The shape of Thursday's Budget statement is already clear and, once again, it'll be a Budget that will do no favours for Joe and Joanne Blow. Indeed this Budget will lay the groundwork for a massive redistribution of wealth back to the wealthy and it'll be workers and the poor who will be expected to carry the burden. This will be a capitalist Budget with a capital 'C' as opposed to Labour's capitalist Budgets with a small 'c'.

First up, that old monetarist favourite, tax cuts for rich people who don't need tax cuts.

And these are substantial cuts. Prime Minister John Key, for example, will get in the region of a $300 a week tax break. In stark contrast everyone on lower incomes - like a nurse or teacher for example - will end up with no more than $20 a week. And, of course, the Key Government will be taking some of that back via the increase in GST.

After constantly claiming that he wanted to raise income levels in New Zealand to those that can be found in Australia, John Key has a lot of explaining to do.

And he's doing a bad job of it. Despite having an army of spin doctors and advisers, all Johnny has been able to come up with is that we need to give the wealthy a helping hand because if they do well we all do well. This is what little Johnny said yesterday:

"If you are talking about can there be tax cuts at the top end, in my view the answer to that has to be yes. The reason for that is you need the people that are paying the top tax rate to stay in your economy. Whether they are your doctors, your entrepreneurs or your scientists - I mean we can be envious about these things but without those people in our economy all the rest of us will either have less people paying tax or fundamentally less services that they provide."

You may have heard this neoliberal mantra before. Variations of it have been chanted over the years by the likes of Roger Douglas, Phil Goff, Michael Cullen, Ruth Richardson and Jenny Shipley - to name just few of the rogues. Yes, its the old 'trickle down' theory making an unwelcome reappearance in 2010.

None of the evidence supports Key's assertion that helping the wealthy helps the economy. The historical evidence of the past twenty five years of neoliberal economic policies shows that the wealthy put their tax windfalls into further discretionary spending on cars, overseas holidays, yachts and the like.

In short, giving Paul Reynolds, the CEO of Telecom, a $1000 a week tax cut will not promote economic growth.

But this Budget is not about 'encouraging economic growth'. You will be hearing this phrase and phrases similar to it a lot over the next few days. You will hear them , of course, from the Government but you will also be hearing them from its cheerleaders in the media.

When we consider the tax cuts for the wealthy against a background of severe cuts in public spending (including a vicious assault on beneficiaries led by Paul Holmes favourite politician, Paula Bennett ) we begin to see what John Key's real agenda is.

The purpose of the cuts in public spending is to produce a long-term reduction in the share of national income attributable to labour, and to increase the share of income that goes to capital. The fall in working class living standards will not reduce the deficit, but it will increase the living standards of the rich.

The tax cuts for the wealthy are just the tip of the iceberg. The Key Government knows which side it is on and it ain't the working class.

This Budget will represent a fundamental attack on the living standards of workers and the poor.

This massive attack on the working class in favour of the capitalist class should be resisted by the organised labour movement

I say should because the chances that the trade union hierarchy will put up any resistance at all is remote since they have actively collaborated with the Key Government ever since it came to power.

There will be a lot of bluster and the duplicitious Andrew Little will no doubt issue his inevitable angry press release. But there will no resistance and we will be expected to believe that the answer lies in voting for Phil Goff and the Labour Party in 2011. And if you believe that then you will believe just about anything.


  1. The incoming tax cuts should suit the Trade Union Hierarchy just fine.

    I wonder what Mr Little will spend his tax cut on?

  2. Well, union officials on business executive salaries, never share the financial distress of their members If they did they might not be so ready to sell out the rank and file.

    Full time officials are removed from the workplace, and invariably enjoy working conditions and pay superior to their members.

    The answer to this problem lies in the revival of rank and file organisation within unions and bringing the salaries of union officials into line with the wage levels of their members.


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