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S&P says no need for cuts, asset sales

Written By: - Date published: 12:00 pm, February 16th, 2011 - 26 comments
Categories: privatisation, public services - Tags: , ,

As you know, National has been trying to justify selling off our assets and cutting our public services to pay for tax cuts for the rich by saying that debt is at dangerous levels and we risk a credit downgrade. Numerous commentators have shown that’s false. Now, the final nail in the coffin has come from credit ratings agency Standard & Poor’s.

In today’s, Herald is a front-page story that, by some editorial oversight, has been buried in the business section:

Standard & Poor’s surprised many late last year when it put New Zealand’s AA+ credit rating on “credit watch negative” signalling a one-in-three chance of a downgrade within two years.

A downgrade in New Zealand’s credit rating would lead to higher interest rates for government and private sector borrowing…

…unlike Key, Curry said Standard & Poor’s did not regard the state sector as “bloated and inefficient”.

“Generally, we look at the Government in New Zealand as being relatively small and compared to its peers it’s quite efficient.”

Furthermore, Curry said New Zealand was “relatively light” in government related entities.

He noted the Government’s plans for partial asset sales, “but if you look at what’s left, the sorts of government related businesses in New Zealand are quite minimal compared to a lot of other countries”…

… Curry said it was the business and household sectors’ dependence on foreign savings that was driving Standard & Poor’s negative outlook on the country’s credit rating

So, the public service doesn’t have fat to cut. When the government cuts it will be cutting the muscle from our public services. And its not government debt, which is one of the lowest in the world and set to peak in four years, which S&P is worried about but private debt, which the government has worsened by gutting Kiwisaver.

It’s time for Key to just admit why he really wants to sell our assets – so he and the elite can buy them, while using the cash the government gets to pay for more tax cuts for himself and the rich.

26 comments on “S&P says no need for cuts, asset sales”

  1. tc 1

    I’m surprised they even published it……can’t have any material contradicting their idols now can we.

  2. Akldnut 2

    In today’s, Herald is a front-page story that, by some editorial oversight, has been buried in the business section:

    Oversight my arse – more like “editorial outta sight”

    Capcha – latter 😡

  3. Bored 3

    Its what I have said all along: the debt is private, not public. What Key is attempting is to sell our assets to bail out private debt. Larceny, theft, defrauding of the public purse. Crony “capitalism” paid for by you and me.

    On top of that you get the pathetic cheerleaders like the poster boy who runs the NZX asking for the market to be expanded to give better buyer opportunities. The bugger is a functionary who adds no value. His desire for market expansion by way of adding state assets to his listings reflects the truly indifferent performance of those currently listed companies. They surely need more investment in preference to safe little deposits in a good renter (aka state assets).

    Those calling for the sale of state assets need to outed for the “play it safe rentier” class they really are. They have become parasites.

    • Draco T Bastard 3.1

      They haven’t become parasites, they’ve always been parasites. Unfortunately, we’ve been told that the rich “create” wealth for so long now that it’s hard to think outside of that false paradigm.

  4. Draco T Bastard 4

    …which S&P is worried about but private debt, which the government has worsened by gutting Kiwisaver.

    And by lowering wages.

  5. kultur 5

    Its the National Party agenda – it remains unchanged – and unless these monsters are voted out resoundingly at all levels of the electorate … we will keep seeing this revisited.

    Take a lead from Egypt perhaps – lets face it due to Clarks government and continuing policies with these neo liberal nutjobs – we dont have an armed forces capable of stopping anything resembling popular dissent.

    The most shameful thing – is that a Lange led labour Government started this whole mess – and that doesnt let National and Muldoon off either – they provided the springboard for this insane rush toward oblivion and loss of all national identity in my opinion

    • Bored 5.1

      They say you should not speak ill of the dead…..I spoke ill of Lange when he was alive for being stupid enough to be the front man for Douglas and his gang of corporatist freebooters. I still say the same, I will always speak ill of him for this treasonous usurpation of the founding principles of the party he was leader of. Some things are beyond the capacity to forgive.

      • just saying 5.1.1

        Never forgave him, and to his shame, he never faced up to what he did.

        • The Economic Illiteracy Support Group 5.1.1.1

          All of that is true … but I still remember him standing up to Reagan, and his wit and intelligence and sheer pugnacious attitude in the Oxford Union debate. The country stopped to watch him stare down a nuclear superpower, and I think a great many people felt proud to be New Zealanders that day.

          He was a terrible politician but a magnificent statesman. RIP.

          And out of respect to Lange’s memory I will resist the temptation to draw any parallels between him and Key on the world stage.

          • Bored 5.1.1.1.1

            I take your point, on that occasion he was magnificent: such a waste. A meteor fascinating us and drawing us along to the power of his tongue into a hell of his associates making. i cannot say RIP.

            capcha: killing hmmmmm!!!!!!!!

  6. Zaphod Beeblebrox 6

    If your car breaks down do you and you cannot get to work to earn an income. Do you

    1. Pay to get it fixed. Worst case scenario is that you borrow so that you pay it back when you earn some more money.

    2. Flog your car off to someone who wants to make a profit. You then have to lease that car back in order to earn an income. BTW- the new owner won’t care if you get to work and earn an income, so if it breaks down bad luck- they have the lease payments guaranteed when you sell it to them.

    3. Start removing other parts of the car to fix the parts you think are broken. This is because you think you can save money. Of course it will keep breaking down ensuring you quickly become broke from not being able to earn any money because you have run your car into the ground. Don’t worry you can blame the previous owner of the car for your predicament.

    You’d think only a fool would pick options 2 and 3- wouldn’t you?

    • Well, yes you would think only a fool would pick options 2 and 3 – unless the person doing the picking does not really see themselves as a passenger in the car and knows they don’t need the car to earn a living (since they have a private jet) and, in addition, fancies that they – or a good friend of theirs – might be able to buy a profitable piece of it themselves, having never personally paid anything for it in the first place.

  7. Craig Glen Eden 7

    So the Smiley vacuum cleaner salesman was just trying to sell the ripe for picking tax payer more shit. Seriously I cant stand Douglas and Prebble bloody traitors, but this Key is just as bad. The sales job they have done on the NZ voters really takes the cake….and anything else they think they could make money out of. We will have nothing left if this bastard gets in again.

  8. SPC 8

    Key was right first time we do not have a debt problem, but wrong to then not look at investment in creating jobs given our government was in a position to do this. New housing was the obvious choice. Clearly only those also interested in looting the public assets would follow Key in his sell-out of this country. Enemies of the people.

    While I agree with S and P on the public accounts because they are clearly better than most in the OECD and this they could do no more than note – I disagree that we have a credit rating problem with the level of private debt. They are not addressing the quality of that debt – people are paying their mortgage interest on homes and farms – these debts are actually valuable assets that banks are making a profit on, even during a recession. But these people could not tell the difference between junk and AAA rated bonds before the GFC so its no surprise.

    What we have is a problem with borrowing to over-invest in non productive assets and consequent asset bubbles in house and farm values (in the sense it was speculation led farm
    buying debt rather than productivity/environment sustainability improvements on the farm)
    – that will take years to recover from. And related to that a lack of domestic saving to afford these investments and maintain a balance to our BOP. The burden of our mistake still lies with us (it just means we use our earnings to re-pay foeign debt) not our foreign lenders, so our credit rating should not be downgraded.

    After all the level of private foreign debt/even foreign + growing public foreign debt against GDP is lower than it was. That is one reason our dollar is lower (less money coming in from offshore relative to the size of the economy to roll over the private debt loans).

    That fact alone should have the government focused on economic growth – jobs as well as holding down house prices (building more does both) to place us on the path towards 75% GDP foreign debt.

    • The Economic Illiteracy Support Group 8.1

      And remember, the earlier sale of assets is one of the things driving the poor balance of payments situation – the Big Four banks export about $2.5 billion in dividends to Australia every year. If BNZ had not been privatised and sold to the Aussies, 100% of the profits would stay on-shore. Just to state the blindingly obvious, further asset sales will magnify the problem, not fix it.

      • Colonial Viper 8.1.1

        Madness. Why do these people want to gut our country? Foreign investors I can understand, but local ‘Kiwis’ aiding and abetting them???

        • Deadly_NZ 8.1.1.1

          Because they are Wannabe’s. Wanna be rich, wanna be powerful, wanna be remembered, wanna be popular. But GONNA be hated.

          I reckon that Jonkeys kids go to private school just to protect them from the ‘normal children’

  9. Jan 9

    Not only is the public sector relatively small – as the smallest of the OECD countries NZ has arguably a disadvantage in that it needs to employ the same kinds of public service specialists on the same basis as much larger countries. What I mean by this that irrespective of the size of the country there aren’t many economies of scale in the services that are provided by trade negotiators, geo-spatial experts. crown lawyers, legislation draughters, serious fraud office experts, census specialists, curriculum designers for example. NZ has to make the same level of investment for specialist services as other OECD countries of say 60million and 300 million inhabitants but off a much smaller population base.

    • Marty G 9.1

      on a related note, you’ve got to feel sorry for a country like estonia – population 1.5 million – that has to have 1,000 diplomats (to our 400) because of all their additional diplomatic needs with the EU.

  10. Stuart 10

    I agree with Craig and The Economic Illiteracy Support Group and many others about Key selling of the Country.Craig really hit the nail on the head.
    I understand the Maoris will get some land deal settled shortly and then the Maoris will get the land sold to overseas investors.
    I was informed that some of the land contains Iron Sands which contains good deposits of Titanium and this will possibly processed by a Steel Mill which will be owned by a Overseas Companies.
    I beleive Key is still involved in the World banking System and guess who will gain out of this. Well Key and his rich prick mates will.
    The Pike mine disastor could of be a front to open cast the coal reserves.
    Key never investigated the report on the mines about saftey he had before him.
    Key has got to go.

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