Thursday, December 04, 2008

The triennial ideological burp

Bill English has released Treasury's Briefing to the Incoming Minister [PDF], and as expected, its the usual ideological burp. Following Friedman's shock doctrine, the market fundamentalists at treasury have seized on the international financial crisis as an excuse for "economic adjustment", including massive tax cuts for the rich, deregulation, public service cuts and an attack of workers rights. Among the highlights:

In the near term, we recommend equalising investment tax rates, including capital gains, and bringing statutory rates on personal income together at around the current level of the corporate tax rate [30% - I/S].
In other words, massive tax cuts for the rich, which combined with a greater emphasis on consumption taxes, will mean a much more regressive tax system. While Treasury recommends compensating for the equity effects of such tax cuts with "suitably targeted transfers and spending programmes", you and I know that this will never happen under a National government. Neither will the proposal to broaden the tax base by finally taxing capital gains properly - National is a party which represents those who benefit from capital gains, and it will represent their interests to the hilt.

In the current economic climate, the net effect of this will be to lock in high debt levels. This strategic deficit will then be used to justify slashing public expenditure and public services.

The RMA, "and the scope for further process improvements, including trading off broad participation versus speed and certainty and the balance between environmental protection and economic growth," is identified as a priority for action. So, screw democracy and the environment, let the developers run rampant. It's not as if that "clean and green" image is worth anything to anyone, is it?

Also identified as a priority:

labour market regulations and the impact on compliance cost concerns associated with the Health and Safety in Employment Act 1999 and Holidays Act 2003; the level of the minimum wage for youth and young adults entering the labour market; and specific provisions in the Employment Relations Act 2000 relating to hiring (e.g. probationary periods) and dismissal.
So, Treasury thinks we should have more dangerous workplaces, fewer holidays, lower wages and less secure employment. Which I'm sure makes perfect sense to an analyst on $150,000 a year who will never experience these conditions (Treasury has the highest proportion of top-paid public servants in the whole public sector). There's nothing like being fifteen floors up with a harbour view to separate you from the concerns of the hoi polloi. But given that they're also trying to boost productivity and build a higher skilled labour force, reducing the benefits of those skills by slashing wages and conditions seems to be the wrong way to go about it.

Sadly, I don't think this programme is going to meet with much objection from National. So, hang on for the ride - Treasury is in charge again, and the 90's are back with a vengeance!