The Dim-Post

February 10, 2010

On reflection

Filed under: Politics — danylmc @ 6:53 am

Taken out of context it’s a pretty robust speech and policy agenda with a fairly orthodox right-wing ideology. Fixing up all the crazy tax loopholes for the rich that Labour ignored for ten years is sensible stuff; switching taxation away from labour and towards consumption is a reasonable solution to the challenge of gathering tax revenue from our aging (soon to be retiring) population.

None of this is ‘step-change’, catch-Australia-in-15-years stuff though and that’s what the PM promised to deliver. His response to Alan Bollard’s dim view of plan-Australia was that he had a bold plan to execute a step-change. A day later he reveals he’s looking at various options.

Most of the rest of the speech is about the government announcing stuff they’ve already announced, or various economic aspirations (mining, back office hub) they’ve been talking about for over a year.

It’d be interesting to know why the policy around taxation is still so tentative: they’re dead sure about a controversial plan to dig up conservation land but awfully vague about what they’re doing with income tax thresholds and property tax. No mention at all of company tax or trusts.

It could be that the government knows what it wants to do but has some horse-trading with it’s coalition partners before they’ll sign off on it. Previously they’ve been able to play ACT and the Maori Party off against each other, but you can’t do that with the budget – and both parties are likely to want things that the other will strenuously oppose. So the details could be tricky and the final result more schizophrenic than the outline sketched by the PM.

The speech was better written than Key’s speeches were last year: very clear, less adjectives, no passive voice, sneaky writers tricks like floating opposites and linked transitions. I bet they farmed it out to a PR company.

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38 Comments »

  1. I think your analysis is fair and balanced but I have to say I prefer what Bernard Hickey had to say about Key…..

    ‘He has finally shown his colours. He is a mediocre leader without the vision or the ability to change New Zealand. He is a seat-warmer who is too scared to scare the masses.’

    Comment by ieuan — February 10, 2010 @ 7:22 am

  2. sneaky writers tricks like floating opposites and linked transitions

    Never heard of these. Can you give an example? They sound kind of cool.

    Comment by Gooner — February 10, 2010 @ 7:27 am

  3. What Gooner said.

    Also I really did expect him to mention cutting *something*. Maybe he doesn’t want to give the opposition that ‘ammo’ for the months leading up to the budget? Maybe he doesn’t have the confidence to sell it?

    Comment by StephenR — February 10, 2010 @ 7:33 am

  4. Some kind of cutting terminology would have been good but this is a framing speech not the budget and as you say StephenR why would the Government tell Labour exactly what they were going to do before the budget.

    Comment by expat — February 10, 2010 @ 7:42 am

  5. Kind of annoyed that I got all interested in a ‘framing’ speech now. Didn’t learn a lot, really – as Danyl said “awfully vague” on some aspects.

    Comment by StephenR — February 10, 2010 @ 7:50 am

  6. Floating opposites are usually used with repetition and end with reversals, they organise information or thoughts into patterns that are easy for people to recognise and absorb. For example:
    We shall go on to the end, we shall fight in France, we shall fight on the seas and oceans, we shall fight with growing confidence and growing strength in the air, we shall defend our Island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender.

    The oceans and air are floating opposites, as are the fields and hills. The reversal comes at the end when you break the pattern and make the point you’re aiming for.

    Linked transitions are when you move from one subject to another but link them, usually through a metaphor. So if you’re talking about health and moving to crime you might promise to ‘also fight the sickness of crime in our communities’. This makes a speech seem more fluid and uniform.

    Comment by danylmc — February 10, 2010 @ 7:52 am

  7. You smooth talker you Danyl. What you doing Friday nite?

    Comment by Tarquin Montford III — February 10, 2010 @ 8:01 am

  8. My favourite phrase from the speech was “it is encouraging that the loss of existing employment almost completely halted in the last quarter.” Now that’s sunny side up!

    Comment by Will de Cleene — February 10, 2010 @ 8:03 am

  9. on the whole it’s not bad. not brilliant, but I don’t think that’s possible. Labour aren’t going to bring down GST back to 12.5 if they get in but will push, with greater or lesser finness, for compensation for the less well off.

    I would have been impressed if there was somethng more concrete about making things Australians want to buy. Perhaps Key should talk to one of his neightbours who does just that.

    Comment by Neil — February 10, 2010 @ 8:03 am

  10. Danyl: fairly orthodox right-wing ideology

    Really? I’m not sure on what wing I am, but Key’s wing ain’t mine. This is stuff Labour could have done.

    And as I mentioned yesterday (and many times before) taxing consumption is left-wing religion in Europe.

    Comment by Berend de Boer — February 10, 2010 @ 8:21 am

  11. no passive voice

    Ah, but the subjunctive…

    Comment by lyndon — February 10, 2010 @ 8:22 am

  12. His response to Alan Bollard’s dim view of plan-Australia was that he had a bold plan to execute a step-change. A day later he reveals he’s looking at various options

    I saw that Phil Goff tweeted (Yes, he’s on Twitter. What a hipster!) :
    Alan Bollard – 1, John Key – 0

    I would suggest that the rest of the tweet goes something like this:
    Alan Bollard – 1, John Key – 0, Phil Goff – Not Selected

    Comment by Phil — February 10, 2010 @ 8:46 am

  13. Gooner:

    With all due (and sincere) respect to Bernard Hickey, the “leave the country!” floucing he re-heats with monotonous regularity is proof that familiarity really does breed contempt. Of course, he forgets to mention that once all these Gen X-and-Yers decamp to Aussie, they’re going to find themselves paying quite a lot of stamp duty.

    Comment by Craig Ranapia — February 10, 2010 @ 10:23 am

  14. I’m reassured that Labour has so far stayed clear of the inter-generational warfare rhetoric.

    Their present concentration on equity issues with a GST hike makes much more sense and doesn’t have the unpleasant scape-goating.

    Comment by Neil — February 10, 2010 @ 10:39 am

  15. It was a speech, not a budget. Unless you intend go into urgency and make laws the day of the speech you don’t specify what you are going to do.

    Key did what was necessary, ie, broadly flag the areas the Govt will move on without causing too much of a rush to the exits, the accountants, the lawyers or the lobbyists.

    The signalled changes moving tax from consumption towards exports, saving and investment amount to about $8 billion (TV3) are not minor and are in line with OECD practice.
    Key needed to hose down speculation on CGT and property taxes to allay panic with Mom and Pop property investors but signalled he would close the LAQC type loopholes.

    He signaled lower taxes for the top incomes but kept quiet about the hundreds of thousands whose incomes magically stop at the 15 and 38% tax levels.. expect to see significant changes here to remove the urge to set up trusts and companies that lock up income to avoid tax.

    In return for moving on trusts and company dodges he promised the necessary increased surveillance on investment vehicles so people will invest in productive enterprises (but I bet he misses the inherent conflicts in the NZX investments).

    All up I thought he did about what was possible and pragmatic. He was a long way from Roger Douglas and well short of the Bradford types, so politically he’s kept open his options till the Budget at least, and probably well beyond. For all that he looks cautious there’s no point in moving faster than the public will accept long term.

    JC

    Comment by JC — February 10, 2010 @ 10:40 am

  16. Their present concentration on equity issues with a GST hike makes much more sense

    Neil: I agree with you that it’s a more politically and intellectually defensible position for Labour, though (as I pointed out up thread) Goff and his deputy should be asked some hard questions about why they voted to introduce, then increase, GST if it’s such an evil regressive way to fuck the poor. (I also had to smile at one TV report picking a new car and a flat screen TV as their examples of how an increase in GST is going to hurt Kiwi battlers on Struggle Street. Yeah, a 2.5% increase in GST is going to stop me. Because getting thirty grand further into the hole for that new car smell was always top of my to-do list.)

    Comment by Craig Ranapia — February 10, 2010 @ 11:55 am

  17. It will be interesting to see how Labour plays this. It’s the sort of thing they should have got round to themselves and I can’t see anything that they would overturn. So they’ll have criticise without making any commitment to change.

    Much like with mining in the conservation estate. They may try and capitalise on that but I very much doubt they would put an end to any such projects if the were re-elected.

    Comment by Neil — February 10, 2010 @ 12:41 pm

  18. Mmm Goff on TV this morning certainly didn’t condemn the mining bit out of hand – nuanced responses don’t really make for good tub-thumping campaigns do they!

    Comment by StephenR — February 10, 2010 @ 12:50 pm

  19. Thanks Danyl.

    Comment by Gooner — February 10, 2010 @ 12:50 pm

  20. Neil you raise a good point. Key needs to get on with the mining asap. Once there is some holes in the ground a Labour govt won’t close them down, but they are likely to can anything that is still on the drawing board.

    Comment by Pat — February 10, 2010 @ 12:56 pm

  21. The TVNZ story on the price of a Kiwi Battler’s $61,790 car as well as being detached from reality was also completely wrong – GST at 15% will increase prices by 2.2% not 2.5%

    Comment by Mike — February 10, 2010 @ 12:57 pm

  22. “…but they are likely to can anything that is still on the drawing board.”

    I’ll wait and see if they make any firm commitment. “we promise…”, I’d be surprised if they did. It’s more likely to be “we promise to review…”

    That’s my guess based on the assumption Labour sees the same sort of economic benefit that National does.

    Comment by Neil — February 10, 2010 @ 1:36 pm

  23. Goff and his deputy should be asked some hard questions about why they voted to introduce, then increase, GST if it’s such an evil regressive way to fuck the poor

    It is an evil regressive way to fuck the poor. Was, is, and forever will be. But you have to remember that Roger Douglas was Prime Minister, and Phil Goff was an unrepentant rogernome.

    He’s repented now, or so he claims – those of us on the left have no idea exactly what he’s repented of.

    Comment by George Darroch — February 10, 2010 @ 2:49 pm

  24. Craig, on the upside, you’ve reminded me that it was Labour Finance Minister Caygill who introduced the offsetting of losses on property against taxable income.

    Comment by George Darroch — February 10, 2010 @ 2:50 pm

  25. [GST] is an evil regressive way to fuck the poor.

    No, it’s not.

    In a single time period, sure; if you spend everything you earn, the rate of GST you pay is 12.5% of your income.

    However, what the opponents of GST fail to understand is that over a longer period (eg, a working lifetime) the rate works out, in present value terms, pretty much the same for everyone regardless of changes in income or starting point.

    Why? Because those savers today become dissavers later down the line, and end up with a GST rate that is substantially higher than 12.5% of earnings.

    Comment by Phil — February 10, 2010 @ 3:32 pm

  26. [GST] is an evil regressive way to fuck the poor.

    One of the problems identified by the TWG is that the wealthy in the country are increasingly going to be older property owners who don’t pay any income tax. GST is a really good way to gather revenue from those people. If you raise benefits, WFF and lower income taxes ‘across the board’ (which is what Key has said he’ll do) then you’ve compensated everyone who is poor or earning a living. And they’re looking at some sort of property tax on top of that to drum up another 2 billion dollars. Hard to judge the merits of that, since we have no idea what it is.

    So the tax changes are fairly sensible given the wealth distribution and changing demographics of our population – but they’re not going to have any impact on economic growth.

    Just watched Bernard Hickey’s appearance on Breakfast. I’ll cheerfully admit that I don’t know what I’m talking about but Hickey really has no fucking clue. It’s unbelievable that he’s considered an expert on economics and finance.

    Comment by danylmc — February 10, 2010 @ 3:55 pm

  27. Why? Because those savers today become dissavers later down the line, and end up with a GST rate that is substantially higher than 12.5% of earnings.

    You’re assuming that those dissavers later spend their savings on GST affected items. They don’t. A great deal of their income goes into property, which isn’t covered.

    I’ve been told that the bottom 50% in NZ earn 17%, but pay 35% of GST. Unless you can provide figures otherwise, I’m sticking with the regressivity of GST.

    Comment by George Darroch — February 10, 2010 @ 4:19 pm

  28. Unless you can provide figures otherwise,

    Equally, a link of some kind to back up your numbers would be an interesting read.

    Comment by Phil — February 10, 2010 @ 4:46 pm

  29. some one needs to nail down what exactly Labour is going to do with GST. right now Mallard is maintaining the GST is an attack on the poor line.

    Are they going to commit to reducing GST back down to 12.5, or even doing away with it?

    I was prepared to be impressed with their approach on this but they’re just looking like spineless opportunists again.

    Comment by Neil — February 10, 2010 @ 6:06 pm

  30. JC @ 10.40am, how dare you bring a balanced assessment.

    Comment by Tarquin Montford III — February 10, 2010 @ 6:50 pm

  31. GST was put up 20 years ago by a Labour government that looks nothing like the Labour party today – I think you would find that the Labour of the 1980′s is far more like National/Act than Labour. Goff wasn’t even on the front bench for goodness sake. Why do Craig et al (including Duncan Garner) hark back to this? IT WAS 20 YEARS AGO. It wasn’t less than 18 months ago when in the middle of an election someone said “I will not raise GST” and if I did it would show that I had failed to do a “half-decent job”. How apt these words.

    Comment by Tim — February 10, 2010 @ 6:52 pm

  32. Hickey does have a point Danyl re: Gen x and y being fucked over re: housing in the main centres.

    Besides that he babbles.

    Comment by Tarquin Montford III — February 10, 2010 @ 6:53 pm

  33. oof, annoyed mode

    Labour had 9 yrs in govt where they must have seen the trouble there is in the tax system, the knew well in advance that National were going to come come out with their own set of reforms and all Labour have ot offer is – GST hurts the poor and taunting Turia over her ministerial car.

    no plan about what they would do just gutter politicking of the most juveneile sort on an issue that is of some significance.

    Comment by Neil — February 10, 2010 @ 6:54 pm

  34. Stop moaning Tim.

    Comment by Tarquin Montford III — February 10, 2010 @ 6:58 pm

  35. Tim, in 9 yrs of govt did Labour ever suggest that they would reduce or abolish GST?

    isn’t it just a little strange that all of a sudden they have a change of heart – especially as they are giving no promise that they would set back GST to 12.5, or lower or abolish it.

    Comment by Neil — February 10, 2010 @ 7:00 pm

  36. Just watched Bernard Hickey’s appearance on Breakfast. I’ll cheerfully admit that I don’t know what I’m talking about but Hickey really has no fucking clue. It’s unbelievable that he’s considered an expert on economics and finance.

    Hickey was the webmaster for Xtra prior to his current role I believe. I also would like to know who considers him an expert on finance. He is an idiot just pushing his ideological agenda without any regard for reality.

    Comment by Ruth — February 10, 2010 @ 7:49 pm

  37. Neil – what “change of heart”? I have not read Goff et al saying to lower GST or abolish it – just not raise it. You seem confused. They are opposed to raising a tax that would disproportionately effect the poor for the benefit of the rich. Not really chaning their position.

    Tarquin – Sorry if fact and debate are too much for your narrow mind to handle. Just go to the fall back position of saying that it is moaning, don’t think you have to add anything to the discussion. Your astute points about ‘babbling’ are overwhelmingly insightful.

    Comment by Tim — February 11, 2010 @ 6:46 pm

  38. Tim – Apologies for casting a slant eye at your one eyed defense of Labour that you now attempt to pass off as fact and debate (chuckle)..

    Comment by Tarquin Montford III — February 11, 2010 @ 8:03 pm


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