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Parker nails English on economic policy

Written By: - Date published: 2:25 pm, August 25th, 2014 - 32 comments
Categories: bill english, capital gains, david parker, Economy, exports, labour, manufacturing, minimum wage, monetary policy, national, wages - Tags:

Labour has the policies to take New Zealand forward into the 21st century – National’s “same old same old” will see the Kiwi skiff swamped. That was the clear conclusion from the debate between David Parker and Bill English on National Radio this morning. Parker’s approach was to put a new engine in the boat and deal to the big issues – exchange rate, housing supply, wages and secure jobs. English preferred to tinker with the old diesel – things are pretty good and “you can’t solve poverty.”

Kathryn Ryan finished by saying “I don’t hear a focus that might shift the economy for the first time in thirty years” to which Parker responded by saying with a capital gains tax 60% is paid for by the top 1% so it is highly redistributive, the answer to housing crisis is to build more houses which every few decades is what Labour governments do and which fixes the problem, and wages have to rise as too many people end up with huge student loans which lead to insecure work and insecure incomes. Bill’s answer was to work on worthy issues one at a time.

Parker said our exports have gone from  from 33% to 29% of the economy and are forecast to drop to 25% so that our external deficit will be 6% of GDP – this contrasts with National’s promise at the 2008 election to lift exports to 40% of GDP. He said that we need to fix the exchange rate, save more, push away from speculation and push up value chain so we lift wages.

Similar points were made by Rod Oram last week in the Sunday Star times. Some excerpts

We need a broader, more sophisticated range of exports to overcome our commodity constraints. But we’re going in the opposite direction. Manufactured goods have fallen from about 37 per cent of exports in 2003 to about 22 per cent today. This increasing simplification of our economy towards low value commodities has accelerated in recent years, according to data from a long-term study of countries’ economic complexity run by Harvard and the Massachusetts Institute of Technology. In 2008, we ranked 39th in the world in terms of economic complexity, in the company of countries such as Brazil, Russia and Greece. But by 2012 we had fallen to 52nd.


There is a common theme for English-speaking countries: monetary and government policies have favoured the domestic over the export economy, asset appreciation over productive investment, and simple low value activity over complex high value business. This is particularly true of our three countries dominated by our natural resources – NZ, Australia and Canada. We could shrug our shoulders and say we are an inherently low growth economy and we can’t do much about it. But anyway it doesn’t matter because our natural resources and commodities enjoy such strong demand.

If this is what we want, National is offering a perfect set of conservative policies to keep delivering it: 1980s monetary policy that controls inflation but to the detriment of the dollar and interest rates and thus export competitiveness; a superannuation time bomb; and tax policy that skews investment to property and away from production. Moreover National offers R&D grants to a few companies at the expense of wider innovation; incentives for more natural resource depletion and commodity production; and declining investment in science in real terms, as shown in the government’s draft 10-year science funding strategy.

Or, if we want a sophisticated, wealthy economy, Labour and Greens are offering progressive policies to trigger the shift: a modern monetary policy that targets inflation and our external competitiveness; and compulsory superannuation that deepens our capital base and adds another tool to monetary policy to help take the pressure off interest rates and the dollar. Moreover, they also offer a capital gains tax to help level the investment playing field; and science, education, skills, investment, R&D policies that help companies develop high value products and invest in new areas such as clean technology.

Oram’s conclusion

This is our starkest choice in economic policy in decades.

I’m for a sophisticated wealthy economy, I think Parker and Labour have the policies to deliver it.


32 comments on “Parker nails English on economic policy ”

  1. I have a certain respect for Bill English – I may not agree with him, but he’s no Steven Joyce and is willing to debate policy. This was by far the most enlightening debate I’ve heard.

    And yes, Parker’s the one with the ideas – and good ones.

    Link to debate

    • Lanthanide 1.1

      Yes, I have to give Bill grudging respect. He has a very slanted view on everything and is always working in the interest of the top 10% against the rest, but he does also really understand the policy behind things and isn’t afraid to put his understanding across.

  2. National may come to regret their decision to front foot their economic performance during the campaign and debates.

    Fully informed with this kind of data and detail, Labour and the Greens may come out looking a lot more credible, in economic terms, for ordinary New Zealanders than they did going into the campaign.

    • Lanthanide 2.1

      Yip, in 2008 it was their meaningless catch-cry of “decade of deficits” that really shored up their vote, and in 2011 they only won their asset-selling platform because of the CHCH earthquakes.

      People like to quote Michael Cullen out of context when he said “the cupboard’s bare – we spent it all”. He was actually referring to Labour’s tax-cut policy boxing National into a corner, on the belief that National wouldn’t dare run a deficit in order to fund tax-cuts – which they promptly showed wasn’t going to be something that they would let get in the way of enriching their mates.

    • Dumbrse 2.2

      I suspect Labour is already regretting their fiscal decisions so much so that they have now cancelled 8 of them. Which 8 was it by the way? Trucks in the fast lane…… what else ? Talk about now being on the back foot.

      • mickysavage 2.2.1

        Do you approve of Key suggesting tax cuts when it is clear the country cannot afford them?

        • Dumbrse

          Yes I do because I’m not silly enough to think they will take effect the day after they return to the benches. If I recall there was some comment about tax cuts in 2017 when, by the sounds of it, they will become affordable.
          Back to Labours back pedal …. Your leader is front footing Thursday nights debate by cancelling fiscally irresponsible policy so as JK cannot ask him to …show us the money… Yes?

          • Colonial Viper

            Tax cuts to the top 5% are NEVER affordable, because it is always the bottom 95% who pay for them.

            • Dumbrse

              I didn’t realise that was Nationals latest tax cut policy. I can’t help thinking you may be another of those in the hacking syndicate to get such advanced notice.

              • Colonial Viper

                And have no specific details, I just admire the way that National consistently serves their core constituency – the top 5%

          • Hanswurst

            It’s bizarre to set store on a policy indication that is produced with no detail on the fly in the run up to an election, when that policy is touted to have no effect until the next election. It reflects a blind faith that defies all reason.

          • Macro

            250,000 out of work, 150,000 on unemployment benefit, 100,000 unemployed and no income – this is a rockstar economy? – How much of the 84% increase in the Meridian profit worth to you personally dumb arse?
            And we can afford tax cats???

      • Puddleglum 2.2.2

        I was thinking more about policies to change the economic settings rather than spending promises.

        National is doing so little in relation to those settings.

        And crowing about GDP growth is an achilles heel now that economists have pointed out the over-reliance of that on the Christchurch rebuild and the lack of anything else in place to either continue growth (if that’s National’s aim) or to transform the economy (or doesn’t National think that’s necessary?).

        • Colonial Viper

          Once the Christchurch rebuild slows down in its money to funnel to their blue mates, of course, National will need to “transform the economy” and get a new money funnel going.

  3. hunter 3

    Agree with the above. An amusing aside before the debate was an anecdote by a guest speaker (sorry didn’t catch his name) referring to the alleged rock star economy. “The problem with rock stars is the managers always take off with the money” CLASSIC

  4. Enough is Enough 4

    I am still not convinced on Parker. He seems to come from the same economics school as English and Cullen and in my view will continue the status quo, albeit with a few of the rough edges knocked off.

    He continues to advocate for austerity measures (increasing the pension age of eligibility), which does not sit well for a party that purports to represent the working class.

    I would like to see Russell Norman get the Finance job. He has the balls and intellect to stand up to the 1%ers.

    To do so the Greens need at least 15% in the polls. Remember that and give your party vote to the Greens,.

    • Colonial Viper 4.1

      Parker is a good man but way too indoctrinated in the economic and monetary orthodoxy.

    • Murray Olsen 4.2

      I’m in total agreement, EiE. Parker is more of a wet Rogernome than anything else. Norman would be great in Finance. He actually has a few ideas from outside the economic orthodoxy. I can’t see it happening though 🙁

  5. fambo 5

    I can’t see what’s to like in either Bill English or Winston Peters. They both hate Labour and even more so the Greens so don’t waste your goodwill on them.

    • Colonial Viper 5.1

      IF National won, I’d want English right in there at the most senior levels of the National hierarchy. Not Joyce, not Brownlee, not Collins, not Bennett, not Adams, not Parata.

      • David H 5.1.1

        And when TricKey uses his oneway ticket to Hawaii, how long do you think Blinglish will last?

  6. Richard 6

    Just love that picture. Seems our “rock star” economy is more Barry Manilow than Rolling Stones

  7. Colonial Viper 7

    Fossil fuel depletion will become severe in the next 20 years. This focus on electronic numbers and spreadsheet balances is fucking our ability to think about and deal with the harsh physical realities which are coming down the pike.

    • Macro 7.1

      Exactly! Both men focused on “growth” as if that is the be all, and end all, in an economy. Neither have any idea of what the economy is about, or even seem to care. Maybe Parker has a little more inkling than English, but as you observe, CV both are fixated in the traditional and failing old school of economic theory. The idea that growth is the panacea of all economic ills, and will get us out of all manner of difficulties, is now so far off reality that it is frightening.
      Humans demands have now outstripped most of our main resources, and there simply isn’t enough left for the traditional solution of growing the pie even bigger (The result of which merely results in those with the largest slice getting even bigger slices and the rest getting crumbs). Evidence the “wonderful” results of Mainzeal, Meridian, etc – “wonderful profits” for whom? and at the expensive of whom? These we are told and they would have us believe, are the result of our “rockstar” economy which is doing so nicely! Yes for some! But what about the rest? 250,000 out of work. 150,000 on unemployment benefit, leaving 100,000 with no job or any income whatsoever! But you know this. I’m preaching here to the casual passer by.
      What is required is urgently finding ways to distribute the “wealth” equitably. Money does not buy happiness. Accumulating more and more at the expense of others is the problem, not the solution.

      • Colonial Viper 7.1.1

        Yep well put, distribute the wealth equitably and also get underway the massive massive amount of work that is needed to ready NZ for a low carbon, de-globalised future. Because that future is rapidly coming, whether we are ready for it or not.

        • Brendon

          Yes and finance it with reserve bank credit, not bank credit from a foreign owned private corporation.

  8. and Oram is the beacon of impartiality, beware of the fallacy of the so called expert to justify an argument

    • Colonial Viper 8.1

      Oram isn’t just an expert, he’s also got excellent real world economic reasoning, something that the bank economists and financial academics can rarely muster.

    • tricledrown 8.2

      ffs just go fishing and stop pouring oil on the fire Simon!
      When Rod Oram first arrived in this country he was a born again Thatcherite!
      The only person that believes Nationals economic lack of policy is working is Phil O’Reilly the of business New Zealand who want lower wages and more short sighted short term thinking!
      Nationals economic policy is to pray for some more Earthquakes!
      Oram knows more about economics than most in this back water country reddeliverence!

      • dave 8.2.1

        i went to one rod orams presentations at labours Epsom branch last year you shake your head in disbelief at just how gutted this economy is so narrowly focused agriculture is only 4.35 percent of the economy the largest part is banking and finance speculation trading houses.
        we cant continue this way our rock star is an air guitar not even a manalow with ageing population the remaining workers have to be more productive (greater value exports ) and our exports must be less dependent on a barrel of oil.

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