Written By: - Date published: 10:39 am, October 2nd, 2011 - 56 comments
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The weeks of the RWC were supposed to be a politics-free zone. Bread and circuses, maybe even an ABs win to take the rugby-loving part of the country into the election in an up-beat sort of mood. All of which was electoral gold for the incumbent Nats.
It didn’t turn out that way. Right out of the gate, with the chaos of the opening night, politics was forced to the front and centre. Then Murray McCully shafted Len Brown, and gave free reign to the Nats’ inner despot, “taking control” of Auckland.
And now, one of the biggest possible political bombs has been dropped in the middle of the RWC. After all their boasting, posturing and dire warnings, the Nats’ “management of the economy” has copped the big thumbs down from two international credit rating agencies. Suddenly the National ediface is looking a bit shaky. You don’t need to take my word for it – the weekend papers are full of it. Here’s John Armstrong:
It’s game on for election as credit ratings cut
As much as Bill English downplayed yesterday’s downgrades of New Zealand’s credit rating, the double whammy from Standard & Poor’s and the Fitch ratings agency inevitably casts a big shadow over National’s claim to be the most competent manager of the economy.
Labour has been arguing – with some justification – that National has not made the hard decisions needed to address imbalances in the economy such as the mountain of private debt. On that score, the chickens have certainly come home to roost for National in the form of the rating downgrades.
John Key’s unfortunate talk of “muddling through” the fallout from the international debt crisis has come back to bite him, big time.
Labour is right.
While National has remodelled the tax system, it has refused to confront issues such as raising the age of eligibility for superannuation – something Standard & Poor’s tacitly noted.
National has instead weakened savings mechanisms such as KiwiSaver and the Cullen superannuation fund. National might argue otherwise, but selling chunks of state-owned companies and chopping back the public service do not add up to be solutions to New Zealand’s economic woes.
In contrast, Labour is walking its talk. With its capital gains tax and a yet-to-be-announced savings policy which may well contain some stick – in the form of compulsion – as well as some carrot, Labour is at least addressing the areas where the hard decisions will have to be made. …
The blowtorch is now on National. It can no longer cruise through the election campaign. It is going to have to come up with answers to satisfy the ratings agencies. And they are not answers which are going to be all that popular.
I think John is wrong about that last point. The Nats will definitely try and muddle through to the election without making tough decisions. The downgrade damage is unavoidable, but they won’t want to add to it. Anyway, Fran O’Sullivan:
Downgrade gives Key’s foes great ammunition
Putting off campaigning until after Cup no longer an option for Nats
Our admirably happy-clappy Prime Minister will not want to pass up the chance to cheer on the Vodafone Warriors at the ANZ Stadium in Sydney tomorrow night. … But what Standard & Poor’s and Fitch Ratings have done with their separate decisions to drop New Zealand by one credit rating notch is hand Key’s political opponents a useful weapon to challenge his Government’s economic management. …
But this [RWC] wonderful six-week interlude of bread and circuses does not disguise the fact that New Zealand is now facing some very big challenges which cry out for concerted Government leadership.
The Key Government is doing very little in a concerted way to tackle youth unemployment, which is back at the heights which shamefully damaged the confidence of an earlier generation in the early 1990s.
The Government remains in stalemate with the international insurers while Christchurch business leaders such as Peter Townsend warn they are getting increasingly worried about the risk of capital and talent flying out of the stricken city. There is little real urgency.
And it is too pussy-footed to make the harder policy choices that will get the country’s finances back into the black faster, raise national savings at a faster clip and shore up New Zealand for the longer term.
Even Bill English – who stressed yesterday that ratings downgrades demonstrated New Zealand is not immune to the global backdrop – has a difficult time puncturing Key’s Pollyanna-ish armour. …
It is now increasingly important that public focus does go on both National and Labour not to try to sugar-coat the fiscal realities as they each did before the 2008 election. … Three years on, and the world is on the verge of a double-dip recession. But this time round Key can’t duck shove Governmental responsibility for our finances on to Clark.
Like Armstrong, I think O’Sullivan is way too optimistic in expecting action from the Nats. Muddling through has worked brilliantly for them by the only criteria that they care about – poll ratings. Why change a winning strategy? As long as the media keep portraying Key as a “great bloke”, everything will be fine. For the Nats. Not for the country.