Is there an “aggressive recovery”? No. Are we “roaring out of recession”? No. Have we had a double credit downgrade from international rating agencies? Yes. So the Nats’ so called “competent economic management” was already pretty much a myth.
But now as the focus of attention moves towards costing the policies, promises and projections of the major parties moving in to the election, the Nats’ economic credibility has been further mauled. Two excellent pieces yesterday tell different parts of the tale (and how it is – or rather isn’t – being reported). Here’s Rob Salmond:
Spreadsheet Troopers: The Battle Rages On
National aggressively points the finger at Labour while admitting $2.6b in mistakes under its breath.
Did you enjoy your weekend of dorky people with dueling fiscal spreadsheets and confused reporters trying to play umpire? Me neither. The latest as at 5:46pm Sunday is that National has another, newer spreadsheet, which says the cost of Labour’s policies is $15.6b. Its earlier spreadsheet said the hole was $17.2b. Labour says $3.6b.
First, notice that National has admitted to blowing out its previous costings by billions of dollars. The total of National’s conceded mistakes is $2.6b. This is the $1.6b difference between its two overall figures, plus the $1b Labour has allocated for an as-yet unannounced policy that National did not know about when it did its first figures.
So National tacitly admits to $2.6b in mistakes. When there was a hint on Saturday that Labour’s figures had a $400m error, there were newspaper headlines specifically proclaiming it to the nation. But oddly today there are no headlines today lambasting National for mistakes totaling over six times as much. Nothing much on last night’s news, either. No doubt this is partly because of the cunning 5:46pm Sunday release of National’s new spreadsheet. Ever feel like you’re getting played, o fourth estate?
It’s worth noting that the argument over foregone dividends from asset sales doesn’t affect Labour’s numbers. It affects how much Labour wrote-down National’s forecast by as their point of comparison. It’s remarkable that so many journalists seem to be confused on this since Labour’s fiscal strategy spells it out quite clearly.
And here’s Gordon Campbell:
On National’s asset sales debacle
The concession by Finance Minister Bill English that National may not get the $5-7 billion it expected from its asset sales programme is a hammer blow to the government’s credibility. A less charitable view would be that having made an ideological commitment to the sales process, English is now talking down the likely sale price that the corporate sector will have to pay for getting their hands on them.
That’s the bind the government has always been in with this idiotic policy. For political reasons, English has to set the asking price for the assets low enough to allow a few more Kiwi contenders into the bidders circle. As soon as he does, this means that far more New Zealanders – ie, the 90% of Kiwis whodon’t invest in the sharemarket – will no longer be getting the best price for the assets they have built up over many decades. …
The admission by English is very damaging. Last week, Labour got slammed (justifiably) for its initial inability to explain how its election costings stack up. In the end, the alleged $17 billion hole in Labour’s books came down to quibbling over a $300-400 million shortfall, which is little more than a rounding error in the overall context of the government accounts. The gap between $5 billion and $7 billion however is far more serious, especially since National has already banked the likely returns in its election costings, and earmarked them for spending on new schools and hospital running costs over the next five years. All round the country, teachers and nurses should now be picketing John Key, and demanding he show them the money. …
Right now, the government is peddling a wildly unpopular asset sales policy that makes little economic sense. That’s because the proceeds won’t be used to reduce debt, but will be frittered away on daily running costs. The full dividend stream will be foregone in perpetuity, when borrowing to cover the short term need is a cheaper, more sustainable option. The selldown generates no viable economic returns – not even from the bit earmarked for irrigation, where Cabinet papers show the estimated returns to be only 6.4% – apart from oh, some spurious, ideologically based claims that the selldown will enhance economic performance. (Thanks, but the state energy companies are already performing really well, and Air New Zealand is hardly a poster child for the economic blessings of privatisation.)
To cap it off, the government is taking this suicidal route in a context of a depressed local market, and when the international scene is in turmoil – thus all but guaranteeing fire sale prices for some of the country’s blue chip assets. That’s even before we start to measure the likely impact of further privatisation of the electricity system on the voter’s power bills.
So…if English doesn’t really know what the returns will be, does he have a reserve price for these assets where he will withdraw them from the market – and if so, what is it? What’s his bottom line for say, Meridian? Just asking.
Gordon Campbell’s piece should be required reading for every so-called political and economic commentator in the country, and Rob Salmond gets right to the heart of the disparities in reporting. The Nats’ are desperate to have the media focus stay on any mote in Labour’s eye, and ignore the beam in their own. In the interests of informed choice, let’s hear both sides of the story…