Tuesday, November 16, 2004

looking ahead


Last weekends Labour Party conference seemed, by all reports, to be a positive affair. Labour know that National can be a threat, and anything like Orewa close to the election could change poll figures even more dramatically as Dunne's worm did at the last election.

We have healthy economy, unemployment is down - well the registered ones, anyway. The unregistered ones are on other benefits and studying. Employment is up as more women enter the workforce. This time next year the election will be over, and parties are gearing up for it already.

But I can't help thinking what is worse: a National government with Brash at the helm screwing monetary and economic policy or Labour passing unpopular bills representing an unwilling public. As we all know, National can be quite mean to beneficaries, and Brash doesn’t really mind if unemployment is at seven percent if inflation is kept in check. That's more than double what it is now. But given that this current government is spending more on welfare than any government has ever done, what will Brash do next time inflation increases. Cutting unemployment benefits won't be as effective - there are fewer beneficaries. I can't see him altering taxes. Surely he won't tinker with the economy to keep wages down, given that Working For Families will be well under way. The whole point of Working for families is to make work pay; so the state is to assist in providing workers with higher incomes than beneficaries because the employers don't. Of course the lower the wages are, the higher state assistance is - and whatever the wages are, people won't want to do overtime as they will lose some of the state assistance.

Then again, if both inflation and unemployment are low, Brash won't have to bash the healthy economy, or beneficaries who won’t get as much assistance as low income families through the Working for Families package. Labour has already made its decision on beneficary families. The Greens want to restore the universal family benefit

Reintroduction of the Family benefit makes some sense with regard to addressing child poverty. Universal family benefits may assist in reducing child poverty, but it will also maintain the gap between the rich and poor families. The poor get more money but the rich, under Working for Families, get even more as they will get the in-work payment as well.

5 comments:

Anonymous said...

Even if I was able to receive money from the Working For Families package I wouldn't take it. Firstly, it is simply unefficient to pass the tax money through the State and funnel it out the other end to people.

Secondly, the people who are employed in the State to get the money back out to the masses are in jobs that are not increasing economic growth for the country. Hands up people who work for the State in these jobs who really like their jobs?

We need more people in R & D and manufacturing in agriculture, science, food sciences, and technology. It's a waste in human capital otherwise.

Matthew.

Jordan said...

The difference between Labour's social legislation and National's economic policy is that ours does not hurt anyone. Giving people the option for civil unions; adopting a harm minimisation strategy in dealing with prostitution law reform; patriating our highest Court (the three most common complaints) do not ruin people's lives. Nor do improving health services, holding the cost of education, etc.

Cutting state spending because you're cutting taxes, slashing benefits, semi-privatising the health and education systems, raising interest rates, cutting accommodation assistance, insisting on higher unemployment - these have a direct, material and negative impact on people. They are policies which hurt ordinary families to deliver gains to the top of our society.

Anonymous said...

Incidentally, I see Wisconsin [Works] voted Democrat
at the last US election... which should tell one something...

Craig

Anonymous said...

And would a National/New Zealand First coalition or
confidence/supply partnership be stable, anyway?
Remember 1998-2000? Has the electorate forgotten
it yet?

Craig

Greyshade said...

The adequacy of the family benefit pretty much depends on where you pitch the level. It was set to 1 pound a week for each child in 1946 which works out to $65 in current money values. It stayed at about (or a little less than) this level in real terms throughout the 50's and 60's while my generation were raised by our "beneficiary" mothers but slipped (in real terms) to a paltry $4.56 ($6 nominal) when it was abolished in 1991. The big thing though is that it was universal. Before working for families it wasn't worthwhile for beneficiaries with children to get jobs. Now it is but, because the benefit is still abated it's not worth increasing they're income above $40-50,000 pa - as National have been quick to point out. With a universal benefit it's worth increasing your income at any level - abatement is, in effect, double taxation and leads to ridculously high (80% plus) effective rates over broad income bands.

Why do we provide Universal age support but insist on targetting child support when it is the children who are going to have to pay for our superannuation?