Written By: - Date published: 8:40 pm, August 10th, 2008 - 39 comments
Categories: economy, same old national -
Tags: bill english
We’ve heard a lot about the ‘private’ opinions of some senior National MP’s this week. What we haven’t heard much about is the policy direction National was putting out in public during the conference.
Rod Oram has a very interesting commentary on that topic in Sunday Star Times “National needs a shake-up”. Rod Oram always takes a long term perspective on the policy direction and its relationship to national economics, which is why I enjoy reading his columns.
Rod runs us through the fiscal mismanagement by National the last two times they have faced externally caused recessions. In both cases the policy response from the National government of the time was proved to be inappropriate and moved directly against stated objectives.
Rod points out that the current external recession is more widespread than previous ones. He then analyzes the economic policy from National articulated at the National party conference.
Then it starts to get interesting as he finishes with a number of conclusions.
So, that is pretty much all we know so far about National economic policies. It’s a rerun of the party’s 1990 mantras about less tax, spending and regulation. That’s no surprise at one level. English, National’s chief policy developer and economic manager, learnt them from the master of budget micro-management, Bill Birch.
Then he gets sarcastic.
She’ll be right, he [English] reckons. We’ll sell more food to Indians and Chinese at higher prices. That was the only vision of New Zealand’s economic future he offered delegates.
Indeed, it would be nice if life were so simple. But, as his own farming constituents would tell him, it’s not. At home, they face distinct physical limits to expanding volumes and financial limits from rising land, fertiliser and other costs. Abroad, they face growing competition from foreign farmers.
The primary sector has a great future, as do many other sectors. But rerunning their 1990s’ strategies won’t deliver that future. The world has already changed hugely since National was last in power and is changing even more radically before our very eyes.
Yes, the change in his own electorate over the last 15 years should be telling English that the world is changing very fast. Dairy, where there used to be sheep. The global marketing of Fonterra pushing dairy products into markets that had little previous penetration.
But the world economy is moving very fast these days as a consequence of the rate of increase of world population and changes in living standards in other countries. NZ is a small exposed economy that has to be fast to move into new markets. This gets driven at least in part by government preparedness and vision beyond the capabilities and short vision time spans of business. When the government goes to sleep then later working generations suffer.
The “she’ll be right” attitudes and policies of the National governments in the 1960′s prevented the critical changes required in the economy then. This meant that changes in our export markets like the entry of Britain into the EEC were not handled. This caused the severe economic difficulties that plagued the following generations. It looks like English still subscribes to this attitude and wants to do the same to more generations in the future. The problem is that everything happens faster. The government going to sleep for a generation is not viable any more.
Key told this columnist in an interview in March that National was working on a “stunning” set of economic policies. But judging by what it has delivered so far, National has spent the past nine years in opposition ignoring a changing world.
He hasn’t said it outright, but I think that Rod is saying that National are conservative. They are looking to solve economic issues the good old way. It didn’t work the last two times they tried it, caused immense damage both socially and economically, but that doesn’t stop them from wanting to try it a third time.
This is why I always feel uneasy about National and its ‘visions’ – they have a habit of being repeats of previously failed policies. It is why the $3 billion fibre to the home policy worries me. It resonates like one of Muldoons “Think Big” projects. Great sound-bite, but what is the economic point?
[hattip: Jafapete]
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Scoopit!
Eh? Not at all.
The approach to all such projects is that if it doesn’t stack up the funding will not be obtained. It is not possible to pull the wool over eyes on projects of that sort of scale (unless you have ridiculous power and can make the decision alone e.g. muldoon). By ‘not stacking up’ I mean if the people will not use and pay for the proposed infrastructure, which has to be proven conclusively using every possible measurement available.
How I would “decide that the project is worth while or not” is, like my current slightly similar but ridiculously smaller business, out of my hands. I do not get to decide whether my current projects are worthwhile or not. That is established by market demand and by independent authorities advising the funders. The funders decide. A case is made out and the best foot put forward. The funders then look at it, get independent advice, and make the decision. These infrastructure projects would work in exactly the same way. The funder is the govt. The govt raises the funds through either taxes or debt (bonds). Its quite simple.
The financial rewards are not an issue. Whatever is the appropriate recompense is fine. I think, other than the odd greedy person, you will find this to be the case with most all business.
Felix, “Poor people have less money because they are lazy, stupid and undisciplined.”
That’s absolutely right. But there is a corollary – Rich people have more money because they are driven, cunning and disciplined.
Where do you draw the line between rich and poor? I say the line is broad enough to cover eveyone within two standard deviations from the mean. That’s a very big percentage of the population who, financially, are neither rich not poor but simply satisfied, or satisficed.
Iprent said “I’ll let other people argue about the infrastructure investments by this government.” It would be nice if we could. Are all of the infrastructure investment figures available in one place? Or are they only available sepearately from each of the different infrastructure agencies? Has National actually stated which infrastructure the $500m a year is going to be spent on? I could only find the general refernce in Key’s speech. There is no policy or discussion documents on infrastructure.
The land transport financial reports don’t report PT spending seperately for improvements and maintenance/operations but a reasonablr estimate is a real twenty-fold increase for improvements and 100% for operations/maintenance. Impressive!
For roads and highways there has been an increases for maintenance/operations of 35%, sufficient to cover increases in the construction price index. The increase for improvements depends on where you drive. A fourfold increase for Wellington and Auckland, no increase for the rest of the North Island and one-third decrease for the South Island. Allow for the increase in the construction price index and there have been real reductions of one-third and two-thirds despite a real two-thirds increase in charges for road use.
Any info for improvement spending by Transpower or the generating companies, hoepitals, schools, police stations, fire stations? Or courts and/or prisons?
The problem with so much infrastructure being operated by SOE’s, LATE’s and councils is that it’s damned near impossible to know what the infrastucture situation is either now or in the near future
Government needs better real-time, online, interactive reporting of all expenses and income. This is needed so that the taxpayer and the rate payer knows exactly what their money is being spent upon so that said government can be more fully held to account of the people that it serves.
I’m only being slightly mischievous