John Armstrong looks at the typical John Key-style punt that lies behind the budget:
“the Budget’s centrepiece package of tax cuts has National betting heavily on the economy continuing its slow recovery and not being hit by another international shock which plunges it back into recession, once more mangling the Government accounts and further delaying a return to surpluses.
That is just the sort of calculated gamble that would be second nature for a former forex dealer like Key.
He has effectively wagered National’s reputation as a responsible fiscal manager on the expectation that there will not be another bout of global financial dysfunction…
The Treasury has warned of “significant uncertainty” as to the economic impact of the tax package. It cautiously assessed that the package might result in growth of less than 1 per cent after seven years – hardly Asian tiger stuff….
It notes the possibility of the euro debt crisis creating further turbulence in international financial markets which could engender another wave of global recession. There are worries about the Chinese economy – now New Zealand’s second-biggest export market.
Were New Zealand to plunge back into recession, the wisdom of tax cuts would come under question even though National’s will supposedly be self-funding.”
Of course, the tax swindle isn’t self-funding anyway, it’s funded by borrowing a billion dollars. But Armstrong is quite right to point out that the global economic recovery is far from certain.
The Dow Jones is down 10% in a month. Oil prices (a key indicator of future demand, and hence economic activity) have nose- dived by 25%. Carry-trade, risky currencies like ours have taken a tumble this week while the USD and gold have risen. These are all classic and very sharp indicators of a flight to quality, a renewed aversion to risk. It means the world markets expect bad times ahead and confidence is drying up.
Meanwhile Tracey Watkins has calmed down after the excitement of seeing the size of her tax cut and is questioning why Key is so afraid of anything but tightly managed media appearances:
Mr Key’s refusal to front the Budget on National Radio the next morning even more mysterious. Given the plaudits, surely the Budget gave him a good news story to tell?
In fact, Mr Key has refused all but three requests to be interviewed by National Radio’s Morning Report so far this year. That must be unheard of among modern-day prime ministers. And it is probably no coincidence that Sean Plunket is one of the most ferocious interviewers in the game today.
So it is less a commentary on the Budget than a further indication of the extent to which media management has increasingly become the byword of Mr Key’s government.
It is no secret that the prime minister’s media team are sound-bite and social-media obsessed. Mr Key’s Facebook following of 20,000 “friends” is roughly the same readership as a small provincial newspaper. But it still merits Mr Key an “events” manager, who even accompanied him on his secret sortie to Afghanistan.
The careful management of Mr Key’s exposure to other forms of media friendly breakfast TV chats and radio talkback slots aside is a worrying trend, however.
So too is the paranoia that pervades his office. Media requests are treated like live grenades. Journalists increasingly bypass the ninth floor altogether. But they are not the only ones who question the ninth floor’s obsession with media management. Increasingly, many Beehive press secretaries are finding it over the top as well.
Fear of damaging the “Key brand” lies at the heart of it, of course.
Beyond ‘Brand Key’ and the promise of tax cuts (note how Key is already promising more) what does National have? Nothing. And Brand Key is tarnished every time the man has to answer hard questions. So he hides from them. Even rightwingers, the principled ones anyway, want accountable government and Watkins is completely right to be worried about the way stage managing their led actor takes precedence over all else with this government