Hailed by hysterical media as ‘revolutionary’ and ‘stimulating’, the 2010 Budget is hardly more than political sleight-of hand. Only the top income earners are truly better off, while everyone else will see their little bit of tax cut gobbled up by higher GST, higher rents, higher prices and rising interest rates. This Budget will have dire economic consequences.
What in the 90’s used to be the ‘trickle-down effect’, which in reality was a hoover up, is now hailed as ‘stimulating the economy’, and no doubt expected to have the same damaging effect. Tax breaks for the wealthy - let’s call a spade a spade - won’t be any more beneficial to the average family than it was last century. Everything else in the 2010 Budget puts some money into one pocket and takes a bit more out of the other.
The revenue stream of GST is considered more stable than income tax, because whether you get made redundant or not, you still have to pay 15% tax to live. It is an immoral shame that the billion dollar financial services industry is GST exempt. In order to collect enough revenue from everyone else, the rate must go up and hit the poorest people the hardest.
Higher GST is claimed to reduce consumption and encourage savings. Yet families on benefits and the working poor spend all their income on necessities and have nothing left to save. Perhaps they are expected to eat less, avoid doctors or go without shoes.
The squeeze on property owners will affect small business operators and those of us who must pay rent. Big landowners will have fun with the extra mortgagee sales this Budget will create, and so get even larger, while fewer and fewer average Kiwis will have the opportunity to save for their retirement in this way, or ever own the homes they live in. Rents will inevitably rise, as business owners pass on costs to customers.
Hold the praise of ‘new money’ for health and education, which merely keeps pace with inflation. Cuts to early childhood education means another stream of children who will start school on the back foot because their parents can’t afford the rise in fees. No amount of national standards testing will fix that.
Well-documented research shows that with income inequality comes soaring health costs and rising crime. The 2010 Budget will allow the gap between rich and poor in New Zealand to widen even further. Weasel words such as ‘encouraging people back into employment’ and ‘giving New Zealand companies a head start’ on Australia are just so much meaningless spin designed to deflect us from the real agenda: business as usual.
While economists keep a narrow eye on the stock exchange in the coming year, the dire state of the economy will be felt in the increasing call on food banks, hospitals and prisons.
ENDS
Contact: Katherine Ransom, Vice President, DSC
Mob: 0274 716 891 Email: katherine.ransom@democrats.org.nz