Savings: National’s failing

Written By: - Date published: 9:01 am, November 2nd, 2011 - 10 comments
Categories: debt / deficit, exports - Tags: ,

National have a rubbish plan to deal with the $38billion of net government debt they’ve built up over the last 3 years.  Asset sales is a short-term plan that pays for this year’s school and hospital upgrades, but leaves us all much poorer in the future.

But at least they can claim that they have “a plan“.

An even more serious problem than government debt is our private debt.  It’s a longer term problem, going back a few decades, and requires more complex solutions as the government doesn’t have direct control of it (except where it just takes it on as government debt by bailing out SCF or giving tax cuts to the wealthy so they can pay off their debts).

And National doesn’t have any plan for it.

This year’s budget was going to be ‘The Savings Budget’, but National panicked, and tried and failed to avoid credit rating agency condemnation with the ‘Double-Down’-grade Budget instead.

They tinkered with Kiwisaver, partially reversing their cut to minimum contributions – but adding tax to the employer contribution and lowering the government contribution.  You were left putting in more, but not getting any more savings as a result.

And now they’re out of ideas, and their Treasury forecasts are saying that our personal savings and current account deficit – currently vastly improved with the drying up of credit of the GFC and the insurance reimbursements of Christchurch respectively – both blowing out worse than ever.

So, inevitably, they criticise when other have ideas.

Labour’s plan to make KiwiSaver compulsory for wage and salary earners and slowly increase employer contributions to 7% has been bizarrely attacked as lowering wages – Keith Ng talks sense.

Steven Joyce counts the debts but not the assets of re-investing in the Super Fund – despite the Super Fund earning more than the debt costs.

And raising the retirement age is far too much for dear old Mr Key, no matter how much the Retirement Commissioner says it’s necessary.  He says Treasury says we can cope with 65 – that’d be the same Treasury that said that GST would have to rise to 19% and we’d all need to pay $30 extra in income tax each week to afford it?  With its former head saying an increase was ‘inevitable’?

In reality even National’s plan for Government debt makes private debt worse.  When a large chunk of our power companies and Solid Energy head overseas, so will a large chunk of the profits, worsening our current account deficit and making us all poorer.  The higher power prices will make other countries wealthy, not us.

You can see why the Deloittes Business NZ conference consensus was that there was ‘no plan’ for the economy under National.

Although this post should be covered by the opinion section of electoral law and shouldn’t need authorisation, here’s mine anyway, just to be safe:
Authorised by Ben Clark, 54 Aramoana Ave, Devonport

10 comments on “Savings: National’s failing ”

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  1. David Clark 1
    2 November 2011 at 9:14 am

    Good post bro. The many examples you’ve cited all point in the same direction. A focus on promoting short term fixes and avoiding long-term solutions. Same with the CGT. The Nats don’t want to tackle the structural issues, prefering to muddle through and pretend the world hasn’t changed.
    As a first-time candidate, I’m enjoying being a part of a team that has real solutions to the big challenges NZ is facing. I’m sure you feel the same.

    • Ben Clark 1.1
      2 November 2011 at 9:46 am

      Thanks big bro!

      Yes, definitely very happy to be part of a team that has real evidence-based solutions. And of a party that’s about the long-term, not short-termism like asset sales.

      • Ari 1.1.1
        3 November 2011 at 12:16 am

        And certainly not short term decisions like implicitly subsidising polluters with a money-go-round emissions trading scheme. 😉

  2. Lanthanide 2
    2 November 2011 at 9:41 am

    Seems to me what we really need is something like Jib-Jab to sum up the past 3 years nice and succinctly: http://en.wikipedia.org/wiki/JibJab

  3. Zaphod Beeblebrox 3
    2 November 2011 at 10:02 am

    You forgot to mention the Capital Gains Tax. Slowing the massive borrowings of our banks from overseas for property is essential if you want to get savings up. Until you do that the ratings agencies will be on our backs all the time.

  4. KJT 4
    2 November 2011 at 10:04 am

    It doesn’t really matter in the long term. Any monetary savings will be wiped out the next time we have to bail out the financial system.

    Anyone who thinks infinitely compounding interest is possible in a finite world is delusional.

    The only true savings are in building up a successful sustainable economy within NZ.
    Including investing in our youth.

    It does not matter how much is in Kiwisaver or any other savings. If the resources and productivity are not there, locally, then our society, including super, will be unsustainable no matter what we do.

    • Colonial Viper 4.1
      2 November 2011 at 10:11 am

      +1

      And I’m afraid that pushing NZers to invest their savings overseas will cause massive amounts of NZ capital to be wiped out with the next Wall St fraud.

      Which has just come about actually: MF Global, one of the Federal Reserves ‘Primary Dealers’.

      Hundreds of millions, possibly more, of depositors funds are now missing.

    • Zaphod Beeblebrox 4.2
      2 November 2011 at 11:46 am

      Yeah but better than having 75-80% negative equity in property, which a huge swathe of teh population do. What do you think will happen to property prices when our credit rating gets downgraded to B- or C?

      • mik e 4.2.1
        3 November 2011 at 1:10 am

        Considering we have $ 72 billion of govt debt now as opposed to 18 billion when national took office thats $54 billion national have borrowed just under $300 million a week
        Borrow and hope.

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