TROUBLE AHEAD: The Reserve Bank has twice in a month put the kybosh on National’s “look how clever we are, we conjured up a surplus” mantra as the solution to all economic ills. I doubt Finance Minister Bill English feels any less smug. He admits one is not on the cards this year.
The Bank raised serious questions about the big issues of liquidity and stability, the housing market, our foreign owned banks and their insatiable appetite for borrowing. Dairy prices are expected to drop further, farmers who have taken on big debt may be in serious strife. Fortunately, established farmers took the opportunity to pay off debt from the high returns last year. The Canterbury rebuild, slow to get going, is going to slow off too. A tiddly surplus can’t hide the elephant in the room, our huge indebtedness and trade balance problems. Banks make money (literally and in the form of profits) by borrowing and lending, the more the better it seems. Prudential risk management still seems a quaint idea instead of a fundamental obligation. So the Reserve Bank is trying to keep them reined in. Sadly I don’t think its short, simple messages percolate far.
I see David Cameron (in whose company I am deeply discomfited) warned about the Eurozone while patting himself on the back for the UK’s improved position as if that will save the UK or the rest of us if things go belly up again. Are we to believe UK banks now leaders in prudential risk management?
Apparently many happy Aucklanders seized their new property valuations and rushed off to borrow against increased equity in their houses to buy a boat, have an overseas holiday, do some renovations and the like. My legal offsider delivered pretty brutal advice to clients in the 1980s who did the same, but it didn’t make a jot of difference. We had to bail out the by then half state-owned BNZ in 1990.
Treasurer Bill English lives off the fruits of inheritance and a well-paid job to boot. I too live off the fruits of capital inheritance (very modest compared with Bill’s), national super, a small amount of rent and a $15 dividend. Savings may be called on to top this up. Many years ago a successful businessman asked me if I knew what a capitalist was and I smartly answered ‘Me. I live off interest, a rental and dividends’. I may have had a job at the time. I believe a capital gains tax long overdue. How quickly we have re-established a class system but one, it appears, that may have less sense of noblesse oblige and social obligations than the previous one.
Handy inheritances (death duties have long since gone) and help with house purchases are huge legs up. It doesn’t get a lot of attention, and even intelligent people seem to think capital gains are achieved by the fruit of their own labours. Generally it just ain’t so although thrift can help. A quasi-hovel next door we bought wayback and in a much worse state now is still rented out at an understandably modest rental. It had been very badly altered by an overenthusiastic DIYer and wasn’t worth more capital input. Our own house has been made more liveable, the lender said we wouldn’t realise a capital gain on it, and if we have it is insubstantial but the value of the land of both houses has rocketed, not a finger raised. My lovely trees and garden (for which I laboured hard and long) is too large for me to manage now but still delights. It and the two houses will undoubtedly be bulldozed for redevelopment when we leave. I’m prepared for the real estate agent to say ‘gardens’ can detract from the price as happened to a friend many years ago.
ISIS: John Key’s ducking and diving on Dirty Politics isn’t splendid and his exaggeration of the ISIS threat inexcusable. Yes, a nasty of their variety could do something very nasty but every week we are exposed to some very nasty deeds by local nasties of the young, male unemployed variety. And some young women. ISIS is well organised and vents anger internationally in pursuit of a nasty cause. Our local lot vents theirs in random violence. Most leftwing bloggers, better informed than I am, seem to think there is no need to change our security laws. Just a smokescreen for action and pacifying a public constantly exposed to war and terror porn. And ignoring the plight of the young.
LOLLING AROUND AND EMPLOYMENT LAW CHANGE: So what can National do to not be seen as just patting themselves on the back until Christmas. Make some silly law changes? Their leader has done the international circuit (probably quite hard work) and his MPs, many of whom are not very centrist, need to be kept out of mischief. Enjoying the delights of victory in the form of patronage and perks bestowed on too many Ministers in and outside Cabinet to keep National’s caucus quiescent is not a good look.
Employment law change in respect of tea breaks is regarded as silly and unnecessary. Adjustments have always been made co-operatively where needed. The change will allow bad employers a level of licence in respect of health and safety. I don’t think there are many really bad employers but forestry and port accidents are a serious problem. There is evidence that contracted out services come with more risk-taking. However, I was hoodwinked by the mainstream media which concentrated on the tea breaks and overlooked the changes that will make contracting out much easier by allowing allowing employers to declare a mass redundancy after superficial bargaining and once again undermine unions.
The social aspect of tea breaks is good for a workplace and exchange of information on a wide range of topics. I garnered a lot of information about life and everything from older co-workers. Many workers make friends for life, meet future partners.
SOCIAL HYGIENE, GALTONIAN EUGENICS?: I had a very happy moment thanks to mishearing Paula Bennett being introduced as the Minister of Social Hygiene on Radio NZ. I heard it twice. Social Hygiene, Hitler, Galtonian eugenics? I was all attention, ears fully pricked. Then I heard the term Social Housing and realised my error. It is not as though a thread of Galtonian eugenics doesn’t susurrate through successive governments, media and general comment when it comes to assisting the less well off. It is incorrectly labelled Social Darwinism. Darwin warned against developing such theories but his followers ignored his insight. Come to think of it the term Social Housing has a bit of a whiff too.
Selling state houses to increase the housing stock flies in the face of common sense. So there it is: nothing for National to do but laze about till the next election waiting for the market to come to the rescue. But, hey, at the end of the day, National supporters haven’t done too badly have they?