- Date published:
11:34 am, May 20th, 2015 - 52 comments
Categories: debt / deficit, Economy, labour, national - Tags:
Labour: Net debt goes from $22 billion to $0
National: Net debt has gone back up to over $46 billion
But..but…but showerheads! Lightbulbs!
Jesus wept? Looking at this disaster by the bean counter in chief is enough to make me weep! 🙁
We are a trading nation. Compare the world economies during the same period for a better analysis.
No country should set itself up as a ‘trading nation’. What we should be doing is zeroing ourselves up as being self sufficient with minimal trading.
That’s a different point though isn’t it.
We are what we are.
We will never be what you want us to be in your idealistic, paradise.
Actually, the way we are is the ideology.
Why do you think we should put up man made borders and isolate ourselves from the rest of humanity?
Aren’t we all on this planet together, and therefore have to strive together towards some inclusive outcomes?
Why should only those who were lucky enough to be born in Planet Draco be able to benefit from the non-trading society existing there?
Where did I say we should?
And such outcomes need to be economic. Trading is, especially over long distances, uneconomic as it uses up more resources.
I didn’t say that there’d be no trading did I?
Oh FFS Bunji, this is utter bullshit.
Cullen ran a debt swap during his years in power. He created government surpluses by allowing the private sector to fall deeper and deeper into debt. Labour 5 swapped government debt for private sector debt.
At the end of 3 terms in power Labour left NZ as a whole deeper in foreign debt than when it started – its just that the government’s share of that debt decreased.
Any government which runs a surplus in NZ is setting households and businesses up for a recession, due to the reality of sectorial money balances.
Figure it out.
Was New Zealand’s (the private and public sector) debt better off at the end of Cullen’s reign?
Is the Private sector debt any better after 7yrs of Nats?
I bet its worse at a higher rate.
private sector debt has not decreased for the major increase in government debt, no.
I wouldn’t agree with the analysis that public and private debt are so strongly linked. Both need solving, and Cullen didn’t solve the Current Account Deficit, no.
I just replied to CR in another post on much the same stuff.
good point CV
and over those boom years from 2003 to 2008, govt spending increased by 50% in just over 5 years. Then when the ass dropped out of the economy we were left with spending promises that couldn’t be cut without disadvantaging those most in need. That is where the debt comes from.
“when the ass dropped out of the economy we were left with spending promises that couldn’t be cut without disadvantaging those most in need.”
That suggests that if ‘those most in need’ had not had the benefit of the additional spending during those 9 years then they would never have had their needs met – in good times or bad.
Not much of a society for ‘them’ then, eh?
If government spending didn’t increase in boom years then when would it?
Or should it never increase? In that case, the whole notion of ‘growing the pie’ in order to afford public services (you know, the ‘gain’ that supposedly comes from the ‘pain’ – as Roger Douglas repeatedly used to say) is a bit of a deceptive crock of an argument, isn’t it?
Put simply, how are the needs of those “most in need” ever to be met if – following your argument – in the absence of government spending the private sector/market economy cannot meet them?
The problem was in the 2000s massive govt spending growth was on the back of the whole country, year after year, spending 115% of what it earned.
Under Clark private debt grew 166% from $60b to $160b.
The whole situation was totally unsustainable but nothing was done to stop what was effectively a massive and growing debt mountain, financing an economic bubble.
And surprise surprise – it led to a financial crisis – in the same way as households would end up in financial crisis if they spend 15% more than they earned, year after year after year.
Thanks for the response – though I’m not sure how it relates to the points I was making. I was not arguing in favour of large national debt.
Are you arguing that when the private sector gets itself into debt the government should trim its – relatively less important – expenditure rather than, for example, somehow reign in private sector debt?
I see the two as distinct policy decisions and so I wouldn’t want to see expenditure on social infrastructure reduced because the private sector has been allowed to go on a non-productive debt-fuelled spending spree.
I don’t see why those ‘most in need’ should suffer because the middle class (and the wealthy) have racked up lots of debt – and the government has allowed them to. That’s especially so if the consequence of the spending spree is higher costs (e.g., in rent) for those ‘most in need’.
If those ‘most in need’ require government expenditure to stay afloat then that expenditure is justified – purely on those terms.
Puddlegum – the point was the government increased spending because it was getting more tax from the debt fueled bubble.
You can’t spend much more than you earn, year after year, so the debt fueled spending wasn’t sustainable, therefore the tax intake and increased govt spending wasn’t sustainable either.
It was all based on the whole country spending much more than it earned. So the govt at the time should have taken measures stop private debt going up 160% under their watch.
That would have done more to help the less well off, because as you say, the bubble hurt them with big hikes in rent.
Yup, government spending was 31.0% of GDP in 2000, 31.2% in 2008 and 35% in 2011.
Spending went up around 60% from 1999-2008 ($34b to $57b).
Did we see a 60% improvement in health outcomes? Education outcomes?
The Clark govt were feeding off the bubble created by the additional spending from $100b of extra private debt.
They did nothing about a whole country spending 115% of what it actually earned – year after year.
Try doing that with your household and see how long you last.
you idiot, a currency sovereign and a household have nothing in common from a budgetary perspective.
So it’s not sustainable for one household to spend 15% more than they earn year after year.
But it’s not a problem if the whole country (2,000,000 households) do it
(on AVERAGE every household in the country was spending 15% more than it was earning in the mid 2000s).
Pretty soon the person/whole country has to pay back the debt, has to cut their spending, and realises that we all collectively own the same houses we did previously, but we owe foreign banks an additional $100m more than we did before.
Profits, jobs, company tax, gst and paye are all down, and the govt realises that like the whole country, it had increased it’s spending on the back of a bubble, so it’s spending like the households, was unsustainable.
No-one ever said that they should not get the benefit of additional spending, just that the level of extra spending was the issue.
Deficit/surplus comparisons are completely meaningless when devoid of context. The implication that governments running deficits is inherently bad is plain stupid.
BTW, the US is currently running a deficit of about 105% of GDP, Japan 200%!
New Zealand? About 33%…
And another thing – that net debt of $46B is money that National has put into the NZ economy, into ordinary Kiwis pockets (although the 1% got more than their fair share).
Are we really saying that we would have been better off as a country with austerity measures, and National pulling that $46B out of Kiwi’s pockets. I mean FFS
Thank you CR! All of the talk of the budget deficit is arse about face, when the GFC hit National lower taxes and took on debt and their was an outcry, plenty saying taxes should be increased instead. Imagine if you were a couple, one of you got made redundant during the GFC, then your partners income is decreased due to higher taxes! The number of people on the street would have grown a lot more than it did!
The other option was to reduce Welfare, Education or Health when they were most needed, FFS is right, taking on debt was the only real option, and lowering taxes was at least a way of trying to get the economy moving again!
but Welfare, Education, Health and many other parts were reduced.
Heck, try being unemployed nowadays and go to Winz for a benefit.
NZ has had its form of Austerity over the last seven years. And those of us that live in cars, eat only once a day or every other day, that can’t go to the doctors or dentist due to lack of funds know full well what austerity means.
that lowering of taxes for the rich, well that was paid for by the GST increase for the poor.
A shit way of getting the economy moving, considering tax cuts might hurt growth.
Yes, yes, I know you’re programmed to believe something else.
Actually National took on debt to five the Rich tax cuts…
All of our eggs are in one basket, namely Dairy…. but seeing as the payout is expected to be $5 Billion less than last year, that will put a huge dent in the plans of the Govt rescuing the economy…
Even Bob Jones, who loves to make money, says there are better opportunities to make money, under a National Govt, but the economy as a whole does better under Labour
Dairy as a whole, doesn’t actually benefit many…
I think the title to this post should be directed to its author
Why, do the Nats always print their budget in a blue cover, when it always end in the RED
Nats spending too much? What do you favour cutting?
The $26 million expenditure on the flag change farce would be a good start!
Do you realise, what you are suggesting is the equivalent to having a $46,000 personal loan and not buying a $26 bottle of wine would be a good start?
Where is the rest coming from? Health, Education, Welfare, Chch rebuild? Those are the big ticket items that could actually make a difference, so your choice…
30m on tiwai
600m? on SCF
6m to buy a farm in saudi
So add in Tiwai and the farm in Saudi (not sure what this refers too) to the flag referendum and you are at $62M of the $46,000M of debt, keep going you are almost there! Just $45,938M left to find!
The $600M was part of the Government Guarantee that was brought in by the previous Labour Government, and rightly so, this covered private investors, not the company itself.
2 sides to a balance sheet Gormless Fool.
I wouldn’t have cut the top tax rate, and I’d have a CGT to take a little of the heat out of the housing market for a start…
I’d also have an economy where jobs were a higher priority, and fewer unemployment and higher tax take does a lot for the books…
What effect would higher taxes have on employment, do you think, Bunji?
Likely positive for employment, if those taxes were spent back on services for communities.
Yes, although if you spend it, will it tend to create a surplus?
Why do you think that running a surplus is a good idea?
We seem to have found the 10 years of deficits that the RWNJs warned us about – it was in National’s governance.
Sure can’t think of anything else that might have caused it.
Hi Gormless Fool formerly known as Oleolebiscuitbarrell,
So when Treasury announced ten years of deficits that was not primarily a function of the Labour Government’s policies but of the GFC that was being factored in?
Someone should have told the National Party during its 2008 campaign. They seem to have misunderstood the cause of the predicted deficits. They were under the impression it had something to do with the then government’s economic management.
It was Treasury to be fair, but I guess you being you will consider them RWNJ.
It was the RWNJs that blew it all out of proportion. That said, our entire financial system is broken and it’s that way because of the teachings that those in Treasury receive.
…. the figures for real GDP per capita/head would be interesting
I think whoever wrote the headline should sign it, “master of ignorance”.
Out of 200+ countries on the planet, there would be very few who wouldn’t happily swap the performance of their economy for ours over the same period.
And yet ours should have been so much better and would have been if National weren’t in charge.