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Robson-on-Politics May 22 2007

Robson-on-Politics May 22 2007

Left is about wealth-creation: Right is about keeping the spoils

The history of New Zealand politics has been the history of a conflict between the progressive Left promoting wealth-creation via national economic development, social justice and human liberty versus the forces of reaction.

The Right, represented by the business lobbies and conservative social institutions, has always been obsessed with their own insecurity, fearful of change and primarily interested in protecting their own privileges.

In the 1890s, the Right opposed the massive infrastructure investment in rail, road, ports and electricity, by the first Liberal Government. The Right opposed the progressive extension of individual rights, such as universal suffrage, and the extension of social protections, such as a State-funded pension to eradicate poverty in old age.

The Right, 100 years ago, opposed the progressive policies which underwrote the higher than average living standards of the early 20th Century.


The newspaper editorials said 1935 would be the End Of The World

Ahead of the election of the first Labour Government in 1935, the obsessive neurotic newspaper editorial writers wrote that the election of a socialist government would be the end of the world, when what they really meant was that it would be the end of their world of privilege and the start of a brand new world for a majority of working families.

Universal State-funded high school education, a fundamental building-block of wealth-creation and a critical strategic advantage that developed economies have over Third World societies, was initially opposed by the Right on the basis of a fraud. They shouted that the "compulsion" by the State was an "infringement on individual rights," although their own children already went to school, and those that were forced to be educated previously lived in servitude to the privileged.

The rising power of the democratic State, as an enabler of economic development and greater social opportunity for those born with less, became, in the hateful, standard rhetoric of the Right during the 1930s and 1940s, a "threat to liberty" and to "individuals," but only, you understand, to those individuals born into privilege through accident and only able to exercise their traditional authority in the vacuum afforded by having an ineffective, weak central State.

And so it is in 2007....

Listening to the ramblings against the Labour-Progressive Budget last week by the Business Roundtable, the Destiny Christian Church and the other cheerleaders for a non-existent glorious past, is music to the ear - a nice reminder that we are making social progress and moving away from Rogernomics.

I thought I would highlight 10 progressive things about Budget 2007, but it is also important now that National is ahead in the polls to look again at exactly what it is a National-led government would do to New Zealand if elected next year.

Our 8th and most progressive budget yet

Budget 2007 was the 8th of the minority coalition government first elected in November 1999, and it was the most progressive yet. Here are just ten initiatives that struck me: A $359.3 million operating boost over four years for early childhood education, schooling and youth interventions; (A Progressive Party 2005 Manifesto objective


A $3 billion operating boost in funding for our public health system, which means more for early interventions including vaccinations, early-detection of childhood ailments and impairments and more help for the elderly;

$256.9 million operating boost to raise the entitlement of NZ Superannuation floor to no less than 66% of the average wage (That was a Progressive 2005 election policy


A $283.3 million capital boost in school and classroom building;

Increased funding in improving tertiary skills by $169.6 million in additional operating funding over the next four years and $79.7 million in additional capital spending over the same period;

$585 million in additional capital investment in infrastructure upgrades. This includes half a billion dollars for the electrification of Auckland's rail network and the upgrade of Wellington's, plus much needed improvements to the national network that was run-down after being sold-off into the private sector by the last National government in the 1990s;

An additional $630 million on a tax credit to promote private sector research and development;

$87.8 million to significantly bolster the Market Development Assistance Scheme administered by the New Zealand Trade & Enterprise;

$3.2 billion to significantly expand KiwiSaver, a fundamental part of the overall economic and social development agenda for New Zealand by this government;

The employment initiative of reducing the company tax rate to 30 per cent to match Australia's in order to encourage greater use of firms' profits to be re-invested into R&D and their workers' skills (a Progressive Party 2005 manifesto commitment


Here's a good socialist position: Cut company tax rate to 10%

This last issue, lowering the company tax rate, is one that I'm going to have to dedicate more to in Robson-on-politics ahead of Election 2008.

There has always been a lot of debate about the role of the company tax rate, and alternatives. I well remember some of the economic advisors to Progressive's predecessor, the NewLabour Party, advocating either abolishing the company tax rate altogether - or at least setting it at a much lower rate - let's say 10%.

I think it is a pro-worker, pro-job and pro-development position that should be given much greater priority than any changes to personal income tax rates. We need more saving and investing, and the historic record of the 1970s through to the 1990s is that lower and lower personal income tax rates did nothing to arrest declining household savings in New Zealand - and plenty to suggest the tax cuts made things worse and contributed significantly to weaker savings and greater loss of control over our own national productive capacity and resources. Note that setting the company tax rate is not the same as setting a progressive tax rate on personal income.


But what does National stand for? What will it do if elected?

The 3rd Labour Government set up a comprehensive individual pension system to complement our State-funded superannuation floor - but the 1975-1984 National Government tore it up and blew it all away with personal income tax cuts. National won three elections (1975, '78 and '81 with the promise of tax cuts for the rich all funded by offshore government borrowing, borrowing that we still haven't paid off).

We paid a very high price for National's big, foreign-debt financed tax-cutting policies of the past.

Has National really changed?

I fear not.

National wants a government it leads to just borrow more money overseas to fund personal income tax cuts that would mainly benefit those that least need it.

While the Labour-Progressive government is working hard to get gross government debt down to 20% of GDP, National would do the opposite - borrow up, take debt back up to 25 per cent of GDP and more - meaning higher interest payments not just for the government, but for every business and mortgage holder.


A National government would just join the credit card band-wagon and push us back to the bankrupt policies that the George Bush Administration has already tried in America.

The right -wing parties of New Zealand and America could not care less about the damage to society that their big borrowing has on the government's finances down the line. Of course, they don't care if the State is severely hurt and that ordinary families and their children pay the highest price. All they want is tax cuts for the rich, funded by borrowing from Asia and Europe.



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