Tuesday January 23, 2018   Last updated 06:39AM

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Prime Minister Ardern seizes leadership on Poverty

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Prime Minister Ardern seizes leadership on Poverty
By John Tamihere

When the Labour-led government passed its Families Package Act on a Saturday afternoon the week before Christmas, it signalled a culture and direction switch for this country and a beacon of light for thousands of New Zealanders.

This Act is significant in itself because it was able to repeal the $8.4 billion worth of tax cuts promised by the National Government. Cuts in the main that would have increased the income of very well-off New Zealanders, not the large numbers of working Kiwis who are on struggle street.

Tax cuts have been proven to be wrong for a number of reasons. Firstly, New Zealand does not have a domestic economy that allows the market to get the best production and price to the consumer. The type of market-led forces in New Zealand’s small sized economy, has led to a perverse outcome, whether that be for petrol, electricity, banking, food, construction or dairy. All of these industries are managed by cartels or oligarchs that set prices among themselves.

The perverse nature of our so called free market has led to price gouging. The amount being charged for inputs on imported material for house construction, is a case in point. It is just plain wrong to have a mark-up price of between 10-40% once the material has landed.

The new direction set with the Families Package legislation, means we no longer will accept the mantra that tax cuts are good. Why? Because there will be a monetary investment into a productive and sustainable economy with more jobs and better wages.

The average wage according to Statistics New Zealand, is $48,800 a year and the previous government loved to use average numbers. If you were not earning the average wage or above, you were deemed a loser for not working hard or not studying hard. This view relied on a position that the so called nature of the market was determined by a standard that we are all born equal.

The facts don’t lie! 50% of New Zealanders don’t earn the average wage. They are hardworking and are trying to do their best. As a consequence of the current economy, these very same people are just treading water and we need a government with the backbone to push legislation like the Families Packages Act through.

The thing with tax cuts is this, once given they are rarely taken away. And again it is important to add that tax cuts mostly advantage the top end and not the bottom end of town.

The main features of the reforms mean that at a minimum, 384,000 New Zealand families will increase their weekly income by $75. On top of that, there is a $450 energy payment that can be deployed on anything targeted at beneficiaries and superannuates.

A $60 per week best start baby benefit for the first year of a child’s life, extends to three years for low income families. The package is complex, given the amount of individual household variations for different compositions of families.

In general terms, households with children with incomes below $60,000 will receive additional payments. Overnight, children who through no fault of their own and who are born into low waged and/or beneficiary families, had a brighter Christmas and New Year because of this package.

Over the last 30 years, and in particular under the last 9 years of the National Government, John Key’s underclass that he identified by walking hand in hand with a poor Polynesian child from Mt Roskill - has increased dramatically. Hardship has increased, violence has increased, and expensive incarceration has also increased.

But now we have a Prime Minister who has seized on Child Poverty as a measure of success for her Premiership. Key would never have utilised ‘carpe diem’ to fix the underclass and that is the point of difference between the previous and current governments.

You have to go back to Michael Joseph Savage, who used government capability and capacity to raise debt from the state. Savage was known as the Father of State Housing and State Advances Loans, and he gave New Zealanders free education, housing and health and a job that paid a fair wage over 40 hours.

Or perhaps you have to go back to a David Lange for seizing on Tomorrow’s School Education promise to find a Prime Minister with the backbone and fortitude to seize on a very difficult and courageous marker of their premiership.



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