Greens – wealth tax, top priorities versus bottom lines

This may be little more than semantics given how malleable election promises and committed bottom lines are – Winston Peters in particular has a record of asserting bottom lines during an election campaign that disappear from coalition arrangements.

MP Julie Anne Genter said at a small business panel discussion the a wealth was a “bottom line” for the Greens if they were to join into a second Coalition government with Labour.

But co-leader James Shaw has followed up saying it would only be a top priority, and Greens don’t do bottom lines.

Newstalk ZB – Wealth tax ‘a bottom line’ for a Greens-Labour government: Genter

The Greens election policies include a plan to make Kiwis with a net-worth greater than $1 million, pay 1 per cent of their wealth to the government as a tax.

Those worth more than $2m would pay out 2 per cent of their wealth as tax.

Greens MP Julie Anne Genter today told a Newstalk ZB small business panel discussion the tax policy was a “bottom line” condition that must be met for her party to join into a second Coalition government with Labour.

However, Labour MP Stuart Nash quickly rejected the idea, saying Labour would not be introducing a wealth tax.

“[A wealth tax was] off the table,” he said.

Genter defended the wealth tax, saying it would only affect the wealthiest 6 per cent of Kiwis.

“Any sensible economist knows that we cannot carry on with the status quo. There is a tiny percentage of New Zealanders that would be affected by this tax – they are the top 6 per cent wealthiest New Zealanders,” Genter said.

“It’s not an individual who owns a $2m house and has a $1.5m mortgage.

“Tax reform has to be a bottom line, this county is not going to be better off if we continue to allow the wealthiest people and the wealthiest New Zealanders to accumulate more and more wealth.”

However, Labour’s Nash said Treasurer Grant Robertson had ruled out imposing any wealth tax.

“As the Revenue Minister, I have had a look at a wealth tax and I think it is very, very difficult to implement,” he said.

“It’s on unrealised gains, which make it very difficult for people to pay who are asset rich, cashflow poor.”

Robertson has already emphatically ruled out the Green tax policy – tow weeks ago Grant Robertson categorically rules out adopting Greens’ tax policy if Labour is re-elected

Grant Robertson has categorically ruled out adopting the Greens’ tax policy if Labour is re-elected, but James Shaw says he’s prepared to walk away from forming a Government with them if a wealth tax isn’t adopted. 

“Reforming the tax system and ensuring that people have their basic living costs met is one of the highest priorities that we are taking into this election campaign,” Shaw told Newshub. 

National Party leader Judith Collins says that’s the Trojan horse that will storm through Labour’s “no more new taxes” if elected policy. 

“The Labour Party having released its tax plan has not ruled out doing deals with the Greens on more asset tax or anything else,” Collins said on Thursday. 

Except Labour’s finance spokesperson Grant Robertson did when Newshub asked him if he could categorically rule adopting the Greens’ tax plan. 

“Yes. This is Labour’s tax plan that we announced yesterday and I said very clearly yesterday that is what we will implement in Government,” Robertson said. 

His message is don’t even bother bringing it to the negotiating table. The only tax Robertson will add is Labour’s higher tax rate of 39 percent on income over $180,000.

“I can’t be clearer than what I’ve been,” he said. 

But Shaw seems optimistic. 

“There is the small matter of an election to go,” he said. 

And if voters send the Greens back to Parliament, Shaw says they won’t accept a raw deal. 

Newshub asked Shaw if he would walk away from negotiations if the Greens don’t get their tax plan and if he will sit on the cross benches outside Government. 

“It’s always a possibility,” he said. 

Robertson said he heard Shaw say yesterday that it was a top priority and not a bottom line. 

Though it appears he didn’t run his hard line by the boss. 

When Labour leader Jacinda Ardern was asked if she would flex to the Greens, she said, “In the aftermath of the election we deal with what the voters give us.”

That is what you call wriggle room. 

So Labour seems to have a position of a wealth tax of definitely no, maybe.

In reaction to Genter’s assertion it would be ‘a bottom line’ in any coalition negotiations Shaw has pulled Greens back to maybe.

RNZ: Wealth tax not a bottom line for Green Party but they will push for it – Shaw

Green Party co-leader James Shaw says one of his senior MPs misspoke under pressure when she said a wealth tax was one of the party’s bottom lines.

Shaw told Morning Report: “It’s a heat of the moment thing and that happens during these debates” and said the extended election campaign was taking its toll.

“People are getting tired and I think she was just pressed on the point.”

She did not accidentally “tell the truth”, he said.

Earlier this month Shaw and party co-leader Marama Davidson told RNZ they had absolutely no bottom lines.

Shaw put it like this today: “At every election we lay out a series of priorities and say ‘how many MPs do we have and are we in a position to negotiate?’

Shaw says the Greens aren’t making the tax a bottom line because “when we get into negotiations we have got to see what the result of the election is. And it’s as simple as that”.

But they will be pushing for it.

“[Tax] a top priority and we have said that. We want to make sure people have enough to live on. We know that Covid-19 has exposed those pre-existing inequalities in our society. Actually the stimulus is making those things worse because the capital is flowing through wage earners and towards asset owners, so it’s driving up house prices, and we’ve had a record close on the NZX even while the median wage has fallen.

Whether or not it becomes a bottom line depends on how many people vote for the Greens, Shaw says.

“That is ultimately the situation we are in. We want to ensure that the next government is led by Jacinda Ardern again, that the Greens are part of that government and that we are able to ensure that it is as transformational a government as possible…

“We are pushing for [tax], we are pushing to significantly expand the state home building programme… we are pushing for significant action on climate change, for sustainable farmers… and so on.

“We will be putting all those things on the table with Labour after the election and saying ‘What can we do together?’.

Obviously first Greens have to get back into Parliament. If they do it their negotiating position will depend a lot on whether Labour have a majority on their own, in which case they will be able to do what they like, or if they need the Greens to form a government, which will give the Greens a stronger hand in coalition negotiations.

But even then any agreement would have to be approved by the Green Party membership.

So top priorities and bottom lines should be taken with a grain of salt.

The top priority for all parties is to get as many votes as they can, which means saying whatever they think will attract support.

After the election policy horse trading and power position negotiations will override specific policies.

I’ve seen some interesting reactions on social media – first applause for Genter appearing to show some strength in having a bottom line on a wealth tax, and then anger that Shaw had watered the Green position down.

One example was Martyn Bradbury who posted Oh sweet Jesus – why BOTHER with the bloody Greens!

This morning I woke truly refreshed brothers and sisters.

I finally knew who I was going to vote for.

The beautiful Greens.

It had happened at the most unexpected moment.

Yesterday, the mighty Julie Anne Genter told a small business panel discussion that a bottom line for the Greens to go into Government with Labour would be their wealth tax!

It was extraordinary!

FINALLY there was a reason to vote Green!

They had brilliantly, for the first time in 3 years, realised that to play politics, you gotta throw a fucking punch!

………and then this…

Wealth tax not a bottom line for Green Party but they will push for it – Shaw

Green Party co-leader James Shaw says one of his senior MPs misspoke under pressure when she said a wealth tax was one of the party’s bottom lines.

…ARE YOU FUCKING KIDDING!!!!

WHAT ARE YOU DOING?

THIS IS THE REASON TO VOTE FOR YOU YOU FUCKING CLOWN!!!

WHY ARE YOU NOW WALKING AWAY FROM IT?????

They need to go. Just go now.

These people are fucking muppets.

Bradbury has been a political yoyo lately and this response is more emotive than most but similar sentiments have been expressed elsewhere.

While Ardern seemed to leave the door slightly ajar to Green tax policy the equivocation from Shaw pretty much guarantees that it can’t be a Green bottom line, so it will have to be a top priority, apart from the higher priority of getting back into Parliament of course.

Pre-election Economic and Fiscal Update – economy “better than predicted”

The Pre-election Economic and Fiscal Update has been released today. Minister of Finance Grant Robertson’s take on it:


  • PREFU shows economy doing better than forecast
  • Unemployment to peak at 7.8%, down from 9.8% forecast in the Budget
  • Year-to-June accounts show tax revenue, debt and OBEGAL better than forecast
  • Global forecast downgraded as COVID-19 second waves and uncertainty grows
  • Balanced plan to support critical public services, manage debt and reduce the deficit caused by COVID-19

The Pre-election Economic and Fiscal Update released today shows that the near-term economic recovery has been stronger than the Treasury and many economists predicted at the May Budget, as the economy bounced back strongly out of lockdown.

“The Treasury now forecasts the unemployment rate to peak at 7.8%, down from 9.8% forecast in the Budget, because the economy is stronger than expected. That compares to an expected peak of 10% in Australia, while countries like the US and Canada have already recorded unemployment peaks above 13%,” Finance Minister Grant Robertson said.

“The unaudited Crown accounts for the year to 30 June 2020 back up the evidence of a rebounding economy, with core Crown tax revenue of $84.9 billion coming in higher than the $82.3 billion forecast, indicating more activity than expected.

“Net core Crown debt was 27.6% of GDP at 30 June, compared to the Budget forecast of 30.2%, and the OBEGAL deficit of 7.7% of GDP at 30 June was lower than the 9.6% forecast.

“These are signs that the New Zealand economy is robust, and that our plan to eliminate COVID-19 and open up the economy faster is the right approach. We can see this in the forecasts, with the New Zealand economy predicted by the Treasury to grow by an average of 4.2% across 2021 and 2022, compared to Australia at 3.6% and the US at 3.5%.

“The Treasury – similar to other economists – initially forecast June quarter GDP to fall by about 23.5% in June from March. In today’s forecasts, the Treasury has reduced that to 16%. All this goes to show is that forecasting month-to-month, let alone years in the future, is incredibly difficult with such an uncertain global environment and an unpredictable virus.

“However, global headwinds and this 1-in-100 year economic shock caused by COVID-19 will have a long-term effect on the Government’s books.

“The forecasts illustrate our balanced plan to manage debt and reduce the deficit caused by COVID-19, while protecting our investment in services like health and education.

“COVID-19 is hurting economies around the world but because New Zealand went into this with low debt and a growing economy, we will come out better than other advanced countries,” Grant Robertson said.

“Policies like the Wage Subsidy, business tax refunds and small business cashflow loans protected jobs and kept businesses going. We’ve also invested to secure PPE and ventilators, and make sure our testing and contact tracing systems are world-class. Taking on debt to fund this response is the right thing to do as we fight COVID-19.

“There is no free lunch here.These measures require significant investment. It has been necessary to use the Government’s strong financial position to do this.

“What counts is our strong track record. Before COVID-19, despite constant urging to the contrary we stayed disciplined with our spending and reduced debt below 20% of GDP while successfully investing in critical public services.

“Our strong starting position that means even at its peak of around 56%, New Zealand’s net debt will be considerably lower than other economies around the world – advanced economies went into COVID-19 with net debt averaging about 80% of GDP.

“The PREFU’s long-term projection model shows debt reducing to 48% of GDP by the end of the projection period. The difference between debt of 56% and 48% at the end of the projection period represents $46 billion less debt than if debt just remained at its peak.

“The projections show the deficit caused by COVID-19 reduces steadily each year from 10.5% of GDP this year, to less than 1% of GDP by June 2028.

“The PREFU also shows the benefit of locking in low interest rates for the long-term debt that has been used to fund the response, with annual core Crown finance costs forecast to reduce by around $800 million over the next four years.

“Because the Government can borrow for 20 years or longer at rates below 1%, it makes sense to lock these in now to fund the response before interest rates rise. Because the Treasury has already been able to secure more funding at lower rates, and because the Government’s cash position has improved since the Budget, the Treasury today announced it has reduced its debt programme over the next four years by $10 billion.

“There are challenges ahead, but we have a five point plan to grow the economy, support businesses and seize the opportunities created by our world-leading COVID response.”


While the economy may not be as bad as predicted the effects could have been delayed and may be yet to bite. Or not.

Shaw sort of talks tough on tax and other coalition demands

Following a ‘pledge’ by Grant Robertson that tax-wise Labour “we will only implement the changes that Labour is campaigning on” next term – see Labour’s underwhelming tax policy – Green leader James Shaw sort of talked tough, saying Greens would consider not forming a coalition if they didn’t get what they wanted.

Shaw said that a wealth tax would be ‘a top priority’ when asked if it would be a bottom line.

Stuff: Labour rules out Green Party’s wealth tax in any Government it forms

The Labour Party has ruled out implementing the Green Party’s wealth tax.

Finance Minister Grant Robertson said no new taxes or other changes to income tax would be introduced in the term.

He was asked if that included proposals from possible coalition partners, such as the Green Party who are campaigning on a substantial wealth tax on millionaires.

“This is Labour’s tax policy. We are committing to not implementing anything other than this if we are in Government,” Robertson said.

He was asked again if this meant he was ruling out giving some ground to the Green Party in possible coalition talks.

“What I’m saying is that this is the policy that Labour is campaigning on, and we will only implement the changes that Labour is campaigning on,” Robertson said.

Polling consistently over 50% Labour can probably afford to talk as if they will be in a position to do what they like next term, which is nowhere near enough on tax, certainly not transformational or reforming.

But Greens are desperate for votes to get them over the threshold to keep them in Parliament, and need to move support from Labour to do that, so are trying something they have done little of before, talking tough.

ODT/NZH: Greens prepared to play hard ball on forming next Government

The Greens are prepared to forego a coalition or confidence and supply arrangement and sit on the crossbenches if post-election talks do not go their way.

Co-leader James Shaw made the comments on Thursday, saying the only post-election deal that was off the table completely was one which would give National power.

However, he said if the Greens held the balance of power it was “always a possibility” that it would walk away from negotiations with Labour if they could not get the gains they wanted.

If there was no coalition or confidence and supply agreement, that would force a minority Labour government to seek the Greens’ support for legislation on a case-by-case basis.

He wouldn’t say what the Greens’ bottom lines in those talks were, but said a wealth tax was a “top priority”.

First the Greens have to get enough votes to get back into Parliament. They also need to hope that Labour don’t get enough votes to have a one party majority (which would enable them to do as they please).

And they also have to learn to do tough negotiations, something they seem unfamiliar with. Within the Green Party they make decisions by consensus, which is quite a different skill to doing inter-party coalition negotiations.

Time will tell whether they get enough votes, and if the do whether they can walk the tough talk.

Shaw also made other indications of demands.

He would also be pushing for co-leader Marama Davidson to be a minister and suggested a Green MP hold the agriculture portfolio.

If Greens are in coalition then Davidson should be one of their ministers, bu this is a different approach to this term when they chose for Davidson to lead from outside Government.

I’d be very surprised if Labour gave Greens the agriculture portfolio.

Shaw said a new Labour-led government would need to be in partnership with the Greens for it to be truly transformational.

“I think, in the next Parliament if Labour and the Greens are able to form a government together, then you will see a truly progressive government for New Zealand.”

The Greens need to push this line to take votes from Labour, but it provides ammunition to opponents, who will say that their are risks with a Labour+Green government getting radical, but there’s been no sign of Labour going anywhere near radical. Instead they look very centrist conservative.

If the Greens were in a position to negotiate a post-election deal, Shaw said it would be up to the party’s members to give any deal the nod.

It makes tough negotiations difficult if the negotiators have to refer to party members to confirm and deals.

Shaw:

“If you look at the policies we have released so far … those give you an indication of where we want to be able to play a role in government.”

He went on to specifically name-check its wealth tax policy as well as its minimum income scheme, clean energy and its upcoming agriculture policy.

Asked if the Greens wealth tax plan was a “bottom line,” Shaw said that it was a “top priority”.

Labour have made it clear it is not an option at all for them.

Greens have some tough times ahead. First they have to make it back into Parliament. Then if they do they have to hope Labour don’t have a majority. They will also hope NZ First are out of the reckoning in coalition negotiations.

If they are in a position to negotiate they then have to see if tough talk can become tough negotiations.

One risk for the Greens with Shaw’s stance – if Labour get enough votes to give them a majority on their own they can do what they like with tax policy, and can hardly roll over on it for the Greens.

If this happens the Greens have virtually ruled themselves out of being included in Government if Labour offers that option.

Green reaction to Labour’s tax policy

Labour announced their tax policy yesterday that will barely change anything – see Labour’s underwhelming tax policy.

One of the strongest critics was the Green Party.

From RNZ Labour pledges to raise tax on earnings over $180k

Greens co-leader James Shaw says Labour’s policy does not address “the growing wealth gap and inequality in Aotearoa”, or help pay for the Covid response.

“The Greens believe we should ask those who are benefiting the most to chip in a bit of what they’ve gained to help the people who need support during this crisis.

“We know that a huge accelerator of this inequality is our broken tax system that taxes people who earn but not people who own,” Shaw says .

Greens emailed Labour’s announcement is not enough:

Earlier today, the Labour Party announced their proposal to introduce a new top tax rate. Fixing the way we tax here in Aotearoa is long overdue, but this isn’t the way to do it. Labour is proposing patchwork solutions when visionary change is needed.

Too many of us are struggling to put a roof over our heads, food on the table, or pay rising rents and bills. Tinkering around the edges of an already broken system isn’t enough to address the growing wealth gap and inequality — and it puts us at risk of the gap growing even further. 

We know a huge accelerator of inequality in Aotearoa is a broken system that taxes people who earn, but not people who own. Unless we fix this, the lucky few will continue to amass wealth without paying their fair share while the rest of us struggle to get by. 

It doesn’t have to be this way.

Earlier this year we announced our Poverty Action Plan: a whole new approach to tax that makes sure the wealthy pay their fair share so everyone has what they need, when they need it. 

A small 1% tax on the wealth of millionaires means big change for the rest of us. It’s a simple and fair way to even the playing field and unlock the resources all of us need to thrive and participate fully in our communities. 

By rewriting the tax rules, we’re going beyond the old, broken system and guaranteeing that everyone who needs it, no matter what, has a minimum income they can rely on. Support shouldn’t be conditional and our plan isn’t either. That means support for students and people out of work, extra help if you’re sick or disabled, and simple payments for families so all kids can thrive.

When we announced our plan, Labour was dismissive and said that it relied on “heroic” assumptions. It’s not enough for us to settle for broken systems — a compassionate system is possible and we’re the only ones with the vision and the plan to make it a reality. This is why the Greens need to be at the table in the next Government. 

We are at a crossroads. We can hit reimagine Aotearoa exactly how we want it. Now, more than ever, we know how much we can achieve when we work together — this is our chance to create change that benefits all of us.

But again Labour has been dismissive of Green tax policy. Grant Robertson:

Robertson is promising no other increases or new taxes, but was asked whether that would stand if Labour needed to negotiate post election for support, with a party like the Greens, that has a more aggressive tax policy.

“This is the policy that Labour is campaigning on and we will only implement the changes that are in this policy,” he said.

So he has effectively told the Greens to get stuffed.

With Labour polling at over 50% he can probably be arrogant.

And with Greens polling mostly close to the 5% threshold and 3.2% in the latest (UMR) poll they may have little or no say in the next Government.

Labour’s underwhelming tax policy

Grant Robertson announced Labour’s tax policy yesterday, not Jacinda Ardern. There’s not much to it, and it was criticised from the left and the right.

So what are the changes? Is Labour putting up taxes?

Our balanced plan protects vital services like education and health and keeps a lid on debt. 

Our three tax policies are:

– A new top income tax rate of 39% – only affecting income over $180,000 

– A freeze on fuel tax increases and no new taxes for the entire term

 – Closing tax loopholes to make multinational corporations pay their fair share 

Just the 2% highest earners will pay more tax – this means MPs (excluding party leaders and ministers) will avoid the higher tax.

The pledge not to increase any other tax in their next term actually means that with bracket creep middle income earners will continue to be taxed at a slightly higher overall tax rate with every increase in their income. This has been happening since the last lower bracket adjustment about ten years ago.

Governments have been promising to ‘close loopholes’ used by multinational corporations for many years, with little changing.

The projected increase in tax take will be only about half a billion dollars a year, which won’t come close to paying back the many billions of dollars borrowed to address the Covid Pandemic.

There appears to be nothing new to try to address property assets – Labour’s announcement mentioned only what they have already done, which seems to have done nothing to reduce property inflation.

They continue to promote ‘fairness’ – “We’re improving the fairness of our tax system to make sure everyone is paying their fair share”. Fairness is in the eye of the payer – most people think it’s fair for others to pay more tax, not them.

National and ACT and others tending right criticised the higher tax bracket.

Goldsmith, Seymour slam higher tax rates

Labour’s opponents say more tax is not the answer to the economic challenges facing New Zealand.

“No country’s ever taxed its way out of recession,” National’s Paul Goldsmith says.

“And this is classic Labour Party policy, spend more, tax more.”

“And there’s a very big question as to how much actual revenue will be gained because this will be great for tax planners and accountants to work their way around.”

Goldsmith also warned this is “just the beginning”.

ACT leader David Seymour said the new rate announced by Labour would raise little revenue and describes it as “divisive populism”.

“Jacinda Ardern likes to say we’re all in this together, but Labour is picking on a small group of New Zealanders to fund the Covid-19 recovery.

“Labour is telling young New Zealanders ‘if you study hard, get good grades, get a good job, save money, and invest wisely, we’ll tax you harder’ – that’s the wrong message,” Seymour says.

One valid criticism was that the Trust tax rate was not being increased so would be 11% lower than the highest bracket. This is likely to increase the use of trusts to try to avoid tax.

The top bracket will also increase to significantly more than the business tax rate, which will also encourage ‘management’ of income and assets to try to reduce tax.

Greens were amongst the strongest critics – see Green reaction to Labour’s tax policy.

But on current polling Greens and NZ First look like struggling to make the threshold and may not be in the next Government.

The latest UMR poll (25 Aug – 2 Sep 2020):

  • Labour 53%
  • National 29%
  • ACT 6.2%
  • NZ First 3.9%
  • Greens 3.2%

It’s looking like Labour may be able to govern alone, or at least with a majority. And they are acting like they believe that will happen.

Robertson is promising no other increases or new taxes, but was asked whether that would stand if Labour needed to negotiate post election for support, with a party like the Greens, that has a more aggressive tax policy.

“This is the policy that Labour is campaigning on and we will only implement the changes that are in this policy,” he said.

That could be seen as confidence or arrogance.

A number of ‘shovel ready’ funding decisions “made in haste” and “not high quality”

Greens are in damage control and leader leader James Shaw continues to copy flak for his decision to approve a $11.7 million grant to a private green school, which is contrary to longstanding Green Party policy (see Greens under fire for $11m private school funding).

But in an apparent attempt in trying to mitigate “creating a mess right at this time at the start of an election campaign” Shaw has said that a number of decisions made were “made in haste” and “not high quality”.

Stuff: James Shaw apologises for school decision, saying he wouldn’t do it again

He said that the speed of the process had resulted in some poor decisions.

“I have to say I’m unimpressed with the whole decision-making process,” Shaw said, referencing the speed with which decisions were made.

“There were a number of decisions that weren’t high quality decisions, that were made in haste to support the country during a crisis,” he said.

I wonder if Shaw will elaborate on which of the other funding decisions have not been high quality.

More from Shaw on the private school decision:

The grant to the Green School in Taranaki from the $3 billion “shovel-ready” projects fund was made alongside ministers from other parties, and in his capacity as associate finance minister, rather than Green co-leader, but Shaw told members that wasn’t good enough.

“I want to apologise to you and the wider Green Party whānau for creating a mess right at this time at the start of an election campaign”.

“I want to apologise for the decision itself. If I was in the same position again I wouldn’t make the same decision”.

I’m sure he wouldn’t make the same decision knowing what a hypocrisy mess he has created for the Greens.

“We are working to fix it,” Shaw said.

“We entered this in good faith, we can’t simply say we’d dump it. It would ultimately be unfair to the other side and be exposed to legal risk”.

Nevertheless, members were told there would be a wider public apology and “resolution” sometime next week.

It would certainly be unfair to withdraw funding already decided on.

But what other sort of fix or resolution is possible? Labour are not offering any help.

Newshub: Multi-million dollar funding for private Green School in Taranaki going ahead despite backlash

Education Minister Chris Hipkins said on Thursday the funding was not something he would have prioritised for the education sector and said the funding for Green School was something the Greens wanted.  

“Ultimately, that was something the Green Party advocated quite strongly for and so it was one of their wins, if you like, out of the shovel-ready projects area. It’s not necessarily a project that I would’ve prioritised.”

Finance Minister Grant Robertson confirmed on Friday the funding will still go ahead despite the backlash because he believes the Government should keep its word.  

“I can understand that there are people who perhaps don’t like it or would rather the decision was changed. But I think the Government’s got to act in good faith here with an applicant and so I’ve got no intention to do that,” Robertson said. 

Robertson said the funding was signed off as part of 150 shovel-ready projects the Government approved to help stimulate the economy. He said the funding is separate from the funding that goes to the education sector.

 I wonder how many of those 150 signed off projects are not high quality in addition to Shaw’s big mistake?

More on Shaw’s decision.

Luke Malpass (Stuff): Hypocrisy, thy colour is Green

Hypocrisy, thy colour is Green.

Or, perhaps more specifically, thy name is James Shaw.

It’s almost a quarter of the money set aside for the Climate Change Commission that Shaw specifically mentioned in his 2019 Budget speech.

The leader of the Green Party, which purports publicly to be the party of the downtrodden and dispossessed, has inadvertently revealed itself for what many think it actually is – a party that mostly serves well-heeled Kiwis in secure and well-paid employment that care about the environment, climate change and want to go cycling and tramping on the weekend.

Stuff understands that the school’s proposal for funding was originally rejected by both the Treasury and the Cabinet committee of the Government’s economic development ministers.

The school incident shows Shaw is just as prepared as NZ First is to wring money out of the Government for pet projects. Now, even worse, Shaw is trying to get the Government to revoke the cash it has already committed to the school. Talk about principles.

It is almost inexplicable that Shaw thought this was a good idea on political grounds, or justifiable on equity grounds. Even the idea that this “creates jobs” also looks dubious. At best, it substitutes one set of jobs for another, as much of the employment will be temporary and go to builders and contractors.

This decision will be an albatross around Shaw’s neck for the rest of his career, which has been carefully built around being an unthreatening, pragmatic Green with integrity.

It’s going be tough for the Greens to keep their support above the 5% threshold after this faux pas from the hapless Shaw.

Looming job and work hours crunch

The number of people in work recovered in June but there are still 20,000 fewer jobs than before the effects of Covid hit at the end of March, and earnings are down – many people have had wage rates cuts and ordinary and overtime hours cut.

While the New Zealand economy has weathered Covid reasonably well (due to a large amount of Government borrowing) a deep recession is predicted.

The Covid wage subsidy, which is propping up hours and jobs, ends next month so there is a looming job loss and wage cut crunch, unless there’s a sudden turnaround in business activity.

Stuff: Job numbers continue to recover after the Covid-19 slump, but wages still down

The number of jobs filled has continued to rise after the April lockdown, according to Stats NZ numbers out on Tuesday.

Filled jobs were up by 2053 in June, to 2.2 million. This followed a rise of 14,399 jobs in May.

Stats NZ economics statistics manager Sue Chapman said there had been month-on-month increases over the last two months after the sharp drop in April of more than 35,000 jobs.

So that’s about 18,000 down from March.

“We calculate filled jobs by averaging weekly jobs paid throughout the month, based on tax data. Filled jobs include jobs paid by employers who are being subsidised by the Covid-19 wage subsidy scheme.”

But many people who have kept their jobs have had pay cuts. The subsidy for people who had been full time requires them to be paid at least 80% of their previous wages – many have had their pay cut to 80%.

Gross earnings for the three months ending June were down $304 million (0.9 percent) on earnings in the March quarter.

This was the first time since the series began in 1999 that June quarter gross earnings were lower than March, Chapman said.

“While job numbers dropped and then started to recover, it is clear that salaries and wages received throughout the quarter have taken a hit,” Chapman said.

And it is predicted to get quite a bit worse.

Christina Leung, principal economist with the New Zealand Institute of Economic Research (NZEIR) said around 2 million people were either on the benefit or the wage subsidy scheme, which represented around 53 per cent of the working age population.

Around 65 per cent of people employed are on the wage subsidy scheme, she said.

“We forecast job losses of over 200,000 by June 2021,” Leung said.

“We expect unemployment rate to peak at around 8 per cent in late 2022. 

That’s over a year away.

The wage subsidy runs out next month, but I’m hearing employers already looking at what to do from September, and a number are talking about job losses or further pay cuts.

The actual impact of that in numbers will be felt straight away by many workers, but the total numbers probably won’t be apparent until after the election.

And some cuts will be delayed. Many companies are waiting and seeing while propped up by the subsidy. Some have already signalled closures later – a department store in Dunedin will close next January.

The economic news isn’t all bad. Grant Robertson in parliament yesterday – 1. Question No. 1—Finance:

On Friday, Statistics New Zealand released overseas merchandise trade statistics for June 2020. These showed total exports were up from the same time last year.

Goods exports in June were worth $5.1 billion—up $107 million from June 2019. The rise was led by dairy; with milk powder, butter, and cheese up $90 million, or 7.9 percent.

The value of log exports was also up by 7 percent since June 2019. This strong performance from our exporters contributed to a monthly trade surplus of $426 million in June.

The trade deficit for the year ending June was $1.2 billion—the smallest annual trade deficit since December 2014. All of this effort by our exporters demonstrates the continued strength of that part of our economy, despite the difficult prevailing conditions arising from the COVID-19 pandemic.

This is just some sectors. While the trade deficit is relatively small that will be affected by lower imports. And some sectors, particularly tourism and hospitality, have been badly affected, and the outlook for them over the next few months looks bleak.

And we are not over Covid yet, especially world-wide, but as some places have shown (like Victoria in Australia) it can easily come back.

Stuff: Mortgage holidays could be extended, wage subsidy back if needed

Minister of Finance Grant Robertson said the Reserve Bank of New Zealand extending mortgage holidays would be “justified” as he confirmed that the bank is considering elongating the scheme for Kiwi borrowers whose pay packets have taken a hit from Covid-19.

Robertson, in an interview with Stuff, also said that if parts of New Zealand were to enter a new level 3 or level 4 lock down in the event of Covid-19 community transmission re-emerging, that the wage subsidy could be reinstated.

That’s if Covid comes back, but people are already significantly affected.

According to the New Zealand Bankers’ Association, at June 30, 7 per cent of consumer loans (almost 60,000 loans) had had all payments deferred, while another 8 per cent of consumer loans had reduced repayments.

That’s over 120,000 loans.

The next set of National Accounts are due to be released on September 17 two days before election day) and will show the extent of New Zealand’s recession. Those figures will include most of the level 4 lock down period.

Robertson said that $14 billion held back last week from the $50 billion fund the Government created to fight Covid was crucial to wheel out if the economy, which has turned up since lockdown, starts to wobble again. Such measures could be required if the global downturn starts dragging New Zealand down further, or if community transmission broke out, and new regional wage subsidies were required.

That won’t help the many workers likely to be affected when the subsidy comes off, presuming Covid stays away.

Dark economic outlook

Robertson also warned that although economic conditions in New Zealand are comparatively robust, the global economic outlook was looking darker by the day. Official figures come out with the Pre-Election Fiscal Update on August 20, but Robertson said that The Treasury has given him preliminary warnings.

“The New Zealand economy has definitely come out of this better and quicker than we thought albeit still tough circumstances. The global economic story is the opposite. It appears to be getting worse.”

So the New Zealand economy hasn’t ‘come out of this better’, the full impact of an international recession hasn’t hit here yet. And our current economic situation is propped up by billions of borrowed money.

And despite all the money being dished out many workers are likely to find things tougher still after the subsidy runs out next month.

My job is reliant on business getting going again in countries currently severely affected by Covid with no quick turn-around expected. My earnings are down to 80% and could easily drop to half time of not to zero if things don’t improve internationally over the next few months. I know of another local business cutting 50 jobs and cutting hours of remaining employees by 25%.

And with Covid cases rising world wide the worst may not be over.

Flaring virus threatens world economy’s sputtering recovery

The world economy’s fragile recovery is in danger of stalling.

A resurgence of coronavirus infections across the Asia-Pacific region, which was considered to have broadly curbed the virus more effectively than elsewhere, is being viewed as an early warning for the rest of the world.

The pandemic continues to rage in parts of the US, hot spots in Europe, and across big emerging economies including India and Brazil. With little prospect of a circuit breaker until a vaccine is discovered and distributed, governments are having to double down on the US$11 trillion worth of stimulus and unprecedented central-bank support unleashed since the crisis began.

The US Federal Reserve meets this week to decide on interest rates as US lawmakers debate another US$1 trillion fiscal stimulus package. The European Union has just signed off on a planned €750 billion crisis package and governments everywhere are having to extend support programmes.

While China’s economy returned to growth last quarter and readings on industrial output have shown a V-shaped rebound, both consumer demand and private investment remain weak.

The US rebound is stalling after coronavirus infections spiked in a host of states.

“The global economic recovery is at risk,” said Mark Zandi, chief economist at Moody’s Analytics. “Key to ensuring the global economy doesn’t slide back into recession in coming months is continued aggressive monetary and fiscal support.”

In New Zealand we may be heading for a job and earnings crunch in the next month or two, but that may just be a phase in amongst larger and longer financial turmoil.

Government puts hold on Covid fund

Government hs put a hold on the Covid fund, saying “it is not there to be used for any old project in the never-never. It is to provide support and stimulus to recover and rebuild from COVID-19”.

Sounds like this has some connection to the election and policy announcements.

Govt sets aside remaining $14bn in COVID Fund

The remainder of the COVID Response and Recovery Fund is being set aside to make sure New Zealand is in a strong position to fight whatever COVID-19 throws at the economy, Finance Minister Grant Robertson says.

“When we set up the COVID Response and Recovery Fund, the Government was clear that it was to be used for our response to keep New Zealanders safe and for immediate support to help the economic recovery.

“We are sticking to our word on this. We are investing money where it is needed to respond to COVID-19, and we are setting aside a significant sum of money to be used as needed in the future. This is the fiscally and socially responsible thing to do.

“As we look around the world, it is clear that this global pandemic is continuing to grow. In the face of this, and on-going uncertainty, now is the time to be cautious and keep our powder dry. Keeping debt under control, and supporting jobs and businesses are both important. We are committed to getting the balance right, to give New Zealand options,” Grant Robertson said.

At Budget 2020, there was $20.2 billion remaining in the Fund to be allocated. The Government has since announced a number of important investments from the Fund, including $570 million for the COVID Income Relief Payment, an extra $700 million for the wage subsidy extension, and more than $300 million to keep supporting our health response including the $150 million for extra PPE announced at the end of June. There was just over $17 billion in the Fund at the start of July.

“Cabinet has agreed that further support for ongoing health, border and economic response measures will require about $3.2 billion, with announcements to be made before the House rises. This amount includes the $760 million already announced for Three-Waters reform.

“This will leave $14 billion in the COVID Response and Recovery Fund, which is now being set aside in the event, for example, New Zealand experiences a second wave.

“We are doing everything we can to keep COVID-19 at our border – nobody wants a second wave. The responsible course of action is to make sure we are prepared for the worst – to give confidence to New Zealanders that we will be able to continue to act swiftly and decisively in our ongoing fight against this virus.”

“The Fund is not there to be used for any old project in the never-never. It is to provide support and stimulus to recover and rebuild from COVID-19.”

Greens in particular have been suggesting a variety of uses for the Covid Fund (to fund their preferred policies). National have also used the Fund in costings for their infrastructure policy.

Not clear here is whether there will be a hold also put on the Provincial Growth Fund, which has been used to address Covid problems.

Government in Southland with message of scant hope, no plan after smelter closure

Prime Minister Jacinda Ardern, Finance Minister Grant Robertson, Regional Economic Minister Shane Jones and a bunch Labour and NZ First MPs fronted up in Southland yesterday to try to address the planned closure of the Tiwai Point aluminium smelter, after Robertson had signalled on Tuesday the visit was not to save the smelter.

From a distance Winston Peters didn’t help with unified commiserations, suggesting that the Government buy the smelter. Peters has a reputation for being an astute reader of public sentiment in election campaigns, but I’m not sure Southlanders will buy that.

Stuff: Prime Minister Jacinda Ardern and Finance Minister Grant Robertson arrive in Invercargill amidst smelter closure

Senior Government ministers have arrived in Invercargill to talk with Southland leaders in regards to the closure of the Tiwai Point aluminium smelter.

Prime Minister Jacinda Ardern and Finance Minister Grant Robertson landed at Invercargill Airport on Wednesday night.

When asked, after she got off the plane, if she was in Southland to save the smelter, she said: “you’ll probably have a chance to see us tomorrow when we’ve got our stand up”.

Stuff asked Grant Robertson what he would say to Southland business leaders, he replied: “It’s a good opportunity for us to hear from all of the business leaders we’re seeing, and various others, and get a feel for the situation, and then we’ll have some stuff to say to you after that”.

Robertson signalled on Tuesday the visit was not to save the smelter.

A spokesperson from Robertson’s office said the plant was not closing until August next year, which meant there was already some transition time.

So that wasn’t a positive start for the visit. And coverage was dominated by Peters despite him not being there.

ODT:  Ardern distances herself from Peters’ smelter buy-out comments

Prime Minister Jacinda Ardern is distancing herself from the position of her Deputy, Winston Peters, over comments he made about the Tiwai Point smelter.

In an op-ed for the New Zealand Herald, Peters suggested that the Government should step in and save the Southland smelter, currently owned by Rio Tinto.

“A buy-out would give those who have the most stake in the success of the smelter, the people of Southland, the opportunity to directly benefit from owning and managing it,” he said.

But, speaking to reporters in Southland this morning, Ardern distanced herself – and in effect the Government – from Peters’ comments.

Asked specifically about what she thought of the Deputy Prime Minister’s column, Ardern replied that she had seen the position of “the leader of New Zealand First”.

In other words, Ardern was making it clear that Peters’ comments were made in his capacity as a party leader and not as a Government spokesman.

The Prime Minister added that the Government stepping in, in the way suggested by Peters, “wasn’t the nature of the conversation that was had with leaders here [in Southland] today”.

She said any talks about a bailout were not part of the conversation today either.
“For us, it was all about what happens next.”

She mentioned the fact a “transition” is needed in Southland, in terms of the jobs in the region.

With both Ardern and Robertson talking of ‘transition’ with no sign of an attempt to rescue the smelter it looks like a done deal.

There was never any chance the Government would buy the smelter. Peters will know that, he is just playing to Southland voters, but they are likely to see through him.

The Government deputation looked grim (see the ODT video).

Ardern said this morning that the Government has long had plans to help develop new economic opportunities in Southland.

She said the question now is: “How do we expedite those”.

One of the ways she suggested this could occur was through initiatives such as: R&D for food production, aquaculture, data centres and work on New Zealand’s Space agency.

But she said: “We are all in agreement that a transition [in Southland] is needed”.

So it looks like they went with no plan and nothing new to offer.

The  E tū union is affiliated to the Labour Party and even they look like they have given up on the smelter and downstream jobs and businesses that are a huge part of the Southland economy.

Stuff: Tiwai workers ‘have more clarity’ after meeting with PM

Tiwai employee and E tū union delegate Cliff Dobbie says the Government is doing all it can to get Southland going as the aluminium smelter prepares to wind down operations.

Dobbie felt he had a clearer picture of future options for his crew after meeting with Prime Minister Jacinda Ardern and Finance Minister Grant Robertson at the E tū office in Invercargill on Thursday.

While he is nearing retirement himself, Dobbie said he was worried about future income for his crew members – many of whom were under the age of 40.

But after the informal meeting over tea and biscuits, he was fairly confident they would be looked after.

“I feel a lot clearer. They didn’t beat about the bush,” Dobbie said.

E tū organiser Anna Huffstutler said the meeting focused on what a just transition would look like and who needed to be sitting around the table for those discussions.

“It’s about bringing the community and stakeholders together and creating a roadmap,” Huffstutler said.

“Government is fully supportive of that.”

Timelines for these plans would be determined by negotiations between Meridian and Rio Tinto around how the smelter will be shut down, she said.

E tū organiser Mike Kirkword said it was too early to nail down where and how Tiwai staff would be absorbed into the Southland economy.

So no fight, no hope, no plan, just acquiescence and vague platitudes from the Government and despite the closure being signalled for years.

 

 

 

Where’s the plan for Southland post-smelter?

Grant Robertson on the shutdown of Tiwai Point and loss of thousands of jobs – ‘too bad, move on’.

Jacinda Ardern on the shutdown:

While Tinto have just announced they will close their Tiwai Point aluminium smelter next year this was a well signalled possibility. The Government response (acceptance of the decision) suggested they were well aware this announcement was coming.

Grant Robertson said Government will support the people and economy of Southland:

The Government will support the Southland economy in the wake of multinational mining company Rio Tinto’s decision to follow through with its long signalled closure of the Tiwai Point aluminium smelter.

“This day has unfortunately been on the cards for some time now, but nevertheless the final decision is a blow to Southland and all those who work at the smelter,” Grant Robertson said.

Stuff: Invercargill Mayor Tim Shadbolt ‘absolutely shattered’ by news of Tiwai Aluminium Smelter closure

Labour list MP Liz Craig, who is based in Invercargill also said she was devastated by the closure news and said her thoughts were with the workers, families, and businesses affected.

Craig acknowledged it will have a huge impact on the Southland economy.

She spoke with prime minister Jacinda Ardern this morning about the impact this will have on Southland.

“I am pleased that [Finance Minister] Grant Robertson has already signalled the Government will support the Southland community in our transition, in areas such as agriculture, aquaculture and manufacturing.’’

Craig has invited Adern and Robertson to visit in Invercargill to discuss how the Government might help support those affected, grow local jobs, and create a sustainable Southland economy.

Ardern visited the smelter when they reopened a fourth potline in December 2018 – that was good news. Will she frobt up when the news is bad? So far she has left it to Robertson, who seems quite relaxed about.

Bernard Hickey: Newsroom: Why is Labour letting Tiwai Pt shut now?

Finance Minister Grant Robertson seemed much more philosophical and accepting of the news when he spoke a couple of hours later. It became clear that both the Government and Rio Tinto had called each others’ bluffs, leaving Southlanders incredulous.

“This is a blow for the people of Southland and I feel for them, but we need to look to the future,” Robertson said.

“There is a certain sense of inevitability about today’s announcement. Rio Tinto have been trying to sell Tiwai Point for about 10 years now,” he said.

The Government is spending $62b to cushion the impact of Covid-19 on the rest of the economy, including handing out over $12 billion to small to medium enterprises to keep often near-minimum wage jobs going for a few weeks.

But it appears unwilling to consider spending a few tens of millions to keep at least 2,600 highly paid jobs going in a region with few other alternatives for such high-wage jobs.

Robertson talked airily on Thursday about the prospects for agriculture and aquaculture, but in reality those jobs will be much lower wage and have yet to be invented.

He has talked repeatedly about his personal desire to avoid the mistakes made during the 1990-91 recession when manufacturing jobs were gutted in the regions and little was done to soften the blow.

The risk for the Government and those remaining high-wage jobs in the regions in the next three months is that the announcement of closures of Tiwai Point (2,600 jobs), Marsden Point (3,500 jobs) and the Glenbrook Steel Mill (3,900 jobs) could potentially all come in the next six months.

The worst recession since 1990-91 could easily be just as damaging for the regions as that one.

So far the Government response has basically been ‘too bad, move on’.

ODT editorial: Post-smelter plan must be readied

Southland does not need woolly promises of help and platitudinous pep talks. It needs a concrete plan to meet and then beat the economic and social destruction left when New Zealand Aluminium Smelters’ closes Tiwai Point.

The looming costs are hinted at in the figures most often pitched as reasons to move heaven and earth to keep the smelter online. Previous estimates suggest it accounts for more than 6% of the region’s GDP, and well over $400million to the region’s economy.

That cash keeps people in work and businesses in profit. It helps people pay their mortgages and their grocery bills, helps them support local schools and pay their sports club subscriptions, and keeps them working in and contributing to the South.

These people, families and communities do not have long to consider the effect of losing the smelter. NZAS will terminate its electricity contract with Meridian Energy in August 2021, when the wind-down is complete.

They have little time to decide what to do next and an uncertain time in which to do it. They need no reminding we face a prolonged pandemic-induced recession, and that finding good work and a strong income may be difficult.

But there has been plenty of time to prepare for the inevitability that Tiwai would be shut down.

There is little time to prepare for a post-smelter future but successive Governments have had the best part of a decade to ensure there was a plan to cope with, and then fill the gap left when Rio Tinto pulled the plug on its regionally and nationally significant operation at Tiwai Point.

Treasury, Ministry of Business, Innovation and Employment and Ministry of Social Development officials have had plenty of time, regardless of which parties were in Government, to forge all manner of strategies for a post-smelter future. They, and a succession of politicians, have had years to prepare for the inevitable.

As such, Southlanders have every right to expect Prime Minister Jacinda Ardern and Finance Minister Grant Robertson to outline robust, detailed plans when they take up Labour Invercargill List MP Liz Craig’s invitation to visit Invercargill and ‘‘discuss how the Government might help us support those affected, grow local jobs and create a sustainable future for the Southland economy’’.

If not, Southlanders have every right to feel let down by a multi-national company and by the governments that saw this coming.

Robertson seems untroubled by the problems faced by Southland.

What about Ardern? I can’t find any response from her on the shutdown announcement. Nothing since her good news PR money handout announcement on Thursday – NZ Herald: Government to bail out councils with $761m water services investment:

Prime Minister Jacinda Ardern has announced a $761 million investment to help councils upgrade “run down” water services across the country.

In a politically charged piece of symbolism, Ardern and Local Government Minister Nanaia Mahuta chose the site of the water bore found to be the source of the fatal Havelock North campylobacter outbreak in 2016 to make the announcement on Wednesday.

“Investing in water infrastructure is about investing in the health of New Zealanders.”

Southlanders are New Zealanders. They received very bad news this week. Ardern was nowhere to be seen.