Written By: - Date published: 1:27 pm, December 18th, 2008 - 47 comments
Categories: economy -
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The latest Treasury economic forecasts are out and, in a continuing pattern, they not only make worse reading than the previous updates but they are already out of date. We are now looking at gross government debt rising from less to 20% to 30% or as much as 40% by 2013. Unemployment could rise above 7% from its current level below 4%.
We are one small country caught in a global storm. Although we went into recession earlier than most other countries, we have entered the storm in better shape than just about any other country with a balanced budget, a decade of strong growth behind us, record low unemployment, and a government with net financial assets for the first time. (ironically, the high inflation and higher interest rates we had also come in handy – other countries are facing the far worse condition of deflation and have already reduced their official interest rates as low as they can go, they have pushed the monetary policy level to maximum without success).
The causes of this crisis are not domestic, our domestic situation is better than most, which makes attempts to blame the last government for the crisis all the more pathetic. However, the way we react domestically will have some bearing on how badly the crisis hurts ordinary New Zealanders.
Right now the National/ACT government is ramming through under urgency a series of hastily written laws (most only a page or two long) dealing with minutiae that National themselves claim won’t change anything but are merely symbolic. How much better it would have been if National/ACT would have shown the same sense of urgency towards developing an economic stimulus program combining sustainable infrastructure spending, skills training, and job creation as they have shown in relaxing energy efficiency standards for lightbulbs.
From Bill English’s comments on these latest updates, it seems he is most concerned about the size of the deficit the government is projected to run. That is the wrong focus. During the growth period we ran large surpluses and used them to pay down our debt, now is the time to run deficits. If we attempt to reduce the deficit significantly (and tax cuts for the rich don’t help) we will have to cut government spending on health, education, benefits, and superannuation, as English did when he was Finance Minister during our last recession. As it did then, that course of action would only make things worse by further reducing employment and cutting people’s incomes. What’s worse we would feel the long-term effects in worse education and heath outcomes.
I’m hoping that English’s instinct to slash public services and hope the economy will fix itself will be over-ruled by Key who, if he really is a pragmatist, will see that we need a proactive government willing to spend and lead the economy out of recession. But I fear my hope is in vain.
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burt,
a response and a thank you..
the first to:—he just couldn’t trust us with our own money – fricken socialists just don’t get it do you – being, your own money, huh, like you’re some legit treasury.. why not tell us about it!
and the second being — -I know what is best for me for its perfect definition of a me-firster. For all here to see.
the best thing to beat uncertainty is certainty..
oops! apols.. the above comment de-emphasises from italics at the third dash line..
northpaw
I think I have a better grasp of what my families needs are than the govt with regard to quality of essential social services. Social services which I can also purchase privately. I appreciate this is not true of the entire population.
I’m a compliant tax payer, that is a legal requirement. I’m not a contented tax payer and are you suggesting that is a moral requirement?
Em. Hows about this as an option for what to do? http://www.dollarsandsense.org/blog/2008/12/inside-account-of-activism-in-greece.html
No? How about in 12 months then? 2 years?
More here http://libcom.org/tags/greece-unrest
I’m not a contented tax payer and are you suggesting that is a moral requirement?
burt,
And why not? New Zealand is a pretty civilised place to live. I’m happy here; care to name some place else where you might be a more contented taxpayer? What would you be contented with?
You remind me of those types who always demand top service at the lowest cost, always knowing the price of everything and the value of nothing.
It must be bad, twelve Labour party staff members have been caught stealing.
I guess they should be shown some leniency given the way Cullen and Clark have stolen from the tax payer for the last nine years.
[lprent: Doing a 4 fold increase in the numbers from the reports I read yesterday? And a standard troll line. You obviously don't want to be here - take a 4 week ban and contemplate why I detest trolls. BTW: with that pseudonym you picked up extra. It is like fairfacts media - you have to live up to the name. ]
[lprent: Incidentally, while looking back in your comment history. I was vastly amused to see you say this to SP
From what I can see you are very good at telling endless lies and half truths about the Nat's yet you take exception (in a rather juvenile way it must be said) to the truth being told about Labour.
bb: I think that you were projecting yourself on to SP]
Bill
Well perhaps it would be viable in 12 months but in 2 years there could be issues. You see the problem will be that if National don’t repeal Labour’s EFA then I don’t imagine thousands of people will want to take to the streets with their full name and residential address on their protest material. Privatisation is undeniably govt policy and therefore to express an opinion on it during the full year election period (which will have started again in 2 years) will be problematic.
Activism is a good thing, don’t get me wrong on that the problem is that when the govt seeks to shut it down and you support that because it’s “your party’ that are crushing dissent you then need to accept that when you are dissenting you will be shut down.
Are you prepared to publish your full name and address to protest about privatisation or are you prepared to be fined and/or sent to jail for not doing so?
Perhaps you personally don’t support the EFA but be careful because the authors of the standard think it’s a great thing well they did when it was working for Labour’s best interests, they might have changed their minds since the election.
Burt.
WTF! What parliamentary party are the people in Greece endorsing? Given mirror expressions of democracy here, what parliamentary party would the people be endorsing? None. so the EFA becomes an irrelevancy.
Bill
It’s possible (but I could be wrong) that such a protest here would be against the current govt. Dissent is not usually endorsing something. People seldom riot in support of something. But hey, what would I know.
burt,
folks very good, and simple, on the topic I thought I’d raised.
Because of the intemperate and misplaced language about socialists didn’t get it when just one look at a kiwi banknote reading — This note is legal tender for — tells me it is you, burt, who does not get it. In refering to “my money” and exuding personal attitudes about it..
Excluding cheques, credit/debit cards, money is legal tender. Needs authority. Legal authority. Do you have that authority, burt? And those notes confer no right to forced purchase. So the use they have enables people buy what makers/manufacturers/suppliers of goods and services willing and able to accept payment. Order in that transactional process is defining. Goods, services etc, then buy. Or extinguishment of debt
In the production of goods and services much if not mostly social content: slamming that component is a long way from smart.
Let’s put this down to the festive season when I allowed also for the other possibility of “my money” as stated by you. Like in the wiki’s B52s ‘Whammy’ album entry —
Suffice to say, burt, that your response hath convinced me of your innocence abroad in respect of such occupation
Have a good holiday and festive season with many useful decisions for your family. To whom also I wish a happy New Year!
northpaw
Yes, well of course. It’s obvious really isn’t it. How did I miss that? Here was me talking about making spending decisions on behalf of my family and all the time it’s all about who actually owns the money. I feel so stupid, I was discussing politics on a political blog and all the time the legal issues associated with currency were eluding me.
Sorry northpaw, I’ll try harder to keep up with next time.
northpaw,
Huh? Why so excited about notes being legal tender?
According to the Reserve Bank “legal tender” only means it is