Opposition plan to rein in debt a stretch at best

In 1991, the then Minister of Finance Ruth Richardson presented probably the most infamous fiscal budget in New Zealand history. It was called the Mother of all Budgets. Controversial among even her colleagues to the point that it led to notable members of her National Party resigning from Parliament; from the National Party, the social service cuts that the budget enacted were some of the most savage in New Zealand history.

30 years later, with COVID19 afflicting the world and New Zealand, having managed to largely freed itself from the pandemic, trying to get its house back in order, National Party Finance spokesperson Paul Goldsmith wants another Ruthanasia-esque slash and burn.

I find it quite striking that Mr Goldsmith is so keen on this plan. This is particularly so when one considers that the same party has just indicated it is not keen on the idea of a health system overhaul, which would among other things;

  1. Better allocate funding for projects and resources
  2. Improve efficiency of monies distribution throughout the system
  3. Provide greater accountability to the Government and taxpayer

There are other Government ministries and departments that could do with an overhaul of how they work. One is Ministry of Social Development. I have described the issues facing them in various articles here, but it needs to be said that the legal framework under which M.S.D.’s umbrella agencies such as Study Link, Work and Income New Zealand, Child Youth and Farmily Service need to be reviewed as well.

There is more to achieving savings though, than simply cutting expenditure. If the investment in appropriate services by the Government is not adequate, this can create additional unintended issues by locking up monies by throttling those services. Simple as it may sound, the lack of willingness by politicians to understand this is really quite incredible.

But I do not think anyone should be dreadfully surprised that National are trying failed methods for the umpteenth time to lower debt. The Government of Prime Minister John Key promised “a brighter future” for New Zealanders at large. Whilst it is true that this was certainly the case for the rich top 3-5% of New Zealanders, the vast majority of New Zealanders saw little or no meaningful improvement in their financial situations.

The $80 billion in cuts being proposed by National are – to put it very mildly – deep. Their Treasury spokesperson Paul Goldsmith suggested that within one decade his party would seek to reduce debt to below 30% of Gross Domestic Product.

To achieve that National have two choices:

  • Significant tax increases, or – more likely;
  • Significant cuts to public services across the board

Based on their philosophical stand point and strong aversion to increasing taxes, massive cuts across the board to public services are far more likely. But is it possible that those cuts will be so deep as to cause lasting damage to health, social welfare, education, policing, housing and other areas with a social focus?


The last time such cuts were made, they were in the Mother of All Budgets presented by Mrs Richardson in 1991. Ruthanasia as it was crudely named by social activists at the time, was a systematic demolition in a single budget in 1991 of a solidly constructed welfare state. Social benefits were cut across the board; user pays were introduced for many requirements in hospitals and schools; state housing was handed over to companies under Government contract in all but name.

My generation of New Zealanders were in primary and intermediate school when these were announced. Having seen the intergenerational social effects of the framework of the welfare state being so deliberately assaulted, I think the push back would be substantial from both centrist and leftist New Zealand.

But am I sure that National cares?


Addressing child poverty is a long term task

For me a nation is defined by how well it treats its most vulnerable sectors of society: the elderly, the very young, the sick and those whose circumstances are the result of complex circumstances – often a mix of bad choices earlier in life and a lack of help since. It is defined by whether those people are able to live a life of dignity; are afforded same or similar chances as others; that those whose conditions are terminal are comfortable.

Children are at the very early stage of the spectrum. They have their whole lives ahead of them and how they are able to live those lives and how they are raised will go a long way towards determining what sort of person they turn into later on. They are yet to learn how the world (does not)work.

Their parents might both hold down full time minimum wage jobs and spend most of the money they get after tax just paying the rent, never mind transport, food, and other costs. They might come from a family that has only ever known poverty and was not able to grow out of it, thus being thrust into a vicious cycle that only a sea change in social welfare can address. If the family has fallen into crime, with drugs and criminal activities happening around the children, before they even go to school, they will have seen stuff no one should see.

It has taken two decades for child poverty to get where it is today. The thought that it might somehow be addressed in a single Parliamentary term is ludicrous. As the latest figures out appear to show, the number of children considered to be in poverty is stagnant. It is neither increasing or decreasing and the number of children now thought to be suffering material hardship has increased by around 4,100.

Child poverty is measured in three ways:

  • The first measure, children living in homes with income less than 50 per cent of the median (currently $1016 a week) before housing costs, counted 16.5 per cent or 183,500 children in 2018.
  • A second measure, 50 per cent of the median income¬†after housing costs

It is perhaps the third measure that resonates the most. Children in material hardship are those in homes lacking the:

  • Ability to see a doctor
  • Ability to pay power bills
  • Basic material needs – such as shoes to wear to school

Treasury estimates poverty will be reduced by 10-12% as a result of the government’s efforts. In other words 88-90% of those in poverty will still be in poverty when current measures expire. I understand solid policy takes time to formulate and implement, but this is hardly the whole sale reduction we need to have happen.

I don’t expect that New Zealand will ever quite eliminate poverty, but if we as a nation are not aiming to cut – maybe over 15-20 years – the number of children in poverty by 50% or more then our politicians are not being pushed hard enough. We are not getting “bang for buck” from them as elected Members of Parliament and we need to say so.

Minister of Social Development not enabling social development

I find the Government’s inaction on welfare to be quite baffling. Sure they have only been in office for 2 years and National had 9 years, but by now I would have thought that some substantive policy at least would be starting to make itself known to the voting public. By the same time in the Government of Prime Minister John Key several basic policies existed in outline form, which would be fleshed out over the following year.

In 2011 a person on an unemployment benefit got $204 per week. A student on a study allowance was paid $180. Thus, as I found out when I started studying for a Certificate of Business Applications at Vision College, I took a $24 per week cut in income, which across 20 weeks would have been about $480 less.

In June 2018 there were 277,000 people on the benefit. We will assume it was still $204 per week for the unemployment benefit and make that the median benefit. For 52 weeks, that is about $2.94 billion across those people. If we increased that to $250 per week across them it would come out at about $3.6 billion, which is an increase of $662,584,000.

With a surplus of $7.5 billion I think we can comfortably afford to do that.

Respectfully Minister of Development Carmel Sepuloni might mean well, but she is a Minister with completely the wrong priorities. Yes, I get that mental health is important and that we need to invest more in programmes that address its effects. Yes I get that losing someone because they committed suicide is a horrible thing.

But this is more like ambulance at the bottom of the cliff kind of stuff, when the accident – the mental health emergency – has already happened.

Ms Sepuloni would do much better to increase the benefits for several reasons, not least:

  • National did not top them up during their 9 years in office
  • Rents have significantly increased in that time and benefits have not kept pace
  • The benefit increases will help found mental health assistance for those on low incomes that might not be affordable currently

But not only should the benefits be increased substantially, they should also be indexed so that they adjust with inflation and not get slowly eroded away.

Families package starts: A first step only

Yesterday the Government’s families package was made live, fulfilling a significant promise made to support families by Labour.

Whilst I welcome this package, it is only a a start and there are several more things that need to be done for the Government to be able to say this is meaningful progress. They are:

  1. Making housing affordable
  2. Sorting out the Ministry of Social Development and its umbrella agencies
  3. Overhauling M.S.D. services
  4. Making schooling affordable
  5. Enabling grandparents who are caregivers/custodians to get better social support
  6. Looking for and removing invisible barriers to paternity for men


This is the obvious one. Without affordable housing the rest of the families programme will have superficial benefits to those who are eligible. The answers are not all in increasing allowances. The houses that are no longer considered to be meth contaminated need to be made usable again as fast as possible. The tenancy legislation needs to be reviewed since recent cases involving both tenants and landlords show its judicial provisions are in need of an overhaul.

Sorting out the Ministry of Social Development

I have mentioned the need to sort out the M.S.D. elsewhere. It has a major trust issue with clients that is as damaging to it as it is to the clients, but also there is a significant amount of internal waste in M.S.D. that suggests internal processes need an overhaul.

The M.S.D. financial services such as their benefits and allowances need to be appended to a market indicator such as the consumer price index instead of being allowed to slowly wither away.


Whilst we live in a digital age there is a real need for a back to basics approach in initial schooling. I have long had a problem with the fact that a lot of students cannot read words on a page, but also there is a need to teach mathematics on paper first – all students should know how to show the working for an equation on paper before they do it on computer. Reading, writing and counting on paper first will help to cut costs to the parents and their school. It will also enable more targetted extra assistance for special needs students to be made available.

Grandparents who are caregivers/custodians

The number of grandparents who find themselves in this role is climbing. Given this is the time when many of them will have reached retirement age and one assumes be enjoying the fruits of their working career, the complete absence of assistance to them is not so much wrong as it is criminal.  Whatever financial assistance is offered to low income parents for the purpose of raising their children should be available dollar for dollar to grandparents who find themselves taking on the role of the mother and the father.

Invisible barriers to paternity

One might think I am being sexist here. No I am not. Men trying to be responsible solo parents do find themselves coming up against barriers unforeseen, thrown up by poorly worded social legislation, unthinking public servants and Government agencies. Much of it is unintended, but just as a few sexist attitudes about women still being in the home exist, so to do the attitudes that men should leave the child raising to the womenfolk. This can range from difficulty accessing child support payments, to mental health support among other needs.

New Zealand has work to do with both genders in addressing gender equality. We pay lip service only in some respects to addressing this.

The New Zealand social emergency created by National

As we move further into the first term of the new Government, it is starting to become clear that there is a significant crisis in New Zealand society. The issues fuelling this crisis are numerous and varied, and none started on the watch of the recently ousted National-led Government. But in nine years in office these symptoms advanced far enough that combined they now pose an immediate and direct threat to New Zealand society.

National has in effect created a social emergency. The failure to address despite repeated warnings that there were problem emerging with housing, health, social welfare and justice have combined to create conditions where the so called market has left behind sections of New Zealand society whose deprivation is feeding social decay.

The conditions created consist of a combination of contributing factors. They include but are not limited to:

  • Drug addled neighbourhoods with police struggling to contain the epidemic of methamphetamine, synthetic cannabis and other harmful substances
  • Absentee parents/caregivers and a break down of parental/caregiver responsibility
  • Rampant truancy and young people leaving school with no qualifications, and no jobs or training to go to
  • School children living in inadequate housing, constantly having to move and living in conditions that are not compliant with basic human rights or housing law
  • Housing rents eating up money for food, clothes, medical expense – children go to school hungry and/or distracted

The problems start in the home or at school, but often end in a police cell. The following is a brief synopsis of how a person might go downhill. I am not suggesting that all people in such circumstances will experience this – indeed there are many fantastic parents who care very much, who go without themselves and try to be a positive influence in their child’s life, but in socio-economically deprived neighbourhoods, this is a real issue.

In the first instance at home or school, they have no food and often start the day on an empty stomach, are irritable or distracted. A failure to be settled in one spot for any length of time will mean the child has trouble settling in at school, distracted by problems at home. Over time this may fuel other problems, because the student will start getting into trouble, picking fights, associating with the wrong crowd. At home the parent/caregiver might be working long hours to make sure there is enough money to pay rent and will not be at home at critical times such as when they have homework or need underage supervision, so the children start misbehaving. At school the teachers realize that the person or people in question have a discipline problem. Homework is not being done, and the student is disruptive, argumentative. It begins to escalate with children missing school and truancy officers picking them up. At this point, the child is at an intersection in their life. At this stage the choice is stark. The child unless there is substantial intervention by the parent, the school and potentially social social workers will either leave or wind up being expelled from school with poor prospects for the future.

It never needed to be like this. And the long term cost to society, the economy and the people who know the child are substantial. If s/he devolves into drugs, then a life of crime and prison awaits. If s/he tries to turn themselves around their past – especially if a criminal history is involved – may catch up with them and hinder their future development.

This is why there is a significant and dangerous poverty issue in New Zealand. It has the potential to fuel illegal substances, crime, violence and gangs, none of which are welcome or wanted. All of which are horrendously destructive and all of which we need to shut down.