National’s favourite public servant (who got himself a nice pay rise), John Whitehead, has been offering dire warnings of the future. $2 trillion in debt by 2050! Something must be done!
Naturally, the Treasury has an extreme right-wing solution – cut everything: cut health – yeah, a less healthy workforce that’ll be great for the economy. Cut education – yup, that’s the route to a high tech economy. Cut superannuation – you’re going to die anyway, why not die a pauper? Even cut taxes – yup Treasury reckons part of the solution to the government not taking in enough money to cover its costs to to cut its revenue.
I could go on about the silliness of trying to project 40 years ahead when you can’t get projections for the next year right. I could point out the methodological flaws, which Treasury acknowledges, that make this more an exercise in ‘ain’t maths fun’ than a crystal ball to the future. I could point out that the reversing the upper class tax cuts and introducing a land tax would pretty much solve the ‘problem’. I could say ‘$2 trillion sounds astronomical now but GDP is meant to be $1 trillion by 2050, so it’s a lot less than it sounds. I could lament the fact that Treasury takes no account of peak oil or climate change – even the conservative projections of the international authorities. But the immediate politics of the thing is more interesting.
Treasury’s recommendations are so ideologically extreme that the Government can reject them, propose smaller cuts instead and be lauded as moderate (it’s the same ploy as they’re using on ACC). Meanwhile, the warnings are so apocalyptic that they are a fig leaf for National to do just about whatever it wants.
This isn’t about 2050, it’s about 2010. It’s all about creating the political conditions for National to begin the wholesale slashing of public services and the selling off of assets. Look for Bill English to bring up the $2 trillion bogeyman as he announces the sale of bonds by SOEs, freezes on core spending, and more insidious programme cuts in next year’s Budget. Look for the talking heads to nod gravely and congratulate National on its moderate, pragmatic approach as they drift further and further to the right.