The rainy day cometh

Written By: - Date published: 3:50 pm, October 6th, 2008 - 115 comments
Categories: economy, election 2008 - Tags:

The Pre-election Fiscal Update projects that gross debt will rise from 17.4% today to 24.3% of GDP in five years. Fortunately, we are facing these tough economic times starting from a solid position due the the Government’s policy of running surpluses and paying down debt, rather than slashing taxes. 24.3% debt is right at the upper edge of even National’s comfort zone but it won’t be disastrous. We shouldn’t choose to increase our debt to such a level but we can deal with it when economic conditions force it on us.

The same goes for unemployment. It is projected to rise to 5% but the rise is coming of a very low base and, because low unemployment is self-reinforcing, the rise will not be as bad as it has been during other economic crises.

These are the rainy days. Fortunately, we’ve acted wisely during the good times. We face the storm in much better condition than countries like Australia who allowed their banks to become exposed to risk on the international credit market, run higher unemployment policies, and undercut their tax base.

115 comments on “The rainy day cometh”

  1. higherstandard 1

    “We face the storm in much better condition than countries like Australia who allowed their banks to become exposed to risk on the international credit market, run higher unemployment policies, and undercut their tax base.”

    Sorry to be so r0b with you – but have you got a link for that ?

  2. r0b 2

    Sorry to be so r0b with you – but have you got a link for that ?

    You say that like it’s a bad thing!

    I don’t have a link for SP’s claims, but I have some standard links re the economy being well positioned for the current crisis. See for example this: Treasury summary:

    Economy well placed to meet challenges in 2008
    The New Zealand economy is well placed to meet challenges in 2008 but uncertainty and market volatility is likely to persist in the short term. In addition, the current high inflation environment further complicates the outlook for 2008. However, the sound fiscal position; the prospect of tax cuts; and the ability of the Reserve Bank to move quickly on interest rates, if growth and inflation drop more quickly than expected, mean that the New Zealand economy is well placed to meet potential challenges over the next year.

    Or how about Reserve Bank Governor Allan Bollard in January this year:

    New Zealand had responded positively to significant global shocks in the past few years, and there was no sign of those shocks abating, Dr Bollard said.

    “We have enjoyed a decade of growth, the longest period of economic growth since the post-World War 2 era. Inflation has been low, averaging 2.2 per cent since 1998. …

    “We have been able to absorb recent shocks reasonably well because of the improvements in our economic institutions and policymaking frameworks, avoiding the boom-bust cycles of the 1970s.”

    Though it is very early days even new policies like KiwiSaver are starting to show their potential in this respect:

    According to funds industry performance analyst FundSource, net outflows for the quarter of $48.6 million would have been much uglier without KiwiSaver inflows of $353 million. … Mr Atkins said the high voluntary uptake suggested a big proportion of the funds would be invested in growth assets. “This will provide a boost to the financial services industry, with greater funds under management also potentially boosting local equity markets.”

    Labour led governments have been good managers of the economy (thanks Dr Cullen!).

  3. vidiot 3

    Ok, so it’s raining ? Are there any tinned nuts on the shelf or are they are in Wellington ? Do we at least have any Wellington boots ? Perhaps David Parker might have some ideas ?

  4. HS. we are well-positioned, some other countries including Australia are not.. surely you’ve heard about their bank issues and how they’re having to dip into their fiscal reserves to try to pump up their economy which is falling fast by contrast, our economy is recovering.

  5. higherstandard 5

    He he – no r0b it’s not a bad thing to ask for the data behind opinion.

    Interesting piece here in the SMH where it’s argued that it’s a multifaceted bubble that’s deflating.

    http://www.smh.com.au

    here

  6. burt 6

    Steve P.

    our economy is recovering.

    Dead cats do bounce – don’t be folled simply because some twat who is outside of his comfort zone tells you it’s all going to be OK if you just vote Labour for the magical 4th term where all will be glorious and propserous.

    In some ways I actually hope Labour win – unlike the failed policies of the 90’s being blamed on National the Labour party might actually need to implement some hard-nose policies themselves to dig the country out of the mess they created.

    [burt, I’m relying in the Treasury forecasts you irredeemable moron. SP]

  7. John Stevens 7

    Great spin boys. But we are pretty well stuffed for the next couple of years plus. It will be worse than this, the world changed dramatically in the past week, but we won’t accept this yet. We will be squeezed by big money as we are so small and they will be picky on where the money goes.

    It will be even worse once the ETS kicks in as well, struggle street will be starvation street.

    I suppose if un-employment goes up WINZ will hire more staff to cope with the increase.

    The time is not right for reckless spending alright, he has been doing this for the past 9 years. What do you think of spending well over $500M more for the train set was then?

    [lprent: You are still a boring troll – your comment looks like something that’d be easy to program, and I bet that I could make a JS emulation program have more wit and humour.

    Did you copy and paste the lines from somewhere? How about coming back after you have learned something about economics? Or at the very least learn to write some lines that are interesting rather than simply mindless.]

  8. Lew 8

    burt: I take it you’ll be exhorting everyone you know to vote Labour, then?

    L

  9. burt 9

    Lew

    I think I would need a few hundred thousand dollars to make a difference. Perhaps Labour can give me a blank cheque from the leaders fund and validate my spending if anyone finds out about it?

    The means would justify the end…. again….

  10. Lew 10

    burt: Buying elections … hmmm, now, there’s an idea. Although I think the going rate is more like $50 per week 😉

    L

  11. burt 11

    Steve P.

    The Treasury statements were before the last round of “Hell on Wall St.”

    Dr. Cullen has no idea what to do about all of this, except spend more and cut taxes…. How will that work ?

  12. ghostwhowalks 12

    Since when have Treasury forecasts been anything but rubbish anyway.

    While its clear there is a low to zero growth period coming up, didnt Treasury predict a much much less rosy picture over the last 3 years than was the case in the previous ‘prefu’.

    Ill try to dig up the last election ‘forecast’ but I hope someone else will beat me too it.

  13. Steve,

    Did you go into the lock up in person?

    How did you like the room it was in, I’m pretty sure those 2 floors (that can be seen in the stuff.co.nz photo) are the ones I spent a couple of months working. Unfortunatly I didn’t stay long enough to see it completed. Is it nice in there?

  14. burt. what’s Key’s solution?

    ghostwhowalks. I agree. I think the Treasury’s assumption that everything returns to normal in the medium term is dangerous.

  15. The rainy day may have cometh but unfortunately Cullen has emptied the cupboard through his wasteful unproductive spending and inept management of the economy.

  16. killingin. no i didn’t go. frankly, the budget lockup was a bit of a waste of time, especially when my net failed.

  17. burt 17

    Steve P.

    So have I got this correct, I’m an irredeemable moron for suggesting the economy is not recovering nicely yet you think the Treasury’s assumption that everything returns to normal in the medium term is dangerous.

    Please explain?

    [you’re an irredeemable moron for claiming I was just accepting what you claimed was Cullen’s make believe when my analysis is actually based on the official information. that’s not at all incompatable with my also thinking that treasury tends to relay too heavily on norm assumptions in the medium term. i agree with treasury’s shortterm projections and have no grounds on which to dispute them. SP]

  18. ghostwhowalks 18

    The right wing morons blamed the high growth economy on the ‘world situation’.
    Funny how when the world goes to hell in a handbasket quicker than you can say Ruth Richardson and its now labours fault.

    However with banks failing in the US, UK, Germany etc , they are a lot lot worse off than we are, and even in Australia the Reserve Bank is borrowing , increasing Government debt, to fund private mortgages.

    I think they might have run special flights on all the Kiwis wanting to return home in a hurry

  19. Scribe 19

    gww,

    The right wing morons blamed the high growth economy on the ‘world situation’.
    Funny how when the world goes to hell in a handbasket quicker than you can say Ruth Richardson and its now labours fault.

    The left-wing *morons* credited the high-growth economy on Labour’s savvy financial management.

    Funny how when the world goes to hell in a handbasket quicker than you can say Karl Marx it’s now the “world situation” to blame.

  20. r0b 20

    it’s now the “world situation’ to blame.

    Ahh – Scribe – take a look around. It’s the worst financial crisis since the 1930s. $700 Billion bail out package which may or may not rescue the American banking system. NZ is not isolated from this crisis, all modern economies are intertwined.

    You can thank Dr Cullen and his prudent management of the economy that we are going to get through this crisis in not too bad shape.

  21. You think the Government has been wise with its money??????

    They have wasted Millions on NZ on Air, welfare and treaty settlements.

    What about Health, Education and infrastructure.

    Oh hang on, thats not Labour base is it?

  22. r0b 22

    You think the Government has been wise with its money??????

    Yes.

    They have wasted Millions on NZ on Air, welfare and treaty settlements.

    In what sense wasted?

    What about Health, Education and infrastructure.

    Prudent spending and good results.

    Oh hang on, thats not Labour base is it?

    Labour’s base is people.

  23. Tim Ellis 23

    It looks like to summarise, crown debt is expected to rise from 17.4% to 24.3%. Labour is planning a multi-billion dollar tax cut package, which will worsen the cash deficit position. It is therefore fair to say that Labour plans to borrow for tax cuts.

    Is that not the same argument that Labour has been running for the last several months about National’s tax policy?

    I don’t think the argument “National will borrow more for their tax cuts than Labour will for ours” is very catchy.

  24. ramsey 24

    Aw, how cute Helen and the standard get all biblical in the same week.

    Helen for suggesting relgion will save us from knife crime and the standard for alluding to the ark of cullen saving us from the floods of righteousness slewing evil capitalism from mother earth.

  25. rainy..? Cloudburst.. well maybe not yet. Cometh more correct, as you say, Steve.

    To Scribe and Darren Rickard I’d say see me and stick with me.. for the straighout answers you very obviously need.. (clk my name)

    To others I’d promised a sort of kiwi blogwatch commentary thing.. picking out the constructive stuff. Outta time personally, but buddy ty picked up on it. Today two topics, tomorrow who knows.. here’s hoping you figure(or feature, whatever). Elsewhere stability is the big deal and that’s pretty certain and a good thing in enzed right now..

  26. randal 26

    uh uh…the new zealand sucks gang are back. it must be hell walking round with so much hate inside!

  27. Dean 27

    “[burt, I’m relying in the Treasury forecasts you irredeemable moron. SP]”

    SP, I see you’re still not above personal insults.

    Why didn’t you just call him a catholic hater and wrecker? Seems to be par for the course with you.

    Pretty weak, mate.

  28. randal 28

    dean you are a imbecilic cretin..howzat. I have no compunction whatsoever in dishing it out where its due so suck it up fascist bludger.

  29. Ben 29

    Struggle Street = looooooooooool

  30. I shouldn’t have called Burt an irredeemable moron, and I would appreciate it if everyone cut out the insults, but here’s the thing. I’m presenting actual arguments based on the official data. I’m only too happy to hear counter-points also based on serious arguments. But when people like Burt come from a position of ignorance and attack my work because they are unwilling or unable to understand what is being discussed, it occasionally can get on my nerves. If Burt can’t keep up he would be better off not commenting or not assuming he is right.

  31. Akdnut 31

    Brett “You think the Government has been wise with its money??????
    They have wasted Millions on blah,blah and treaty settlements.

    WTF sounds like typical Tory dribble (hidden racial undertones)

    Aside from the fact that assets are returned or $$$$ is given in recompence when it has been proven in Legal Court/Tribunal that the losses where unlawful and intolerable.(Don’t blame this Govt for doing what all previous Governments havent had the balls to do – right the wrong) and settle an old debt.

    The organisations that are bequeathed all these so called wasted millions must be structured in a way that is transparent, organised and operated as a business, pay taxes back into govt coffers and if their business fails it all goes back into the system anyway.

    Cut the crap cause you sound like youre full of it

  32. Gooner 32

    “We face the storm in much better condition than countries like Australia who allowed their banks to become exposed to risk on the international credit market, run higher unemployment policies, and undercut their tax base.”

    Australia is not in a recession.

    We are.

    [give the man an award. Yes, we are in recession and Australia is not yet but it is feeling the effects of the credit crisis much worse than we are. As I wrote (and it would be really awesome if you would bother to read) while our economy is recovering and projected to grow in the fourth quarter, Australia’s situation is worsening into recession. SP]

  33. Macro 33

    Tim – in reply to your comments:

    “It looks like to summarise, crown debt is expected to rise from 17.4% to 24.3%. Labour is planning a multi-billion dollar tax cut package, which will worsen the cash deficit position. It is therefore fair to say that Labour plans to borrow for tax cuts.”

    Yes it does! Quite frankly we could have just squeaked through this crisis without borrowing if the present round of tax cuts hadn’t been introduced. We might even have had some money left over for some more important initiatives.

    “Is that not the same argument that Labour has been running for the last several months about National’s tax policy?”

    Yes it is – but just remember that National is promising even bigger and better tax cuts and more spending on prisons (about half a billion), and broadband (one and a half billion), and .. well we shall just have to wait and see. Do REALLY think that this is good a policy in the current world situation? Remember the cost of borrowing from overseas is going to be a LOT more expensive.

    “I don’t think the argument “National will borrow more for their tax cuts than Labour will for ours’ is very catchy.”

    No its not. Do we really want these tax cuts and the billions of debt they will incur? It has taken this country 9 years to reduce the previous govt debt of $22 billion in 1999 to $2 billion in 2008.

  34. Quoth the Raven 34

    I thought Cullen’s tax cuts were a stupid idea at the time, now we see the results of this kind of crap. Apart from that Cullen has done a good job.

  35. dave 35

    I thought you`d be a bit more positive here, its not all bad news. Given our economic outlook the Maori seats will be safe for at least another 10-12 years as there will be no money for treaty settlements.

  36. Macro 36

    QtR

    I agree entirely.
    Govt’s can only do what the people let them. I believe the constant braying by the media etc for tax cuts has forced Cullen into this. The wff way is the much better approach it targets relief where it is needed most. But the vociferous dinkies etc who miss out on wff want even more. If your not elected – you can’t do anything about it. The country gets the govt it deserves in the end, and if the country doesn’t want to pay taxes – with all its encumbent pitfalls (and you know them as much as I) then that’s what the country will get.

  37. Tara 37

    Scoop now features links to Farrar and KiwiBlog.

    http://www.scoop.co.nz
    10.29 PM
    6/10/09

    [it has done so for a few months. They’re in buisness together, along with Public Address – scoop media. Basically, scoop organises their advertising and skims a bit off the top. Bit of a sell out on scoop’s part but there you go. SP]

  38. lprent 38

    Actually the piece I liked was from Paul Buchanan

    Death Of Neoliberalism, From A New Zealand Angle

    That was a much better piece than kiwiblogs crying over missing out on unneeded taxcuts

  39. Tim Ellis 39

    Macro said:

    No its not. Do we really want these tax cuts and the billions of debt they will incur? It has taken this country 9 years to reduce the previous govt debt of $22 billion in 1999 to $2 billion in 2008.

    I appreciate your intellectual integrity Macro. That is the crux of the real debate we should be having on the economy macro: what is a prudent level of debt?

    National’s argument for some time has been that New Zealand doesn’t have a debt problem: 17.4% of GDP is not a high level of debt. Key was promoting increasing debt by about 2% to fund infrastructure. The Labour Party would have had it, a couple of months ago, that this was reckless gambling on the New Zealand economy. They have today published the PREFU, forecasting debt to rise to 24.3% of GDP. That has pretty much killed Labour’s argument.

    There are three things you can do when the government’s balance sheet is worsening: cut spending, increase taxes, or increase debt. Even 30% debt-to-GDP is very low by OECD standards. If you cut spending or increase taxes in a recession, you risk worsening the recession. If debt isn’t a problem, then you can maintain spending and revenue, and increase debt in the short term.

    I don’t think debt is a problem in the short term. I think National would like to see a lower long-term spending track, and a higher long-term growth path. We’re not going to get the latter unless we significantly increase infrastructure spending. The only way to fund that higher growth path in the medium term is by increasing debt. I don’t have a problem with that.

  40. lprent 40

    macro: Just as an example, the current top search terms for this site are:-

    The Standard, tax cuts calculator, tax cuts 2008

    The first has been the long-term favourite, the latter ones kicked in big time last week.

  41. Rex Widerstrom 41

    Macro says”

    …if the country doesn’t want to pay taxes – with all its encumbent pitfalls (and you know them as much as I) then that’s what the country will get…

    Of course that’s true. If you ask even the most dedicated socialist if s/he wants to pay any more tax than is necessary, they’d answer no. The argument revolves around what’s necessary. But when a politician’s telling us what needs to be taken from our wage packets their answers can’t be trusted because (aside from PREFUs) we’re getting spun.

    Yes there are Budgets, but Treasurer of the day can pretty much make them say what s/he wants them to. The PREFU is the closest we come to direct, unfiltered reporting from Treasury to the NZ public.

    At times I’ve lived on the dole and at others I’ve owned a business and been fairly comfortable. Whenever the financial situation has changed I’ve sat down with my family and put all the cards on the table – the new income, the fixed expenses, and the variables.

    Assuming there’s a surplus after fixed expenses everyone has a say in what should be spent, and how, and what should be saved. The kids have learned that if they go nuts when there’s a bit of extra cash, then the hard times will be really hard.

    So if I can trust my children, why can’t the politicians trust us?

    How many people would demand tax cuts if they really understood how their taxes were spent and had a say in it? Perhaps they might want a cut, but a lesser one than politicians think they need to promise to get elected. Perhaps they’d be happy with a reallocation of resources to things they feel matter. Perhaps they’d still want a large cut, as is their right. In PR parlance they’d call it “getting buy-in”.

    Technology has evolved to the extent that we can now have this sort of national conversation, so there’s no excuse for not involving us more.

    It’s our money, and it’s our country.

  42. Paul Robeson 42

    Surely someone from the Government has to come out swinging at this crap from Key?

    Labour is responsible for the current down turn in the economy?

    That is a mighty brave thing for an ex-Merrill Lynch man to say, when he has been awfully quiet about the rest of the problems of speculation on Wall Street.

    The New Zealand markets have had some resiliency so far because in part of the availability of NZ capital through the savings schemes introuduced, and taken up in large numbers, by this Labour government.

    Surely someone has to come out show this rubbish for what it is? Lame politicking, from someone who has married themselves to tax cuts on the speculative gamble that this will buy them the election, damn the circumstances.

    If we had already taken the tax cuts and measures backed by finance spokesman Key at the last election how would we be sailing now?

  43. Pascal's bookie 43

    “If we had already taken the tax cuts and measures backed by finance spokesman Key at the last election how would we be sailing now?”

    Exactly.

    Tim? What say you?

  44. Tim Ellis 44

    Goodness me, PB, it’s a bit early on a Tuesday morning to be nominated as the spokesperson for the Right.

    “If we had already taken the tax cuts and measures backed by finance spokesman Key at the last election how would we be sailing now?’

    I don’t know how we would be sailing now. Right now we are in recession. It is going to be deep. Australia is not in recession. It is safe to say that if I were living in Australia right now, I would not be living in an economic recession. I wouldn’t go so far as to say that if Don Brash were Prime Minister, we would not be in a recession, but I don’t know what his policy response would have been.

    I am confident though that as John Armstrong says in this morning’s herald:

    The bickering over tax has long made up for the lack of argument over wider economic policy. Yesterday changed everything. The election is no longer about tax. It is about which party can best convince the voters its policies will shorten the length and depth of that recession.

    I think Armstrong is spot-on with that analysis.

  45. I’ve just listened to the international financial news and right across Europe and the US governments are panicking and desperately blowing out debt forecasts to bailout their failing banks and markets. It seems pretty sweet here by comparison…

  46. Tim Ellis 46

    I agree Robinsod, the ongoing news from the US seems to be very, very messy right now. I don’t think we’re anywhere near immune from it though. About the only thing in our favour is that our banks (yes, the Australian-owned ones) are the safest banks in the world.

  47. yukkity 47

    “About the only thing in our favour is that our banks (yes, the Australian-owned ones) are the safest banks in the world.”

    According to standard and poors and we KNOW how good their track record is of late.

    Lil ole NZ will play late catchup on this global recession, we dont lead demand we follow it.

  48. The diminished size of the NZX also reduces our exposure. Which kinda makes a joke of the right’s frequent claims the damn thing needed “saving” by way of partial floats of SOEs…

  49. Tim Ellis 49

    I don’t follow that logic Robinsod. The SOE floats were about increasing private savings and investment in New Zealand assets. If there were more quality domestic assets for New Zealanders to put their private money into, they would have been more likely to invest in those high quality, local assets, rather than put their money into offshore funds and/or risky New Zealand asset classes.

  50. Pascal's bookie 50

    Thanks Tim, I wasn’t nominating you for anything, just asking your opinion.

    Not sure what Australia’s got to do with anything. You say that you don’t know what Brash would have done, and that’s true. But we do know what he campaigned on.

    He thought that the surpluses we were running three years ago were theft, and that they should be payed back via tax cuts, and that we could have afforded to be running small deficits back then. Key was his finance spokesman.

    You didn’t seem to address this aspect at all, for understandible reasons, prefering to think that Brash might’ve somehow made us Australia.

  51. The SOE floats were about increasing private savings and investment in New Zealand assets.

    What faith you have in rational economic individuals. All an asset float would have done is further expose productive New Zealand assets to the speculative and emotive vagaries of the market…

  52. higherstandard 52

    PB

    Australia has had a raft of cutting tax cuts over several terms now – comparisons between countries with different economies and reliance on varying sectors makes all inter-country comparisons very difficult.

    “He thought that the surpluses we were running three years ago were theft, and that they should be payed back via tax cuts, and that we could have afforded to be running small deficits back then. Key was his finance spokesman.”

    Depends what really what National would have done with those surpluses – how much would have gone to fund infrastructure, how much would have been returned to the taxpayer – what would they have used it for what effect would that have had on the economy – who knows ?

    Perhaps whoever’s in charge of the economy after the election can ring the Canadians and ask if they still want to drop 2 billion into the NZ economy for a 40% share of AIA Ltd – seems we’re going to need it rather badly.

  53. higherstandard 53

    sod

    Talking of vagaries what’s going on with the liabilities under Kyoto.

    http://www.treasury.govt.nz/government/liabilities/kyoto

  54. Pascal's bookie 54

    hs, The US has also had tax cuts aplenty over the last decade and all their stats are looking worse than when Bush took office. I agree that these comparisons are hard, but I didn’t bring them up.

    We do know what Brash campaigned on though. He said that Cullen was a thief for running surpluses and that they should be returned via tax cuts. We all know what this would have done to the NZ government books in hindsight. It’s about judgment. No comparisons with Australia are needed.

  55. higherstandard 55

    PB

    In terms of the US – it’s a very simple combination of greed and stupidity that many commentators saw coming over a decade ago – it’s happened before it’ll happen again.

    “I agree that these comparisons are hard, but I didn’t bring them up.”

    Quickly followed by ……

    “We do know what Brash campaigned on though. He said that Cullen was a thief for running surpluses and that they should be returned via tax cuts. We all know what this would have done to the NZ government books in hindsight. It’s about judgment. No comparisons with Australia are needed.”

    This is very muddy thinking – we do not know what this would have done to the government books in hindsight unless you are assuming that Brash and his government would have embarked on exactly the same spending as the Labour led government of the day and that the money put back into the economy in the form of tax cuts would have had no effect.

  56. Hey Y’all,

    I really would like a “shit, trav told us this ooh, about 5 months ago and we told her she was nuts” right about now.
    Now please watch money masters and money as debt

    We don’t own anybody anything. It’s a rip off and a scam perpetrated by the banksters and a very good reason to throw John Key, Don Brash and their ilk out of this country. Nuff said.

    By the way, the idjit who said that Oz was not in a recession should tell that to all the kiwi’s who are trying to find a job back here.

  57. Phil 57

    Hey Trav,

    I’ll concede that you did tell us all about this 5 months ago.

    I’ll also bet all the money (as debt) in my pockets against all the money (as debt) in your pockets that you made the same “cry-wolfist” claims six months ago… and 1 year ago… and 2 years before that…

    That’s the beauty of shotgun doomsday predictions. Eventually you’re going to be right, but that doesn’t make you Nostradamus.

  58. burt 58

    Cast your minds back, just one month….

    Economy over the worst: Cullen

    Finance Minister Michael Cullen thinks the worst of the economic recession is probably over – and that Labour’s tax cuts will help to push the economy back into positive growth just as voters head to the polls.

    So who wants to say they trust this man to guide us through the rainy times ahead? He has no F$#king idea what he is doing.

    [burt, it’s you that has no idea what is going on. The indicators, including business confidence, is that our economy is picking up. But month ago, was before the wall st meltdown and Cullen’s opinion has changed since then. National’s plans have not changed. SP]

  59. outofbed 59

    What’s the difference between an investment banker and a pigeon?

    A pigeon can still put a deposit on a Porsche.

  60. burt 60

    Oh, it me that has no idea . Well just as well I’m not the Finance Minister then isn’t it – but really Steve, it’s not about me.

    Do you think that Dr. Cullen actually thought (just one month back) that the worst was over or do you think he was just making stuff up as he went along to make people think that Labour are prudent managers of the economy?

  61. noxxano 61

    These are the rainy days. Fortunately, we’ve acted wisely during the good times. We face the storm in much better condition than countries like Australia who allowed their banks to become exposed to risk on the international credit market, run higher unemployment policies, and undercut their tax base.

    Mr. Pierson or whoever you are, that must be the most ridiculous statement of 2008, and therefore I award you the Nobel Prize of Economics with emphasis on Stupidity.

    Only a Labour supporter could write that in defense of a pathetih Dr. Cullen.

  62. Tony Norriss 62

    noxxano said “Fortunately, we?ve acted wisely during the good times”

    Really? So buying a train set at way over value just when the country clearly couldn’t afford it was acting wisely?

    The problem with having a history teacher running the economy is that he can tell you everything about what happened yesterday but wouldn’t have a clue about what to do about tomorrow.

    When Cullen said he was out of his comfort zone that was code for “way out of his depth and scared totally shitless”.

  63. burt 63

    NZ’s heart services lagging behind

    Heart patients are getting fewer operations than six years ago, according to a damning new report to the Government on cardiac services.

    A working group on national cardiac surgery services said New Zealand was lagging behind other countries in the provision of heart surgery, despite a high incidence of heart disease, which kills around 6000 Kiwis a year.
    Furthermore, the most urgent patients do not always get the quickest treatment.
    Wellington patients waited the longest – an average 163 days – compared with the national average of 93 days and almost twice as long as in Auckland (75 days).

    In Australia, the level of coronary artery surgery is 85 per cent higher.

    OK, so the money spent on health over the last 9 years has achieved a negative result. What else has Labour made a pudding of?

    captcha: bondi bridges – Oh yes.

    [lprent: Now that is silly of you. Tell me what is a primary characteristic of an aging population…. They tend to have more people wanting health services. That means that the health budget has to spread further so just increasing spending doesn’t mean that the dollar per person wanting services goes up. The solution – raise taxes to pay for more spending.]

  64. burt 64

    lprent

    “The solution – raise taxes to pay for more spending”

    That is not what Labour are doing ? Do Labour not understand this as well as you?

  65. r0b 65

    Really? So buying a train set at way over value just when the country clearly couldn’t afford it was acting wisely?

    Troll speak – calling it a “train set” is a pretty good indicator of the quality of your “thinking”. Governments are supposed to invest in infrastructure, remember? And it doesn’t get much more fundamental than rail infrastructure, especially as we start to ponder a low emissions future.

    The problem with having a history teacher

    More troll speak (Key is an accountant eh?). Dr Cullen has a PhD in Social and Economic History, and has been Finance Minister for 9 years.

    When Cullen said he was out of his comfort zone that was code for “way out of his depth and scared totally shitless’.

    Or, possibly, he meant that he was out of his comfort zone.

  66. Tony Norriss 66

    r0b said “Governments are supposed to invest in infrastructure, remember?”

    No problems with investing in infrastructure. What I do have a problem with is paying way above the odds for the assets. Even Cullen at the time admitted he had paid a premium for it. For him to admit that suggests, as some commentators suggest, that he had paid hundreds of millions too much.

    “Dr Cullen has a PhD in Social and Economic History,”

    Exactly my point.

    “Or, possibly, he meant that he was out of his comfort zone.”

    No, I think my description is better. He has only known bountiful economic times. I think he would definitely have been looking at the future with fear and trepidation.

    r0b, don’t be so sensitive about the terse language. Afterall, a lot of people, including myself, are feeling pretty pissed off about the state of the accounts. I don’t think blaming it all on market conditions really washes IMO.

  67. Tim Ellis 67

    SP said:

    These are the rainy days. Fortunately, we’ve acted wisely during the good times. We face the storm in much better condition than countries like Australia who allowed their banks to become exposed to risk on the international credit market, run higher unemployment policies, and undercut their tax base.

    In my haste this morning I didn’t read this, and agree with noxxano that it is absolute nonsense. New Zealand is in recession. Australia isn’t. New Zealand banks are owned by Australian banks, which happen to be the safest in the world, due in a very large part to a mixture of a very strong economy, very large savings records, and sound fiscal management.

    We will be facing much tougher times in New Zealand. If our banks weren’t Australian-owned, we would be in much more trouble.

  68. r0b 68

    No problems with investing in infrastructure.

    Pleased to hear it.

    What I do have a problem with is paying way above the odds for the assets. Even Cullen at the time admitted he had paid a premium for it.

    Do you have a reference for Cullen’s comment? I’d be interested to see it.

    “Dr Cullen has a PhD in Social and Economic History,’
    Exactly my point.

    So we can describe Key as an accountant then?

    r0b, don’t be so sensitive about the terse language.

    I have no problem with terse language, been known to be terse myself. But there are certain phrases which are just cut and paste KiwiBlog right troll speak – “train set”, “history teacher” – if you have serious points to make you don’t do yourself any favours with troll speak.

    I don’t think blaming it all on market conditions really washes IMO

    Why not? It would have been a great deal worse without Cullen’s prudent management – I won’t repeat it all but see the second comment in the thread.

  69. lprent 69

    burt: Sorry that last should have been as a message rather than a note (I was rushed for time before a meeting).

    Labour does understand this. They have already massively increased spending on health and have more still in the budget. However the political reality is that the Nat’s have been politically irresponsible for their short-term electoral advantage. They’ve been pushing major tax-cuts into public perception (because it is frankly their only really popular policy platform). Of course they don’t bother to detail the ongoing costs of doing that.

    Cullens ‘tax-cuts’ are effectively just removing accumulated fiscal drag (and I’d love a way of doing that as a routine system rather than as ‘taxcuts’). Much of the money from the slow increase in taxes from fiscal drag has gone into dropping old Muldoon-related debt (finally) which is good because it also has dropped the interest payments out of the cost side.

    Most of the increase in the revenue from reduced unemployment and interest payments, and a better tax-take from a growing economy has gone into preparing for a aging population in the future, eg Cullen fund, Kiwisaver, WFF (be nice to have young ones to help pay for it in 30 years), Health, and Education (be nice if the young ones are able to pay for it).

    However it still isn’t enough. The super system is still not fully prefunded for the peak. Increased funding for health still isn’t keeping up with demands on the health system due to an aging population that lives longer.

    Nationals usual solution is to say “Bugger all of that – lets put it into the pocket now and let productivity increases take care of the future”. That is fiscally irresponsible because to date they haven’t shown a single way that those productivity gains are going to happen (and if anyone mentions their broadband solution again I’ll have fun explaining again why it is a waste on money). They sound to me like used car salesmen – but I prefer AA reports because they’re MUCH more reliable.

    The responsibility of government is to be fiscally prudent, not only for now, but also into the future generations. Cullen has been. English/Key looks like they just want to load debt on to a future smaller tax base.

    I’d prefer to tax now to pay for it. After all the taxpayers now are going to be the pensioners who receive the benefit.

  70. Tim Ellis 70

    r0b said:

    Do you have a reference for Cullen’s comment? I’d be interested to see it.

    Google it, r0b. There are literally dozens of references for it. At the risk of sounding terse, I’m not: there are just too many references to the statement to list here.

  71. RedLogix 71

    Lynn,

    Could we please have a policy that all right wing commenters who maliciously refer to Dr Cullen as a “failed history teacher” (or similar)…should be summarily banned as trolls.

    The man was a lecturer in Economics History; a highly pertinent and valuable pre-requisite to the job as Minister of Finance.

    By contrast Mr English has no discernable qualifications in Economics, and seems to be determined to repeat all the mistakes the Massey govt made in the Great Depression of the 1930’s.

    [lprent: Isn’t going to happen. However saying it – without any other points is a bloody good indicator of a troll.]

  72. Paul Williams 72

    We face the storm in much better condition than countries like Australia who allowed their banks to become exposed to risk on the international credit market, run higher unemployment policies, and undercut their tax base.

    I think that’s over simplified but I get the point you’re making.

    Assuming you’re talking about the decision to buy Australian residential mortgage‑backed securities, it is fair to say that this is about reducing the risks that the the housing bubble might burst. There’s plenty of NINJA (no income, no job or assests) mortgages in Australia that rightly cause concern but the big four trading banks don’t actually have lots of exposure to the credit crisis – I think ANZ’s $150M to Lehman’s was the highest single write-down/off (but I could be wrong).

    However, unemployment in Australia is comparatively low – 4.1% for the year ending August 2008. Sure this is marginally higher than in NZ but small fluctuations shouldn’t be over-emphasised. Labour force participation overall is historically high but is projected to decline primarily due to shifting demographics.

    I’d say the Australia economy is well positioned to see out this crisis but if you’re close to retirement, however, you’ve probably seen a fair chunk of asset value disappear which will be worrying.

  73. Tim Ellis 73

    Could we please have a policy that all right wing commenters who maliciously refer to Dr Cullen as a “failed history teacher’ (or similar) should be summarily banned as trolls.

    And while you’re at it, let’s also ban anybody who refers to John Key as a “money market manipulator” or variations thereof. Alternatively, we could just choose not to take such expressions from either side seriously.

    By contrast Mr English has no discernable qualifications in Economics, and seems to be determined to repeat all the mistakes the Massey govt made in the Great Depression of the 1930’s.

    Actually Bill English does have an economics degree. He also spent some years working as a policy analyst in the Treasury. They seem like quite credible and discernable economics qualifications to me, if such qualifications are actually needed. He also spent several years as a Finance Minister.

    I personally don’t think that previous economics backgrounds matter quite so much. I don’t care that Michael Cullen was an economic history lecturer. Almost the entire time that he has been Finance Minister, he hasn’t had to deal with an economic crisis. It is a pity that he will almost certainly be voted out of office before he gets to deal with it. That’s the true test of a great Finance Minister.

    [lprent: Neither is going to happen. However saying either or equivalents – without any other points is a bloody good indicator of a troll.]

  74. burt 74

    lprent

    That sounds a lot like the good old cradle to the grave policies of yester-year. The only problem is that the pensioners of today were told repeatedly over the last 40 years that if they pay higher taxes “now’ (over the last 40 years) they will be looked after in their retirement. Sadly though intergeneration theft occurs because dim-bulb interventionist can’t remember why they collected all that money and find new and exciting ways to spend it today in the interests of getting elected “NOW’.

    I’m old enough to remember we have heard all of this before, perhaps you are not and that might be why you buy into the idealism of it (as I once did) ignoring the ‘heard all that before’ and the reality is that it is primarily BS. Feel good stuff that the govt have touted about but never delivered because sure the future is why we do this stuff but that gets thrown out the window when an election needs to be won. (The massive overspend to buy KiwiRail is a prime example)

  75. Tim Ellis 75

    Paul at 12:19pm: I think that’s a fair, sober and lucid explanation of the prospects for the Australian economy. The bottom-line is that Australia is forecast to withstand this crisis without facing a recession. New Zealand is already in recession.

    The statement from SP that we are better placed in New Zealand to deal with the international crisis than Australia is just nonsense.

  76. Actually Phil,

    It was not a prediction. Nostradamus I am not.
    It was reading 112 news papers a day and watching every video I could lay my hands on. It was reading Stiglitz, Whitney, Roubini to name a few. This system was doomed to fail from it’s inception in 1907.

    I started to tell my in-laws and friends two years ago and all of them now have beautiful veggie patches. In fact last week I received an e-mail with photo’s of a proud friend with her first harvest. A young assistant of my husband sold his house just before it all went to pot and I can assure you he was very grateful for having followed up on my advise. He is renting cheap and has a veggie patch too.

    Two other friends on the verge of buying houses recanted after I showed them what was going on in the world and they too are relieved to have followed up on my advise.

    Some of them have completely gone of the grid as we have almost too, to ride out this storm.

    But than they are people who know me and know that they can trust me and I show them the sites were I get my information from so they can make up their own minds as I do here too by the way.

    What you are watching is the US going supernova and the worlds privately owned financial system is what’s causing it.

    And I’ll give you another one for free.

    Last week the US senate was threatened. If they refused to vote in favour of the bailout plan America would go under martial law

    Based on that and the fact that US army troops called back from Iraq are training in the US (in total contravention of the Posse comitatus act) for crowd control, FEMA has build over 400 huge prison camps which are all manned already and the USA has been in a state of emergency since 911(funny how that day made it possible for Bush and his cronies to take just about all of America’s civil liberties away eh) I predict that America will be under martial law before the election date and there will be no elections. End game.

    Just in case you’re wondering I’ve been telling friends that for the last 5 months and I sure as shit hope I’m wrong but it ain’t looking good.

  77. Tony Norriss 77

    r0b said “So we can describe Key as an accountant then?”

    Look r0b, I’m sure that Michael Cullen is a very nice fellow, in his own smug sort of way. But he ain’t no business man, thats for sure. There is no way a Ron Briely or Bob Jones would have paid as much as Cullen did for Tranzrail. In fact, it was reported at the time from Australia that the Tranzrail directors were laughing all the way to the bank, not surprisingly. I saw another article at the time where Bob Jones commented on Tranzrail being an absolute dog.

    Cullen’s problem was he wanted the deal at any cost. So that is what he paid. The only thing was it was our money he was using. It is a well known axiom that the party who has the power in a negotiation is the one that is willing to walk away from the deal. Clearly, this wasn’t Michael Cullen.

    At least John Key has a sort of ruthlessness about him that comes from the hard knocks of doing business in the real world. I think
    that is what the country needs right now.

  78. r0b 78

    The massive overspend to buy KiwiRail is a prime example

    What massive overspend Burt? What was the market value of Tranz Rail, and how much too much did the Government pay? I’m interested in what you think the details are.

  79. Tim Ellis 79

    Travellerev I think you have demonstrated that by reading so much and influencing so many people that an economic meltdown is imminent, you have caused the housing crisis in New Zealand. It is that kind of doom and gloom took that is causing the housing market to collapse. If all of your friends and family who had sold their property to plant vegetable patches had just quietly stayed in their homes, then New Zealand wouldn’t be in the recession we are in today.

    I’m sure you meant to do well, but you do seem to have caused a lot of economic misery. Remember the eighth law of economics: if you tell somebody often enough that something will happen, it will happen.

  80. r0b 80

    Cullen’s problem was he wanted the deal at any cost. So that is what he paid. The only thing was it was our money he was using.

    I think that’s probably correct. But Cullen has a much bigger picture of “our money” than you (and the other right wing detractors) have. Here’s what he said about it in Hansard:

    Toll certainly needs to cash up—there is no question about that particular fact of life; there is no question the Government has paid a premium price. But the alternative is continuing to subsidise a foreign-owned company failing to invest sufficiently in basic infrastructure, increased expenditure required on roading, increased accidents on the roads, and increased greenhouse gas emissions at a direct cost to the taxpayer.

    Looking at both sides of the equation helps to put things into perspective don’t you think?

    At least John Key has a sort of ruthlessness about him that comes from the hard knocks of doing business in the real world. I think that is what the country needs right now

    Interesting point of view, and not one that I agree with. Key has shown abundantly just how ruthless he can be with peoples’ livelihoods.

  81. Matthew Pilott 81

    Tim, while you’re back, do you want to have a punt at Pascal’s Bookie’s question from earlier?

    Y’see, Key said last night that after 9 years of Labour we’re going to have 10 of deficits (and blaming the former for the latter… Perhaps he’s just not that bright after all). The problem with that statement, of course, is that if we’d had 3 years of National to date, we’d have already have had 3 years of deficits, and already have sizeable debt.

    So a deficit is bad if Labour causes it, according to Key (despite the fact that it was not ’caused’ by Labour but a forecast drop in GST take, Corp tax take and so on), but a National deficit is fine.

    If you now add in the projected extra $7bn debt forecast, well, you’d have to say New Zealand is extremely lucky to have not had a National government since 2005.

  82. burt 82

    rOb

    What massive overspend Burt? What was the market value of Tranz Rail, and how much too much did the Government pay? I’m interested in what you think the details are.

    Sorry rOb, I forgot that Labour=good and public rail = better and National would have had us pay more for a trip on the train because their big business backers want their return on investment…..

    Go back to sleep rOb, it’s over – precious status quo is going to change and no amout of BS from you can change that.

  83. r0b 83

    Sorry rOb, I forgot

    In other words Burt, as usual, you haven’t a clue, and you’re just parroting lines written by others that you don’t understand.

    Go back to sleep rOb, it’s over – precious status quo is going to
    change and no amout of BS from you can change that.

    Change is only to be expected Burt, big wheel keeps on turning…

  84. Matthew Pilott 84

    burt, that was a very pathetic attempt to hide that you can’t back up what you’re saying. You do that a lot, don’t you? Basically every time you can’t support a point you’re trying to make you have to say that the person disagreeing with you is saying ‘labour good, national bad’, or some variant. It’s a pretty transparent and predictable way of covering, burt.

  85. Tony Norriss 85

    r0b said “I think that’s probably correct. But Cullen has a much bigger picture of “our money’ than you (and the other right wing detractors) have.”

    Glad to see that you acknowledge that Cullen admitted paying too much for Tranzrail.

    I could accept this if he had paid 10-20 mil more than its worth. However, many commentators think he had paid hundred’s of millions too much. Unacceptable. Besides that, we now have to turn around and replace the rolling stock because its so old and worn. So, what exactly did we get for the hundreds of millions?

    Honestly, it would have been a better deal for NZ if we had brought up a heap of new trains and given them to Tranzrail.

  86. Euh Tim Ellis,

    John Key was a money market manipulator and a derivatives trader.
    Right there in the hart of the collapsing money market; Wall street.
    Right there in the most deregulated era of banking since before the great recession. In fact he ran the department of debt for Merrill Lynch in this interview he recalls how he ran this department were he had all these guys develop these nifty new financial products (read bonds and derivatives according to his own website)

    He also worked with Andrew Krieger who was the first to manipulate an entire currency to the point of almost collapse with John Key in cahoots. Ooh oops that was the NZ dollar.

    In fact while he worked for Merril Lynch he was involved with the manipulation of the Thai bath just before the economy collapsed and ML almost lost 1 to 1.5 billion dollars in the collapse of the LTCF hedgefund. He was involved with the Russian economic collapse in the late 90ies. Both countries were forced to change their financial management and allow the international banks to move in on their currency.

    Looks like money market manipulation on a massive scale to me mate and I’ll tell you what he will do here.

    Increase liquidity and hence the inflation of our currency by tax cuts and massive borrowing and when we’re satiated with worthless dollars his international buddies will do what they are doing in the rest of the world and what they have done throughout the history of the federal reserve system of fiat money; they will contract the money supply and cause the recession to get even worse forcing us to sell our assets and resources like they are doing in the US.

    He will than fly of into the sunset with his cutsy family to spend his time playing golf with his banking criminal buddies on Hawaii waiting it out as the plebs are left with nothing.

  87. burt 87

    Matthew Pilott

    So are you like rOb trying to say we Cullen didn’t pay too much for KiwiRail?

    Do you really believe that it was worth what was paid? I know all about willing seller and willing buyer etc. But come on – hundreds of millions over valuation? Was that really a prudent thing to do when our economy was clearly heading for a recession?

  88. r0b 88

    Glad to see that you acknowledge that Cullen admitted paying too much for Tranzrail.

    Cullen’s words were “a premium” – whether that is “too much” depends on the full cost benefit analysis.

    I could accept this if he had paid 10-20 mil more than its worth. However, many commentators think he had paid hundred’s of millions too much.

    Many commentators think that National’s tax cut plans are hugely irresponsible too. Gotta love “many commentators”.

    Honestly, it would have been a better deal for NZ if we had brought up a heap of new trains and given them to Tranzrail.

    You’re entitled to your opinion Tim, and I will give it all due weight in forming my own.

  89. burt 89

    travellerev

    The plebs are already left with nothing – low incomes, high taxes and a stagnant/shrinking economy. Which part of “now” can’t you see while describing your fantasy of what Key “might” do?

  90. burt 90

    “the full cost benefit analysis”

    If Labour get elected my salary is $280K, if they don’t it will be $160K. (actual numbers may vary).

  91. Matthew Pilott 91

    Burt, and reasonable assessment will do. If we paid more for it than it was worth, but, for example, that saves us having to fork out millions in corporate subsidies, would you be able to step back from the black-and-white view that the dollar amount paid for the assets is not where the buck stops?

    If not, then this is not worth discussing with you. There’s no point when all you can do is look at the pyhsical assets – there is no value in such an analysis whatsoever.

  92. r0b 92

    If Labour get elected my salary is $280K, if they don’t it will be $160K. (actual numbers may vary).

    Good for you Burt, so I guess you’d better hope Labour get elected.

    (Or was that an attempt at sarcasm? Couldn’t be – too weak even for Burt).

  93. burt 93

    rOb

    Simple question: If the purchase stands up to full cost benefit analysis then why were there no other buyers prepared to pay within $400m of what the opinion poll driven socialists paid?

    Can you answer that question without denigrating me for asking?

  94. Tim Ellis 94

    He thought that the surpluses we were running three years ago were theft, and that they should be payed back via tax cuts, and that we could have afforded to be running small deficits back then. Key was his finance spokesman.

    I am not sure that Brash did say this. As I recall he certainly said that the level of surplus was excessive, and that tax cuts were affordable at that time, and that tax cuts were preferable to increased spending.

    At the time Michael Cullen said that tax cuts were not affordable. He has since reversed this view, and said that tax cuts are now affordable due to the so-called “structural surpluses”, which appear, given the state of the books, to be non-existent in a “structural” sense.

    As I say, I can’t predict how the NZ economy would have fared differently under Brash. My view is that we would have had lower taxes, lower spending, increased growth, and lower deficits. MP has claimed that we would be facing lower taxes, same levels of spending, no increased growth, and higher deficits. That is a matter of opinion, and I think it’s as valid as mine. I think there’s a hazard of thinking what would have happened in different circumstances in that it doesn’t really address the key issues.

    I think the key issues NZ face are what the prudent levels of government debt are (rather than the hysterical “John Key wants to gamble your future by increasing debt by 2%”, the arguments for which have disappeared); what can be done to effect an improvement in the state of the government accounts and the economy generally (I think lower tax, higher infrastructure spending, and moderately increased debt will improve our growth track and solve the surplus issue more quickly).

  95. Paul Williams 95

    Hell’s bells, Tim you’re not going to trick me into changing my political colours just by being reasonable… :->

  96. Tim Ellis,

    I just got of the floor catching my sides because they hurt so much from laughing.

    WTF Are you blaming me for the entire housing crisis?

    Jeez you are even more of a nut case than I already thought you were.

    I guess I caused the entire global financial melt down too, what with my blog and all? LOL.

    Bush and the Wall street hustlers and let’s not forget Cullen and Helen Clark must have been reading my blog and thought now that’s a bloody good idea. We’ll cause a massive financial crisis just because trav says so on her blog and we’ll blame the hole thing on her. LoLLL.

    No Tim, the international banking scheisters with their ever extending easy credit building an unsustainable housing bubble are what is to blame for the collapsing housing market.

    The ridiculous rise in house prices world wide had nothing to do with supply and demand market forces but everything to do with a Wall street orchestrated housing bubble.

    When I arrived here three years ago I could not believe the house prices. When I left Europe I could have bought a beautiful ancient big house next to the beach on an Island in the Adriatic in one of the most beautiful Mediterranean resorts for $ 150.000,- and here people were paying ridiculous prices for fake wooden houses isolated with Styrofoam cramped together on little pieces of land almost to the point of having no privacy.

    Just think of it, the NZ population has not grown the last 10 years, in fact as National keeps pointing out it is shrinking, the wages have not gone up to the extend of justifying the house prices, actual production jobs have gone down due to outsourcing and yet the house prices went up and up and up.
    People took out second mortgages to buy boats, cars and other consumables and are maxed out with credit cards and now that bubble is busting.

    This is what banksters do. Bubbles and busts and while they live in palaces we are expected to pay the bill they leave us with every single time.

    Have a look how Dick Fuld, the CEO who gambled Lehman bros into the ground lives and will continue to live while every man, women and child living in the USA will have to fork out
    $ 2.200,- to pay for the Wall street scheisters follies. And that is only the beginning.

    Doom and gloom were upon us long before I started writing about it.
    Two exhausting wars and Wall street saw to that just like they did before the first big depression and not little ole me pointing that out to people.

  97. r0b 97

    Can you answer that question without denigrating me for asking?

    You’re always happier being the insulter than the insultee aren’t you Burt.

    Simple question: If the purchase stands up to full cost benefit analysis then why were there no other buyers prepared to pay within $400m of what the opinion poll driven socialists paid?

    Becuase no other buyers would list among the “benefits” the kinds of factors that Cullen listed in considering the general good of NZ. Other potential buyers have much to narrow a focus on short term profits. Governments have to think bigger and longer term than that. Thank goodness we have such a government.

  98. randal 98

    look guys New Zealand has the highest pro rata erpsonal dbt per capita in the world. we are like magpies going for overseas trips, flash cars, boats, teevees etc etc etc. we just cant resist the lure of consumer goods. Kiwis have an overwhelming need to justify themselves by externally referencing themselves to the size and cost of their goods. we need more heart operations because it is a kiwis inalienable right to stuff themsleves with fatty foods. all our troubles are of our own making and like junkies in denial we just cant see the wood from the trees. this country has been infantilised by the media and is becoming more childlike and childish by the day.

  99. Hi, there I seem to have landed in purgatory again.

  100. Burt,

    You have no idea how good people in general have it over here compared say with England and the US.

    In the US more and more people are living out of cars and tents and I’m not talking poor smucks on skid row but people who until last year thought of themselves as hard working middle class families. You know, salt of the earth.
    Whole families who have lost their savings, their houses, their jobs thanks to the tanking economy with a chance like a snowflake in hell to rebuild their lives because there are no jobs any more.

    All thanks to the banksters and the neo liberal crap John Key spouts too.

  101. Tim Ellis 101

    Hell’s bells, Tim you’re not going to trick me into changing my political colours just by being reasonable :->

    I don’t set out to convert people with entrenched views, Paul. Matthew Pilott and r0b and co all have entrenched views, and I’m not going to change them, just as they aren’t going to change mine. But we can have a reasonable and rational debate so that people whose ideas are less entrenched can weigh up the arguments and form their own opinions.

    My sense of the Labour Party’s campaign this year is that it is saying: “Vote for us. We are proud of our record. Think about what we have done for you.”

    I think that campaign is a major strategic error, and seems to be symptomatic of governments that have been around for a long time. The flipside of it is: “Don’t vote for the other guys and put all of this at risk.” It’s the strategy National used in 1999, and Howard used, and pretty much every government that has run out of ideas.

    I think it is a bad strategy not because it invites the Opposition to attack the Government on its record where its record has been weak (although it does do that), but for a more substantial reason: my impression of voters is that they take a government’s record for granted. The public expectation is that governments are competent. It isn’t a great selling feature: “Be grateful for us, because we’ve been competent.”

    Voters aren’t grateful. They don’t think back to the last round of tax credit/tax cut/benefit increase. They take those as a given. Particularly when the opposition isn’t promising to remove them. A party that obsesses about its record, at the expense of telling voters what it plans to do next, in my view, sees its message fall on deaf ears.

    Labour has been very short on telling voters what it plans to do next. It hasn’t released much policy, at all. It spent six months hounding National to release policy, and now that National has responded, Labour’s found that it is itself that remains silent on future plans.

  102. Phil 102

    All Hail Randal – Philosopher King and Champion of Righteousness!

    Only he/she/it can save us from ourselves.

  103. burt 103

    rOb

    Becuase no other buyers would list among the “benefits’ the kinds of factors that Cullen listed in considering the general good of NZ.

    I think you are missing a key consideration in this, the difference between public funding and public provision. If [xyz rich bastards railway managers Ltd.] were negotiating with a govt that cared about the public good then they would be able to factor public funding (for the good of NZ) into their pricing model and cost benefit analysis. The govt are stuck on some BS ideological position that only the govt can provide essential services because it’s the govt. This same argument can be applied to health services. Where is the benefit in slashing people off waiting lists, sending them to Aussie for medical care when we have private facilities with spare capacity?

    The price of saying “we own it’ is a luxury that a prudent manager would have considered carefully before acting when they did for no bigger reason than to say “we own it’. The capital squandered so that we can say “we own it’ is almost as much as the economy can stand in new policy initiatives for the election. That was one hell of a gamble Cullen took, not the sort of gamble that qualifies him as a prudent manager.

    There is no reason why the govt could not have invested additional capital into public transport without needing to tie up large amounts of public money in a recession simply so they could claim ownership. Ownership is an ideological/emotional consideration. Emotion costs money and somewhere in there we forgot what we were trying to achieve. Better, cheaper and more reliable public transport.

  104. r0b 104

    I think you are missing a key consideration in this

    Burt – in brief and in haste – you’re missing a key consideration to. Tranz Rail had a private owner and were receiving public subsidies. That model didn’t work.

  105. burt 105

    rOb

    That model didn’t work or that implementation of the model didn’t work ?

    Can not allow public money to create private profit – fuck the tax payers and the public – it’s about ideology and it’s better to spend hundreds of millions to claim ownership rather than tens of millions to improve services…. That is the model that won’t work.

  106. insider 106

    r0b

    Can you list those other benefits and their value because Cullen has not – afaik there has been no published business case supporting his valuation of rail or its benefit going forward, only a few bland pronouncements around climate change.

  107. Matthew Pilott 107

    Tim – just briefly, what was labour’s slogan for 2005? I suppose with Big Bad Brach breathing at the door it was a useful concept – hence Key’s (as Tracey Watkins mentions at any chance) sensible Centrist facade.

    MP has claimed that we would be facing lower taxes, same levels of spending, no increased growth, and higher deficits.

    Not quite – I suppose national may have razed the books to fund those tax cuts between 2005 and now, but as I recall, National would have had to do that, plus cancel WfF and run a minor deficit for the last three years to fund their tax cuts proposed in 2005. So, right now, we’d have decreased government services (at a time when i’d argue they’re going to be more needed than ever), a string of deficits that were about to increase markedly, and a debt that would require a lot to fund.

    To offset this, there would be some degree of growth those tax cuts would have instigated. Would this be enough to cancel out the costs incurred? Unlikely – there’s a reason Cullen isn’t happy with the debt he’s about to incur, yet National is happy with it, presumably beccause it will be hermetically sealed as ‘infrastructure’ debt, not tax cut costs.

    If you consider this a big difference, then you’ll probably be mighty thankful that Labour has kept debt as low as possible for as long as possible, and hope that National don’t get the chance to make things worse than they are (echoes of the 90s anyone?) this time around, as they’ll almost inevitably do.

  108. burt 108

    Matthew Pilott

    The debt we are about to incur would be close to $1b less if we hadn’t purchased the railways. Slice and dice it however you like but that is close to $1b that didn’t need to be spent at this time. An analogy that would seem appropriate would be a person who has just taken a salary cut claiming that paying cash for their house (which needs hundreds of thousands of dollars spent on renovations) a few months back was a great move while they borrow money to pay the rates, insurance, electricity and to put food on the table.

    A prudent financial advisor might advise them to shift their money into something productive (growth) and rent a place to live in until they can genuinely afford the house that they want to own.

    I understand that talking about productive investments (growth) vs the emotional comfort of ownership makes me a right wing nut job.

  109. RedLogix 109

    burt,

    The purchase of the railways (at about $700m, not $1b as you state), was a one off purchase.

    This is completely different to a tax cut that will reduce govt income in the order of $8b each year and every year into the future. Given that the deficits are ALREADY projected to be about $5b under the existing tax cut regime, this totals to about a $13b per year cut in govt income.

    That is about 13/50 *100 = 26% reduction in govt income. Over a period of just six years (two electoral cycles) that adds up to about $60b dollars. If we pay say 5% on that the interest bill will be $3b per year.

    The interest on this projected debt alone, would have bought back the New Zealand rail system 4 times over.

  110. Draco T Bastard 110

    Phil
    October 7, 2008 at 9:23 am

    I’ll also bet all the money (as debt) in my pockets against all the money (as debt) in your pockets

    Here you go Phil, some interesting reading by the Reserve Bank of Chicago about how money is created. I should also throw in the new Zietgiest: Addendum movie – it’s much better than the first one.

  111. Draco T Bastard 111

    SPAM trapped again 🙁

  112. lprent 112

    burt: The fundamental problem was that the super fund wasn’t left in ‘save as you earn’ by a national government in the 1970’s. I decided then that the Nat’s were being short-term fuckwits then, and I’ve never seen a reason to change that opinion.

    The inherent problem is that having a system like national super is that it depends on the birth/immigration rate remaining reasonably constant. It hasn’t – as was obvious in the 1970’s. If you are going to have a system like national super (and it is almost impossible to change now), then it should be paid for by something like the Cullen fund up front – not transferred as a burden to future taxpayers.

    As far as I’m concerned the current generations should get tax cuts AFTER they have fully funded the super shortfalls.

  113. burt 113

    lprent

    I completely share the same perspective that Muldoon scrapping the super fund was short sighted. I remember the time, it was very very different to today but there was one constant. When it comes to gaining in the polls political parties are complete popularity sluts. They will do and say whatever it takes. However the bottom line is that the public that voted a govt in to do that are the stupid ones, they got what they deserved.

    Problem is voters have short memories and partisan tendencies ensure we only notice when the opposition behave this way.

    The problem with the Cullen fund mentality is that is is fundamentally unfair despite it being socialistically adorable. There is no recognition of input in the output. How can that be fair. I have no argument with a minimum standard but no recognition for the weight you have carried for others to have the minimum? It’s simply not just.

    KiwiSaver provides an incentive to rely less on GRI for your survival but it in no way addresses the fundermental inequities of the Cullen fund as a concept. Winston Peters with his referendum on superannuation was half way there. The scheme was basically sound except for the fact it required you to take an annuity from the fund on reaching retirement age. The intent of such a rule is clear but it’s against the grain to be told how you must collect your savings.

  114. lprent 114

    When it comes to gaining in the polls political parties are complete popularity sluts. They will do and say whatever it takes. However the bottom line is that the public that voted a govt in to do that are the stupid ones, they got what they deserved.

    Politicians almost have to be, after all you have to have the treasury benches to be able to do much to influence policies. What convinced me to move to the left was the nature of the right’s politicians. They seem to prefer being irresponsible and outright decitful because they know that spelling the implications of some of their policies will ensure that they are not elected. The left tend to be more honest.

    The information role is meant to be filled by the 4th estate, but they seem to have been overcome with the passion for sales generating headlines. In TV that is almost the nature of the medium. Radio (with the exception usually of RadioNZ’s national programme is either music or bigotry by people who are under employed.

    There is often some interesting material in the print articles. But that is seldom shown in the headlines or first few paragraphs. Facts don’t help sales.

    That is why I helped to set this site up, regardless of the partisan nature, it helps provide a channel for debate. There is starting to get to be a substantial readership because it is a place to get an outline of a discussion with drill downs for more. The comments allow the posts themselves to be analyzed.

    We exist to be critical of other peoples policies and shortfalls. Both the media and politicians love us (yeah right), and seem to be amongst our most avid readers (well at least their staff are).

  115. lprent 115

    burt: Anyway back on the super discussion. The problem is that once you set the system up as Muldoon did, then your choices as a government get limited. The Cullen fund specifically follows the muldoon fund for that reason. It is a patch for the existing scheme to partially cope with a age distribution shortfall in the future.

    It follows the implicit contract that workers should pay for their elders – but adds the codecil (?sp) that it should not fall much heavier on the workers than it fell on their parents.

    Kiwisaver is probably more important longer term. One of the issues with national super is that the expectations of the superanuiatants (?sp) is also increasing (like they expect to have internet access). Since workers should not expect more than they contributed to their elders, then they need to start saving for it.

    So Kiwisaver is a way of making sure that most of the working population starts paying for their expectation of the retired standard of living, rather than passing the burden onto their working children.

    People can (and should) also run other investments as well. But we’re heading to a tiered retirement system. The ‘state’ makes sure that the minimum super system operates as a baseline. If you work, then it makes it easier to save (kiwisaver). If you want more, then save/invest yourself.

    Putting in one size fits all package (aka NZF’s ideas) in the current super environment is probably impossible. It would require some generations to double pay. This tiered approach is probably the most effective way to make sure that you don’t leave non-workers (eg ‘homemakers’) living on nothing in their old age after their divorce.

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