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English should follow Bennett’s lead

Written By: - Date published: 11:02 am, April 13th, 2010 - 26 comments
Categories: benefits, bill english - Tags: , , ,

Well, I’m pleasantly surprised. For once, Paula Bennett has played it straight on the benefit numbers.

Usually, the monthly figures are an exercise in self-congratulation from our Social Development Minister with the over-inflated ego, even though the numbers have been uniformly bad since she took office. This month, the figures indicate the situation has at least stopped getting worse, and (quite rightly) Bennett hasn’t tried to shower herself in platitudes.

Bennett’s press release is titled “Benefit numbers decrease as expected“. And she’s right, the drop was bang on the norm for March.

The number on the dole fell by 4,000 to 60,211 (remember, it was 17,000 in 2008) and overall benefit numbers fell by 11,477 to 324,814. These 6.5% and 3.4% drops are in line with the average over the previous ten years.

The decrease is just the normal seasonal variation but at least things appear to have stopped getting worse. The challenge now is to get dole numbers really falling, and that will require action on jobs.

If only Bill English could have followed Bennett’s new-found modesty. Instead he is gloating over the Government’s Financial Statements released last week. These show the government spent $915 million less than expected in the 8 months to February. English claims it’s all thanks to him saying: “Government’s fiscal focus reflected in accounts“.

Not true. Treasury explains why spending was lower than expected, it’s mostly timing issues:

“Core Crown expenses were $915 million (2.2%) lower than forecast due to the timing of Treaty of Waitangi settlements being later than forecast ($337 million), and deferred funding to Transport agencies ($144 million). The remainder of the variances are individually small across a number of departments.”

Take out the delayed payments for Treaty settlements and NZTA and the difference is just $433 million – 1.1% – pocket change for the government and an entirely normal variance from forecast.

What is interesting, however, is that gross debt is way under forecast – $3.2 billion, or 2% of GDP lower than expected. And the deficit is about half the size that was predicted. Meanwhile, the Cullen Fund continues to beat expectations.

Despite the Government canceling contributions to the Fund, it is worth half a billion more than forecast.

So how about it Bill? Debt is under control and the Cullen Fund is bringing in the cash. Time to resume contributions and start investing in our country’s future?

26 comments on “English should follow Bennett’s lead”

  1. tsmithfield 1

    “Debt is under control and the Cullen Fund is bringing in the cash. Time to resume contributions and start investing in our country’s future?”

    Actually, if the managers of the Cullen Fund are doing their jobs properly, they’ll be reducing their exposure to the market at the moment. Investors generally are becoming very complacent about risk at the moment and sharemarkets generally have been on a run sponsored by state-funded liquidity sugar-high. That liquidity is starting to be withdrawn, so I expect there to be some fairly substantial pull-backs in the reasonably near future.

    • Bright Red 1.1

      I’m sure they are doing their job properly, watching for signs of peaking as the cue to move into bonds and cash. It’s why they’ve beaten the market so consistantly.

      • Rob 1.1.1

        This is hillarious, its ok now to back these money men becasue they are managing the Cullen Fund and bag every other fund manager as not contributing uesful value to society. I love the comment “It’s why they’ve beaten the market so consistantly”, really wise words from Bright Red.

        • Zorr

          It isn’t about bagging every money man/fund manager as not contributing. It is when all these people are doing is shifting money “between accounts” so to speak to generate wealth on paper that has no basis for existing in reality that there begins to be problems.

          The managers of the Cullen Fund are acting responsibly, hence why they get our praise. Simple stuff really. No wonder you don’t get it.

  2. ghostwhowalksnz 2

    “Deferred funding to transport agencies ??”

    Sounds like he cooking the books, so that there will be a big ‘rise’ in transport funding in the budget, when there isnt.
    I wondered why the completion of the Manuaku interchange is at a standstill. It could be ready for opening by now , but seems to be six months away.

  3. Peter Johns 3

    No Cullen fund injection required while we are borrowing $250M every week.
    Makes no sense at all.
    Labour would have spent like drunken sailors in 2009 if they were in power. Then we would have a soverign default later down the line.
    National deserve credit here I reckon, just like the apple debate where you reckon Labour deserve all the credit. Unemployment was always going to rise in 2009-10. Australia stimulated the economy and they are paying for it now with higher inflation.

    • Bright Red 3.1

      “Australia stimulated the economy and they are paying for it now with higher inflation.”

      Australian inflation is 2.1% http://www.rba.gov.au/inflation/measures-cpi.html ours is 2.0%

      Their unemployment rate is 5.3% and dropping while ours is 7.3% and climbing.

      Their growth rate is higher than ours and their wages are growing while ours are going backwards.

      Yup, Aussie really stuffed up bad, eh?

    • Bright Red 3.2

      oh, and you poor sucker for spin. We’ve never been borrowing ‘$250 million a week’. That’s just English’s exucse for cutting spending.

      Over the last half a year, net debt has risen at only $135 million a week. And from the end of December to end of feb (latest figures) net debt actually went down $236 million a week.

    • Pascal's bookie 3.3

      “No Cullen fund injection required while we are borrowing $250M every week.”

      Latest figures would seem to suggest that this talking point is inoperative, please login for the necessary patch ASAP.

  4. tc 4

    Comparing us with Oz will hurt your brain and make you envious……..it’s simply not a rational/equitable comparison but that never stops sideshow john claiming we can catch them…..dream on

  5. ianmac 5

    I wondered if Paula’s muted response was part of the plan leading up to the May budget. “We must cut spending further because we are still in trouble with unemployment. So lets cut more from the Public Service.”

  6. tsmithfield 6

    You think we have problems with our deficits.

    Here is a really frightening chart from the US:


    Anyone wonder why the US is stuffed?

    • Bright Red 6.1

      Two trillion dollar wars?

      • Rob 6.1.1

        $750 billion worth of hand outs peed up against the wall, labelled as stimulous packages.

        • felix

          So that money has an effect but the two trillion dollars BR mentioned doesn’t?

          • Rob

            Of course it does, what do you think.

            • Bright Red

              that stimulus money clearly wasn’t wasted. it averted a depression.

              and, btw, the US govt is getting a lot of that money back from the banks now.

          • tsmithfield

            Part of the grand plan of the US printing money is that the yanks devalue the US dollar and thus inflate away their overseas debt. The US has been banging on at China for being a currency manipulator for pegging the yuan to the dollar. However, China as the biggest creditor of the US, stands to lose big time if the US is able to carry out its devaluation plan. So why wouldn’t they want to keep the yuan pegged to the dollar? If you have a look at a chart for the dollar over the recent years it becomes apparent who the real currency manipulator is:


  7. Luke.xensen 7

    “deferred funding to transport agencies” so thats what the Nats mean by bringing forward infrastructure. I think this may refer to public transport projects being delayed and canned, esp in Auckland.

  8. Kleefer 8

    Bright Red, you appear to be conflating inflation with price increases (one is a symptom of the other) but you may be right, Australia is likely to experience lower inflation than New Zealand in the near future thanks to putting its interest rate up earlier.

    In fact, about the only thing the Aussies have done right recently is putting the rate up. Everything else the Aussies have done for the past couple of years (first-home buyers bribes, borrowing billions to pay people to go to the mall in the delusional belief that consumer spending drives economic growth etc) has only pushed that country closer to the edge of the cliff on top of debt mountain. They should have listened to Steve Keen!

    The Aussie unemployment numbers are misleading as many of those jobs are in sectors propped up by cheap money and government stimulus (construction for instance) so those “jobs” are actually a drain on the Australian economy and need to be liquidated so that labour and capital can be diverted to more profitable activities. It’s a painful process as many New Zealanders are finding out.

    New Zealand has taken a (slightly) more honest route and I’m certain that when the proverbial hits the fan the highly regulated labour market New Zealand’s union leaders would love us to emulate will come back to bite Australia.

    My point is that with any government-sponsored statistics you have to look beyond the headline to find out what the numbers really mean. This is just as vital for GDP and unemployment numbers as it is for when Bill English tries to claim credit for public spending cuts his government hasn’t had the courage to make. The only thing governments are better at than destroying economies is fiddling with the numbers to escape blame.

  9. iliveinauck 9

    I was talking to someone that grew up in the same area as Paula Bennett last night. She had wealthy parents who looked after her children while she did her winz funded training. Also, I know of someone that works for her that builds houses & rents them to Housing Corp..the tenants pay $80 per week & the govt tops it up to $425. Thoso kind of people I call Beneficiary beneficiaries.

    • ianmac 9.1

      iliveinauck: It would make an interesting story if you could authenticate it. Sort of double dipping, or a counter to the election story “poor little DPB girl makes good.”

    • felix 9.2

      Fascinating. I look forward to hearing more about this little property business.

  10. Im not very good at the financial side of politics financial matters leave me cold.
    To be truthfull i’m just glad my ,wife manages our financial affairs. Having said that I must ask.To whome is this money that every country in the world owes, owed to .?. Is some body collecting it all in and stacking it in piles?

    • Bright Red 10.1

      is you’re talking about governments then they owe it to each other and private lenders (pension funds, investment banks etc). If you’re talking about the debt of countries as a whole, it balances out – the net debt of countries with net debt equals the net assets of those with net assets

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