Monday, 5 December 2011

The future’s so bright, I gotta wear shades

Well Jianqi has corralled his lambs and just about got his coalition organised. And when you think of it; coalition is a good name for it since it will be putting out a lot of heat and black smoke and it will bring tears to your eyes before very long.

So what is that blinding light on the horizon? Is it a bird? Is it a plane? Of course not, you silly buggers; it’s that brighter new future we were promised so many times during the last month.

What’s that? You can’t see it? With all due respect, I think you need to take the blinkers off NOW, because Jianqi’s brighter future is here and just keeps getting brighter each day.

Take the economy for example (I wish someone would...). Is that bright or what? Treasury figures are just out on the country’s operating deficit for the four months to Oct 31, 2011. Treasury gave all us voters the low down on how this would work out six weeks ago and now we find they were absolutely...wrong. It was out by 4.1 percent, which doesn’t sound much, but considering this prediction was only made six weeks ago (and half-way through the period in question) it is not particularly bright.

They tell us it was down due to lower Crown revenue and a smaller tax and GST take. So the taxation policy is working well, then...NOT. They can hardly blame the economy on Labour now they’ve been in total control for the last three years!

Maybe we should check out the brighter health outlooks instead. I see National Disgrace is promising to provide even more elective surgery. Goodness me, that sounds great. Furthermore they have a goal of all patients booked for elective surgery to wait no more than four months. Wow – two months less than now. Or is it? Actually no. The whole waiting times issue is a load of lies and deceptions.

You see the current system ‘guarantees’ patients on the list will be seen in six months, but how can they guarantee this, you might ask? Easy, I answer. If they don’t think they can see you in six months; then you don’t get put on the list. This was exposed on National Radio’s Nine to Noon programme of 10 November 2011 where surgeons told Kathryn Ryan exactly how it works and why we have Charity Hospitals in Auckland, New Plymouth and Christchurch performing much needed varicose vein and hernia operations as well as many other surgeries for painful conditions that the DHBs are ignoring.

Okay then let’s look at the brighter future for jobs. That’s always one to get everyone excited. Jianqi tells us the abolition of the youth rates lost us 9000 jobs in one fell swoop. Let’s suspend judgment on that for a moment while we check out the Nats’ brighter future answer to this.

They are going to introduce what they have dubbed a ‘starting-out wage’ which apply to 16 and 17-year-olds beginning work and 18-19 year-olds who have just come off a designated benefit as well as 16-19 year-olds in training in certain recognised industry training courses. It will be equivalent to 80 percent of the minimum wage (wow $10.40 before tax -such generosity). For new young workers this will apply for the first six months with the same employer. Which means if for some reason their employer decided to toss them out after three months (and what is to stop him/her?) they have to start again with their next employer at $10.40 for another period of six months. You see after six months the employer is obliged to pay them the adult rate, so with an easy out at three months it is easy to see what will happen to many.

So what is really giving us a brighter future Jianqi? Certainly nothing in this lot. But perhaps it is your plan for asset sales ... er sorry ‘the mixed ownership model’? Now in the lead up to the election we were told the change to the ‘mixed ownership model’ would net us $7B. That sounds quite a tidy sum, but how did the Nats arrive at it? Well, unfortunately we don’t know because they muzzled treasury and the Ombudsman before the election. I can think of only one reason why they would do that, and it has nothing to do with ‘commercial sensitivity’. It is ‘political sensitivity’ because when you discover the whole concept has been built upon figures that don’t add up, it suddenly becomes a far more worrying matter than simply losing the income from these assets. After all that pain was supposed to bring gain. But realistically what sort of gain could it ever bring other than a very brief elation rather like when you sell your house and have a whole lot of money ....but nowhere to live, because you didn’t get as much as you thought for it.

I am the first to admit that my understanding of economics is rudimentary at best, although lately I have begun to realise I share this level of expertise with those in treasury who get paid far more than I could hope to earn. So at this point I should defer to those who actually work in the money market.

Auckland financial analyst Brent Sheather, and NZ Herald business columnist Brian Fallow have both laid out a very convincing analysis of the situation You can find details of their analysis at but in a nutshell Sheather says To get these asset sales, the Government will need to price the companies at price-earnings multiples of somewhere around 14 to 16 times, which implies after-tax earnings yields of 6 to 7 per cent. The 7% is the profits of the company after tax. So the company could pay out 4% as tax free profit, and re-invest the other 3% for more growth. Either way, that’s going to be nearly twice the 4% cost [of the borrowing option.]. Again, these sums indicate that ordinary New Zealanders stand to lose by selling down the assets.

 Both commentators seem to be of the opinion their views are pretty widely shared within the financial community, who is pulling Jianqi’s chain? And more to the point; where is this brighter future coming from?

Maybe it’s coming through the communication companies who are rolling out faster broadband ‘all over the country’. Wow! But wouldn’t it be better if all of us had decent cellphone coverage and television reception first? I mean how fast does broadband have to be? You can only type or click so fast.

Or maybe it’s coming from those nice mining companies. You know the ones. . These guys bring lots of work – they are the good guys. We’ve got a mining inspector so it’s okay. The companies are responsible people. It’s just that they don’t need all that health and safety nonsense because they employ real men, not cry-baby scaredy-cats who worry about being entombed in their workplace, or blown to smithereens.

But wouldn’t our future be so much brighter if everyone just stopped complaining about silly things such as child poverty child abuse, drunk drivers, lousy employers, a failed health system, dirty dairying, degraded environment and a failed education system and just got on with helping Jianqi to help us?

Yeah, right! I might as well toss my shades away for the next three years.

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