Nats have held us back for four years

Written By: - Date published: 7:47 am, May 8th, 2013 - 22 comments
Categories: debt / deficit, economy, national, spin - Tags: , , ,

It has always been clear that the NZ economy would get back on its feet one day. Thanks to the previous Labour government’s prudence (zero net government debt) we weathered the global financial crisis in good shape and were out of recession in the June quarter of 2009, before the Nats’ first budget.

We should have taken off again then, like Australia, but Australia had a plan and we did not. We had the Nats. Their misguided “expansionary austerity” budgets stifled the recovery. Instead of “roaring out of recession” or the “aggressive recovery” that we were promised, we have just limped along – because the Nats cut when they should have (like Australia) stimulated the economy.

The evidence for the foolishness of austerity measures is growing ever stronger, as Britain (where the Tories are the leading proponents of this nonsense) has gone to the brink of a triple dip recession. Paul Krugman has been leading the criticism:

Paul Krugman’s call to arms against austerity

An interview with the Nobel prize-winning economist, whose book roundly attacks the ‘delusional’ deficit-reduction strategy

…More than four years on, austerity is being questioned as never before, not least because most countries implementing a deficit-reduction policy have failed to grow. Krugman, his blog and comments on Twitter, have become the focal point for objectors worldwide.

Speaking to the Guardian to publicise the second edition of his book End This Depression Now, he argues that his battle will go on until policymakers realise that their reliance on deficit reduction is a “delusional” misreading of basic economics. But despite his persistent criticism, austerity remains the default position for most western governments.

Here in NZ our own Bernard Hickey is the voice of reason (though he could learn a thing or two about snappy headlines!):

NZ PM Key defends government drive to return to surplus and start reducing debt despite doubts overseas that ‘expansionary austerity’ is actually working

Prime Minister John Key has defended the government’s focus on returning to budget surplus and reducing the government’s debt load, saying it made sense to strengthen the nation’s balance sheet through government debt reduction, given households remained indebted and foreign debt was still high.

He also warned that higher debt could trigger credit rating downgrades that increased New Zealand’s interest rate premiums.

His comments followed intense debate over the last month in Europe and the United States over a strategy of reducing government debt to improve economic growth rates.

The strategy has relied on academic research by US economics professors Carmen Reinhart and Kenneth Rogoff into the connections between government debt and economic growth, in particular in this academic paper ‘Growth in a time of debt’ published in 2010. It suggested a tipping point was reached when government debt rose over 90%, significantly reducing growth rates to below zero%.

However, those conclusions were questioned last month in another academic paper which said the Reinhart/Rogoff was based on a spreadsheet error and was skewed by the omission of data on episodes of high debt, including, most importantly, in New Zealand from 1946 to 1949, when our country showed both high growth and high debt. …

However, Key said the government remained committed to its strategy of returning to surplus by 2014/15 and then reducing debt from almost 30% of GDP in 2017 to 20% of GDP by 2020. The Reserve Bank pointed out in its March Monetary Policy Statement that the government’s austerity strategy was driving a tightening of fiscal policy equivalent to 3.2% of GDP over the next four years, which was a factor dampening momentum in the economy.

Well we’ve been here before, but currently we have  another round of “green shoots of recovery” type stories, and talk of an optimistic budget.  No doubt we’ll be hearing a lot more of this spin, but keep in mind that the bulk of those “green shoots” are due to factors beyond the Nats’ bidding (the stimulus of the Christchurch rebuild, and the good performance of old Labour-built assets the NZ Super fund and ACC). Unfortunately as Russel Norman points out, the real economy of the jobs market and the tradeable sector is still getting worse.  

We will get there in the end no doubt, but it will be in spite of this bungling Natational government, not because of them. All National have done is hold us back for four years.

22 comments on “Nats have held us back for four years ”

  1. Draco T Bastard 1

    But despite his persistent criticism, austerity remains the default position for most western governments.

    Yeah, and the reason why that is so is because austerity helps transfer the communities wealth into the hands of the few. Stimulatory policies, like raising taxes on the rich and increased government spending, do the opposite.

    Prime Minister John Key has defended the government’s focus on returning to budget surplus and reducing the government’s debt load…

    So, how much per week is this government presently borrowing?

    What we really need to do is drop the delusional economics system and the theory that supports it. Until we do that, our society will always be held back and poverty will be rampant.

    • One Anonymous Knucklehead 1.1

      “…do the opposite.”

      Are you sure? My impression was that austerity gives them (the “few”) a larger percentage of a much smaller pie, so they end up worse off in real terms.

      Probably just faulty memory on my part.

      • Pascal's bookie 1.1.1

        Over the long run. But given the marginal utility value of a dollar when you are pulling in millions of the damn things, the only thing that counts is the relativities. Real terms doesnae get a look in, the numbers are as arbitrary as a role playing game’s ‘Experience points’ score.

      • mickysavage 1.1.2

        It is the creation of a crisis that is all important. Once the crisis is going they then have to hock all of the state assets off to their mates. Then they just sit back and wait for the money to start rolling in …

        • Draco T Bastard 1.1.2.1

          +1

          Exactly and that is what this government are doing. Create or use a crisis to sell off the states assets making the people poorer but a few very much richer as they now own and control the resources that the many need – the resources that the many once owned.

        • Rich the other 1.1.2.2

          Why don’t you buy a few shares ?, there’s still time to become one of their mates.

          • Murray Olsen 1.1.2.2.1

            Why not? Maybe because I believe society exists and those who want all the wealth for themselves are parasitic scum. Maybe I know that a rising tide lifts all boats, but many of my fellow humans have had their boats taken off them, or have never had one. Maybe I’m just choosy about my mates.

          • Mike S 1.1.2.2.2

            Yeah, I agree, he should eat cake too.

            twat

  2. Pascal's bookie 2

    Remember when English step-changed the economy away from the housing sector and towards productive ‘proper’ jobs by slashing the shit out tof he top marginal tax rates?

    Remember when after that, when it didn’t seem to be working, he defended himself by saying that the low unemployment under Labour led governments was fake because it was propped up by house price inflation?

    Now watch this drive. *schwing*

  3. Colonial Viper 3

    Outstanding (though US-centric) documentary on massive inequality, the attitudes and people which have brought it about, and what to do about it.

    http://www.youtube.com/watch?v=s-GWdpvgiIA&feature=player_embedded

  4. ianmac 4

    National has mis-managed the Economy for Fourrr Loooong Years and ……..

  5. DH 5

    Nats might be crap but this guy doesn’t inspire any confidence either;

    “David Parker: The rights and wrongs of regulation”

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10882038

    Parker is saying he wants to remove a lot of the existing regulations in the ‘competitive markets’. Nice one, an open invite to every white collar crook in the country.

    • Draco T Bastard 5.1

      Yep, just as it was in the 1980s and 1990s. The reason why the 5th Labour government actually started putting that regulation back.

    • Enough is Enough 5.2

      I have often qustioned Parker’s commitment to the labour movement. He loves the politics of opposing the Nats but I quite often think he would be better suited in their camp.

      I don’t think he will advance the movement in a way a labour finance minister should.

      • DH 5.2.1

        He does give that impression. These free market theorists just don’t seem to grasp the fact that business attracts a lot of ethically challenged people, they’ve got this bizarre notion that competition keeps everyone honest. Nothing could be further from the truth.

        The easiest way to be ‘competitive’ in business is to bend & break the laws. If we don’t have strong regulation, and even more important robust enforcement of regulation, then we end up with the wrong people dominating the business sector. That’s pretty much the scenario we have now and he wants to let more of them in.

        • Draco T Bastard 5.2.1.1

          +1

          Without regulation we don’t have a market – we have a free-for-all with the biggest and meanest sharks ‘winning’.

  6. Grantoc 6

    “The real economy of the job market…..is still getting worse”

    Really.

    If Norman is referring to unemployment, this is currently around 6.9% in NZ and predicted to drop to 6.8% in the very near future. During the whole of the GFC period it’s remained well below 10%, a regular level for most other western countries,.

    Australia and the US currently enjoy similar unemployment rates to NZ.

    Most European countries still experience unemployment at 12% or above. It was a lot higher during the period of the GFC.

    The basket case economies of Greece and Spain (maybe Ireland too) are in the 25% -30% unemployment range. (Partly as a result of the growth of the state at the expense of the private sector).

    By contrast NZ has done very well both economically in general and in the job market in particular.

    Norman either doesn’t know what he’s talking about, or he’s making it up for political reasons.

    • Mike S 6.1

      Or maybe you don’t understand how politicians arrive at an unemployment figure in this country?

      If it wasn’t for all those people moving to Aussie and all the jobs needed for rebuilding Christchurch, even the official figure would be horrendous.

      But you hit the nail on the head in regards to the direction of this article. European countries are practicing austerity and have high unemployment. The basket cases have extreme austerity and extreme unemployment.

      Austerity does not (and has never in the history of economics) worked.

      • Grantoc 6.1.1

        Mike

        I note I was conservative in my assumption about how much unemployment would drop by in NZ; as you will have heard its dropped to 6.2% according to the latest figures. I also note that the number of new jobs has increased. These are official figures; not those spun by politicians.

        I’m ambivalent about the austerity verses throwing money at the problem argument. I suspect that decisions on this should be made on a case by case basis.

        In the case of Greece in particular austerity is inevitable because of the way that government and that society recklessly spent and squandered borrowed money. In their case most of the borrowings were spent on such things as unrealistically generous superannuation plans; a bloated public service (public service jobs for life/salaries significantly higher than the private sector etc), massive tax avoidance and so on. Little if any of the borrowed money went on stimulating the productive sector of the economy – which is the point presumably of “throwing money at the problem”.

        Greece and, I suspect, Spain’s extremely high unemployment rates are an outcome of this economic behaviour; austerity is the consequence not the cause.

Links to post

Recent Comments

Recent Posts

  • EV road user charges bill passes
    Transport Minister Simeon Brown has welcomed the passing of legislation to move light electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) into the road user charges system from 1 April.  “It was always intended that EVs and PHEVs would be exempt from road user charges until they reached two ...
    BeehiveBy beehive.govt.nz
    22 hours ago
  • Bill targets illegal, unregulated fishing in international waters
    New Zealand is strengthening its ability to combat illegal fishing outside its domestic waters and beef up regulation for its own commercial fishers in international waters through a Bill which had its first reading in Parliament today. The Fisheries (International Fishing and Other Matters) Amendment Bill 2023 sets out stronger ...
    BeehiveBy beehive.govt.nz
    23 hours ago
  • Reserve Bank appointments
    Economists Carl Hansen and Professor Prasanna Gai have been appointed to the Reserve Bank Monetary Policy Committee, Finance Minister Nicola Willis announced today. The Monetary Policy Committee (MPC) is the independent decision-making body that sets the Official Cash Rate which determines interest rates.  Carl Hansen, the executive director of Capital ...
    BeehiveBy beehive.govt.nz
    24 hours ago
  • Stronger protections for apartment owners
    Apartment owners and buyers will soon have greater protections as further changes to the law on unit titles come into effect, Housing Minister Chris Bishop says. “The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act had already introduced some changes in December 2022 and May 2023, and ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Travel focused on traditional partners and Middle East
    Foreign Minister Winston Peters will travel to Egypt and Europe from this weekend.    “This travel will focus on a range of New Zealand’s traditional diplomatic and security partnerships while enabling broad engagement on the urgent situation in Gaza,” Mr Peters says.   Mr Peters will attend the NATO Foreign ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Keep safe on our roads this Easter
    Transport Minister Simeon Brown is encouraging all road users to stay safe, plan their journeys ahead of time, and be patient with other drivers while travelling around this Easter long weekend. “Road safety is a responsibility we all share, and with increased traffic on our roads expected this Easter we ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Cost of living support for over 1.4 million Kiwis
    About 1.4 million New Zealanders will receive cost of living relief through increased government assistance from April 1 909,000 pensioners get a boost to Superannuation, including 5000 veterans 371,000 working-age beneficiaries will get higher payments 45,000 students will see an increase in their allowance Over a quarter of New Zealanders ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Tenancy reviews for social housing restart
    Ensuring social housing is being provided to those with the greatest needs is front of mind as the Government restarts social housing tenancy reviews, Associate Housing Minister Tama Potaka says. “Our relentless focus on building a strong economy is to ensure we can deliver better public services such as social ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Kermadec Ocean Sanctuary plan halted
    The Kermadec Ocean Sanctuary will not go ahead, with Cabinet deciding to stop work on the proposed reserve and remove the Bill that would have established it from Parliament’s order paper. “The Kermadec Ocean Sanctuary Bill would have created a 620,000 sq km economic no-go zone,” Oceans and Fisheries Minister ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Cutting all that dam red tape
    Dam safety regulations are being amended so that smaller dams won’t be subject to excessive compliance costs, Minister for Building and Construction Chris Penk says. “The coalition Government is focused on reducing costs and removing unnecessary red tape so we can get the economy back on track.  “Dam safety regulations ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Drought support extended to parts of North Island
    The coalition Government is expanding the medium-scale adverse event classification to parts of the North Island as dry weather conditions persist, Agriculture Minister Todd McClay announced today. “I have made the decision to expand the medium-scale adverse event classification already in place for parts of the South Island to also cover the ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Passage of major tax bill welcomed
    The passing of legislation giving effect to coalition Government tax commitments has been welcomed by Finance Minister Nicola Willis.  “The Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill will help place New Zealand on a more secure economic footing, improve outcomes for New Zealanders, and make our tax system ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Lifting economy through science, tertiary sectors
    Science, Innovation and Technology Minister Judith Collins and Tertiary Education and Skills Minister Penny Simmonds today announced plans to transform our science and university sectors to boost the economy. Two advisory groups, chaired by Professor Sir Peter Gluckman, will advise the Government on how these sectors can play a greater ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government announces Budget priorities
    The Budget will deliver urgently-needed tax relief to hard-working New Zealanders while putting the government’s finances back on a sustainable track, Finance Minister Nicola Willis says.  The Finance Minister made the comments at the release of the Budget Policy Statement setting out the Government’s Budget objectives. “The coalition Government intends ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government to consider accommodation solution
    The coalition Government will look at options to address a zoning issue that limits how much financial support Queenstown residents can get for accommodation. Cabinet has agreed on a response to the Petitions Committee, which had recommended the geographic information MSD uses to determine how much accommodation supplement can be ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government approves extension to Royal Commission of Inquiry into Abuse in Care
    Cabinet has agreed to a short extension to the final reporting timeframe for the Royal Commission into Abuse in Care from 28 March 2024 to 26 June 2024, Internal Affairs Minister Brooke van Velden says.                                         “The Royal Commission wrote to me on 16 February 2024, requesting that I consider an ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • $18m boost for Kiwis travelling to health treatment
    The coalition Government is delivering an $18 million boost to New Zealanders needing to travel for specialist health treatment, Health Minister Dr Shane Reti says.   “These changes are long overdue – the National Travel Assistance (NTA) scheme saw its last increase to mileage and accommodation rates way back in 2009.  ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • PM’s Prizes for Space to showcase sector’s talent
    The Government is recognising the innovative and rising talent in New Zealand’s growing space sector, with the Prime Minister and Space Minister Judith Collins announcing the new Prime Minister’s Prizes for Space today. “New Zealand has a growing reputation as a high-value partner for space missions and research. I am ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Concerns conveyed to China over cyber activity
    Foreign Minister Winston Peters has confirmed New Zealand’s concerns about cyber activity have been conveyed directly to the Chinese Government.     “The Prime Minister and Minister Collins have expressed concerns today about malicious cyber activity, attributed to groups sponsored by the Chinese Government, targeting democratic institutions in both New ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Independent Reviewers appointed for School Property Inquiry
    Independent Reviewers appointed for School Property Inquiry Education Minister Erica Stanford today announced the appointment of three independent reviewers to lead the Ministerial Inquiry into the Ministry of Education’s School Property Function.  The Inquiry will be led by former Minister of Foreign Affairs Murray McCully. “There is a clear need ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Brynderwyns open for Easter
    State Highway 1 across the Brynderwyns will be open for Easter weekend, with work currently underway to ensure the resilience of this critical route being paused for Easter Weekend to allow holiday makers to travel north, Transport Minister Simeon Brown says. “Today I visited the Brynderwyn Hills construction site, where ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Speech to the Infrastructure Funding & Financing Conference
    Introduction Good morning to you all, and thanks for having me bright and early today. I am absolutely delighted to be the Minister for Infrastructure alongside the Minister of Housing and Resource Management Reform. I know the Prime Minister sees the three roles as closely connected and he wants me ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Parliamentary network breached by the PRC
    New Zealand stands with the United Kingdom in its condemnation of People’s Republic of China (PRC) state-backed malicious cyber activity impacting its Electoral Commission and targeting Members of the UK Parliament. “The use of cyber-enabled espionage operations to interfere with democratic institutions and processes anywhere is unacceptable,” Minister Responsible for ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • NZ to provide support for Solomon Islands election
    Foreign Minister Winston Peters and Defence Minister Judith Collins today announced New Zealand will provide logistics support for the upcoming Solomon Islands election. “We’re sending a team of New Zealand Defence Force personnel and two NH90 helicopters to provide logistics support for the election on 17 April, at the request ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • NZ-EU FTA gains Royal Assent for 1 May entry to force
    The European Union Free Trade Agreement Legislation Amendment Bill received Royal Assent today, completing the process for New Zealand’s ratification of its free trade agreement with the European Union.    “I am pleased to announce that today, in a small ceremony at the Beehive, New Zealand notified the European Union ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • COVID-19 inquiry attracts 11,000 submissions
    Public consultation on the terms of reference for the Royal Commission into COVID-19 Lessons has concluded, Internal Affairs Minister Hon Brooke van Velden says.  “I have been advised that there were over 11,000 submissions made through the Royal Commission’s online consultation portal.” Expanding the scope of the Royal Commission of ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Families to receive up to $75 a week help with ECE fees
    Hardworking families are set to benefit from a new credit to help them meet their early childcare education (ECE) costs, Finance Minister Nicola Willis says. From 1 July, parents and caregivers of young children will be supported to manage the rising cost of living with a partial reimbursement of their ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Unlocking a sustainable, low-emissions future
    A specialised Independent Technical Advisory Group (ITAG) tasked with preparing and publishing independent non-binding advice on the design of a "green" (sustainable finance) taxonomy rulebook is being established, Climate Change Minister Simon Watts says.  “Comprising experts and market participants, the ITAG's primary goal is to deliver comprehensive recommendations to the ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Chief of Army thanked for his service
    Defence Minister Judith Collins has thanked the Chief of Army, Major General John Boswell, DSD, for his service as he leaves the Army after 40 years. “I would like to thank Major General Boswell for his contribution to the Army and the wider New Zealand Defence Force, undertaking many different ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Minister to meet Australian counterparts and Manufacturing Industry Leaders
    25 March 2024 Minister to meet Australian counterparts and Manufacturing Industry Leaders Small Business, Manufacturing, Commerce and Consumer Affairs Minister Andrew Bayly will travel to Australia for a series of bi-lateral meetings and manufacturing visits. During the visit, Minister Bayly will meet with his Australian counterparts, Senator Tim Ayres, Ed ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Government commits nearly $3 million for period products in schools
    Government commits almost $3 million for period products in schools The Coalition Government has committed $2.9 million to ensure intermediate and secondary schools continue providing period products to those who need them, Minister of Education Erica Stanford announced today. “This is an issue of dignity and ensuring young women don’t ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Speech – Making it easier to build.
    Good morning, it’s great to be here.   First, I would like to acknowledge the New Zealand Institute of Building Surveyors and thank you for the opportunity to be here this morning.  I would like to use this opportunity to outline the Government’s ambitious plan and what we hope to ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Pacific youth to shine from boost to Polyfest
    Minister for Pacific Peoples Dr Shane Reti has announced the Government’s commitment to the Auckland Secondary Schools Māori and Pacific Islands Cultural Festival, more commonly known as Polyfest. “The Ministry for Pacific Peoples is a longtime supporter of Polyfest and, as it celebrates 49 years in 2024, I’m proud to ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • 2024 Ngarimu VC and 28th (Māori) Battalion Memorial Scholarships announced
    ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Speech to Breast Cancer Foundation – Insights Conference
    Before moving onto the substance of today’s address, I want to recognise the very significant and ongoing contribution the Breast Cancer Foundation makes to support the lives of New Zealand women and their families living with breast cancer. I very much enjoy working with you. I also want to recognise ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Kiwi research soars to International Space Station
    New Zealand has notched up a first with the launch of University of Canterbury research to the International Space Station, Science, Innovation and Technology and Space Minister Judith Collins says. The hardware, developed by Dr Sarah Kessans, is designed to operate autonomously in orbit, allowing scientists on Earth to study ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech to the New Zealand Planning Institute
    Introduction Thank you for inviting me to speak with you today and I’m sorry I can’t be there in person. Yesterday I started in Wellington for Breakfast TV, spoke to a property conference in Auckland, and finished the day speaking to local government in Christchurch, so it would have been ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Support for Northland emergency response centre
    The Coalition Government is contributing more than $1 million to support the establishment of an emergency multi-agency coordination centre in Northland. Emergency Management and Recovery Minister Mark Mitchell announced the contribution today during a visit of the Whangārei site where the facility will be constructed.  “Northland has faced a number ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Celebrating 20 years of Whakaata Māori
    New Zealanders have enjoyed a broader range of voices telling the story of Aotearoa thanks to the creation of Whakaata Māori 20 years ago, says Māori Development Minister Tama Potaka. The minister spoke at a celebration marking the national indigenous media organisation’s 20th anniversary at their studio in Auckland on ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Some commercial fishery catch limits increased
    Commercial catch limits for some fisheries have been increased following a review showing stocks are healthy and abundant, Ocean and Fisheries Minister Shane Jones says. The changes, along with some other catch limit changes and management settings, begin coming into effect from 1 April 2024. "Regular biannual reviews of fish ...
    BeehiveBy beehive.govt.nz
    1 week ago

Page generated in The Standard by Wordpress at 2024-03-29T02:24:31+00:00