Sunday, December 9, 2012

Eric Roy and His Hand Basket


The National MP for Invercargill, Eric Roy, publishes a little opinion piece in the Southland Express (a weekly community newspaper) every week. This week he has written in support of National's economic management under the title "We're Getting There". Eric has manipulated data and provided a rather dishonest summary of National's progress. I have reprinted his comments and included my analysis in blue:

WE'RE GETTING THERE ("hell" and "hand baskets" come to mind)

"The last household income survey has been released and shows the average annual household income from wages and salaries increased from $77,843 to $82,029 to the end of June  - a 5.4% increase."

Averages distort the reality when it comes to wages, median incomes give a more accurate picture of what most people are experiencing. The median household income has actually dropped over the same period so that most households are worse off. The rise in the average is because the rich have seen their incomes increase substantially (a 20% increase in wealth last year). While the average household income may have risen to $82,029 the median is only $62, 853 (around $20,000 less) and half of all households would earn less than that. Maori and Pasifika families have suffered the largest drops in income. Maori families have actually lost $40 a week in their household income over the last four years and Pasifika families have lost a crippling $65 over the same period. The median weekly family income for Pasifika families is $390 (only 20,280 a year) and when you realize that half of the families earn less that that you will begin to understand why poverty exists in New Zealand. National's economic management has only benefited the top two quintiles of incomes while the bottom three have experienced an erosion of income. 

"The survey also shows an average household with a mortgage is paying $20 a week less than a year ago."

For those few who are able to afford a mortgage this is good news but for a growing number of New Zealanders home ownership is not an option. Our housing is amongst the most expensive in the world (more expensive than new York or Los Angeles) and we have rapidly dropping rates of home ownership. The quality of our housing overall is said to be 50 years behind Scandinavia and we have about $11 billion worth of repairs needed on leaking homes that were built in the deregulated 90s. 40% of Pasifika people live in overcrowded houses and 23% of Maori, while only 4% of europeans suffer from crowded conditions. According to the Department of Building and Housing, Auckland will have a housing shortage of 90,000 dwellings in the next 19 years if nothing more is done. 

"National has been rebalancing the economy so that it can again be competitive."

If we look at what this rebalancing means in reality we need to see where the Government has shifted its focus. It has placed a high priority on the Roads of National Significance ($12 billion) when few have shown to pass basic cost benefit analysis. It has tried to sell off our State Assets, which will result in decreased government revenue over time. This Government has invested much money into encouraging overseas investment in extracting our oil, gas and coal, however Petrobras has lost interest in our oil reserves because they're uneconomic and the price of coal has dropped as other countries shift to renewable sources of energy. This Government has decided to renege on most of their environmental obligations and reporting to encourage more intensive farming and yet the costs of mitigating the drop in water quality are soaring ($144 million for lake Rotorua alone) and the damage to our 100% Pure brand could have a huge impact on our export markets. The Government's refusal to control speculation and over investment in our currency has seen our dollar become over valued by up to 25% and is killing off our manufacturing businesses. While National is certainly rebalancing our economy, it definitely isn't helping our competitiveness.

"At the same time we have managed the economy through the worst of the global financial crisis, the recession, and the Canterbury earthquakes."

Other countries have also had to suffer through a recession and natural disasters (the US, Japan and Australia have suffered flooding, tsunamis and tornados). The Government has tried to justify our increasing rates of unemployment, our growing levels of poverty and the decline in manufacturing by claiming there are other countries worse off than us. We actually have the second highest current account deficit in the OECD (worse than Greece) and a trade deficit this last October that was $500 million up from the previous year. While we don't have the highest unemployment statistics in the OECD we have one of the fastest growing. Large profits are being achieved by banks and many large companies within New Zealand, but because they are largely overseas owned the dividends are heading off shore and are not being reinvested in New Zealand.  Even the Government's procurement policies favour options off shore rather than investing in our local industries and ensuring the money remains in our own economy. Our Government borrowing has increased dramatically since 2008.

"As you can see, our economic development agenda is already starting to deliver results and National will continue to build on this."

The only growth this government has delivered is in areas where it is least wanted. We may be getting getting there Mr Roy, but I don't like the destination nor the mode of transport.  


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