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Key’s economic bravado now reduced to whining

Written By: - Date published: 7:04 am, October 21st, 2010 - 24 comments
Categories: bill english, economy, jobs, john key, labour, monetary policy, national - Tags: , ,

In three short years John Key and National have gone from economic bravado, to failure, to lies, excuses and whining. The Nats are desperately trying to spin excuses for their failure. How did we get here? Let’s take a stroll down memory lane.

The recession and Labour’s legacy

In 2008 the world was slipping into what was obviously going to be a very difficult recession. Economic projections were dire, but 9 years of prudent management of the economy by Cullen and Labour had left New Zealand well placed. Treasury said so at the time in their briefing to the incoming government:

A stable macroeconomic environment gives investors confidence in the New Zealand economy as a place to invest. It gives New Zealand businesses a degree of certainty for making business decisions. Successive governments have done a good job of getting the New Zealand economy in a position where it can respond well to economic shocks. Low levels of public debt allow freedom to look through short-term cyclical fluctuations and there is room to adjust monetary policy to support demand.

Bill English said so too, on Dec 18 2008:

“I want to stress that New Zealand starts from a reasonable position in dealing with the uncertainty of our economic outlook.” “In New Zealand we have room to respond. This is the rainy day that Government has been saving up for,” he told reporters at the Treasury briefing on the state of the economy and forecasts.

Bill is still saying the same, in May 2010. The IMF agreed, and according to Reserve bank Governor Dr Allan Bollard in 2008: “We have enjoyed a decade of growth, the longest period of economic growth since the post-World War 2 era.” More details here.

In short, the coming problems were clear, the economic projections were dire, but New Zealand was well placed to respond. This was the context in which the 2008 election was fought, and in which the new National government took office. So – what were they saying about the economy?

National’s economic bravado: Before the election

Before the election John Key was in no doubt at all about the nature or extent of the economic crisis. He said:

Ladies and Gentlemen, this is no ordinary election campaign. Because this election comes at a time when the global economy is in turmoil and at a time when we are all concerned about what the future may contain. … Earlier this week … I released National’s economic management plan. It’s a plan to bring discipline to government spending, to reduce red tape, to reduce personal taxes, to boost infrastructure investment, and to raise education standards. It’s a recovery plan to ensure our country and our families get through these tough times.

Key and National were chock full of economic bravado. Of their tax cut bribe Bill English promised:

“National has structured its credible economic package to take account of the changing international climate. Our tax cut programme will not require any additional borrowing.” A few days later, Mr Key launched “a tax package for our times” that is “appropriate for the current conditions”. He said it would require “no additional borrowing, or cuts to frontline services to fund it. …

On December 16, Mr English was up in the House confirming “National will not be going back on any of those promises, as we fully costed and funded them”.

Tax cuts were, of course, the centrepiece of National’s five point recovery plan:

Only National can provide a government that is focused on the big economic challenges our country is facing. Only National has a serious, considered plan for delivering financial security to New Zealanders. …

Our economic plan focuses on the long-term needs of New Zealand. It isn’t a short-term set of band-aid solutions. It is a considered plan to get New Zealand through this downturn, put the economy back on its feet and raise incomes. Because in good times and in bad, National will be resolutely focused on strengthening our economy and delivering better wages and living conditions to New Zealanders. We won’t just care about those things in election year.

In short, John Key told us that he was fully aware of the state of the economy and the extent of the global problems, and he promised us that National had a recovery plan to get us through. Key promised to deliver a strong economy and good wages.

National’s economic bravado: After the election

Key’s vacuously “sunny” optimism continued after the election. In 2009:

“…we’re starting to come out of the recession which is good news,” Key said. … “The government has a comprehensive plan, not just for managing through the current recession but also for improving the fundamentals of the New Zealand economy,” he said. “The six policy drivers I have outlined will help to create an environment that allows businesses to thrive.”

Key infamously predicted that New Zealand would come “reasonably aggressively” out of recession. As recently as July this year he was saying:

I also want to pay a special acknowledgement to my friend and deputy, Bill English. What a great job he is doing as Finance Minister. He’s delivered two Budgets that have steered New Zealand out of recession and put the economy firmly back on track to grow and create jobs.

So much for the promises and rhetoric. How did it all turn out in reality?

It all turns to custard

I’ll spare you another big mess of quotes. We’ve all seen the news.

August 2010: Unemployment rate jumps.
August 2010: Tasman wage gap $40 a week wider
September 2010: Kiwi dollar tumbles on weak GDP.
October 2010: Economy ‘fragile’ – Reserve Bank gov.
October 2010: Economy contracted last quarter, says NZIER.

And so on and so on. It doesn’t sit very well with all of National’s bravado does it?

And now the whining starts

National have been caught out badly. They promised that they understood the problem and had a recovery plan. The reality is that they did nothing (except cut taxes, which is somehow supposed to fix everything by magic). The reality is that National have failed badly, and it is becoming more and more obvious. So how do they respond?

(A) Tell lies!

The Nats are spinning all sorts of nonsense about the economy. Fellow Standardista Marty G has been taking these lies apart for weeks (e.g. here, here, here, here). The Nats are claiming that average wages are increasing! Keith Ng takes that lie apart (well yes, because so many low wage people have lost their jobs). The Nats are claiming that the current low inflation is an economic victory! Gordon Campbell demolishes that one (there’s a lot of desperate sale pricing of luxuries but the essentials are still rising). And so on.

(B) Whine and blame Labour!

Perhaps sensing that the lies are too transparent to last, Key has fallen back quickly to Plan B — whine and blame Labour:

“Tens of thousand of Kiwis are finding they just can’t pay their bills,” says Labour leader Phil Goff. Mr Key says that’s not his Government’s fault – he blames Labour. “It’s a lagging indicator, and these people are having to deal with the mess Labour left the country in,” he says.

People can’t pay their bills and that’s a “lagging indicator”? Hello! Out of touch much? Let’s go full circle back to the start of this post — Labour left the economy well placed heading in to this recession (even Bill English said so). Key campaigned on a recovery plan, and said that only National could fix the problems. Key claimed that two National budgets “have steered New Zealand out of recession and put the economy firmly back on track to grow and create jobs”. And now when all the bravado is revealed as bullshit he wants to blame Labour? Yeah good luck with that.

Time to learn the lessons John

John Key, you need to face up to some basic lessons:

(1) Your “tax cuts will solve everything” sham of a “plan” for the economy is a failure. Labour left you well placed to respond to the crisis, and you’ve blown it. As early as June 2009 we were out of recession, but because of your do-nothing “plan”, two budgets later, we are slipping back in.

(2) What is happening in New Zealand is only a microcosm of what is happening internationally. Neo-liberal economics has failed. It died in the heat of the global financial crisis of 2008, and only trillions of dollars worth of “socialist” tax payer bailouts have animated the corpse since then. Even that half life is likely to end soon on the twin pyres of sovereign debt and American foreclosure fraud.

Conclusion

This is a time for fresh thinking, both globally and locally.

Some people get it. People like Bernard Hickey, who has renounced neo-liberal economic orthodoxy. Some organisations get it. Organisations like the Labour Party, who used their recent conference to break the economic mould and promise fresh new thinking.

On the other hand, some don’t get it at all. John Key doesn’t get it. The National Party doesn’t get it. As long as they are in power they will have nothing to offer economically except tax cuts for the rich. As the economy languishes they will have nothing to offer except more lies and pathetic attempts to blame Labour. If the economy does stagger back to health it will be despite National not because of them.

Trace National’s path from economic bravado, to failure, to whining. Consider the alternatives. A reinvigorated and open-minded Labour, or a closed-minded National clinging to failed policies and excuses. That’s the choice facing New Zealand at the next election.

24 comments on “Key’s economic bravado now reduced to whining”

  1. lprent 1

    Great post. It is exactly how I feel about these clowns. They’re full of bullshit, able to piss around the margins with idiot legislation, but totally ineffective at the basic roles of government, and increasingly incoherent as Ministers go off doing their own thing.

    Right now they’re starting to seriously annoy me with the PR lying – with blatant misuse of bogus numbers out of context.

    But I guess that National is getting worried. Those poll trends are Not good for them, and neither is the feeling I am getting when talking to people. Quite different to last year

  2. burt 2

    Good post rOb, you just forgot to mention that NZ was already in recession prior to the global economic crisis.

    • Pascal's bookie 2.1

      Ooh again. Care to comment yet on the actions of the fed reserve in 07 and 08, particularly in comparison to our RB, and how this relates to your oft repeated bullshit?

    • Marty G 2.2

      burt. NZ entered recession in the same quarter as the US, Ireland, Norway, Sweden etc and one quarter prior to the rest of the world.

      We entered recession the quarter after the oil price spike and the sub-prime crisis took off.

      It’s OK to be ignorant of these facts the first time. Now it just looks like you can’t read.

    • Marty G 2.3

      and, guess what, the recession started three years ago.

      Key is the PM now. It’s his job to sort things. Instead he’s whining.

      • Jim MacDonald 2.3.1

        Key, Double Dipton and the other Cabinet Dipsticks

        – they have wasted opportunities that would have put NZ in a better position

        – they have stuffed up priorities that would have helped NZ cope with the recession

      • burt 2.3.2

        and, guess what, the recession started three years ago.

        I agree, late 2007 – So we were in recession before the global crisis, actually before the sub-prime debacle….

        As rOb said;

        In 2008 the world was slipping into what was obviously going to be a very difficult recession.

    • ghostwhowalksnz 2.4

      yes that was part of the Reserve Banks deliberate policy to give a slow landing along ( remember they were ratcheting up interest rates) with the loss of production due to the drought

    • bbfloyd 2.5

      burt.. are you taking the piss? or are you really that stupid? read the post again moron, and this time, have a break between paragraphs.. you just might find the bits that deal with the recession in 2008 specifically… if you havn’t got it after a few hours of patient reading, then i suggest you stick to your knitting. that, at least shouldn’t tax your tiny little mind too badly… what a complete plonker you are….

    • Fisiani 2.6

      There is a common misguided theme on this blog of how awful National have been.
      A good analogy would be if a rugby team passed the ball across the pitch from player to player. No forward progress just transferring the ball sideways. Finally it gets tossed to the player in the Blue shirt a microsecond before he is hit by 3 huge forwards. it’s called a hospital pass.
      How dare he fumble the ball. The rest of the team did not. He must be awful. They call him nasty names. (unemployment up, deficit up, loser)
      Despite this he has shrugged off the opposition and made more progress in the last two minutes than the reds on his side did in nine minutes.

      • lprent 2.6.1

        It looks more like progress backwards than forwards to me…

      • Draco T Bastard 2.6.2

        Wow, a delusional RWNJ propounding more delusion to justify the way his preferred government fails at, well, governing.

        I’ll spell it out for you Fisiani, NACT have fiddled while the economy burned and now that it’s in ashes they’re blaming Labour even though Labour left the books in better shape than at pretty much any time in the last 30 odd years.

        Now, Labour made some mistakes, the biggest is in supporting capitalism, one of the other one was supporting the delusional neo-liberal paradigm that has, once again, proven that it doesn’t work. NACT are, of course, still pushing this paradigm because it’s made them rich – at everybody else’s expense. Of course, being a bunch of psychopaths they’re not concerned about the damage that they’ve done to everybody else with their greed. In fact, their out there right now blaming the victims.

  3. Carol 3

    An already the MSM, and NACT supporters are whining (in a Stuff article & on the Standard & Red Alert comments) about the actors’ unions being responsible for (predicted) loss of filming the Hobbit in NZ. But, Gordon Campbell shows that it is NACT’s and Brownlee’s fault for not making the financial incentives to film in NZ competitive enough:

    http://www.scoop.co.nz/stories/HL1010/S00119/gordon-campbell-on-the-hobbit-countdown-to-d-day.htm

    Wednesday, 20 October 2010, 9:26 am
    Column: Gordon Campbell

    At his post Cabinet press conference last week, Prime Minister John Key was asked (by me) whether the government-convened talks to keep The Hobbit in this country had included the possibility of raising the level of film production subsidies available in New Zealand. “No,” Key replied, “that hasn’t been on the agenda.” Interesting. Offhand, I can’t recall any other negotiations where this country has had so much at stake, and where we have seemed quite so complacent about going into them at a trade disadvantage.

    After all, it isn’t as Minister of Economic Development Gerry Brownlee isn’t aware of the benefits or major film productions to New Zealand – both now, when we’re offering a 15% rebate on the local spend by foreign film companies or later, if we chose to raise our bid slightly. Last year, Brownlee reportedly put the case for production subsidies this way – “Can anyone tell me what’s wrong when we put up 15% and they give us 85%?” Right. Yet surely, the same logic applies if the ratio is 20% to 80% – or even if we raised our subsidy level to the 25% that some parts of Eastern Europe are now offering, and settled for a 75% share of the bounty? That still sounds like a good deal to me. Why isn’t Spada – not to mention Sir Peter Jackson – putting on the table at least the possibility of the government sweetening our bid? After all, back in January, Spada’s Penelope Borland was saying publicly that “in fact New Zealand now has one of the more modest rebate schemes for international productions.” Exactly. So why is Spada (and everyone else) now choosing to ignore that reality?

    • Draco T Bastard 3.1

      I read that and laughed.

      One of the major selling points of the neo-liberal delusion was that you didn’t need subsidies as the “market” would fix it all automatically and make everything cheaper due to “competition” and yet every major undertaking in NZ, and around the world, still has massive government subsidy. Privatisation is failing, as it always has, to step up to the challenge of actually improving society. All it (privatisation) does is ask that the people take pay cuts, lower working conditions and also pay for the capitalists to become even richer and then blame them for being poor.

      We need to get rid of capitalism, and its irrational market as it is, quite literally, killing us.

  4. ZeeBop 4

    Brownless says employment legislation not flexible enough to allow actors to negotiate
    a better deal over the Hobbit movie and so we are going to lose it offshore because of
    existing laws. Actors will still be employed but not here in NZ. But its a timely
    reminder than unionism can mean loss of jobs, and the current government will crow
    if it happens. But actors are global workers and can move, or take jobs from those
    who do move to the new Hobbit stage in ?E.Europe?

    Government obvious hates the man in the street, as students are now finding, students
    can’t be trusted to vote out complusory student fees. How stupid is our government,
    without the political hustlings put on by unions we don’t get to track the political
    agitators of the future, whether they be gormless rightwing or leftwing ones.
    Student unions provide opportunities to the future radio shock jocks, future
    accountants doing the union books, future politicians, even allow state security
    services a means to discover the new threats or potential staff of the future.
    What is government thinking? forcing a new wave, generation, of political
    activists out of the limelight of student politics to the back alleys of the internet?

    Cut, cut, cut. The voters are rightly targetted by National for voting for neo-liberal
    stupid policies over the years, and well National are going to keep on offering neo-liberal solutions.
    Its like National are forcing voters to prove their faith in the economics of stupid
    by taking the cuts without a fight.

  5. Carol 5

    And when NACT is not whining, it’s cutting back on democratic rights, because it knows most of the less well off don’t usually vote for NACT:

    http://tvnz.co.nz/politics-news/voting-rights-bill-slammed-3845371

    A bill that will ban all prisoners from voting has been slammed as undemocratic by the Maori Party.

    Currently only prisoners serving terms longer than three years are forbidden from voting – the Electoral Disqualification Bill extends that to all prisoners. The second reading of the bill passed through Parliament 63 votes to 55 last night.

    Labour voted against it, and the Greens said that this bill breaches UN Covenants on human rights.

    So, is NAC’s grand plan to blame everyone else, and meanwhile ensure opposition is diminished by incacerating more and more people, and disenfranchising them?

    • Draco T Bastard 5.1

      NACTs plan is always to blame someone else for their failures. They have no sense of responsibility or a conscience.

  6. WOW… i just had some fatcat mofo buy me a new fridge stocked full of food and paid for by his taxcut.

    he said it was all part of the trickle down generosity for the poor and needy credo he’s decided to live by and that next week he’s going to stimulate the retail sector and develop his social conscience even more by consuming us a new lounge suite.

    …and then i woke up on my shitty couch, hungry as a muthafucka wondering how to meet the rent increase and pay the next hiked power bill.

  7. BLiP 7

    You overlook the fact that Natonal Ltd™ has been particularly successful with its real agenda of making the rich richer and the poor poorer. From that point of view, John Key has truly been a maestro.

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  • Burger King shows zero-hour contracts not needed
    The abandonment of zero-hour contracts by Burger King is further evidence good employers do not need to use them, Labour’s spokesperson on Labour Issues Iain Lees-Galloway says. "Congratulations to the Unite Union and Burger King for settling an employment agreement… ...
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  • Kiwis deserve more than reheats
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  • Landlords not cashing in on insulation schemes
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  • Zero excuses, end zero hour contracts now
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  • We’ve reached Peak Key with ‘artificial target’
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  • Top 10 need to know facts on climate change
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