Cuts, three of the same kind

Written By: - Date published: 10:21 am, November 13th, 2008 - 36 comments
Categories: economy, national/act government - Tags:

From Stuff:

Mr Key said New Zealand had a significant advantage over other countries because official cash rates set by the Reserve Bank were high. “If that weaker scenario is anything like what it could be, then you will see significant rate cuts in New Zealand.”

Oh Christ. It was bad enough when he was trying to direct the Reserve Bank as Opposition Leader but to be making comments like this when he is, in effect, Prime Minister is beyond the Pale. Does this guy not understand that our constitutional set-up gives independence from political interference to the Reserve Bank or does he just not care?

Of course, while the erosion of our constitutional separation of powers is one thing to worry about, a more serious issue, in terms of everyday impact, is where National/Act is going to cut the billions it needs to keep the budget from blowing out while still giving tax cuts to the rich. There’s only a few programmes big enough to cut billions out of them – health, education, Working for Families, benefits, Super, and the Cullen Fund. Where will the National/Act cleaver slice?

[turns out we’ve always used the term PM-elect, thanks mysterious stranger]

36 comments on “Cuts, three of the same kind ”

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  1. NX 1
    13 November 2008 at 10:45 am

    I think the term Prime Minister designate is probably more appropriate.

  2. Seti 2
    13 November 2008 at 10:48 am

    Bollix SP. He’s giving an obvious prediction not direction.

  3. Bryan Spondre 3
    13 November 2008 at 10:54 am

    “It’s time the Reserve Bank stopped strangling New Zealand with high interest rates when the problem is coming from overseas. The only result is to weaken New Zealand’s economy when it needs to be strong. Stop punishing Kiwis for a problem they didn’t create. Lower interest rates.” – July 15, 2008

    [bryan. a few dumb commentators waste too much of other people’s time on this blog. you’re one of them. I didn’t say no-one can comment on what they want to RB to do, I said that it is established practice that the Government and the PM do not comment on what they wnat or expect the RB to do because it undermines the RB’s independence. It’s fine fr you and I to express an opinion because we’re not the PM, it’s not ok for Key to do so. SP]

  4. Simon 4
    13 November 2008 at 10:55 am

    Labour eroded the constitutional separation of powers more than any government in the OECD; stacking the Public Service with Labour apparatchiks and interfering in Justice and the Police by setting targets and quotas.

    Yet _now_ the communist hypocrites of the “Standard” are concerned about the separation of powers -you couldn’t make this stuff up.

    Now to tax cuts. They’re not “Tax Cuts for the Rich” as the slobbering imbeciles of the Standard would have us believe. They’re long-overdue respite for the overburdened who for TOO LONG have been expected to support the lavish lifestyles of the undeserving.

    Where are the tax cuts going to come from? The New Zealand taxpayer is no longer going to be expected to pay to support the P habits of the criminals and the lazy.

    IrishBill: I’m getting sick of people coming onto our blog and abusing us with this sort of shit. Who the fuck do you think you are? You’re banned for a week.

  5. Robinsod 5
    13 November 2008 at 10:56 am

    Seti – The PM is not supposed to engage in predictions on the OCR. That’s to ensure that so called impartial observations are not used – or seen to be used – as a way of tacitly directing the RB guv.

    NX – I agree with you… Probably for the last time in a long time…

  6. Matthew Pilott 6
    13 November 2008 at 10:57 am

    Bryan – the executive SP ain’t.

    Edit – Simon, the election is over. Please, for the love of the Great Magnet, spare us the C/T manicured bullshit National PartySpeak.

  7. Graeme 7
    13 November 2008 at 10:57 am

    TVNZ have been using “Prime Minister designate”, and occassionally “Prime Minister to be”.

  8. Steve Pierson 8
    13 November 2008 at 10:59 am

    Seti. There is very well established practice arond what politicians can say about independent bodies’ actions – no direction, no ‘prediction’. Just as it’s not OK for the PM to go around saying what they want the outcome of a criminal trial to be, they can’t go around ‘predicting’ the actions of the Reserve Bank. No matter how you couch it, it is an attack on the independence of the independent body by the politician. because politicians are elected they have a lot of force behind what they say and they can generate public expectations about what will happen – given this power, it is wholly inappropriate for them to abuse it.

    Key would be wise to not be seen to be trying to influence the decisions of independent bodies

  9. Bryan Spondre 9
    13 November 2008 at 11:01 am

    “As a matter of urgency, we must then rewrite the Reserve Bank Act.

    Now this is an obscure piece of legislation that very few New Zealanders understand and even fewer have actually read.

    The job of the Reserve Bank should be to maintain stability in the economy in terms of employment and growth as well as keeping inflation under control – as it is for example in Australia, the UK and the US.” – Winston Peters October 21, 2008

  10. lonelyavenger 10
    13 November 2008 at 11:01 am

    “Does this guy not understand that our constituional (sic) set-up gives independence from political interference to the Reserve Bank or does he just not care?”

    I suspect he just took his cue from Helen Clark when in May she made a comment about the government being committed to interest rate cuts and then in October said is was her view that interest rates “should come down”.

  11. Bryan Spondre 11
    13 November 2008 at 11:06 am

    “Bollard said he had an easier time of it than previous Reserve Bank governors, such as Don Brash, who had to hammer inflationary expectations lower with less flexible inflation targeting.

    Bollard said the current Policy Targets Agreement between himself and Finance Minister Michael Cullen requires the Reserve Bank to “minimise unnecessary instability in output and exchange rates and interest rates.’

    “That says don’t get too cute about these things. We’ve got to be aware of the broader objectives of government and we’ve got to allow for flexibility,’ he said.” – Allan Bollard August 6, 2008

    Pot, kettle,black ?

    [no Bryan. The Policy Targets Agreement does not allow the Government to direct or ‘predict’ the RB’s behaviours. It requires the RB to be mindful of government objectives other than inflation, something else entirely. honestly, last chance to say something sensible. SP]

    [Tane: Steve, Bryan is banned from this site permanently. He can go play at policy.net with his mates Chri… oh, that’s right, they’ve both quit.]

  12. Steve Pierson 12
    13 November 2008 at 11:06 am

    lonelyavenger. The first is a statement of government policy, not a direction to the RB to behave a certain way in response to certian events. The second, I haven’t seen the quote but as you have and you haven’t given it word for word, I suspect she’s talking about banks’ interest rates, not the RB’s OCR.

    If she did make statements on what the RB should do, that would also be wrong.

  13. Scribe 13
    13 November 2008 at 11:14 am

    There is very well established practice arond what politicians can say about independent bodies’ actions – no direction, no ‘prediction’.

    Wasn’t there an interesting situation earlier this year (or maybe last year) about Auckland International Airport and possible overseas investment? Can’t remember the exact details, but I recall there were allegations of ministerial influence.

  14. Tigger 14
    13 November 2008 at 11:16 am

    For Key I propose the use of the phrase Prime Tosser.

    The Americanisation of our electoral process was an unfortunate by-product of our and their elections occurring close together. I’m not a fan of it at all – especially since Key seems to have ridden on Obama’s coat-tails – I can’t fathom why the press fell for that linking but they did and they pushed it and it helped National win.

  15. lonelyavenger 15
    13 November 2008 at 11:17 am

    Steve,

    The quote is from memory, so it shouldn’t give it too much credence. Regardless of who said what, a politician or PM commenting what they think the Reserve Bank should do or will do does not necessarily compromise its operational independence. Surely there would need to be more action than mere comment?

  16. Mike 16
    13 November 2008 at 11:23 am

    Re Prime Minister – Elect… I hate to cite Wikipedia but it seems “Prime Minister Elect” is often used (incorrectly) by the media throughout the world – must be part of an international right wing conspiracy…. ;P
    http://en.wikipedia.org/wiki/Prime_Minister-elect

  17. Graeme 17
    13 November 2008 at 11:26 am

    I’ll add that I’m pretty sure that, long before some were calling John Key the Prime Minister-elect (even though we don’t elect prime ministers), others were calling Helen Clark out “first elected woman prime minister” (even though we don’t elect prime ministers).

  18. Akldnut 18
    13 November 2008 at 11:43 am

    Key – Prime Minister elect. He hasn’t been sworn in as PM! So until it happens he is still clearly leader of the opposition. The term Prime Minister designate is more appropriate.
    But I agree with Tigger – Prime Tosser / Liar would do.

    Simon the communist hypocrites of the “Standard I think that you would be pretty lucky to find anyone here a member of the Communist Party – a typical statement from a gloating troll.

  19. Killinginthenameof 19
    13 November 2008 at 11:52 am

    That is pretty bloody damning of John Key, surely he can be that green at this that he can let one like that slip? This along with the herceptain thing is a worrying trend.

  20. Scribe 20
    13 November 2008 at 11:54 am

    Here’s a look at the Auckland Airport situation. Comparing Cullen to Muldoon.

    From the Sunday Star-Times

    And from the Herald

    Cullen’s comments and actions cost many New Zealanders a lot of money.

  21. Steve Pierson 21
    13 November 2008 at 11:56 am

    scribe. Making money for Auckland Airport shareholders is not the only priority of a government. And I’m speaking as one.

  22. tsmithfield 22
    13 November 2008 at 12:02 pm

    Hasn’t the RB governer already been making statements along these lines? If not, would it not be unreasonable to assume that the RB governer had given Key a heads-up on his future plans?

    In either case, it seems likely to me that Key is taking his direction from the RB not the other way around.

  23. TimeWarp 23
    13 November 2008 at 12:13 pm

    Scribe. Your point has some bearing, if being untimely and misdirected.

    $1.5bn of our money to be thrown loosely away on a “Think Big” style program to run glass wires into every premise in the country. So who is Muldoon now?

  24. Scribe 24
    13 November 2008 at 12:36 pm

    TimeWarp,

    How is National’s broadband policy in the same league? John Key isn’t making up policy as he goes like Cullen did in this case, or like Muldoon routinely did.

    From the Star-Times column linked to above:

    Political commentator Chris Trotter said the use of an order-in-council to rewrite the law harked back to the 1980s. “It would have been just another day under Rob Muldoon,” he said, “but using the governor-general and most of the cabinet to rewrite the rules is not something we are used to any more.”

  25. Tim Ellis 25
    13 November 2008 at 12:51 pm

    I’m afraid you’re wrong, SP. Prime Ministers have frequently commented on the Reserve Bank and its activities. The convention is that PMs should avoid saying anything that may interfere with the political independence of the RBNZ. That does not extend to banning PMs from welcoming rate cuts after the fact, or giving a personal view as to which way rates may move, or the sort of factors that the RBNZ may take into account.

    Just a few weeks ago, the PM was reported as saying:

    Labour’s leader Helen Clark says she is sure the Reserve Bank will ignore high inflation when it reviews interest rates on Thursday, despite inflation peaking at 5.1% in the year to the end of September.

    http://www.radionz.co.nz/news/events/election2008/stories/2008/10/21/12437a22356c

    Where was your hysteria then, SP?

  26. TimeWarp 26
    13 November 2008 at 1:24 pm

    Scribe.

    How is it not? It’s a grandiose, headline-grabbing scheme (I use that term loosely given the lack of policy definition) that squanders billions of taxpayer money without good economic return. (As it happens I have concerns about the AIAL intervention, but it pales by comparison to the fibre plan. The AIAL intervention it can be argued took away some of the property rights of shareholders – but it didn’t take away their property. By contrast, the fibre scheme both in effect nationalises Telecom’s copper network, and misappropriates $1.5b of taxpayer funds.)

    Don’t take my word for it:

    “Fibre to the Home is too interventionist and too expensive.” – Rod Drury, NBR this week.

    “The price tag of $1.5 billion represents only a small portion of the total cost of FTTP deployment, for which estimates range from $4 billion to $10 billion, depending upon whether we take it to the street or make the highcost
    leap into the premises. We risk marginalizing current and future investment,
    overbuilding and destabilising the industry with no clear view of what exactly we want to achieve or the total price tag to taxpayers…. New Zealand already has considerable metropolitan and urban fibre, with
    more planned through private investment. On this basis, a new nationalized fibre
    network risks overlaying or bypassing, at least in part, existing competitive
    infrastructure. Is that the Government’s objective?” – IDC

    Quite apart from all that, the Cullen/Muldoon reference was avoidance on your part. National supposedly is the party of individual freedom, responsibility and accountability; but when it’s Leader is questioned the answer is the actions of someone else months or years ago? Apparently the previous Labour government did little right, but is now an appropriate benchmark by which Key & co should be evaluated?

    There are important issues for the country to address in the here-and-now for the benefit of all New Zealanders, and we should focus on those. There has been little real critical evaluation and debate in the election campaign; perhaps we could start some now than firing shots at dead and departed Finance Ministers.

    One of the immediate questions to you as a supporter of Key’s policy, echoing the comment above: Do you believe the government should be competing with/superseding established commercial entities and networks?

  27. randal 27
    13 November 2008 at 3:22 pm

    oh goody
    now I can play pac man and space invaders on line with some dweeb in the middle of the sahara desert
    wow
    sign me up
    is it free?
    where’s winnie whenyou need him

  28. travellerev 28
    13 November 2008 at 3:25 pm

    Oh shit,

    All of youse left and right still believe in a benign institution protecting the countries financial affairs with dignity and suitably independent from us the people who govern through our elected representatives but somehow we need an external undemocratic group of people who deal with what is ostensible that which wields the most power: Money. Our wealth, earned by our toil but we don’t get to decide how much of it is in the system or where we spend it on. An non-transparent international cartel of banks and powerful mysterious individuals is tasked with our finanacial affairs

    Doesn’t it sound strange to you that and unelected, uncountable group of people deals with what we build up in wealth through our labour.

    An unelected group of people who are giving billions of “our” money to other powerful unelected institutions called banks.

    And who borrow billions and billions to keep those banks afloat to “protect” us and our economy. Shady money funnelling, unelected but powerful and unaccountable international institutions who lend money and charge interest and on whom we are totally dependent for some strange reason.

    For all of you now would be a really good time to watch “Money masters” and “money as debt” and if you really want to know why it is that the federal reserve can “lend” (i.e. print money out of thin air” watch this presentation about “the creature from Jekyll Island”.
    The presenter of whom told me when I met him in Sidney in March 2008 when I conveyed my worries about JK, “he will sell your country and throw in his mother with the deal.”

    After you’ve watched those you will probably understand that JK is probably the only one who really understand who really rules.

    I’ll give you hint: Baron the Rothschild once said, “give me the right to print money and I care not who makes the laws.” His family has been printing the money for England, Australia and the US ever since. he also said:” I care not who sits on the throne, the one with the real power is who the one who controls the money stream. I control the money stream.

    And yes, when the NZ government signed the Federal reserve act in 1989 as prepared by Don Brash they started to print it for NZ too.

    Two years after Alan Greenspan took the chair, allowed the trade in speculative derivatives again which had been shelved in the year 1933 to protect us the working population from the speculative Wall street/City of London predators and allowed bubble after bust after bubble and which is now bringing down our financial system.

    Congratulations New Zealanders, you just told the fox he could eat the chickens.

  29. Billy 29
    13 November 2008 at 3:45 pm

    Ignore Ev, everyone. She is running a “NZ sucks” campaign. Everyone around here hates that.

  30. Tim Ellis 30
    13 November 2008 at 5:12 pm

    Ev, you are running a “NZ sucks” campaign. If you don’t like living in New Zealand, and think New Zealanders are stupid, feel free to leave. If you do leave, I suggest you go to live some place where there is no democracy so that you don’t have to suffer the pain of seeing your beloved dictatorship voted out by stupid people.

  31. randal 31
    13 November 2008 at 6:32 pm

    dont listen to them ev.
    they are incapable of understanding the difference between the general and the particular and in particular they are new zealanders and they suck
    just have to look at teevee and listen to the radio with the ignorati thinking they are somebodies now because jahnny keys got a go
    suck suck
    those people suck and furthermore they are not real mainstream new zealanders and neither is john keys
    he is just a currency speculator lining up his mark

  32. travellerev 32
    13 November 2008 at 6:47 pm

    Biily and Tim,

    Perhaps you don’t get it but I really love this country and it’s people but I also see a lot of ignorance.

    Randal,

    What are you doing tonight.

  33. randal 33
    13 November 2008 at 6:55 pm

    why ev
    I thought you were a happily married gel
    however I will be thinking of you and your courage to keep on at these sub humans
    they need it
    onya mate

  34. randal 34
    13 November 2008 at 7:25 pm

    Hey Ev
    while we are about it
    the same lot of noo noo heads are busy hijacking kiwi cultural icons like anzac day and saying they are exlusively national party fixtures
    sick dudes ev
    watch out for them

  35. keith 35
    14 November 2008 at 11:33 am

    Key is an ex-FOREX trader and knows that when the reserve bank drops its rate (or even looks like droppping its rate) that the NZ dollar falls with respect to foreign currency. I suspect that Key has a boatload of foreign $ that he wants to convert to NZ$ at the best rate possible so this announcment is just him using his political clout to drop the NZ exchange rate for that purpose. He’ll want all that NZ$ to spend on the sweet NZ based business deals him and his cronies will be giving each other now that they’re in government.

  36. Blue is good 36
    14 November 2008 at 1:58 pm

    Irish Bill is correct.
    Freedom of speech is also part of our constitution and typical of the left, if they don’t like what they hear, they will shut them up.
    Yep domocracy at work right here at the Standard.
    What a joke..