We’ve been saying for some time that the $9 billion of fiscal stimulus that the Government claims it is putting into the economy in reaction to the global recession is no such thing. In fact, the Government is spending within the ordinary increase in spending allotted by the Budget back in May. And it is spending it on policies either put in place by Labour before the election or promised by National before the credit crisis. This is spending that would have happened anyway dressed up as a recession package, which it is not. Over at Pundit, Tim Watkins and Nicky Hager have excellent pieces detailing this economic sleight of hand. There ought to be some blushes in the press gallery that they have fallen for it so completely.
The one time it has been put to Bill English that most of his so-called recession package is spending that would have happened had there been no recession, he replied he can’t do much more compared to other countries because Labour started reacting to the recession in May. Which is bollocks. There was no recession package in last year’s Budget because when it was released in May we had only one quarter of negative growth and, while a technical recession was expected for the first half of the year, everyone expected us to pull out of it – the twin punches of the peak of the oil spike and the credit crisis had not yet hit. But just because something is bollocks doesn’t mean you don’t see it parroted again and again.
On a side note, it is worrying to see that Key seems willing, once again, to ‘bend the rules’ (ie break the law and/or constitutional convention). This time, he’s indicated he would be willing to ignore restrictions on foreign investment to get capital for Fisher and Paykel. I know it is unfashionable to put things like constitutionality ahead of style but I for one am worried at this pattern of behaviour. If the rules wouldn’t produce the right outcome, the Government should change the rules (or seek Parliament’s approval for changes), rather than bending them.
Anyway, F&P is a solid, profitable company just in need of some more capital. Rather than ‘bending the rules’ to let some foreign company take over F & P, why don’t we put up the cash like we did with Air NZ and keep the profits here, in New Zealand?