Extracts from Rod Oram’s piece in the SST as posted on Facebook:
No worries, it’ll all come right, the Budget assures us
Everything economic will come right by 2017, the government assures us in its latest budget. Businesses will enjoy higher commodity prices, moderate wage inflation, modest interest rates and a manageable dollar. Citizens will thrive on more jobs, low inflation, more spending and only moderate increases in house prices. And the government will benefit from higher tax revenues, enabling it to double new spending, increase its budget surpluses and cut taxes – just in time for the 2017 election.
This sunny view is based on Treasury’s economic forecasts accompanying the budget. Treasury believes serious shocks to the global and local economies over the past decade, and particularly over the past year, will fade quickly away. Dairy and oil prices will rise, inflation will resume and economies will motor on, whether in stagnant developed or slowing developing countries.
But what if the world is experiencing profound shifts? What if, for example, deflation is driven by structural causes such as ageing populations and rapid technological change?
This air of unworldly calm also pervades the budget itself, which the government has entitled “A plan that’s working”. Sure enough, there is a bit more money for health, education, police, corrections and other core services. But our population and inflation will both rise by 1.4 per cent in the year ahead, Treasury forecasts. So, the extra spending announced for core public services won’t cover rising costs and demand. So there’s no chance for real wage increases for teachers, nurses, doctors and other public servants.
So this budget, as the six before it, is a triumph of micro-management. The government has mastered the skill of switching small sums around to give the illusion of progress. What’s missing from it, and the six before, is any glimpse of the world we live in, let alone the political leadership we need to survive and thrive in it.