Last week, John Key said that, due to the earthquakes, “from June to June, my guess is that we’ve lost $12 billion in GDP”. Later, he said it was $15b over 4 years due to the quakes. Now, Treasury says most of that $15b is from the recession Key and English had led us into before the quakes. The Nats are trying to use the quakes to cover up their failings.
David Cunliffe brought Treasury’s statement to public attention in the House yesterday, when he challenged English, who had been blaming the projected $15b economic shortfall and accompanying $5b reduced tax take entirely on the earthquake:
Hon David Cunliffe: Can he confirm that Treasury’s February monthly economic indicators states at page 4: “Over the 2011 to 2015 March years, nominal GDP is expected to be a cumulative $15 billion lower than in the Half Year Update … This is mostly related to the weaker outlook we were seeing prior to the February earthquake,”?
Hon BILL ENGLISH: Yes, I can confirm that. The forecasts of growth, either those by Treasury, when they are published finally in the Budget, or those by the Reserve Bank, which will be publishing forecasts this week, are likely to reflect the fact that most of the reduction in the growth outlook was occurring before the earthquake. The earthquake has certainly had a negative impact on it.
To be precise, Treasury says that $10 billion of the $15 billion shortfall in previously projected economic activity will be due to the under-performance that was happening before the quake. That suggests of the government’s $5 billion shortfall in revenue less than $2 billion will be due to the quake. The rest is due to the economy not meeting expectations under Key and English.
This isn’t as serious an instance of Key making stuff up as he goes along as was his claim that 10,000 houses will need to be demolished and whole suburbs abandoned. But it is another example of the government trying to use the earthquake as an excuse to get away with things. Whether its the controversial new foreshore and seabed bill, or the shock retirement of a senior minister, or Working for Families cuts, or the failure of their lazy economic leadership, National seems to think they can use the tragedy of the earthquake to gloss over anything they don’t want the public to notice.
We deserve better than this.