By Gareth Vaughan
In the midst of Auckland's recent COVID-19 level 3 lockdown, a strange thing happened. The National Party and one of the country's biggest trade unions found themselves in agreement. Topping it off they were on the same side against traditional union ally the Labour Party.
This unusual event occurred when National called on the Government to cover 100% of a worker's wages or salary when they're forced to self-isolate.
“The ‘stay home, save lives’ mantra sounds simple enough, but it’s not always that easy for people who can’t afford to not be working," National leader Judith Collins said.
"The current Leave Support Scheme pays full-time workers $1176.60 and part-time workers $700 as a lump sum for a two-week period, with the money going to their employers. This is well below the minimum wage and below what a full-time worker would earn from sick leave,” added Collins. “We must make it easier for people to stay home when required."
The E tū union, formed in 2015 through the merger of the Engineering, Printing and Manufacturing Union, the Service and Food Workers Union and the Flight Attendants and Related Services Union, agreed.
"E tū assistant national secretary Annie Newman says workers need to feel confident that they will not be penalised financially should they need to stay home to keep themselves and others safe from the virus," E tū said in a statement.
"Other organisations are joining the call for 100%, even including the National Party, who are now calling for the Government to directly pay workers 100% of their wages when they have to self-isolate," the union added.
In the midst of a global pandemic and with normal enemies National and a trade union agreeing, you could certainly argue they had a reasonable point.
But COVID-19 Response Minister Chris Hipkins was having none of it.
"We've got quite a range of support out there available at the moment. I do note that the National Party haven't indicated how they would pay for these additional things that they're proposing. We're not proposing to make any further changes," Hipkins said at one of the Government's regular daily COVID-19 press conferences.
This story was covered by TVNZ on the day. (See video below).
The Crown Settlement Account
Watching the TVNZ report at home during the lockdown I was left wondering to what extent Hipkins understands government finances.
The Government has a Crown Settlement Account (CSA) with the Reserve Bank, you know that government owned entity that, among other things, issues the New Zealand dollar. The CSA is an account provided by the Reserve Bank for the Government, via Treasury, to use to deposit surplus funds into. Funds held in the CSA earn overnight interest from the Reserve Bank at the Official Cash Rate (OCR), currently 0.25%.
The most recently available Reserve Bank data shows the CSA's balance, at the end of February, stood at $38.445 billion. A Reserve Bank data series dating back to December 2001 shows the current CSA balance is the highest it has ever been.
It also means the Government has more than $38 billion available. Although payments such as welfare benefits and interest and principal payments on government bonds create outflows from the CSA, this $38 billion is money the Government already has.
I'm not sure what, if any, source National had in mind for the money to pay 100% of self-isolating workers' wages. But the point is the Government could do so.
Thus this discussion really needs reframing. The reality is the Government could find the money to cover 100% of self-isolating workers' pay but is choosing not to. Why is that? We'll come back to this question soon.
What would you do with a slice of the $38 billion?
Now, I'm not suggesting all of the $38 billion is available for spending or should be spent. But the Government could certainly cover a lot more than merely self-isolating workers' pay.
RNZ reported on Wednesday that the NZ Nurses Organisation isn't ruling out striking during the COVID-19 vaccine roll-out if it can't reach an agreement on satisfactory pay agreements, with contract negotiations or work on collective agreements going on across the health sector. Few would begrudge the Government dipping into that $38 billion to give our hard working nurses a reasonable pay rise.
Then there's the whole range of other issues NZ faces. Anyone seen all those ageing water pipes bursting in Wellington this summer? And what about the ongoing calls for another harbour crossing in Auckland?
Heck, if it was available a slice of the $38 billion could help tackle the big kahuna that is our housing affordability crisis. And then there's the push to wean the agriculture and transport sectors off carbon emissions.
Of course, none of this could be done overnight. But there are plenty of needy projects around the country that could use funding. So what about some good old fashioned long-term planning?
Remember this is a Government that's basking in a sovereign credit rating upgrade. That's because S&P Global Ratings recently upgraded NZ’s foreign currency credit rating to AA+ from AA, and its local currency rating to AAA from AA+, making NZ the first developed country with investment-grade debt to receive a sovereign credit rating upgrade since COVID-19 hit.
The key benefit of a higher credit rating is it supposedly lowers your borrowing costs. See credit ratings explained here, and there's a wide ranging explanation of what government debt is and what it means here.
Once again, let's reframe this conversation. Why is the Government so reticent to spend surplus money? Are they worried there may be a really nasty sting in the tail of the COVID-19 pandemic? Are they worried about unleashing rampant inflation? Is their key priority looking fiscally conservative and prudent against inevitable claims from the opposition that Labour's the tax and spend party? Are they austerians, who like Disney's Scrooge McDuck would rather swim in money than spend any on anyone else? Or do they not realise there's money available?
The Reserve Bank primes the pump for the banks
With monetary policy and financial stability outsourced to the Reserve Bank, it's interesting to look at what it's doing in response to COVID-19. Obviously it cut the OCR to that record low of 0.25%. But there's much more going on.
The pandemic has seen the Reserve Bank join many other central banks and embark on quantitative easing, or QE. Through this large scale asset purchase programme valued at up to $100 billion, the Reserve Bank is buying government bonds and local government bonds in an attempt to keep borrowing costs to households and businesses low. It's buying these bonds in the secondary market from a range of banks.
"When we buy assets, this increases their price and so reduces their yield. That means the interest rate, in this case on government bonds, fall. This has the effect of ‘lowering the tide’ on other interest rates in the economy, particularly longer-term interest rates of two years or more. It also reduces the cost of borrowing for households and businesses," the Reserve Bank says.
"Secondly, when we buy these government bonds, it encourages the sellers of assets to use the money they receive from us to switch into other financial assets like company shares, bonds, or new lending – helping to inject money into the economy."
This explanation makes QE sound like a version of trickle-down economics, through which tax breaks and benefits for big corporates and the wealthy are expected to trickle down to everyone else. And as with the trickle-down economics theory, after more than a decade of experience with QE in the likes of the US and UK, there are plenty of questions over whether it's helping widen wealth and income inequality between asset owners and non-asset owners.
Additionally the Reserve Bank is offering banks up to $28 billion of three-year funding priced at the 0.25% OCR through a funding for lending programme (FLP). Banks can borrow the equivalent of up to 6% of their total outstanding loans, meaning big banks such as ANZ, ASB, BNZ and Westpac can potentially borrow billions through the FLP at 0.25%.
The FLP is designed to provide additional stimulus in response to the COVID-19 pandemic, with the aim of reducing banks’ funding costs - including the deposit rates they pay savers - and lowering the interest rates banks charge their borrowing customers. This, the argument goes, will encourage banks to continue creating credit by lending in an uncertain world and stimulating economic activity.
Thus the banks are offered more largesse that's supposed to trickle-down through them as intermediaries to borrowers, but not savers.
So far just three banks have accessed the FLP, for a combined total of $1.14 billion. And while carded, or advertised, fixed-term mortgage interest rates may currently be as low as 1.99%, most floating mortgage rates and some credit card rates remain outrageously high in such a low interest rate world. The big four banks' floating mortgage rates range from 4.44% to 4.59%. And Reserve Bank statistics show the weighted average interest rate on personal interest bearing credit card advances was 18.1% as of October last year, the last time the statistics were updated.
Thatcher was wrong
In a 1983 speech to the Conservative Party Conference, British Prime Minister Margaret Thatcher said it was a "fundamental truth" that "The State has no source of money other than money which people earn themselves."
"If the State wishes to spend more it can do so only by borrowing your savings or by taxing you more. It is no good thinking that someone else will pay - that 'someone else' is you. There is no such thing as public money; there is only taxpayers' money," Thatcher said.
Thatcher's stance remains the prevailing viewpoint in NZ. But it's not true. No government borrowing or tax take is required to fund quantitative easing or a funding for lending programme.
Both QE and the FLP involve new money from the government owned currency issuer. If money can be created to ensure banking system stability, could it not also be created for other purposes? And would it be desirable to do so? These are issues we should be discussing.
Last June strategy and risk consultant and ex-Christchurch City Councillor Raf Manji argued, in an interest.co.nz article, that New Zealanders need to talk more about how our money system works. This Manji said, is because the outcomes of the decisions on money production, distribution, exchange and ownership are matters of interest to all of us.
Manji was, and remains, right. Perhaps we could start by educating our politicians.
*This article was first published in our email for paying subscribers early on Thursday morning. See here for more details and how to subscribe.
41 Comments
National and Labour have embraced very slightly different policies? That is unusually courageous of them!
The policy situation reminds me of that gameshow "The price is right" where one person would guess an item costs $100 and the next person would guess $99 because it made no difference how close you where as long as you where the right side of your opponents estimate.
"Of course, none of this could be done overnight. But there are plenty of needy projects around the country that could use funding. So what about some good old fashioned long-term planning?"
Both the capacity and capability to perform thus has been removed from the government sector over the past few decades ......and with the private sector averse to the cost of training the capability is barely there either.
We have kneecapped ourselves.
we had about 200 working groups and enquiries -- not one of those was about developing a long term sustainable vision for New Zealand -- Even if the main protagonists could only have agreed on maybe 30-40% of things -- at least we would have a fundamental basic plan and vision to work towards
if you are under25 and dont have the family leverage available into a home -- all the best and brightest will be leaving these shores and in twenty years time the devastation and gaps in Public services will be too big to fill -
It is entirely possible there will be another exodus of capable Kiwis (or potentially capable) to foreign shores when the borders open ...that wont change until we decide to invest in our own rather than importing the cheapest and spending all our export earnings flitting around the world.
Imagine if we used some of those $billions to build thousands and thousands of public houses to drive down rents and deflate capital gains expectations (while also using planning rule reforms and infrastructure funding to encourage as many general market houses to be built as well). That could rebalance the rigged housing market and consequent wealth divide somewhat couldn't it?
Or you could reduce the tobacco excise. I think you'll find that taxing over 2 billion dollars per year from the poorest & lowest socioeconomic group in society has a profoundly negative effect on poverty and wealth inequality. We could probably reduce working for families / Accommodation supplement etc simply by reducing tobacco tax.
No government borrowing or tax take is required.... if money can be created to ensure banking system stability....
And in that one paragraph lies the seed of our coming demise - "If money can be created to ensure banking system stability." It can't. It can only be produced and ensure INSTABILITY. It can only be reallocated to delay the inevitable.
There is no need for taxation or borrowing under any form of MMT (QE and FLP etc etc etc). None, other than the psychological stick to 'control' inflation.
Once a population gets 'wealthy', free of charge, it squanders its most precious resources = Time and the Productive Capacity of its population.
Without work there is no purpose to life. Without the combined communal effort of taxation to support a society, there is no society; only the individual; "every person for themselves" and the chaos that unchecked self-interest creates.
When this lot breaks, (the cost of traditional money - mortgages etc at 50%? Pick any number you think is better) it's going to be horrific. Perhaps Christine knows (of course she does! We all do)
" European Central Bank is effectively forced to keep buying bonds on a mass scale to stop markets repricing the "Club Med" debt risk "
The whole narrative, Gareth, is based on a false assumption.
The problem is that you end up needing to 'do stuff'; deliver food to tables, fuel to pumps, wastes to 'away'.
We kept account of that with tokens, which have turned digital and have become completely debt-issued. But we made the mistake of thinking of the debt-issued digital tokens as always being able to 'do' real stuff. That worked, while the real work and the real stuff existed. Unfortunately, the reals stuff is depleting exponentially and the issued tokens are increasing exponentially. Given the name of this site, I'd have though the inevitable crossing of those graphs (which had to signal the inability of Interest to rise above zero without crashing 'growth') should have been investigated.
Yes, you can issue tokens to 'workers' (it's not really work in many cases but we'll leave that point for a later time) if you wish; yes, you can have equality if you wish. But that equality will be under a sinking underwrite-lid, and the more people you have, the less underwrite you can have per person.
And Entropy is increasing; decaying bridges in the US, dead city centres, aging pipework in NZ; entropy always wins (we all die for the same physics reason).
"because the outcomes of the decisions on money production, distribution, exchange and ownership are matters of interest to all of us". Well, maybe they are, but only because 'we' have been fooled into believing a completely false narrative. How much there is left of resource-stocks and capacities, how many people there are desiring them (including future generations) and how we should distribute them, is indeed the question?
Debt-issued money cannot answer that, whether held by Govt or individual. It's not just politicians we need to educate.........
pdk,
"Entropy is increasing; decaying bridges in the US". That, in my view is a gross misuse of the word: in physics, entropy represents the unavailability of heat energy of a system to work. That, as far as we know at this time, will be the eventual fate of the entire universe, as well as us as individuals. To characterise the decay of infrastructure as entropy makes no sense.
Enough. Your total inability to acknowledge any possibility that the future will not mirror your dystopian vision has become frankly, boringly repetitive and I will not bother to respons any more. I wish you well.
"Entropy, the measure of a system's thermal energy per unit temperature that is unavailable for doing useful work. Because work is obtained from ordered molecular motion, the amount of entropy is also a measure of the molecular disorder, or randomness, of a system."
What you did, for the record, was to attempt to shoot the messenger (inference, I got the definition wrong, therefore I'm wrong), then used an excuse to close the door on the uncomfortable. Don't blame me, I'm just the messenger - and I got Entropy exactly right......
go well
Entropy is a non-renewable resource - change my mind.
With a deep respect to both of you, PDK has it spot on in my opinion. Perhaps jumping through premises too quick which may reflect "what you see depends on what you know, and what you know depends on what you see". Audaxes appears to have an academic financial education and PDK has a science background.
We can't "cheat" science. The in-efficiency of societies, mostly there for vestigial (greed/lazy/control) reasons will steal the momentum (energy out of growth).
I recommend a brilliant book called Cycles of Time by Roger Penrose.
Nature survives without humanity but not the other way around.
Audaxes appears to have an academic financial education -
For the record, I have BSc(Hons) degree from Victoria University Wtgn, complemented with a professional career as a stockbroker in NZ and bond and futures trading position at a US G-SIB in London, over a period of 20 years.
We may be facing a decline in energy and productive capacity (in that i totally agree) but how we address those issues is critical....we are in possibly the most advantageous position in terms of population density, energy resources and geographic position to mitigate both resource depletion and climate change (certainly in the next century) if only we would apply ourselves to it....we appear determined to do the opposite.
Both QE and the FLP involve new money from the government owned currency issuer. If money can be created to ensure banking system stability, could it not also be created for other purposes? And would it be desirable to do so? These are issues we should be discussing.
The spawn for both these supposed monetary easing programmes is the RBNZ purchasing already issued bank monetised securities debt circulating in the hands of private owners which has to be paid back to extinguish the previously created deposits, upon their redemption.
An RBA detailed example of the private and QE deposit creation process can be viewed here.
In addition every dollar deposit held by the Crown in the RBNZ Crown settlement account has been deducted from banks' reserves and will be returned as and when government deposits transfer payments into bank accounts held by beneficiaries.
A recent Bloomberg article described central bank QE easing with the phrase “pumping money into the economy.” That’s a misconception. Monetary easing is actually an asset swap. The public was holding savings in one form, and now it holds it in another. The Fed buys Treasury securities from the public, and replaces them with currency and bank reserves (base money) that someone has to hold, at every point in time, until the Fed sells its bonds and retires the cash. All monetary policy does is to change the mix of government obligations held by the public. Only fiscal policy – specifically deficit spending – changes the total amount of those obligations. Link.
The FLP term sheet explicitly states the RBNZ is engaging in a repurchase agreement with banks - banks sell investment securities (NZGBs & RMBS etc) with a liability to repurchase them from the RBNZ in three years time at a cost determined by OCR, plus any haircut.
Effectively, the RBNZ is transforming, possibly expensive, short term bank debt into cheap, for now, term debt. Core funding (CFR) is defined as retail deposits plus wholesale funding with maturity of more than one year. And in the process manipulating the money market yield curve flatter for longer. Hardly a growth prognosis.
A review of this accounting diagram Exhibit 2 (secured borrowing) sets out the reality - no new money. Thereafter, banks engage in their normal lending procedures to grow their balance sheets by exchanging IOUs with preferred borrowers supposedly at a lower interest rate, which is extracted from depositors in lower returns when they are in receipt of bank IOUs, masquerading as savings, when assets and goods change hands.
Unfortunately, depositors are unsecured creditors, no recourse to collateral for them, in receipt of returns that do not reflect the risk taken. The government should know better and take steps to defend citizens from such exposure
Any politician taking this argument out there would be shot down quickly.....
So Minister, you are saying that if I have $1000 in my current account earning 0.25% and a debt of $10,000 charged at 2% in another account, I should go out merrily spending my $1,000?
The point that politicians need to understand is that when Govt spends it is always new money, which is deleted when it is taxed out of the economy. The Govt money in the economy is the non-govt surplus (the money we have).
So we should not be scared by the amount of Govt money in the economy - we need it. If we can stop focusing on a meaningless number we can start focusing on things that actually matter - preventing inflation, productive work, genuinely full employment, funding infrastructure and innovation etc.
"we should not be scared by the amount of Govt money in the economy "
If that money is the surplus of productive or probable endeavour, then no.
But if it is the result of balance sheet manipulation, then we should be frightened out of our wits.
You may not be; the RBNZ may not be.
(Question: If the Balance Sheet creation of 'money' worked, why are we here? Why are we even having this conversation? I know! We didn't do enough (of what doesn't work!), right?)
Let's hope you are both right, because if you aren't, then there is no way back other than the traditional mechanism to resolve manufactured debt and an unemployed, destitute population(s) - a manufactured war.
This conversation is going on across the globe. A comment from the UK this morning, which looks about right to me:
Central banks cannot override the markets.
If they could the UK would not have been driven out of the ERM, The Bretton Woods system would not have collapsed and Argentina would not have to default every 20 years.
The truth is that central banks can only control the markets IF the markets are willing to accept the paper they print. When they do not, they are as powerless.
bw,
I agree, but belief in the abilty of central banks to control the narrative is very widespread and deeply rooted.. I raised this issue with a contact in the US who is a consultant to the Federal Reserve of Chicago. I was asking him for a view on the rapidly rising Debt/GDP ratio and whether at some point, this might become an issue for holders of the debt.
In essence, his reply was that the US is too powerful and that the Fed. could just as he put it, create a few more dollars. i beg to disagree.
‘The surplus of productive endeavour’. Excellent point - but you can also come at this from the other angle: the role of Govt investment in utilising dormant resources to boost productivity or achieve social goals. A smarter Govt would focus strategic investment on increasing ‘productive endeavour’ - they could start by paying young people in forgotten towns to do construction apprenticeships, and securing new building material supply chains (for example).
Well put.
"... Govt investment in utilising dormant resources to boost productivity or achieve social goals"
Which is what I thought I was voting for with the Ardern Government.
The reality is that it doesn't much matter that I was wildly optimistic in that regard, and wrong; it doesn't much matter what the RBNZ does, as dictated by the Central Banking cartel. What matters is the sheer scale of the Central Banking mandated, globally co-ordinated destruction of the capacity for trade to exist.
Without a trusted and valued medium of exchange, who will swap their motor vehicles with us in exchange for our milk? (What is the trade exchange value of the NZ$ if its quantity varies at the stroke of a key?)
Those dormant resources you mention might have $0 value under such circumstances, and if we've gone off and created 'money' in anticipation of those resources having future fungibility, and they don't, then what.
Let's not forget that the banks are creating money every time that they make a loan and this is debt that truly can destroy an economy as happened in the GFC. For us to pay back this debt without causing a deflationary effect then the government will need to replace this money with its own.
The second the Government replaces the capacity of the private sector (banks) to create debt, asset prices will collapse. What are they worth if the ability to transact (lend money into existence to do so) is removed from the private banking system?.
The answer appears to be - The Banks will have to be Nationalised.
(NB: The probably have been already. They just have a different set of logos on the CEO's business cards.)
It is a major flaw to frame the discussions in terms of the money that the Government holds in its settlement account. The discussions needs to be framed in terms of the Government's deficit and how further increases in that deficit will be funded without currency debasement. Currently, those deficits are funded by Treasury bonds that end up with the RB through the QE programme.
KeithW
No private savings can be created without the government running deficits, whether this money is held as bank reserves or as bonds makes no material difference. As Warren Mosler says in the HuffPost.
Proposals for the Treasury
I would cease all issuance of Treasury securities. Instead any deficit spending would accumulate as excess reserve balances at the Fed. No public purpose is served by the issuance of Treasury securities with a non convertible currency and floating exchange rate policy. Issuing Treasury securities only serves to support the term structure of interest rates at higher levels than would be the case. And, as longer term rates are the realm of investment, higher term rates only serve to adversely distort the price structure of all goods and services.
I would not allow the Treasury to purchase financial assets. This should be done only by the Fed as has traditionally been the case. When the Treasury buys financial assets instead of the Fed all that changes is the reaction of the President, the Congress, the economists, and the media, as they misread the Treasury purchases of financial assets as federal ‘deficit spending’ that limits other fiscal options.
https://www.huffpost.com/entry/proposals-for-the-banking_b_432105
Currently, those deficits are funded by Treasury bonds that end up with the RB through the QE programme. [my emphasis]
The real liquidity lubrication underpinning the banking system disappeared into safe keeping repository vaults by thoughtless central bankers.
Some clues:
Seeing Interest Rates Counter To What They Actually Are
Deja Vu: Treasury Shorts Meet Treasury Shortages
Going Back Inside Lehman One More Time: An Important and Relevant Follow-up
Ghosts of Lehman And a Budding Bank Crisis
It is a major flaw!
I think it is misleading to describe the deficit as being funded by bonds though. That is not how it works in practice. Govt adds to its deficit the moment it spends money. So, Govt pays $1m for nurses' salaries, Govt adds $1m to the deficit. Govt issue bonds in exchange for 'cash' that is sat in the reserve accounts of commercial banks earning 0.25%. This is just an asset swap. Both bonds and cash in bank reserves are included in the Govt deficit, so swapping one for the other doesn't change anything really. The real purpose of bonds is to create a rock solid Govt-backed financial asset for commercial banks, pension funds etc to trade with each other.
I am completely with you on the currency debasement point though. There is a risk that excessive Govt spending (deficit) could lead to inflation in some areas. For example, if Govt wanted to build 100,000 houses and had to compete with the private sector for skilled tradies and materials, that could well lead to inflation in those areas, which could cascade to other areas. However, if Govt wanted to employ loads of out of work people to fence off streams on farmland, plant native forests, do conservation work for DOC, train to be construction workers etc, this would have very limited impact.
In relation to bonds and QE it is helpful to think of it in terms of the system
Treasury bonds are purchased by financial institutions using their 'digital cash' reserves. If these bonds are then purchased by the RB then the payment is also in 'digital cash'. So the financial institutions are exactly where they were at the start of these transactions (except for receiving an intermediation fee) , having bought and sold the bonds, and with digital cash used and replaced. But the Government now has new 'digital cash' available to it which has, via intermediaries (the financial institutions), been suppled by the Reserve Bank.
Currently, the Government's settlement accounts have lots of 'digital cash' sitting there waiting to be used. but much of it is already spoken for.
Keith W
Keith to me this is the crucial point;"The discussions needs to be framed in terms of the Government's deficit and how further increases in that deficit will be funded without currency debasement." It is a point I made during an earlier discussion on MMT, in that when the Government issues new currency through it's spending programmes, it must always consider what and where it must tax, and what value is being added to ensure that the factors that support the international value of the NZ$ are upheld.
A very good article on Zerohedge about where and how the governments and central banks of the world have got it all wrong: https://www.zerohedge.com/markets/bubble-everything-how-debt-driven-eco…
This country is no different. As governments rapidly paint themselves into a corner by creating perverse incentives to try and beat economic cycles.
Gareth, you're not touting MMT are you? But seriously it is a good article. To your opening points the payment of workers undergoing isolation is just the tip of the iceberg. The serious under payment of staff working in the MIQ facilities is of equal or greater concern. These people are facing significant risk and penalties, and their working conditions are very tough, but they are not being paid extra for this. In almost any other western country they would be being paid considerably more than just their normal pay to do these jobs, but miserable, socialist NZ thinks it is OK to just work them with out recognition. And the people making these decisions will all be being paid (I cannot use the word 'earning') relative mega bucks. In some countries, staff working under such conditions would be able to effectively double or more, their pay and tax free too!
As to where the CSA funds could be spent; no central Government funds should be spent on local infrastructure. that is the role of local Governments, and they should be accountable for meeting those requirements.
And finally I think your point re Maggie Thatcher's view towards Government funds is arguable. As the Government works for, and represents the people, then all money at it's disposal should be considered as 'public funds', and Governments need to be accountable for how it is spent. God help us all if politicians (at any level decide they don't need to be held to account for the spending they implement.
I've seen this strange trend lately in the last couple of years. National pushes its conservative lens, but in a lot of way has actually moved more to the left, especially due to the impacts of coronavirus. Labour has in some ways become more conservative, i.e. expansion of police and military, more armed police, fiscal conservatism, support for business prioritised as opposed to support for unions and workers. I see this as a continued trend, with National effectively trying to out-left Labour, proposing their version of Labour policies - which in a lot of way steer more to the left than Labour does. Are we witnessing a political reversal? It's not the first time this has happened in NZ history.
This seems to be what has happened in Britain where Labour has abandoned the working class and the workers now vote for the Conservatives. Our Labour Party, the Australian Labour Party and the British Labour Party are all fiscal hawks in proposing budget surpluses and "paying down the debt". Austerity budgets that damage the welfare of workers and the poor. All of their finance spokesmen have come out strongly against any understanding of MMT just as our minister of finance has.
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