Black Budget (New Zealand)

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Nash and Nordmeyer. Walter Nash and Arnold Henry Nordmeyer.jpg
Nash and Nordmeyer.

In New Zealand, the term Black Budget refers to the government budget of 26 June 1958 in which Minister of Finance Arnold Nordmeyer increased taxes on beer, tobacco, cars and petrol.

New Zealand Constitutional monarchy in Oceania

New Zealand is a sovereign island country in the southwestern Pacific Ocean. The country geographically comprises two main landmasses—the North Island, and the South Island —and around 600 smaller islands. New Zealand is situated some 2,000 kilometres (1,200 mi) east of Australia across the Tasman Sea and roughly 1,000 kilometres (600 mi) south of the Pacific island areas of New Caledonia, Fiji, and Tonga. Because of its remoteness, it was one of the last lands to be settled by humans. During its long period of isolation, New Zealand developed a distinct biodiversity of animal, fungal, and plant life. The country's varied topography and its sharp mountain peaks, such as the Southern Alps, owe much to the tectonic uplift of land and volcanic eruptions. New Zealand's capital city is Wellington, while its most populous city is Auckland.

Government budget government document presenting the governments proposed revenues and spending for a fiscal year

A government budget is an annual financial statement presenting the revenues and spending for a financial year that is often passed by the legislature, approved by the chief executive or president and presented by the Finance Minister to the nation. The budget is also known as the Annual Financial Statement of the country. This document estimates the anticipated government revenues and government expenditures for the ensuing (current) financial year. For example, only certain types of revenue may be imposed and collected. Property tax is frequently the basis for municipal and county revenues, while sales tax and/or income tax are the basis for state revenues, and income tax and corporate tax are the basis for national revenues.

Minister of Finance (New Zealand) in New Zealand

The Minister of Finance, originally known as Colonial Treasurer, is a senior figure within the Government of New Zealand and head of the New Zealand Treasury. The position is often considered to be the most important cabinet post after that of the Prime Minister. The Minister of Finance is responsible for producing an annual New Zealand budget outlining the government's proposed expenditure.

Contents

Background

The second Labour government took office in 1957, the 32nd Parliament. Within a year, the government was confronted with a balance of payments crisis caused by the collapse of the price of butter in Britain (at the time New Zealand's largest export market). Nordmeyer's colleagues were reluctant to cut government spending or break expensive election promises, so Nordmeyer was left with little option but to raise taxes, which was recommended by both the Treasury and Prime Minister Walter Nash (himself a former Minister of Finance). [1]

The Second Labour Government of New Zealand was the government of New Zealand from 1957 to 1960. It was most notable for raising taxes on alcohol, cigarettes and petrol, a move which was probably responsible for the government lasting for only one term.

32nd New Zealand Parliament

The 32nd New Zealand Parliament was a term of the New Zealand Parliament. It was elected at the 1957 general election on 30 November of that year.

The balance of payments, also known as balance of international payments and abbreviated B.O.P. or BoP, of a country is the record of all economic transactions between the residents of the country and the rest of the world in a particular period of time. The balance of payments is a summary of all monetary transactions between a country and rest of the world. These transactions are made by individuals, firms and government bodies. Thus the balance of payments includes all external visible and non-visible transactions of a country. It is an important issue to be studied, especially in international financial management field, for a few reasons.

The budget increased social security benefits but was very unpopular, not least with Labour's traditional working-class supporters. The term 'black budget' is believed to have been coined by union leader Fintan Patrick Walsh, but was taken up by the National Party opposition, and became the commonly used term for the budget. Rises in income tax levels hurt single earners and childless families the most. [1]

The New Zealand Labour Party, or simply Labour, is a centre-left political party in New Zealand. The party's platform programme describes its founding principle as democratic socialism, while observers describe Labour as social-democratic and pragmatic in practice. It is a participant of the international Progressive Alliance.

Fintan Patrick Walsh Seaman, trade unionist, farmer

Fintan Patrick Walsh was a notable New Zealand seaman, trade unionist and farmer. He was born in Patutahi, Poverty Bay, on the East Coast of New Zealand in 1894, and died in Wellington in 1963.

New Zealand National Party Major New Zealand political party

The New Zealand National Party, shortened to National or the Nats, is a centre-right political party in New Zealand. It is one of two major parties that dominate contemporary New Zealand politics, alongside its traditional rival, the New Zealand Labour Party.

The budget was prepared by the cabinet finance committee of Walter Nash, Arnold Nordmeyer, Phil Holloway and Tom Skinner; and Warren Freer was told by Holloway that it was Nash rather than Nordmeyer who fought for the "draconian measures" finally adopted. While export prices had "had a real bashing" with butter at half its normal level and wool and meat also down, Holloway and Skinner felt that prices of both wool and meat were likely to rise and drastic measures were not fully justified. In caucus the measures were criticised by Michael Moohan, Frank Kitts and Bill Fox and, despite his cabinet position, Moohan continued to agitate against the beer price rise in private. Philip Connolly said of Nash, who had said that there was no alternative, that he was "telling a bloody big lie" as Nash was rubbing the gold cross on his watch chain when he said it. Freer saw some saving grace in the tightening of import controls and emphasis on local manufacture which boosted employment. [2]

Walter Nash New Zealand politician

Sir Walter Nash was a New Zealand politician who served as the 27th Prime Minister of New Zealand in the Second Labour Government from 1957 to 1960. He is noted for his long period of political service, having been associated with the New Zealand Labour Party since its creation.

Arnold Nordmeyer politician

Sir Arnold Henry Nordmeyer, born Heinrich Arnold Nordmeyer, was a New Zealand politician. He served as Minister of Finance (1957–1960) and later as Leader of the Labour Party and Leader of the Opposition (1963–1965).

Phil Holloway New Zealand politician

Philip North Holloway,, was a New Zealand politician of the Labour Party.

The government's popularity never recovered from the budget, which is generally believed to have cost it the 1960 election. Nordmeyer was forever tainted by the 'black budget', which gave him a reputation as a puritanical 'wowser' who was opposed to simple working class pleasures such as automobiles, beer and cigarettes. [1] Despite this, he became the leader of the Labour Party in 1963, but was replaced by the more popular Norman Kirk only two years later.

Norman Kirk Prime Minister of New Zealand, politician

Norman Eric Kirk was a New Zealand politician who served as the 29th Prime Minister of New Zealand from 1972 until his sudden death in 1974.

In 2010, DB Breweries ran an advertising campaign attributing the creation of one of its brands, DB Export Gold to the increased taxes on beer introduced by the 'black budget'. However, the brewery was forced to pull the campaign from television and internet in February 2011 (though newspaper ads were unaffected) after the New Zealand Advertising Standards Authority partially upheld a complaint laid by Progressive Party leader Jim Anderton that the campaign was "unethical, inaccurate and distorted history" as little beer was then imported to New Zealand and the budget raised the excise only to the same as local beers. [3]

DB Breweries company

DB Breweries is a New Zealand-based brewing company, owned by Heineken Asia Pacific. Founded in 1930 by Sir Henry Kelliher and W Joseph Coutts, the partners purchased Levers and Co. and the Waitemata Brewery Co. in Otahuhu. Asia Pacific Breweries acquired DB Breweries in 2004, which in turn was bought-out by Heineken International in 2012. The company mainly produces pale lager, whilst its Tui brand is one of the better-known beers in New Zealand, partly due to strong advertising.

Jim Anderton New Zealand politician

James Patrick Anderton was a New Zealand politician who led a succession of left-wing parties after leaving the Labour Party in 1989.

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References

  1. 1 2 3 Coughlan, Thomas (17 May 2018). "How not to budget". Stuff.co.nz . Retrieved 17 May 2018.
  2. Freer, Warren (2004). A Lifetime in Politics: the memoirs of Warren Freer. Wellington: Victoria University Press. pp. 102–3. ISBN   0-86473-478-6.
  3. "DB ordered to pull 'Black Budget' beer ads". The New Zealand Herald . 11 February 2011. Retrieved 20 September 2011.