[ad_1]
OPINION: 2020 is the year of tough decisions, the kind for which there is no good result, only the “least worst”.
The decision to put the country under lock and key was probably easier than we like to think. As Greens co-leader James Shaw said, “The choice is: do you have a major economic collapse with the deaths of tens of thousands of people or a major economic collapse without the deaths of tens of thousands of people.”
Thursday’s budget will be different. It is the product of hundreds, even thousands, of decisions and represents the canonical vision of government on how much to tax and how much to spend, and where. These decisions are not as easy as blocking. The pitfalls are everywhere, and they are not always obvious.
A budget for the election year is also the meeting point between the technocratic economy and emotional politics, a conflict in which Finance Minister Grant Robertson is content to disappoint everyone a bit. He has pointed out that the debt will rise astronomically: economists like this, the Government should be the spender of last resort.
READ MORE:
* Here are the data showing the impact of Covid-19 in New Zealand
* Benefit numbers exceed GFC, and worst is yet to come
* Coronavirus: Blocking is essential to avoid financial pain, ministers say. Some disagree
The government has also signaled that there will be no major tax changes, no tax cuts, and no tax increases. At the moment, this is a happy marriage of politics and economics. There is no point in looting pockets when the economy needs all the cash it can get, and there certainly is no point doing it in an election year.
But that short-term thinking postpones another series of unpleasant political and economic choices, each as unpleasant as the decision to go into shutdown.
This is most visible in the meager prospects of New Zealand youth.
Less than two months after what will likely be many years of economic hardship, youth unemployment is skyrocketing. The data on benefits from the Ministry of Social Development show that the number of young people between 18 and 19 years old who claim an employment subsidy already looking for work increased 46.1 percent for young people between 18 and 19 years old, 61.6 percent for from 20 to 24 years and 58.2 percent for 25-29 years between the end of February and April.
There are now 53,000 New Zealanders ages 18-30 looking for work, almost more than the number of applicants from all other age groups combined. That number will surely increase when the wage subsidy begins to expire for companies in the coming weeks.
The number of people aged 45 to 65 applying for employment has increased by approximately 30 percent during the same period.
Government assistance so far has been quite forceful. That is justifiable. The goal was to get money to companies and their employees quickly, rather than wasting time on complicated media testing.
But last week’s criticism of former finance minister Roger Douglas was fair. Forceful corporate assistance has the effect of securing the privileged position of corporate titans who could and should fend for themselves.
The government’s firm refusal to adjust retirement eligibility, or to consider a more equitable tax system, simply delays the inevitable generational adjustment. This budget is not going to happen, but Labor must begin to seek to modernize the tax and benefit system to ensure that the responsibility for paying for this economic disaster does not rest with the worst-paid: its supporters.
The twentysomethings unceremoniously initiated into the work queue will somehow have to stretch their pay packages to finance the Covid-19 repair bill, along with the government’s already unaffordable guaranteed retirement for those over 65.
Douglas’s call to rethink the economic privilege enjoyed by front-line companies and their bourgeois employees is fair.
New Zealanders often look with hazy-eyed envy at the decadent social welfare systems of old Europe.
But now we are on the precipice that those countries had 10 years ago, at the beginning of the global financial crisis. Their firm refusal to adapt to a new economic reality and their corporations’ addiction to billions of euros of welfare meant that unionized and gold-plated bourgeois jobs were saved, while the economic bridge was erected for young and non qualified.
The result was a decade of youth unemployment, which has yet to drop to pre-crisis levels. Upon entering the Covid-19 economic crisis, Spain, Italy and France had youth unemployment rates of 30, 29 and 19 percent, respectively. Our rate during a similar period was only 11.4 percent.
The European example is important: the response to this crisis must consider equity, not only cushion the blow for the middle class and the wealthy. Failure to address the inequitable way in which economic pain falls simply turns an economic problem into a political one.
Failure to account for these inequalities and a commitment to bourgeois well-being over real aid to the unemployed and the vulnerable have led to the near extinction of European Social Democratic parties, such as our Labor Party. Voters insisted on the fact that there was little desire for economic justice behind the aging brands of these parties.
The unfortunate email leaked from the prime minister’s office shows that Labor is more than willing to deploy Jacinda Ardern’s star quality to distract herself from very real problems, but Ardern would be wise to use the tactic sparingly.
Just ask the Europeans; sooner or later the hoi polloi take notice.
