the jobs are eg Tiwai point, movie industry just like Key is doing.
    Are you seriously suggesting that we fold the Rail network? Imagine all the container trucks etc on the roads

    Reply
    • Alan Wilkinson

       /  11th August 2015

      The rail network is an ongoing uneconomic disaster. We don’t have to imagine it. As a communication corridor the land is probably far more valuable than what is now on it.

      Reply
    • Alan Wilkinson

       /  11th August 2015

      “That’s what happens in a free market but in this case, the Govt has the money & can direct it to where the jobs are eg Tiwai point, movie industry just like Key is doing.”

      Doesn’t work on the scale you implied since Governments can’t beat the market for allocating resources efficiently, especially to investments.

      Reply
    • I do not understand Howick Boy’s reference to directing funds towards Tiwai Point “where the jobs are”. I agree that jobs are being created in the NZ-based movie industry and applaud the innovators who are making it work. I would like though to see a proper cost-benefit analysis of the NZ industry as I suspect in real terms it is in negative territory. Tiwai Point is another problem. In order to attract large scale production of aluminium in NZ in earlier times the then Government sold cheap electricity to Rio Tinto – an incentive with the same merit as subsidising Saudi sheep farming. The rewards at the end justify the means. I actually think the “Key think tank” are playing the game against Rio Tinto very cleverly because what is available in surplus cheap renewable electricity which is not in demand for other industries yet. By not further subsidising Rio Tinto’s electricity and setting a time scale for future negotiations, the Government is inviting Rio Tinto to find a better deal elsewhere, one which I seriously believe does not exist. Don’t send good money after bad and how does the whole project stack up in real terms, given the depreciation of the Kiwi?

      Reply

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