National cannot be blamed for the current financial crisis and recession of course. But they can be blamed for their short sighted and inadequate response. Stuck in old ways of thinking (cut spending, cut jobs, sell stuff) they have done nothing to stimulate the economy. All their talk of extra spending turned out to be just rebranding existing spending (see here and here), or moving money from one project (public transport) to another (more highways). The talk-fest jobs summit resulted in nothing – a token cycleway (now axed) and a nine day fortnight plan (going nowhere). Where was the leadership? Where was the vision?
Well, the chickens are coming home to roost. Borrowing and hoping not an option, says English:
Finance Minister Bill English is setting the scene for a grim Budget next month with the likely cancellation of personal tax cuts in 2010 and 2011. … Government spending growth cannot continue at this rate, particularly with revenue falling so significantly in the current environment.
Next month’s Budget looks set to be a grim affair focused on reducing the country’s ballooning debt and eschewing any major prime-the-pump spending initiatives. … “The preliminary forecast has shown such a strong increase in debt that we don’t think there is room for any significant fiscal stimulus at the moment,” he [English] said.
National should have acted sooner and stronger. Instead of going on holiday after the election, or rushing through their own narrow agenda under anti-democratic urgency, they should have been addressing this crisis while there was still time. They had it wrong then, and they still (according to the IMF) have it wrong now:
It [the IMF] again spelt out the case for a strong fiscal policy response, with the Government acting as the “spender of last resort” to break the negative feedback between weaknesses in the financial sector and the real economy.
National had their chance, and they’ve blown it for all of us..