No super contributions = worse net debt

Written By: - Date published: 7:08 pm, May 28th, 2009 - 114 comments
Categories: budget 2009, economy, spin, superannuation, welfare - Tags:

I’ve had a dig into Treasury’s numbers and worked out that they expect the Superannuation Fund will make a 13% return next year, falling to 11% a year by 2012. Those figures seem pretty good, not too optimistic. It’s what the Fund made in ordinary years before the crunch and bear in mind the Fund made 8% last month.

Now I asked, what if we put in the payments we were meant to ($1.25 billion more in 2009 than the $250 million National is putting in and $2.2 billion a year thereafter), getting the money by borrowing more?

Government bonds are selling at about 6% return a year (I’m pretty sure that’s non-compounding unlike the returns the Superannuation Fund makes, doesn’t make a huge difference).

So, what would we make if we borrowed $7.85 billion in the next four years at 6% and made the 13-11% returns that Treasury projects for the Superannuation Fund?

About $1 billion by my count.

So, not only National has effectively sounded the death knell of superannuation as we know it in the future, they’ve cost us money right now. $1 billion in just four years. The loss will be much, much more by 2020 when payments to the Superannuation Fund resume (yeah, right – not if National has a say).

Our net debt would be 0.5% of GDP lower in 2012 if we kept on making contributions to the Fund. Far from being unaffordable and risking our credit rating, the contributions would have seen our national books in better shape.

John Key and Bill English are both former bankers. They can do the maths. They know that borrowing to buy an asset with abetter long-run rate of return makes sense. The gamble, as always, is that none of the media can. Do you think the gamble has paid off?
-Marty G

114 comments on “No super contributions = worse net debt ”

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  1. tsmithfield 1
    28 May 2009 at 7:13 pm

    Those of you who argue that the Cullen fund contributions should have been maintained are missing some vital points:

    1. Risk v Return: Sure, there are opportunities for making money at the moment. However, focussing only on the return side of the equation is shear folly. The adage “the greater the return, the greater the risk’ is even more worth remembering in the economic times we face. Borrowing large sums of money to speculate with is simply stupid because the borrowed money has to be paid back. We don’t know how far the market can fall yet, so there is still truckloads that could be lost.

    2. Net present value v future value of money. To assess the likely worth of an investment it is important to consider the cost of the borrowed money at the time that the return is to be realised. Paying interest on borrowed money over the many years it takes to get a return may eliminate any gain that is eventually made, no matter how much it may seem. If you doubt me, get a financial calculator and work out the actual cost of $2billion per year compounding at three percent for the next 20 years.

    3. The assumption that the market will rebound quickly from its current lows may not be correct. The market may well remain flat at a low level for a number of years before it recovers.

    With these factors taken into account, I think the government is quite justified in suspending the fund until it can fund it out of surplusses. In my view the risks of funding it out of borrowing is too great. If you doubt me, consider if you would mortgage your house to invest on the sharemarket. If the answer is “no’ then you really have no complaint about the government doing the same thing.

  2. aj 2
    28 May 2009 at 7:34 pm

    1/ The Super Fund does not just invest in stocks. I’d imagine investments in the next few years would be conservatively balanced. At worst the nett position after borrowing costs could be neutral.

    2/ The interest costs do not ‘compound’ in the sense you are trying put forward. Returns compound. Interest is a fixed cost.

    3/ See 1

  3. burt 3
    28 May 2009 at 7:49 pm

    Marty G

    Over on this thread there is much discussion about how Treasury projections are crap. (see: http://www.thestandard.org.nz/the-debt-bogey-returns/ )

    Do you agree with the other people who have commented about the validity of Treasury projections? Do you think the Treasury projections are more accurate for the Cullen fund growth but not for debt? Or did these numbers just fit better with your own opinions?

  4. The Baron 4
    28 May 2009 at 7:50 pm

    Is this the same blog where a whole pile of wannabe anachists keep crying “capitalism is dead”?

    And then you expect us to go out and make a killing in the sharemarket? Where are those anarchos now to pour cold water on this “everything goes up” investment plan?

    Pure madness. Christ, you lefties need some consistency.

    • Chris S 4.1
      28 May 2009 at 7:53 pm

      Yeah, we should be more like the “team” that just flip-flopped on a bunch of their election promises?

      • The Baron 4.1.1
        28 May 2009 at 7:55 pm

        You can’t have it both ways Chris – I thought tax cuts were economic madness?

        If you want us to assume that that is what Labour would have done with their future tax cuts had they won the election, then so be it. My, how irresponsible that would have been.

        So, what are the other attack lines that grassroots labour is seeding? might as well get them all out in the open now, team. or is it getting in the way of your pre-written letters to the editor?

        • lprent 4.1.1.1
          28 May 2009 at 8:03 pm

          The question is more about keeping your promises. Personally I thought that Cullens tax cuts were too much. A slow and gradual bracket move was all that was required.

          When this current pack of idiot politicimoaners started whining about taxcuts in 2004/5 I thought they were positively moronic. When I saw them massively over-promising last year, I knew that were lunatics who would keep braying at the unrealistic orb of increased productivity through taxcuts and deficit spending until reality hit them. Then they’d break their promises.

          Which is what they have done….

          • The Baron 4.1.1.1.1
            28 May 2009 at 8:08 pm

            But again I ask, if Labour had have won the election, what would you have expected them to do with their promised tax cuts?

            There were only two options available here – either break your promises or push us deeper into the shit than we are already. You can’t sit back and criticise the nats when labour made THE SAME PROMISES.

    • lprent 4.2
      28 May 2009 at 7:58 pm

      Also the same blog that has a pile of dipshit commentators who claim that everything is the fault of
      a. the unions
      b. excessive PC
      c. Not enough tax cuts

      The comments section is full of interesting people… Take yourself for instance…

    • Quoth the Raven 4.3
      28 May 2009 at 8:54 pm

      The Baron – I don’t know that there is any other anarchist except me that comments here. From your comments it is clear you understand nothing of anarchism. There’s no point even trying to explain how ignorant your comment is.

      • The Baron 4.3.1
        28 May 2009 at 8:58 pm

        My apologies for offending your wacko sense of ideals, QoR.

        I assure you that there is plenty of WANNABE anarchists here, who know even less than I do. How about you read the entire sentence before revelling in the exclusivity of your radicalism.

        • Quoth the Raven 4.3.1.1
          28 May 2009 at 9:24 pm

          Then your comment required ‘wannabe’ to be inserted before anarchos or are we take it that it was simply implied? Must we analyse and delve deeply into the language of your little irruptions? Futher to the point I don’t see any wannabes either, despite your assurances.

          • Pascal's bookie 4.3.1.1.1
            28 May 2009 at 9:44 pm

            Here’s a usedtabee, which is not meant as a criticism of the philosophy, if you’ll catch the distinction. Got a black flag? Wave it. We need the critique.

          • The Baron 4.3.1.1.2
            29 May 2009 at 9:45 am

            Er, it was inserted, QoR – go back and have a look after your eye check.

  5. tsmithfield 5
    28 May 2009 at 7:56 pm

    The Baron: “Is this the same blog where a whole pile of wannabe anachists keep crying ?capitalism is dead??

    And then you expect us to go out and make a killing in the sharemarket? Where are those anarchos now to pour cold water on this ?everything goes up? investment plan?”

    Well said.

    aj: “1/ The Super Fund does not just invest in stocks. I?d imagine investments in the next few years would be conservatively balanced. At worst the nett position after borrowing costs could be neutral.

    2/ The interest costs do not ?compound? in the sense you are trying put forward. Returns compound. Interest is a fixed cost.

    3/ See 1”

    Aj, the point is, it is other peoples money that is being invested, not their own. Also, it is being put in the hands of fund managers. Might as well put it in the hands of monkeys. I think you will find that the historical success of fund managers has been fairly uninspiring. Afterall, why do these people need jobs as fund-managers if they are so good? If they were any good then they would be making their own money instead of trying to manage others poorly.

    Depends how you borrow as to whether the interest is compounding or not. If it is funded as interest only, then it definitely does compound.

  6. tsmithfield 6
    28 May 2009 at 8:04 pm

    aj “1/ The Super Fund does not just invest in stocks. I?d imagine investments in the next few years would be conservatively balanced. At worst the nett position after borrowing costs could be neutral.

    2/ The interest costs do not ?compound? in the sense you are trying put forward. Returns compound. Interest is a fixed cost.

    3/ See 1”

    Aj, if it was put in the hands of someone like my friend who had made himself a multi-millionaire and retired by the age of 30, I might agree with you. However, it is put in the hands of fund-managers who have tended to be spectacularly unsuccessful. Think about it. If these people were so good, why are they employed as fund managers rather than making their own fortune like my friend has.

    Interest also can compound if it is borrowed as interest only. I don’t know how the government would have funded the borrowings for the super fund.

    • IrishBill 6.1
      28 May 2009 at 9:05 pm

      The super fund managers have done a good job of beating the market so far (as have the ACC fund managers) so I’m not sure what you mean by “spectacularly unsuccessful”.

      • aj 6.1.1
        28 May 2009 at 11:00 pm

        tsmithfield,
        I reccommend you go and study up on the Superfund. Many of your comments come from your imagination.

  7. Paul Walker 7
    28 May 2009 at 8:23 pm

    Question: If the super fund can make 13% per year then so can other people, just by doing what the super fund does, so why would they lend to the government at 6%? Getting 13% is better than getting 6%.

    IrishBill: Because they aren’t investing on a timescale of decades and they don’t have the capital required to rife out the peaks and troughs that average 13% rate is derived from.

    • tsmithfield 7.1
      28 May 2009 at 8:39 pm

      Paul you are quite correct. These are the questions that others here should be asking themselves.

    • The Baron 7.2
      28 May 2009 at 8:45 pm

      The risk profile of the two investments is quite different though.

      13% is unlikely to be the average over that term, as the markets are still quite volatile; whereas the 6% is likely to be guaranteed. Some people would be happy to take a relatively riskless 6% over a very risky 13%. Why on earth Marty thinks that that sort of gamble is ok with public money is beyond me.

      • Paul Walker 7.2.1
        28 May 2009 at 8:52 pm

        So at the very least the 13% and the 6% are not comparable as they have different risks attached to them. Thus Marty G should be comparing risk adjusted numbers.

        • The Baron 7.2.1.1
          28 May 2009 at 8:54 pm

          Well don’t rely on that being done with any accuracy – cos accuracy ain’t Marty’s strong suit.

          Prent, it’s time to cut this retard loose before he drags the quality of this blog down even further.

    • Paul Walker 7.3
      28 May 2009 at 9:18 pm

      Bill. There are many funds out there which invest long-term and have the funds to deal with peaks and troughs. As an example the California Public Employees’ Retirement System was worth around US$179.2 billion at the end of 2008. And anyway the gap between 13 and 6 is just too large for that to explain it.

  8. Thomas Beagle 8
    28 May 2009 at 8:45 pm

    That’s awesome! I think we should borrow as much money as we can at 6% (with the right leverage we should be able to get quite a bit) and then invest it at 11-13%. We’ll make a killing.

    • Macro 8.1
      28 May 2009 at 9:27 pm

      You can try it if you like – but be warned unless you have a sound investment strategy and don’t know what you are doing – it can all become horribly unstuck! You have to pay back your borrowings even if you loose them. And I wouldn’t trust the investment advisers down the road either.
      Fact is (for burt’s benefit – it reminds him of his granddad) the Super Funds investment team are right up there with their investment strategy and are performing reasonably well. Although I’d prefer to see that they stuck to ethical investments. Not companies involved in nuclear, or weapons production or employing slave labour in 3rd world countries. Do you reckon you can out perform them?

  9. tsmithfield 9
    28 May 2009 at 8:51 pm

    Thomas Beagle “That’s awesome! I think we should borrow as much money as we can at 6% (with the right leverage we should be able to get quite a bit) and then invest it at 11-13%. We’ll make a killing.”

    Yeh, But what if your investment loses 13%? How much have you lost then borrowing at 6%?

  10. kinoy 10
    28 May 2009 at 9:13 pm

    What is really pissing me off at the moment is the green party! Where the hell are the press releases asking the hard questions? Questiong what the government has done to create jobs in this budget? Are they not a party that support the unempolyed? They make me sick………. Some left party! Makes me sick!!!!!!!!!!!!!!

  11. RedLogix 11
    28 May 2009 at 9:16 pm

    Everyone seems to have forgotten that if National had NOT gone ahead with the $2.2b tax cuts on April 1 this year; then the Super Fund contributions could have been fully funded from existing govt income.

    Given that the vast majority of the Nats package went directly into the pockets of the top 10% of taxpayers, then all that has happened is that the multi-party poltical consensus and NZ’s Super system itself have been put at huge risk of complete failure… simply for the benefit of the wealthiest handful of New Zealanders.

    It was National who have relentlessly pursued the tax cut mantra since 2004, succeeded in setting a poltical agenda around them, and more or less compelled Labour’s hand as well. Yet from at least September last year it was obvious to anyone with half a clue that the Nats tax cut promises were nothing more than deluded baying at the moon. They were never going to happen, Key must have known they were never going to happen, yet he staked his PERSONAL GUARANTEE that they would.

    The man is either a total fool or lying filth.

    • cocamc 11.1
      28 May 2009 at 9:35 pm

      RedLogix
      I understood the April tax cuts were funded from Kiwisaver changes. so if we didn’t have tax cuts we’d still have Kiwisaver obligations. In the end same result. Would have spent the money on tax cuts or spent on kiwisaver

    • Macro 11.2
      28 May 2009 at 9:39 pm

      “man is either a total fool or lying filth.”
      I think he is the former – he just can’t go around making all these “warm fussies” if he was anything else! I don’t think he has any idea what he is saying. Take for instance his “target of 50% reduction in green house emissions by 2050” Does he really understand what this means? What sort of commitment this is? And we fiddle while the rest of the world – yes even USA and China get on with policy.This budget has nothing in it apart from the insulation initiative that even looks at the problem, and funding on CRI’s and science is reduced!

  12. tsmithfield 12
    28 May 2009 at 9:34 pm

    Redlogix

    “Everyone seems to have forgotten that if National had NOT gone ahead with the $2.2b tax cuts on April 1 this year; then the Super Fund contributions could have been fully funded from existing govt income.”

    But it still would have been borrowed. The government is running a deficit much bigger than the contribution to the Cullen fund. At least with the tax cuts people can put the money into their own superannuation funds, pay off their houses, or do what ever they want to prepare for their retirement rather than leaving it to the government to pour it down the toilet for them.

  13. RedLogix 13
    28 May 2009 at 9:52 pm

    But it still would have been borrowed. The government is running a deficit much bigger than the contribution to the Cullen fund.

    But still $2.2b less than now. We are now borrowing to pay for all sorts of things, but even you are presumably not suggesting that we slash them all in order to reduce the deficit to zero? English and S&P claim to be happy with the balance of debt and costs at present; with an extra $2.2b in the kitty, some decent level of Super Fund contributions could have been maintained with pretty much the same overall balance.

    But they threw that opportunity down the toilet with their slavish obsession with tax cuts, pushed through under urgency the instant they got into power. At a time when there was so much uncertainty in the world that an even mildly prudent man might well have taken pause.

    At least with the tax cuts people can put the money into their own superannuation funds, pay off their houses, or do what ever they want to prepare for their retirement

    That is just a plain old bit of wicked Tory nonsense. In that bad old days before pensions, large numbers of the elderly suffered terrible poverty once they became too old to work. Many simply died in their 60’s.

    The fact is that even with a prudent, safe investment plans and strategies, by no means everyone will succeed in making them work. Many will fail, often through no fault of their own. And hell, exactly WHERE do you think we should invest our money? The thieving snake pit that is our stock market? One word… Feltex. Finance companies? Or the much maligned property investment market?

    The fact is that once you have retired (or get close to it) you need certainty, because if the investment plan falls over for any reason, it’s too late to stage a recovery… you’re basically fracked. Only the govt is big and stable enough to provide that certainty. Every other investment vehicle in this country has a long and inglorious record of destroying huge amounts of capital. (Pouring it down the toilet if you like.)

    • Macro 13.1
      28 May 2009 at 10:00 pm

      Exactly! Red and – we are still to see what the outcome of this reduced investment is to be! An increase in the age for retirement I’m predicting and not too far off. 67? 70? next year?

      • micro 13.1.1
        28 May 2009 at 10:14 pm

        Who’s stopping you saving for your own retirement ?

        Do you want the government to come to your house and wipe your bottom after you’ve done number 2s tomorrow morning ?

        • RedLogix 13.1.1.1
          28 May 2009 at 10:19 pm

          Well if you fall victim to senile dementia, as many do in old age, then likely you would hope someone would.

    • jerry 13.2
      28 May 2009 at 10:18 pm

      “As a financial advisor with over twenty years of experience, I have seen markets go up and down many times and have assisted my clients in getting through them. We are prepared for a normal economic cycle where the economy overheats and then needs to cool off through a recession before picking back up again. We are primed to advise our clients through various charts and graphs how these cycles work and why they need to stay invested in equities in their 401k plans for a solid retirement. We are ready to console and counsel our clients through market downturns. We were not ready for this.

      Due to a perfect storm of financial incompetence created by Congress, banks, and Wall Street our clients are going through an economic downturn that is destroying their retirement. This is not a normal economic cycle. This is a credit market fiasco that was caused by appalling decisions made in governmental monetary policy, Fannie Mae and Freddie Mac Congressional oversight, loan creation with no accountability, and by Wall Street derivative designs that took delight in how complex and over-leveraged they could make their derivatives. They were all playing with taxpayers money, depositors money, and 401k plan money as if it were a board game with no real economic consequences. We are seeing the economic consequences now.

      Counseling 401k participants into staying in equities through normal market cycles is good retirement planning advice. Counseling them to stay in equities when the parties mentioned above have mismanaged the entire economic system is folly. Advising your clients to stay in equities through this downturn would be similar to advising your clients to stay in Enron stock after the mismanagement of that company. The best advice you could have given an Enron shareholder would have been to sell and go to cash, the earlier the better. The same advice would have been best here as well.

      The market is down 52% and may still drop more. How much do we have to pay for mistakes that we never made? Investors did not cause this. They put their faith in the system that was supposed to invest their money prudently. The system has failed them. Bankers have failed them. Congress has failed them. Wall Street has failed them. Nonetheless, they are paying the price as they watch their 401k plans dwindle before their eyes. Hard-earned money that took years to accumulate is gone to pay for these mistakes. Their only mistake was trusting the system.

      During the great depression, stocks lost 90% of their value and unemployment went up to 25%. As most financial historians know, governmental policy and speculation also exacerbated that economic downturn and created tremendous hardships on ordinary Americans. I do not believe we will experience that kind of economic depression but we have already paid a terrible price which can still become worse.

      Wall Street’s propaganda that if we trust them with our money they will invest it wisely turns out to be just that. We do have one of the best economic systems in the world but, in this case, our trust has been abused. We have also done a tremendous disservice to our 401k participants in advising them to ride this market all the way down. We should have recognized that this was not a normal economic recession but a mismanagement of the financial system by those who believe they are so much smarter than the rest of us. They broke the system and we should not have let our clients pay the price.

      Congress, the banks, and Wall Street need to earn our trust again. My clients are in almost all cash now and we will not change that position until we know that any investments we make will not go to imprudent lending or unregulated derivatives. Stocks can still be excellent long-term investments but they need a competent and stable financial system that supports them. Wall Street needs to understand that the trillions of dollars 401k participants give them to invest is not money to play with but the economic future of each hard-working American. That money needs to be given the respect it deserves by investing prudently, not speculatively.”

      • Draco T Bastard 13.2.1
        28 May 2009 at 11:52 pm

        We do have one of the best economic systems in the world but,

        Yeah, I think you need to do a little bit more research. Try reading E.F. Schumacher’s book Small Is Beautiful. Here’s a small quote:

        I started by saying that one of the most fateful errors of our age is the belief that the problem of production has been solved. This illusion, I
        suggested, is mainly due to our inability to recognise that the modern
        industrial system, with all its intellectual sophistication, consumes the very
        basis on which it has been erected. To use the language of the economist, it
        lives on irreplaceable capital which it cheerfully treats as income.

        Our economic system is, quite literally, consuming itself.

  14. burt 14
    28 May 2009 at 9:59 pm

    The whole issue of tax cuts Labour/National is absurd. They were and are required. They were affordable for 9 years and we didn’t get them, they are not affordable and we got them. And people still play the tribal game and vote red or vote blue. Astounding.

    Tax is mechanism to raise govt revenue at an agreed level. It is not a way to fill the coffers for an election spend up, it’s not a popularity lever come election time.

    If you worked for a company that had record profits for 9 years and never gave you a pay rise till you said you might resign you would feel they had exploited you. Why would some see it differently for tax take?

    • Macro 14.1
      28 May 2009 at 10:03 pm

      No they weren’t!! required or affordable! There were far too many in this country shafted in the 90’s and they are about to be shafted again.

    • Lanthanide 14.2
      28 May 2009 at 10:27 pm

      Labour reduced the company tax rate to 30%.

      Labour introduced Working for Families, which is essentially a tax cut for a particular sector of the workforce.

      • RedLogix 14.2.1
        28 May 2009 at 10:32 pm

        Yes, the truly ironic thing is that biggest effective tax cut most righties will ever see in decades, will probably have came from a Labour govt.

  15. tsmithfield 15
    28 May 2009 at 10:07 pm

    Redlogix “But they threw that opportunity down the toilet with their slavish obsession with tax cuts, pushed through under urgency the instant they got into power.”

    I seem to remember National being pilloried here because their tax cuts were largely what Labour had planned to do anyway. You can’t have it both ways.

  16. RedLogix 16
    28 May 2009 at 10:10 pm

    Burt,

    Demanding tax cuts without at the same time being explicit about what govt spending cuts you are willing to implement at the same time, is intellectually weak and dishonest.

    Dr Cullen repeatedly stated that the surplus’s of the 2002-2008 period were NOT structural. In other words he believed that when the boom turned to bust, that they would vanish like the morning dew. And so they did. He was absolutely correct… was he not?

    As any prudent business should do, he used the boom time profits to reduce debt, build capacity and set aside reserves for the inevitable rainy day.

    That is not exploitation. It is simply an age old lesson, known since the time of Joseph when he served the Pharoahs.

    • burt 16.1
      28 May 2009 at 10:30 pm

      In other words he believed that when the boom turned to bust, that they would vanish like the morning dew. And so they did. He was absolutely correct was he not?

      I don’t think you should be defending his gloating that he had left the cupboard bare for National. Yes Cullen & Clark were great extractors and spenders of the nations wealth. The govt became rich and went back to poor while we slipped quietly down the OECD ladder. What about this makes Cullen a capable finance minister?

      And when you talk about economic bust you seem to be ignoring the fact NZ was in a domestic recession well before the sub prime crisis and ensuing global shite. Our productivity was stalling as was our growth. Surpluses were already predicted to be shrinking when Cullen waltzed all over his 4 way test in an attempt to match the opposition. I don’t call that a strong finance minister – do you?

    • burt 16.2
      28 May 2009 at 10:44 pm

      Demanding tax cuts without at the same time being explicit about what govt spending cuts you are willing to implement at the same time, is intellectually weak and dishonest.

      Are you saying it is not possible for the govt to set a budget and operate largely within it?

  17. RedLogix 17
    28 May 2009 at 10:15 pm

    I seem to remember National being pilloried here because their tax cuts were largely what Labour had planned to do anyway. You can’t have it both ways.

    Oh yes I can. It was National who relentlessly beat the tax cut drum for more than 5 years, constantly repeating the ‘overtaxation’ attack line, creating a massive political expectation. This more or less forced Labour’s hand… but Dr Cullen repeatedly stated that he was very uncomfortable about whether they were possible or even desirable.

    Turns out the much pilloried Dr Cullen was right .. was he not?

    • Zaphod Beeblebrox 17.1
      28 May 2009 at 10:41 pm

      Not only that the didn’t touch WWF and student loans. This budget could easily be written by Cullen.

      • burt 17.1.1
        28 May 2009 at 10:45 pm

        I agree, I bet if you scratched at the blue covers just a little the red would start to show through pretty quickly.

  18. tsmithfield 18
    28 May 2009 at 10:20 pm

    Redlogix “Turns out the much pilloried Dr Cullen was right .. was he not?”

    Nah. The real problem is that things haven’t gone far enough in that direction. Tax cuts to date have been little more than tokenism.

    • burt 18.1
      28 May 2009 at 10:35 pm

      tsmithfield

      Absolutely correct. Question 1. Did Labour restore the top tax threshold to it’s 1999 policy level of the top 5% of all earners – NO. Have National – Almost/perhaps.

      Plain and simple – tax cuts to date have been tokens. The govt still takes more from our pocket while borrowing like crazy from overseas than it did in 1999. And people still play tribal games and vote red or blue. Outrageous.

  19. RedLogix 19
    28 May 2009 at 10:26 pm

    OK Mr Smithfield. Be honest. Stop hiding behind vague rhetoric.

    Tell us exactly what taxation levels you want.

    And exactly what the govt would cut in response.

    You cannot have one without the other. So cut the waffle, get honest for once.

  20. Josh 20
    28 May 2009 at 10:30 pm

    The problem with your analysis is that you assume the money invested in the Cullen Fund will be available to draw down over the immediate term as it returns 11-13% per year. By law it cannot, the capital of the Fund cannot be touched until 2027 (2030 after today i think). So you are borrowing today to invest in a fund which has a future maturity. Now, there is nothing wrong with that in principle, but the problem we face is that we have massive and sustained cash deficits, deficits which cannot be solved over the medium term (10 years) through the investments in the super fund. The decision is then simple, we have to borrow, the only question is how much can we afford to take on without a) a credit downgrade or b) a massive increase in sovereign debt such as we faced in the 1980s

    • RedLogix 20.1
      28 May 2009 at 10:35 pm

      Simple. Recind the $2.2b tax cuts put in place in April 1 this year. That way we could maintain existing levels of Super Fund contributions, and no need for increased public sector debt.

      • Josh 20.1.1
        28 May 2009 at 10:53 pm

        Correct me if i am wrong, but that was $2.2bn over 4 years? The contributions are $2bn each year, where is the other $18bn going to come from?

  21. RedLogix 21
    28 May 2009 at 10:46 pm

    Burt,

    I don’t think you should be defending his gloating that he had left the cupboard bare for National.

    So in this sentence you tell us that Cullen impoverished the govt.

    The govt became rich and went back to poor while we slipped quietly down the OECD ladder.

    And in this sentence you tell us that he enriched it.

    And when you talk about economic bust you seem to be ignoring the fact NZ was in a domestic recession well before the sub prime crisis and ensuing global shite.

    A normal sort of business cycle recession that in the normal course of events we would have pulled out of, as we have done many times before. But that is not what we are being told is the reason why Mr Key’s personally guaranteed tax cut promises have been broken is it?

    • r0b 21.1
      28 May 2009 at 10:51 pm

      Mr Key’s personally guaranteed tax cut

      Nice one!

      Yes, this is going to define Key as a politician – he said: “Under National, personal tax cuts are a priority. New Zealanders will be able to believe in our tax cuts, they will be able to trust our tax cuts”…

      He wasn’t wrong to cancel the tax cuts today, he was wrong to promise them in the first place…

      • burt 21.1.1
        28 May 2009 at 10:55 pm

        rOb

        It’s up there all right rOb, right up there with only the top 5% of earners.

        Key has joined Clark already on a key election promise. I call them both shite but I know you only have bad thoughts about one of them. Shall we agree to differ on that tonight?

        • r0b 21.1.1.1
          28 May 2009 at 11:23 pm

          It’s up there all right rOb, right up there with only the top 5% of earners.

          Both turned out to be silly promises Burt, but in no sense are they of comparable significance. Nationals miraculous tax cuts personally guaranteed by Key defined their last two election campaigns.

          Take a look around on the various media comments sections – people are pretty pissed…

          • burt 21.1.1.1.1
            28 May 2009 at 11:27 pm

            Oh FFS rOb, yes yes yes it’s National we are talkign about – bad bad party people angry yes yes. Labour good, little broken promise people go tisk tisk and move on – yes rOb I get it – I do really get this now.

          • burt 21.1.1.1.2
            29 May 2009 at 1:03 pm

            rOb

            You were proven wrong here:
            http://www.thestandard.org.nz/national-has-blown-it/#comment-129599

            English had a choice though, and he blew it. Even now he could reverse / rearranges the tax cuts in the budget. But National lack the will to do what is required. Instead they will sit and watch it all fall apart.

            What you said should happen did happen, why are you so upset about it ?

        • r0b 21.1.1.2
          29 May 2009 at 2:45 pm

          What are you on about Burt. The Nats cancelled new cuts yes, they did not reverse the existing (April 1) ones, which is what I was suggesting.

    • burt 21.2
      28 May 2009 at 11:11 pm

      RedLogic

      Yes I take two different position on Cullen and the economy. The clue for the readers is when I say; “The govt became rich and went back to poor while we slipped quietly down the OECD ladder. “

      Tricky stuff timelines.

      • RedLogix 21.2.1
        28 May 2009 at 11:22 pm

        Oh so now you are implying to us that the reason we ‘went back to being poor” was the global financial crisis Dr Cullen engineered? Or exactly what are you saying?

        Just to compound things, Mr English today explicitly acknowledges that Dr Cullen was right in maintaining high surplus’s and reducing debt.

        Tricky stuff these timelines.

        • burt 21.2.1.1
          28 May 2009 at 11:34 pm

          OK, lets put this to the test. Labour said they would put us back in the top half of the OECD and we went backward. Once we generally agree that the global economic crisis is past the bottom lets see if after all OECD countries have been ranked after hitting the ‘bottom’ we are in the top half, better than we were in 2008 or worse than 2008, better or worse off then before we went backward under Cullen.

          That will be the proof of the pudding for Cullen. Do you agree this is a fair test ?

          • r0b 21.2.1.1.1
            28 May 2009 at 11:45 pm

            Don’t mean to intrude, but just to get the facts here Burt, could you point to the data on OECD rankings and how we went backward? The actual data please, not some blog rant.

          • burt 21.2.1.1.2
            28 May 2009 at 11:54 pm

            F off rOB, you are being a c##t again. You look up the data and post your findings if you want to prove me and the less cantankerous and belligerent members of the blogsphere wrong.

            Do you think that it is a fair test to judge the Labour govt on ?

          • r0b 21.2.1.1.3
            29 May 2009 at 12:17 am

            See thing is Burt, when you make a claim the onus is on you to back it up. Data please, I’d be interested to see it. (Discussions of “tests’ make no sense until we know what we’re talking about).

          • burt 21.2.1.1.4
            29 May 2009 at 12:25 am

            A sepcial rOb verison.

            OK, lets put this to the test. Labour said they would put us back in the top half of the OECD. and we went backward. Once we generally agree that the global economic crisis is past the bottom lets see if after all OECD countries have been ranked (after hitting the ‘bottom’) we are in the top half, better than we were in 2008 or worse than 2008, better or worse off then before we went backward under Cullen took the levers of power.

            That will be the proof of the pudding for Cullen. Do you agree this is a fair test ?

            edit: Your point is inconsequential to the question – can you answer the question with that point removed ?

          • r0b 21.2.1.1.5
            29 May 2009 at 12:36 am

            Do you agree this is a fair test ?

            No, its nonsense.

            What happens to the NZ economy over the course of this crisis will be determined by 2 factors, (1) how strong the economy was going in (Labour) and (2) how the government of the day (National, but perhaps Labour again by the end) performs during the crisis.

            There’s no sensible way to separate out the contributions of Labour and National. But note re 1 that the economy is well placed going in to the crisis, thanks to the prudent management of Dr Cullen.

          • burt 21.2.1.1.6
            29 May 2009 at 12:46 am

            Bet you are even to scared to back him not having gone backward since he took office on 2008 statistics. You are incredible, defend him to the death but you won’t back him when the rubber hits the road on hard data will you.

            OECD stats to follow tomorrow night.

          • burt 21.2.1.1.7
            29 May 2009 at 9:49 pm

            rOb

            Here we go for a starter. OECD ladder too steep for NZ to climb ( Trinh Le, New Zealand Institute of Economic Research | Friday October 24 2008)

            New Zealand’s ranking indeed fell from 20th highest income per capita in the OECD in 1999 to 21st by 2004 and 22nd by 2006.

            That growth promise, which seemed to have been discarded in the light of New Zealand’s performance, was this week revived in the Labour Party’s election campaign….

            Future growth prospects are not very positive, given labour productivity growth has been heading south since 2000…..

            So what do you reckon, we will be above 20 in the 2008 statistics?

  22. jarbury 22
    28 May 2009 at 10:50 pm

    A good one to throw back at National each time they claim Labour screwed up the economy.

    http://blogs.nzherald.co.nz/blog/audrey-young/2008/12/18/things-must-be-bad/?c_id=1501219

    Bill English (on December 18th last year):

    Having condemned his predecessor for many years for paying off debt too quickly, English said: “I want to stress that New Zealand starts from a reasonable position in dealing with the uncertainty of our economic outlook.’

    “In New Zealand we have room to respond. This is the rainy day that Government has been saving up for,’ he told reporters at the Treasury briefing on the state of the economy and forecasts.

    • Pascal's bookie 22.1
      28 May 2009 at 11:03 pm

      Exactly, what our friends from the starboard seem to miss is that this recession was foreseeable. Many foresaw it. Some countries acted in advance to prepare, others just tried to keep the bubble inflating harder. Those countries blew their wad, for the benefit of delaying the onset.

  23. aj 23
    28 May 2009 at 11:19 pm

    English all but admitted in his budget speech that Cullen was right. He said that the government started from a strong position to deal with the economic storm.

    Remind me – who was it that put the government in such a good postion.

  24. burt 24
    28 May 2009 at 11:25 pm

    aj

    The National govt that handed them a growing economy, low interest rates and less progressive taxation. After nine years of golden economic weather, an international dairy price boom the reckless spending and welfareism of the socialist had it in recession ready and waiting for the global crisis. Yes debt was paid back but really any monkey can pay off the credit card while overcharging their customers. Where was the vision for growth, the investment in infrastructure?

  25. aj 25
    28 May 2009 at 11:32 pm

    burt if you opened your eyes and took of your blinkers you’d see the heavy investment in infrastructure and education eg apprenticeships that national ignored during the 1990’s. A growing economy? after stagnation even a 0.1 growth is growing. And welfareism? yeah, right WWF Student Loans Kiwisaver – all flagship programs not being touched by National.

  26. RedLogix 26
    28 May 2009 at 11:40 pm

    Where was the vision for growth,

    The $700m Fast Forward R&D Fund? Shitcanned.

    the investment in infrastructure?

    The $1b Labour/Green home insulation fund (not the crappy $300m we got from the Nats).

    Labours significant swing of funding into public transport reducing our oil dependency … not the endless unimaginative fracking motorways we got from the Nats.

    A broadband policy that actually made sense… not some pointless damm fibre-pipedream that would only be good for delivering faster porn.

    An ETS scheme that would have boosted our trade credentials. Shitcanned

    A commitment to sustainable bio-fuels. Shitcanned.

    And so on. It’s late at night Burt, so maybe I’m too tired to remember it all, but hell I struggle to think of even ONE constructive thing this pack of clowns calling itself a govt has actually done in the last seven months.

    • Luxated 26.1
      29 May 2009 at 12:57 am

      “A broadband policy that actually made sense not some pointless damm fibre-pipedream that would only be good for delivering faster porn.”

      Probably wont (wouldn’t? Has it survived the budget?) have even do that, NZ lacks the international backhaul to actually be able to get the data here in the first place so all it would have done is enable people to look at locally hosted pages really quickly.

      I seem to remember Labour offering part funding for any new Tasman cable which would have helped somewhat, Australia is also short on capacity so the benefits would be dubious at least until new Australian cables went into Guam. Anyone know if this offer survived the change in government or are we still at the mercy of Telecom/Singtel Optus being generous enough to upgrade Southern Cross every once in a while?

  27. gingercrush 27
    29 May 2009 at 1:27 am

    Sheesh R0b it doesn’t matter how prudent Cullen was. That is over and done with. The Treasury forecasts and indeed any sane person must agree that debt is climbing and we are facing a number of years where rather than surpluses we are getting deficits. Is that not true? Therefore we’re no longer well placed to face this recession. Because the forecasts are clear we’re in trouble.

    National has chosen to get debt under control. The far-right would like to see debt dramatically controlled and deliver huge cuts to government services including whole departments. Labour and the left one imagines want a sizable fiscal stimulus whilst seemingly cutting nothing, meaning debt would rise dramatically and we would have seen a downgrade by S&P, interest rates would likely rise also. Though its hard to even quantify what Labour and other elements of the left would do since they just criticise and don’t offer any proposal whatsoever. The Greens of course did produce a possible Green Measures stimulus.

    You can not keep harping on about how Cullen left us in a fine economic position when world forces have made that position irrelevant. Labour inherited a sizable surplus from National. They also inherited forecasts of rather strong economic growth in the future years. When Labour came into power. The dollar was very low. This enabled businesses to prosper thanks to that low dollar and strong commodity prices. This saw an increase in tourist numbers and sizable immigration into the country. This saw significant consumer spending on goods and services leading to the unemployment rate dropping significantly. Meanwhile a housing bubble was created that saw record growth of house prices. This made us feel good about the country. But it was spending that in the end proved unsustainable leading to a self-created recession that would have been short-term had it not been for this world recession.

    What Labour failed to do was diversify the economy. They failed to transform this economy instead relying on substantial consumer spending for the economy to grow. That isn’t a sustainable economy. They spent excessive money that works when the economy is running well but when economic conditions worsen it means there are implications. They also expected the economy to keep getting surpluses thus why we got the Suerannuation Fund. This fund assumed this country would continue to enjoy surpluses. It implicitly said that if the government of the day was in a situation where there were to be no surpluses that the fund could be suspended. That Labour and the left choose to ignore the specifics of that legislation proves their ignorant.

    National in turn doesn’t get to enjoy inherited surpluses. True they inherited a better credit rating than what Labour inherited and true they inherited good government debt. But that changed so swiftly that by the time National actually got into office. Government debt levels were forecast to soar, unemployment numbers were set to rise and the government was facing years of deficits. That means they have to sort out how we get back into surpluses and how we reduce government debt. Something the current opposition has absolutely no answers for.

    Don’t you see the inherent difficulties this government faces. It doesn’t enjoy surpluses when it gets into office. It doesn’t get projections for economic growth in the short term. It gets forecasts that are all in the wrong direction. Before it even starts to transform and diversify the economy it has to worry about the worse economic conditions for years.

    So you are correct when you say this government will be tested on how the economy performs in the future. But you must also provide allowances for the difference Labour faced from 1999-2008 and what National is facing now.

    • r0b 27.1
      29 May 2009 at 2:19 am

      Sheesh R0b it doesn’t matter how prudent Cullen was. That is over and done with.

      It certainly does matter. It sets the parameters that the current government has to work with. And as this blog amply illustrates, the legacies that governments leave are important and are debated for decades afterwards.

      National has chosen to get debt under control.

      No it hasn’t, National has budgeted for a decade of deficits. It has chosen to hope that over a period of many years magical economic growth will make the problem just go away. It has no plausible plans for growth or stimulus, and it (fortunately) lacked the will to go the other route and slash everything. This was very much a punt and hope budget.

      What Labour failed to do was diversify the economy. They failed to transform this economy

      The economy is diversifying all the time, though too slowly. No they didn’t “transform” it, whatever that means. But they paid off debt, and helped lower income earners, and invested in long term future planning.

      But that changed so swiftly that by the time National actually got into office. … Don’t you see the inherent difficulties this government faces.

      I think I understand the difficulties as well as most non economists. And yes in a way I feel sorry for National, they have come to power at a historically difficult time. But I feel much sorrier for the country, as it’s clear that National hasn’t a clue what to do, except punt and hope for the best.

    • Zaphod Beeblebrox 27.2
      30 May 2009 at 3:56 pm

      GC “What Labour failed to do was diversify the economy”

      Isn’t that what biofuels, emission trading, the green branding, Fast Forward rural research funding, , R and D, sustainable farming fund, sustainable communities fund, recycling were all attempting to do.

      All trashed.

      I know Labour wasn’t perfect, they allowed way too much private borrowing for housing, but tell how National are attempting to diversify the economy?

      Air NZ don’t seem to think they are doing anything for tourism.

      Its OK to play it safe, but you still need to have a plan and vision.

  28. Bevanjs 28
    29 May 2009 at 6:47 am

    Cullen was only ever going to make contributions from surpluses anyway. Sounds sensible. Don’t gamble what you don’t have.

    “The government will make contributions to the Fund from available surpluses. Where these are insufficient for making the required contribution a reduced contribution would be made. If this were the case, the government would need to specify how it would make up for the reduced contribution in future.’

    http://www.beehive.govt.nz/speech/questions+and+answers+proposed+nz+superannuation+fund

    • lprent 28.1
      29 May 2009 at 7:58 am

      Of course they’d be a *lot* closer to a surplus if both lots hadn’t put in tax cuts. Then there might even be contributions towards national super within the next few years under the Cullen criteria.

      I say – rollback the tax cuts and pay the top up on national super. Because otherwise that superannuation burden is going to be hell in a decade or so. You’re either going to have massive tax increases or old people starving.

      • aj 28.1.1
        29 May 2009 at 9:07 am

        I’d agree here. The tax cuts mostly go to people who have high incomes anyway – the top 10%?
        Half of the savings into the Super Fund and the other half to reduce debt.

        This would have been too difficult for a National Party to do though. We know they never have the best interests of the majority at heart.

  29. burt 29
    29 May 2009 at 8:05 am

    Bevanjs

    Please don’t confuse what Cullen said he would do with what National have done. Sure on the surface it may appear that National have kept with Dr. Cullen’s intentions and plan for the super fund BUT there is one big difference.

    National did it. It’s bad – Reptilian brain stem reflexes in lowly evolved (tribal) thinkers respond according to the colour of the party logo that made the decision rather than the substance of the decision. This is something that more highly evolved thinkers need to be sensitive to.

    • r0b 29.1
      29 May 2009 at 9:48 am

      This is something that more highly evolved thinkers need to be sensitive to.

      Well if you ever meet one Burt, be sure and warn her.

  30. tsmithfield 30
    29 May 2009 at 9:10 am

    RedLogix

    “OK Mr Smithfield. Be honest. Stop hiding behind vague rhetoric.

    Tell us exactly what taxation levels you want.

    And exactly what the govt would cut in response.

    You cannot have one without the other. So cut the waffle, get honest for once.”

    I don’t see things that way. I believe we need to go back to first principles with Government and decide what Government does or does not get involved with and how government should function. For me, this would mean a lot less taxes and a lot more individual responsibility.

    However, I am also a pragmatist and realise this is not likely to happen any time soon, so prefer strategies that reduce the amount of government in our lives.

  31. jarbury 31
    29 May 2009 at 9:15 am

    Sheesh R0b it doesn’t matter how prudent Cullen was. That is over and done with. The Treasury forecasts and indeed any sane person must agree that debt is climbing and we are facing a number of years where rather than surpluses we are getting deficits. Is that not true? Therefore we’re no longer well placed to face this recession. Because the forecasts are clear we’re in trouble

    Thanks GC for finally admitting that Cullen handled the economy pretty damn well.

    Setting aside the superannuation debacle, I think the strangest thing we have in this budget is how it seriously goes against what pretty much every other developed-world economy is doing to get itself out of the recession.

    Are we right and the rest of the world wrong, or vice versa? Personally I’m going to go with the majority.

    • burt 31.1
      29 May 2009 at 9:21 am

      The test for Dr. Cullen will be comparing out standing in the OECD ratings for 2008 compared to our standing in 1999. If he was a prudent manager of our economy we will have climbed, if not we will have fallen. These stats will be out in about a year or so – it will be interesting.

      If we have gone up I’ll join you in heaping praise onto Cullen, if we have gone down will you stop claiming he was a good finance minister?

    • infused 31.2
      29 May 2009 at 7:42 pm

      The spend, spend, spend which most other countries are doing isn’t working. It’s very clear. It may stabilize things short term – that’s about it. You also have to realise that New Zealand is not facing a lot of the problems these other countries are facing.

      • Zaphod Beeblebrox 31.2.1
        30 May 2009 at 3:58 pm

        Define not working. Japan has just had a record increase in industrial production, US consumer spending is increasing, Australia’s unemployment rate dropped last month. Don’t any of this happening in NZ

        • gingercrush 31.2.1.1
          30 May 2009 at 4:12 pm

          You’re taking isolated incidents. That doesn’t tell us much. New Zealand’s building consents rose in April compared to March. By the assumptions you seem to be making. You would have to say that is good news.

          Of course none of that is good news. For the US, consumer spending may have increased slightly but they still record a sharp contraction in their economy. For Japan, they experienced further job losses and are seeing real signs of prices deflating. Australia’s unemployment numbers are still set to go down.

          You simply can’t take isolated incidents to somehow show that an economy is improving or that stimulus is working. Such thinking is absurd. Until you get many things moving in the right direction. For instance, consumer spending up, less contraction in an economy, unemployment slowing, business confidence up etc etc etc. Then you could say that an economy is improving.

        • gnomer 31.2.1.2
          30 May 2009 at 4:16 pm

          Have you just had a workout with the triple breasted whore of Eroticon six or are your comments always so breathless ?

          • Zaphod Beeblebrox 31.2.1.2.1
            30 May 2009 at 4:26 pm

            I’m not saying that we are on the verge of economic nirvana. But making all embracing generalised statements about whats working and whats not, unless you have good evidence to back it up is ideological.
            I suspect we won’t know how successful these measures are for a long time and even then we will be arguing about it on blogs like this one.

  32. jarbury 32
    29 May 2009 at 9:46 am

    That seems a pretty blunt instrument for measuring his success burt. Over the course of the last Labour government we did out-perform Australia in terms of economic growth, and we also started to close the wage-gap on them.

    Just remembering that in 1984 our GDP per capita and wage levels were higher than those in Australia. It was the next 15 years of neo-liberal thinking that destroyed that.

  33. burt 33
    29 May 2009 at 9:50 am

    jarbury

    So what are you saying? Cullen’s management might have been good and made an improvement? 9 years was not long enough to make a difference? You don’t have the balls to stand up and be rated by one of the least subjective measurements we can use?

    Please clarify why you don’t want to use hard data to back your assertion that Cullen was a prudent finance minsiter and that he prepared our country better than most for the down turn?

    • r0b 33.1
      29 May 2009 at 9:59 am

      you don’t want to use hard data to back your assertion that Cullen was a prudent finance minsiter and that he prepared our country better than most for the down turn

      These people all used hard data Burt, and they all said that the NZ economy was well placed going in to the economic storm:
      – Treasury,
      – the IMF,
      – the National Party.

      Now we can add rating agency Moody’s:

      While the budget indicated continuing pressure on public finances for several years to come, because the country’s finances were starting from a relatively strong position, the Aaa rating was not immediately affected by the projected debt path, Moody’s said.

      So Labour left us well placed going in. It remains to be seen how National will do as the storm progresses. Given their “do nothing” approach so far I’m not hopeful, and that’s a disaster for NZ…

  34. r0b 34
    29 May 2009 at 9:54 am

    That seems a pretty blunt instrument for measuring his success burt.

    A single ranking is a very blunt instrument indeed. But the OECD does lots of rankings. LOTS of them. For every one that Burt will find and trumpet as having fallen (income per capita), there will be another one that has gone up (percent employed). There are also many other ranking agencies other than the OECD, but trust Burt to find ones that will suit his “reptilian brain stem” “Labour bad” “NZ Sux” campaign!

    • Pascal's bookie 34.1
      29 May 2009 at 10:10 am

      Nah It’s ‘unions bad’ for burty boy. The labour thing just follows. They ruined his holidays back in the seventies and now he cannae think of anything leftish without a red mist covering his eyes as he pictures that wee lad tearful on the dock in picton with snot dribbling outa his nose, and icecream melting down his T-shirt and onto his stubbies.

      Now he spends his days in ever increasingly daft attempts to prove once and for all that no one to the left of him really cares about anything, that they are none of them on his pure plain of intellectually honest impotence. That none can compare to his own uber strict adherence to the cold inflexible demands of truth (TM).

      Every issue is simply a prop, raw material to be fed into the pseudohypocrisy identifying ad hom generation device that he imagines counts for a tinkers damn.

      Burt: Clue: at the end of the day, it matters not 1 fucking stale bean that you are any more or less honest pure principled or consistent than other commenters on the blogs. So why do you keep trying to demonstrate this?

      I feel sad for him. He needs to move on, it’s boring.

    • ak 34.2
      29 May 2009 at 11:12 am

      Go easy on him r0b. “OECD rankings” is one of the last threads the righties have to grasp.

      burt’s retrospectively validating mob have lost “tax cuts”, and “nanny state” (as they now tuck us up in our own homes and build us bike tracks), and their slick 50-million-dollar “business wizard” is now but a grinning shell of his former vainglory – ironically at the mercy of the faceless and discredited S&P “bureaucrats”.
      Take away “OECD” and pretty soon “rich pricks” and “haters and wreckers” will be all burt has to hang his hat on.

      The cocky rolling maulers are now possums in the headlights: hoist and exposed by their own media fabrications and “north of $50/wk” vote-bribe – now chewing gum for the rich and the reaper hovering over the rest of us.

      It’s the fudge-it budget. Billy Bleak fingering his rosary beads and hunkering down with a whimper: hoping against hope as the train roars on round the world, sucking us off the platform at any minute.

      No wonder burt and co are getting all philosophical on us. Their own ideological ammo is spectacularly blowing up in their faces and there’s not a thing they can do about it. Not even any bread, and the supercity circus is threatening to eat its keeper.

  35. jarbury 35
    29 May 2009 at 10:04 am

    Burt, the main thing I am saying is that we should look at absolute gains rather than relative gains.

    If everyone in NZ is significantly better off than they were 10 years ago, why should it matter that people in other countries are more significantly better off? Why is the competitive battle to do better than other countries so important? Why can’t we all be winners?

    • burt 35.1
      29 May 2009 at 10:18 am

      Jarbury

      If we are looking at individual gains rather than relative gains then why are we saying that Cullen left the country in a better position than most to face the economic downturn? Better position than most is a relative comparison (all be it subjective at this time). The acid test (objective) is our standing in the OECD.

      Sure you can say Cullen left you better off than you think any other govt would have but that is completely your own opinion. Personally I have profited from the Labour govt as well however my best interests and the countries best interests are not one in the same. Looking at my personal wealth relative to 1999 my subjective rating of Labour is quite high but I acknowledge that for an objective rating a less “how I feel about it & how it effected me’ rating is required. This is why I’m suggesting the OECD ratings are valid for this purpose.

      Are you only interested in saying you think Cullen was great or would you rather say he was great?

      • jarbury 35.1.1
        29 May 2009 at 10:31 am

        Burt I’m just quite interested in exploring the conversation actually, and coming to some sort of conclusions.

        1) From a public debt perspective Cullen seems to have left NZ in a pretty good place. Nil net debt and historically low gross debt.

        2) From a private debt perspective the last government probably should have done more. I’m not sure what exactly, perhaps a capital gains tax, perhaps built a crap load more state houses to off-set the shortage of housing in Auckland that led to skyrocketing house prices?

        3) From a spending perspective, perhaps Labour did get carried away in the last couple of years. The only policy that seems to be responsible for that though would be Kiwisaver. Perhaps it was a bit generous, but there were good reasons for that, with lowering that horrific private debt being the big one.

        4) Regarding absolute vs relative rankings, I’m saying that from an absolute perspective Cullen left NZ with a reasonably low amount of public debt going into the recession. Just as from an absolute perspective the Labour government improved the lot of New Zealanders quite significantly.

  36. infused 36
    29 May 2009 at 10:44 am

    Investors can cry all they want about losing money. The signs were there. Tell me how, NZ’s only owned investing company never invested in any of this crap that’s sinking the world and making a healthy profit at the moment?

    At the end of the day, people were greedy.

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