I have said it before. This Government is a government of spin. Thanks to Crosby Textor advice and assistance it has well honed skills in making bad news sound good.
But there are limitations. National MPs are uncritical supporters of laissez faire free market neoliberalism. No matter how you dress up the PR this will always fail in delivering a society that is best for all of us. And people are noticing more and more regularly that beneath the carefully crafted veneer we have a typical right wing government.
This week has been an interesting week. I don’t know if it was planned or not but on Thursday if National had intended to run with news about how things were great because we had a stonking surplus it chose the wrong day to do so. Because this was also the day that news broke that Housing Corporation is going to run out of cash. Soon.
It may be that National rushed out the surplus story to try and lessen the damage but if this is so then they just wasted a big positive story on damage minimisation. No matter what they had a very bad day.
A primary reason for the surplus is the immigration surge. Vernon Small in Stuff said this:
The change of fortunes is down to a combination of things; high immigration, low interest rates and surprisingly strong growth. Together they turbo-charged the tax take by $3.8b to a total of $70 billion.
Tunnelling down into the data released by Treasury shows there are not only more of us, we are working longer.
The population grew by 2 per cent, thanks to migration peaking at 70,000, while average income and employment grew by a similar amount. Total hours worked were up 3 per cent.
No wonder this week’s moves to lower immigration levels were more symbolic tweaking than substantial cuts. Slashing immigration would cut off the supply of golden eggs.
But the Crown accounts were not all sunshine and giggles.
Despite the headline surplus borrowing continued to increase in dollar terms; by $1.3b.
And the operating balance including gains and losses was savaged by the accounting treatment of ACC and the Government Superannuation Fund as well as losses on the revaluation of carbon credits, leaving $5.4b of red ink.
The Housing Corp news will hurt at many levels. It attacks every meme and idea National and Crosby Textor has built up over eight long years.
For instance National’s status as genius economic managers is clearly a joke. Solid Energy is in flames and selling state houses to bolster the balance sheet of a social housing provider is not the sort of thing a competent economic manager does. And running out of cash makes you wonder how Bill English is going to achieve National’s Kiwibuild lite programme. Especially with this sort of report which was provided a few months ago.
It looks like the Government’s announcement by Stephen Joyce tweet earlier this year that it was not going to take dividends from HCNZ was actually calculated rather than a massive brain freeze by Joyce. Because given the way HCNZ’s financials were crashing there was going to be no dividend anyway. At least one of any meaningful size.
Housing NZ is already spending $2Bn over next 3 yrs building & buying houses – & no dividend nxt 2 yrs
— Steven Joyce (@stevenljoyce) July 10, 2016
On July 10, 2016 the day of the tweet Joyce must have known that no dividend was going to be paid. Because on May 20, 2016 Bill English was sent HNZ’s draft plan and this showed a return of $14 million in the next financial year. The dividend was going to be minimal at best.
But clearly there had been a change in position and it was not all down to a Joyce tweet.
— Grant Robertson (@grantrobertson1) July 11, 2016
And you have to wonder about National’s recent announcement that it will implement Labour’s Kiwibuild programme, even if it is a lite version. Where is the money coming from?
HCNZ believes that its funding model is not sustainable and it has requested a new model be looked at. It appears that it has a very good case. Looks like that surplus is not going to last long.