The most important steps the Government takes are those steps that support the confidence of businesses to invest and put more capital into their business, and to therefore, in the long run, be able to pay higher wages. The Government does not influence that directly. However, we can contribute by, for instance, showing fiscal restraint and persisting with economic reform. This enables interest rates to stay lower for longer but enables businesses to improve their competitiveness and therefore their ability to pay higher wages. – Bill English
The government books are showing a surplus:
The operating balance before gains and losses (OBEGAL) for the seven months to January was a surplus of $77 million, driven by higher than expected tax revenue and lower than expected operating expenses, Finance Minister Bill English says.
“This is the first time the Government’s books have shown a part-year surplus since 2009. Although it is too early to say whether we will have a surplus for the full 2014/15 year, this result demonstrates the strides we have made in improving the Government’s finances,” Mr English says.
The OBEGAL outturn was $712 million better than the $635 million deficit forecast by the Treasury in the Half-Year Update (HYEFU) in December, but was still $120 million below Treasury’s Budget 2014 forecast, undertaken at the start of the fiscal year.
Corporate tax was $158 million, or 3.2 per cent above the HYEFU forecast and source deductions were $146 million, or 1.0 per cent above forecast.
“Although corporate tax and source deductions were both ahead of forecast for the seven months to January, these latest figures underscore the difficulty in forecasting the difference between two large numbers,” Mr English says.
“We won’t know until the final accounts are published in October whether we will achieve a surplus for the whole year. The variance of both tax and expenditure from forecasts reinforces that message.”
Core Crown expenses for the first half of the financial year were $249 million lower than forecast at HYEFU.
“The Government is continuing to responsibly manage its finances. Core Crown expenditure for 2014/15 is forecast to be $4.1 billion lower than forecasts made when we first set the surplus target back in 2011,” Mr English says.
This is on-track to an annual surplus.
Whether or not that is reached this financial year or next it is a significant achievement and good reflection on the government’s careful management.
It has turned around the decade of deficits forecast in Labour’s last year in government and has been achieved in spite of the financial turmoil and natural disasters the government had to face.
Quote of the day:
This is a Government that believes that what works for the community is what works for the Government’s books. So every time we keep a teenager on track to stay at school long enough to get a qualification or have one more person pulled off the track of long-term welfare dependency, we get an immediate saving, of course, and an immediate benefit for those individuals and for the community, and a long-term saving in taxpayers’ money – Bill English
Good social policy pays both social and economic dividends.
The stronger the economy, the more there is to invest in social investments.
The better these work, the bigger the social and economic dividends.
It’s a virtuous cycle in contrast to the alternative vicious circle of welfare dependency and poor educational outcomes with high social and financial costs.
One of National’s goals in government has been to deliver better public services. It set firm targets and it’s making good progress towards achieving them, but it’s not resting on its laurels:
The Government has set itself ambitious new targets including 75,000 fewer New Zealanders being on benefits by June 2018 as part of its Better Public Services drive, Finance Minister Bill English and State Services Minister Paula Bennett say.
The ministers today released the latest results from the Better Public Services programme showing almost 5000 people (-6.6 per cent) came off long-term Jobseeker Support benefit in 2014, the number of children who experienced substantiated physical abuse decreased by almost 200 (-5.6 per cent) over the 12 months to September 2014, infant immunisations are at an all-time high and crime numbers continue to fall.
“The latest results show that the programme, which measures progress in 10 areas chosen in 2012 to focus on improving the lives of people who most need the Government’s help, is working,” Mr English says.
“All the areas are making progress including improvements in the immunisation rate, a reduction in the incidence of rheumatic fever and we expect that results for NCEA Level 2 will show progress towards the 85 per cent achievement target.
“However, in some of our target areas it is not yet clear whether the positive trends are sustainable. The challenge now is to find ways to influence those who are harder to reach and who may be in circumstances that make it more difficult for them to respond. This will require a broad search both inside and outside the public service for better solutions, more innovative ideas and intensification of activity to keep making progress. We will track results and spend our social investment funds where they make the most difference.”
Mrs Bennett said ministers were today announcing they were extending the Better Public Services welfare targets and, as signalled earlier, also challenging themselves and the public service to do even better at reducing crime, and improving the workforce skills of young adults.
Mrs Bennett said the new targets are:
Result 1 – A 25 per cent reduction (from 295,000 people as at June 2014 to 220,000 as at June 2018) in the total number of people receiving main benefits and a $13 billion reduction in the long-term cost of benefit dependence, as measured by an accumulated Actuarial Release, by June 2018.
This replaces the current target of a 30 per cent reduction – 78,000 people to 55,000 people – in the number of working-age recipients of Jobseeker Support who have continually received benefits for more than 12 months.
Result 6 – 60 per cent of 25-34 year olds will have a qualification at Level 4 or above by 2018.
This replaces the current target of 55 per cent of 25-34 year olds holding those qualifications by 2017, which has almost been achieved.
Result 7 – A 20 per cent reduction in total crime by 2018.
This replaces the target of a 15 per cent reduction by 2017, which has already been achieved.
Mrs Bennett said the change to the welfare reduction target recognised that many people who were not on Jobseeker Support also wanted to work and they deserved the same levels of support as jobseekers to do that.
“We know that around 90 per cent of people who went on benefits aged 16 or 17 also lived in benefit-dependent homes as children. This reinforces the urgency and importance of getting people in to work to improve their circumstances, and to help break the cycle of inter-generational welfare dependence.
“We have been making some real progress in this regard and it is good to see from the latest results that people who have been exiting Jobseeker Support have been staying in work for longer.
“There has also been real improvement in helping young people and young sole parents in to work so it makes sense to include them in this expanded new target because they are most at risk of long-term dependence, with a resulting heavy cost to themselves and taxpayers.”
Results on targets set so far are here.
This could be part of the solution to housing affordability:
In the 1970s the GM factory in Trentham turned out old-school Vivas and Chevettes. Today it was re-opened by the Hon Bill English with a role better suited to the 21st century – building homes.
Matrix Homes was established last year by Wellington entrepreneur Sean Murrie and architect Graeme Farr to produce quality affordable homes for two thirds the cost of traditional building methods.
Matrix Homes’ managing director Sean Murrie said, “Matrix Homes came about from our belief that New Zealanders pay millions more than they should for housing due to inefficient practices and markets.
“Our mission is to put that right by redesigning the build process. We set out to drastically reduce the cost of a new home without sacrificing the quality you expect in what is most people’s largest investment. By re-engineering the whole build process from the ground up, Matrix have made a quantum leap forward in affordability and quality.”
Matrix Homes are not built on-site but under cover in the Trentham factory. This enables work to continue irrespective of the weather. The cost-savings are achieved through greater efficiencies: economy of scale in sourcing building materials, standardised modular construction and no down time.
“Traditional ‘affordable’ housing focuses on reducing the cost of materials and results in a home that forever looks cheap. Matrix is a proper wood-framed house with timber weatherboards, cedar cladding is an option, Gib lined and with a galvanized iron roof. So far we’ve designed dozens of Matrix configurations for the three standard modules.
A range of sustainable options are also available including a full off-grid package including solar hot water heating and a self-contained wastewater system,” Sean Murrie said.
“With Matrix you get factory quality control and eliminate ad hoc on-site improvisation. Our design incorporates standardised window sizes enabling phenomenal savings. Assembling floors and walls on pre-built jigs has virtually eliminated the tape measure – the biggest single source of time and material wastage. Materials are pre-cut and perfect with each component optimised and identical.
“More often than not, your new home will be completed by the time you have planning consent and completed your site preparation. We can deliver virtually anywhere in the country and the modular format enables you to expand your home at a later date if required.”
Prices range from $89,000 for a one bedroom home of 51 m2, $99,000 for a 70m2 2 bedroom home to $195,000 for a 4 bedroom, 2 bathroom home of 140 m2. Pricing includes floor coverings, painting, oven, cook top, range hood, laundry tub, corner shower, hand basins and vanity units, heated towel rail and extractor fan. Transport, piles and installation are in addition. While homebuyers are responsible for site preparation, Matrix can organise this on their behalf.
Homebuyers can personalise their home by selecting options including decks, garages and heat pumps and the like.
When the factory reaches full production, economies of scale will enable the costs to be further reduced to around half that of a same sized house build on-site.
The factory currently employs six people fulltime with that number expected to grow to 70 by the end of this year.
Sean Murrie said, “A Show Home has been completed and the concept has attracted considerable interest from home buyers and property developers and we are now completing the final design details for a large number of customers. By the end of 2015, we expect to be building one house per day and are aiming for 1,000 per year when the factory reaches full production. Realising this goal will help contribute to lowering the cost of new housing and develop a sustainable manufacturing business in the Hutt Valley.”
How much did it cost to buy an average car and an average house 50 years ago and how much does it cost now?
I can’t give the exact figures but I cam confident that the increase in the cost of the average car is far less than the cost of the average house?
Several factors will be responsible for that, one of those is that we get mass produced cars but we don’t get mass produced houses.
These houses aren’t mass produced but the time and cost involved in building them is a lot less than conventional methods.
Cabinet Ministers are getting to grips with the new spending processes Finance Minister Bill English is introducing in this year’s budget. Where departments previously put in bids for the amount they thought would be needed to finance particular programmes, they will now be expected to match the bid with an assessment of the return on the investment. This follows the changes initiated in delivering better public services, when departments were instructed to publish results their programmes were achieving. In effect the Govt is seeking to revolutionise the way ministries operate.
It requires different departments to work together, rather than in isolation, particularly in the field of health and community services. The Govt accepts the new processes will have to resolve complex problems such as privacy issues but the objective is to push Ministries towards targeting the money available to achieve tangible results. The Govt argues it has a duty to ensure funds raised from taxpayers are applied to maximise outcomes, rather than just for “nice-to-haves” Ministers or bureaucrats advanced in competition with each other.
The duty becomes more onerous as the Govt strives to bring the Crown accounts back into long-term surplus, without any nasty spending blow-outs from programmes initiated in earlier years. An example where unintended consequences can spring out of the woodwork to damage spending projections lies in Employment Court decisions related to the care of aged people and the definition of work, as well as in pay equity. One decision concerned the definition of work as including driving to and from the places where aged-care providers are working, and another involves the principle of equal pay, with the concept aged care workers should be entitled to the same hourly rates as those in the Corrections Department. How the Govt deals with these complex issues will have long-term budgetary impacts.
National is often criticised for having no plan by people who don’t understand that a lot of what it is doing is being done quietly, like this requirement for a return on taxpayer investment.
Green co-leader didn’t deliver the speech she’d prepared to deliver at the Ratana celebrations but she got the publicity she was seeking from it anyway:
Greens co-leader Metiria Turei launched a stinging attack on John Key in his absence at Ratana today, saying his view of New Zealand’s history was “warped, outrageous and deeply offensive”.
She also said Mr Key was a prime example of the “ignorant, uneducated Pakeha” economist Gareth Morgan had talked about the day before. . .
Ratana elders usually frown upon using the occasion for a political speech, but Ms Turei was unrepentant.
“This is a political event. We need to come here and front up to Maori about our Maori policy, our Treaty policy and explain ourselves. And that’s what I’m doing.”
She said Mr Key had to be taken to task for a “disgraceful way to describe New Zealand’s history”. . .
The Prime Minister wasn’t there but his deputy was:
Mr English said the Greens were “nasty” on occasion and it didn’t serve them well.
“John Key has developed a very positive relationship with Maori even though there isn’t very strong political support among Maori for National. He has focused on a lot of areas they want him to focus on. So I don’t think the audience will be too impressed by it.” . . .
Nor would those member of the Green Party who take their values, which include engaging respectfully without personal attacks, seriously.
However, neither the people at Ratana nor Green members were her intended audience.
She was dog whistling to Mana voters.
The chances of Mana returning to parliament now the party doesn’t have an MP are very slight. Turei’s outburst looks like an attempt to gain its supporters’ attention.
If that’s the strategy it’s a risky one.
Anything aimed at voters from the radical Maori left of the spectrum are likely to scare away more moderate voters towards the centre and make the idea of a Labour-Green government less attractive to both Labour and many of its supporters.
Meanwhile, the Deputy PM showed better manners and a more positive outlook:
Deputy Prime Minister Bill English spoke for National, beginning by acknowledging the iwi leaders at the event and the work of the prophet. The Finance Minister got some laughs when he added that he was also interested in another type of ‘prophet’ – “profit. The one we can tax.”
Mr English also spoke about the privilege he had to be involved in Treaty settlements. He acknowledged Dame Tariana Turia, who was sitting on the paepae, saying he would miss being nagged by her. He said he would also take care of ‘your baby, Whanau Ora.”
He also referred to the relationship with the Maori Party and Maori voters’ preference for Labour.
“They’re not waiting for the government you want – they’re working with the Government you’ve got.”
He said there had been gains under that.
“We’re a long way forward.”
He also nodded at Ratana’s allegiance to Labour. “There’s been discussion about how Ratana votes, we’ll get to that in three years’ time, because there’s young Maori there who need us next week.”
While the Green Party is seeking headlines in opposition National is working with the Maori Party, and other coalition partners, to make a positive difference for all New Zealanders.