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It’s Labour’s fault it didn’t rain!

Written By: - Date published: 12:00 pm, August 14th, 2009 - 33 comments
Categories: economy, national/act government - Tags: , , ,

One of Bill English’s favourite lines is that New Zealand entered recession ahead of the rest of the world ‘due to Labour’s mismanagement of the economy’ and that’s why his government is unable to get off its arse now.

Pity that Agriculture Minister David Carter had to go and spoil the lie for him:

“Agriculture Minister David Carter has revealed that the nationwide drought between spring 2007 and autumn 2008 cost the New Zealand economy $2.8 billion.”

The new MAF report shows the drought knocked nearly $3 billion (1.7%) knocked off economic output. If that hadn’t happened, the country wouldn’t have entered recession until the global financial crisis hit.

Just to make it crystal clear, this report shows beyond doubt that the previous Government didn’t cause the early 2008 recession (not that any evidence has ever been provided as to how it could have caused it) – the drought, coupled with falling house prices and skyrocketing oil prices, are what brought on recession.

I’m sure Labour will be only too happy to remind English of this report the next time he tries to deflect questions about his own lackadaisical economic management. Maybe now, English will have to get on with his job instead of making excuses.

33 comments on “It’s Labour’s fault it didn’t rain! ”

  1. BLiP 1

    One of Bill English’s favourite lines is that New Zealand entered recession ahead of the rest of the world ‘due to Labour’s mismanagement of the economy’ and that’s why his government is unable to get off its arse now.

    Really? I thought Blinglish had resiled from that untenable position.

    • Bright Red 1.1

      I think he did then he didn’t. He’s been blaming Labour all the time in Question Time recently.

  2. TightyRighty 2

    a whole lot of lube on them there straws marty?

  3. tsmithfield 3

    Can’t have it both ways. I’ve seen plenty of posts here congratulating Labour for low unemployment etc during a worldwide boom that kept our economy humming along.

    If Labour can be praised for factors beyond their control, then it is only fair that they be criticized on the same basis. Can’t have your cake and eat it too.

    • Maynard J 3.1

      Can I have two or three examples so we can check them apples, and see if they compare well?

    • Ianmac 3.2

      TS That’s a bit of naughty stuff from you. Both statements re unemployment and the Drought can be true. I have certainly heard English and Key say that the recession was due to Labour’s mismanagement. Actually they had better watch out because if climate change exists then another Drought will happen soon. Who would they blame for another drought/recession?

    • Bright Red 3.3

      Weird, so you’re admitting there’s no logical basis to the criticism but claiming the right to make it anyway.

  4. In terms of the core point, I think it’s a valid point to acknowledge that NZ did enter recession before other countries and the contributing factors to it.

    Having said that, the masses here have lauded Labour’s handling of the economy (where’s SP when you need him??) yet it is blindingly obvious that Labour simply road the housing boom and took credit for it, cheered along on the sidelines by many here.

    National is talking the right things in terms of creating the macro-economic framework we need but they shoot themselves in the foot through the lack of action in the very areas they have highlighted ie R&D.

    The reality is that regardless of which party is in Government, as a trading nation our fortunes rise and fall with that of our main partners – we are the cork bobbing around in the ocean.

    And while I’m at it, for all the cheering here of Obama’s actions in the US and clamour for NACT to do the same, there is a major backlash building as many realise what the long term consequences will be. National’s relative inaction – planned or not – may prove to be inspired further down the track.

    • JustRight 4.1

      Daveski – I agree. Give it a few years and Obama’s approach is going to be seen as disastrous. He has unleashed the inflation genie out of the bottle and has sunk the US in a mountain of debt.

      To me, National have been measured & responsible while also being realistic about how much they can actually do to solve the issues.

      • chris 4.1.1

        perhaps, but because of their debt they sure as shit don’t want deflation. inflation will at least reduce the total value of their debt

      • Zorr 4.1.2

        chris mentions deflation and the truth is that that is what the US is trying desperately to avoid at the moment. However, all the data points to a serious deflationary trap of the kind seen in Japan. I do not have a degree in Economics but I have been educating myself by reading the important texts and keeping up to date. Perhaps you should try something similar JustRight?

        Also, with regards the idea of sitting on your arse being a potentially inspired action, a complete lack of action is never inspired. They definitely do not appear to be making the conscious decision to sit on their hands and do nothing… rather that they are completely inactive due to a lack of any ideas.

  5. JustRight 5

    Marty… recession was also brought on by high interest rates in an effort to curb inflation which in part was caused by inflationary (and ineffective / unproductive) public spending, all the while exporters died due to the high exchange rate.

    Hell – the tradeables sector of the economy shrunk 10% between 2002 and 2008. It was only the Non-tradeables which grew – i.e. Public spending – so where do you think the inflationary pressure was from? Under Labour’s management, there was a recession in the most important area of the economy for 6 years before they were booted out.

    • Bright Red 5.1

      I didn’t think the government set interest rates… oh yeah, it’s the reserve bank with the neoliberal mandate to control inflation above all else.

      • burt 5.1.1

        Bright Red has a point. Mega brain Cullen told us that public spending isn’t inflationary… So hey – must have been the private sector that caused inflation – perhaps it was the rain before the drought.

        • Maynard J

          Where did he say that, exactly?

        • Draco T Bastard

          Considering that the government spending within the economy over the last few years was less then the tax take (surplus remember) then it wasn’t inflationary. The governments actions would have been deflationary so all of that inflation really was coming from the private sector. I’ll give you a hint: Most inflation comes from the fractional reserve banking system.

    • fraser 5.2

      “It was only the Non-tradeables which grew”

      doesnt this also include borrowing? (ie: house purchases)

    • Pascal's bookie 5.3

      “which in part was caused by inflationary (and ineffective / unproductive) public spending, “

      Good thing you said ‘in part’ otherwise you’d be making a complete arse of y’self. As it is though the comment is nigh on meaningless, as without knowing how much of an impact govt spending had we’ve no idea of whether it was much of a problem. Cancer, for example, is in part caused by being born.

      One fairly big clue however would be the fact that Cullen was paying back loads of debt, and stashing great big gobloads of dosh away in his fund for the paying of the boomers pension. That would be one of the uses he made of all those horrid surpluses that Brash and National and all tools rightwards was calling theft and demandsing he pay it back through the cutting of the taxes.

      I’m not an economist, but when you have a govt that is takin out more money in taxes than they is a spending, and putting aforementioned gobloads of money out of circulation, then you’ve got yerself a pretty fucking hard row to hoe if you are wanting to be making the case that they are all about expasionising the money supply and pumping up the bubbles.

      Particularly if you want to compare them with an opposition that was demanding tax cuts so as the poor hard done by top quintiles could buy themselfs a flasher kitchen for the bach they bought in Taupo leveraged off their half a dozen rentals.

  6. You’re very correct Daveski in your last parahraph. There is a massive backlash building in the states at the moment. I think it’s going to turn out to be a disaster. This small gain over the last few weeks will take a dive in the coming months.

  7. Noko 7

    According to ALAC (quoting a BERL study), alcohol causes 5.2 billion dollars worth of social problems every year. A back of the envelope estimate puts alcohol tax income at 1.2 billion dollars a year. This is based on 80% of population being over eighteen, and the tax on pure alcohol at $9 a litre. Does this cause the country to go into a recession each year? If so, maaaate.

    • Bright Red 7.1

      Of course, not because alcohol is a cost each and every year – each year is held back pretty much the same amount.

      A recession means that output in a given year (or quarter) was lower than the previous year (or quarter) (for two quarters in a row)… so a one-off shock can cause a recession but not a constant cost.

  8. gingercrush 8

    There may well be a backlash in the United States and I am no fan of Obama. But those people are simply irrational fools that instead of discussing things like Health Policy are spouting bullshit. The same can be seen in some elements of the far-right blogosphere. Its simply maddening.

    • Daveski 8.1

      I agree regarding some of the responses – the “Socialist Republic of America” is wonderful hyperbole. The point is beyond the hyperbole, the extent of the bail out will mean that the US will continue to suffer from the current recession when many other countries such as NZ will hopefully come out the other side.

      This of course is the other point – the problems in NZ where no where near the scale of the US which raises a logical question – why take the same medicine when we don’t have the same disease?

      • Maynard J 8.1.1

        ” why take the same medicine when we don’t have the same disease?”

        Depends if we have the same sympotms, or if it is a less virulent strain 😉

  9. Brett 9

    wrong thread

    • Maynard J 9.1

      Are you such a munter you put your little “I am whipped” comment here by mistake?

  10. felix 10

    I’d still like to know why this National/ACT govt can’t get decent lemons into the supermarkets. Since November 9 last year all the lemons have been rubbish.

    Oh, they look like good lemons, a lot of care has clearly gone into researching and breeding them to have the ideal shape and colour. And they’re always huge.

    But there’s no juice – they’re just, dense, tasteless, horrible things, a bit like burt or David Garrett. And what the hell do I want with a lemon if there’s no juice? It’s only really the juice that I want! And because they’re sold by weight, these monstrosities actually cost more each than the proper little juicy lemons that we used to get last year.

    Good for decorating my fucking drinks and that’s about it.

    Thanks, National. Thanks ACT.

    • Zorr 10.1

      I guess the take home lesson is this:

      If life gives you shitty lemons… make shitty lemonade

      lol captcha: sharing

    • Pascal's bookie 10.2

      They’re up to fuckn sumptin felix.

      I’ve got a lemon tree in a bucket to provide me with all my lemon juice needs.. Was a time, it would always have a half dozen good fruit on the go. Since this government came in to power it’s given up the ghost. Loads of blossoms, leaves are fine, looks healthy as, bees are doing their business, but the fruit hardly don’t never set, and when they do they only get so far before falling off.

      I’m having to buy lemons at the supermarket, and as you say, they suck.

      What the fuck are they up to?

  11. RedLogix 11

    Given that total US debt is around 300% of GDP (ie about $35 trillion) and that most of this will have to be unwound over the next few decades, the several trillions of Federal stimulus package is relatively puny.

    Ultimately deflation will trump ‘qualitative easing”.

  12. Ianmac 12

    My lemon tree keeps changing its fruit sort of like Sir John’s policies. The tree is producing a firm carrot on one side and pansies on the other side. Tomorrow……..

    Catchpa: invalid or is that in- va- lid?

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