Blog Bits

August 8th, 2008 at 2:47 pm by David Farrar

Four interesting blog pieces – all from “professional” journalists also. First off is Nick Stride, editor of The Independent:

Deputy Prime Minister Michael Cullen was on even shakier ground when he tried to paint National leader John Key’s debt raising and investment strategy as a ruinous policy designed to hide borrowing to fund tax cuts.

If memory serves, it wasn’t so long ago Labour was attacking National for the speed with which it was pushing national debt levels down to 30% of GDP.

Now it’s on the attack over plans to lift that ratio from 20% to 22% a rise so insignificant it will barely register at the sovereign rating agencies.

The fact is, New Zealand ranks high among OECD countries in terms of its debt-to-GDP, and in the bottom half in terms of its infrastructure. It therefore makes perfect sense to allow the two to come a little closer together, to everybody’s benefit.

It’s true, as points out in his column on page 24, there’s no free lunch; the extra debt envisioned by National will have to be serviced, reducing the amount government can spend elsewhere.

But it’s not a zero-sum business in which a dollar spent on infrastructure is a dollar that must be taken from health or education. According to research conducted in 2004 by Macquarie Research Economics, every 1% rise in infrastructure spending can be expected to lift GDP 0.5%.

This is what the debate should be about – whether the return on the capital and the interest on borrowing is a good investment – will it lead to higher economic growth. Instead we have had a near Taliban like mentality – that any extra borrowing is madness and Muldoonism.

The Dom Post’s Vernon Small also blogs on this issue:

Yes, National’s plan to increase gross debt to 22% of GDP is conservative. But maintaining it two percentage points above Labour’s target does bend the party-political continuum.

Since when did centre-right parties run a looser fiscal regime than centre-left ones?

It is somewhat ironic. My non serious answer is since Labour started believing in tax cuts. My serious answer is that centre right parties see a difference between borrowing and expenditure on social spending, and borrowing for expenditure on capital works.

No, National cannot credibly say it is raising $750 million in borrowing only for infrastructure and not for tax cuts. Residual borrowing is the net impact of a complete revenue raising and spending programme, though there are good accountability reasons why politicians should explain how new programmes affect the mix.

Finance Minister Michael Cullen is also happy to let debt rise over the next few years, driven by a tax-cut programme. So it is a relativist, not absolutist, debate. They may as well argue they are borrowing to cover the impact on government revenue of the current recession.

Yes if National is borrowing for tax cuts, so are Labour. As I did a long winded post on last weekend, you have a current account and a capital account, and the cashflow funds both those things.

He isn’t a blogger but Keith Rankin writes in support of infrastructure spending:

Helen Clark and Michael Cullen are describing National’s proposal to borrow in order to fund infrastructure projects “incredible”, meaning foolhardy and irresponsible. (“Key unveils plan to borrow, PM dubs it ‘hilarious”‘ – NZ Herald August 4, 2008.) All Clark and Cullen are doing is showing how out of touch they are with economic reality.

Financial crises happen when lending slows down significantly in financial markets. The problem usually is a lack of credible borrowers. This is precisely the time that borrowers such as governments funding infrastructure need to step up to the plate.

Governments need to spend more and borrow more precisely when the private sector is spending less and borrowing less. This was the most important lesson of the Great Depression in the 1930s.

Ben Thomas writes on the so called secret agenda:

All of which is a roundabout way of saying the scandal that did erupt – the audio files of English and the Smiths, Lockwood and Nick – was outrageously overplayed by the and National’s parliamentary opponents.

The story was as follows: an unknown person, who claimed later to be unaffiliated with any political party, attended the Friday night social event posing as a National Party member and engaged the three senior MPs in conversation around left-wing touchstones: state ownership of Kiwibank, nuclear power and Working for Families.

The conversations were recorded and played on the broadcaster as evidence suggesting that National had a “secret agenda.”

Fine. Except the recordings disclosed no such thing. They were evidence of absolutely nothing except a slightly looser verbal style than MPs would present in a formal media interview or Parliament. This is a story about language.

The Smith & Smith conversations especially were hyped up massively. They were quite unexceptional.

At it’s most basic, there is syntactic precision: there was little effort made in the media to differentiate a secret recording of a conversation (as in this case) from a recording of a secret conversation (which may have yielded something much more interesting).

A useful point.

English conceded he would eventually prefer to sell off Kiwibank “but not now.”

In fact absolutely nothing in English’s comments was inconsistent with National’s declared policy. Lockwood Smith was accused of revealing the hidden agenda when he said “Once we have gained the confidence of the people, we’ve got more chance of doing more things.”

He even said, “We may be able to do some things we believe we need to do, perhaps go through a discussion document process – you wouldn’t be able to do them straight off.”

In other words, National may have a secret plan to, er, consult with the community and gauge public opinion before implementing new policy.

Yes, how a public policy consultation process is proof of a secret agenda, I do now know.

The reality is the secret agenda meme is all about trying to associate a negative brand with a party. I will touch more on this next week, but is is the equivalent of the “Have you stopped beating your wife” question.

There is a very relevant example of a major political party in government pursuing a deeply unpopular policy in the face of public opposition, and refusing to abandon it despite repeatedly being told it is not what voters want. It is the Labour government’s push for state funding for political parties.

Labour has never campaigned in an election on this policy but it is a fond wish of the prime minister and her party.

It’s also a policy that is widely detested by the public, and has been soundly rejected every time its prospect has been floated either through official comments or strategic leaks.

Labour’s secret agenda for state funding – indeed. They don’t have the guts to make it a manifesto promise, because they know it is as popular as anthrax.

Finally back to Vernon Small again, who asks where the dividing line is between bloggers and journalists, with the catalyst being my accreditation as media at the National Party conference. It is an interesting issue (especially to me), but somewhat academic. This is the fourth or fifth National conference I have attended as media. I’ve also been in budget lockups as media, attended tax conferences, spoken on media panels at media conferences, and get invited to cover conferences and seminars on a very regular basis.

I’ve commented over on Vernon’s blog on a couple of issues he raises.

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15 Responses to “Blog Bits”

  1. dc (173 comments) says:

    Helen Clark and Michael Cullen are describing National’s proposal to borrow in order to fund infrastructure projects “incredible”, meaning foolhardy and irresponsible. (”Key unveils plan to borrow, PM dubs it ‘hilarious”‘ – NZ Herald August 4, 2008.) All Clark and Cullen are doing is showing how out of touch they are with economic reality.

    Financial crises happen when lending slows down significantly in financial markets. The problem usually is a lack of credible borrowers. This is precisely the time that borrowers such as governments funding infrastructure need to step up to the plate.

    Oh come on, Clark and Cullen are not stupid, they know all that. They are pushing these (doubtless polled and focus-grouped) lines entirely cynically, counting on their voters’ economic ignorance to carry them through.

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  2. kevin_mcm (152 comments) says:

    what surprised me about the weekend was National’s response – instead of going onto the front foot and saying – see, what we say in public and private is exactly the same – they backed off and had english apologising, suggesting they had done something wrong. An opportunity lost really.

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  3. philu (13,393 comments) says:

    i agree with rankin on this..

    “..Financial crises happen when lending slows down significantly in financial markets. The problem usually is a lack of credible borrowers. This is precisely the time that borrowers such as governments funding infrastructure need to step up to the plate.

    Governments need to spend more and borrow more precisely when the private sector is spending less and borrowing less. This was the most important lesson of the Great Depression in the 1930s..”

    but this will happen when the aussie banks fall over..

    ..and everything totally turns to shit here..

    ..and unemployment goes through the roof..

    ..big..green..govt spending..

    ..to build a truly sustainable society..

    ..will be one of the (few) ways out of the big mess we have coming our way..

    ..but almost everyone is still in denial..

    ..’tax cuts’..bah..!

    ..fools..!

    phil(whoar.co.nz)

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  4. homepaddock (429 comments) says:

    “where the dividing line is between bloggers and journalists”

    I’m not sure it’s a line, more a grey area in which there is a lot of writing of varying quality – which also could be said of other media.

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  5. Fisiani (848 comments) says:

    Attack like with like

    Allege that Labour has secret agenda items.

    Which of the following 20 are true and believabkle aims in the event of a 4th Labour-led term of government?
    Labour want to
    1) introduce massive taxpayer funding of political parties
    2) give trade unions the right to examine emplyers books to negotiate wage awards
    3) introduce legislation to make any anti gay speech a new crime of hate speech
    4) make it compulsory for all public servants to have Maori lessons to reach NCEA level 1 at least
    5) harden the Electoral Finance Act to mean that any members of non government parties are excluded from working in any sector of government civil service.
    6) allow the flourishing of Cook Islands tax shelters to protect political slush fund Trusts
    7) sack teachers who allow a child to sit on their lap
    8) have a Speaker of Parliament who is incompetant biased and partisan beyond belief
    9) have Pharmac spend $25million to maintain the health of West Coast Snails
    10) ban the use of coal fires and bonfires
    11) raise GST to 20%
    12) Raise tax for super rich pricks to 60%
    13) make employer kiwisaver deductions a compulsory 10% for all workers
    14) require an oath of allegiance to Helen Clark
    15) make NZ a republic under President Clark
    16) introduce a fat tax, a fart tax, and a fucku tax
    17) drop the age of voting to 16
    18) further nationalise significant infrastructure
    19) make all contibutors to political blogs disclose real names and addresses
    20) take ownership of beastly newspapers such as the Dominion and New Zealand Herald

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  6. emmess (1,332 comments) says:

    Why is there not more talk of what happened to the tapes?
    I made this comment on another thread but it seems it was a bit far down to get a response

    Not 100% sure yet but this is starting to sound dodgy, with the change of story

    From http://www.3news.co.nz/WellingtonCityCouncildeniesmistakeregardingCCTVfootage/tabid/419/articleID/66189/Default.aspx?ArticleID=66189

    The Wellington City Council denies it has been caught on the hop thinking there was CCTV footage of a National Party cocktail conference when there was none.

    The Council has written to the party admitting there is no footage of the event in the Town Hall where a young man secretly recorded MPs discussing sensitive policies.

    National had hoped the security cameras in the foyer area would help spring the culprit who posed as a member of the party’s youth wing.

    The council initially said security footage is not normally given out – except to police – but now it has admitted that in fact there was no footage of the event in question.
    Council spokesman Richard McClean says providing video security is not really part of the deal.

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  7. Mr Dennis (348 comments) says:

    Completely unrelated, but in the interests of transparency:

    I have just been announced as the Family Party candidate for Selwyn
    http://www.scoop.co.nz/stories/PO0808/S00069.htm

    This should be an interesting electorate to run in, it has been a strong National seat for years but with the border change it has taken a good hunk of Banks Peninsula, currently held by Labour, which will liven things up a bit.

    More info will be up on the party website soon:
    http://www.thefamilyparty.org.nz

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  8. tim barclay (886 comments) says:

    Helen Clark will see losing the election as the end of the world as she knows it. So she views with alarm what her life will be like without being prime minister. I assume she will suffer a nervous breakdown, which may even see her go completely bonkers like Margaret Thatcher. But her fate should not be confused with the rest of the country. For my part I see a National Government as a new phase of broad sunlit uplands and if the Labour Party suffers a complete political destruction I will view that as a wonderful thing. So will many others. So her comments on debt are quite irrational and will be seen as such.

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  9. philu (13,393 comments) says:

    “..I assume she will suffer a nervous breakdown, which may even see her go completely bonkers like Margaret Thatcher..”

    heh..!

    ..that’s funny for two reasons..

    ..one is the thatcher reference..

    ..the other the glimpse into the fevered/fervid mind/imagination of ‘old tim’..

    ..eh..?

    phil(whoar.co.nz)

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  10. tim barclay (886 comments) says:

    Phil some of the irrational stuff she has been coming out with suggests to me she is not that stable mentally. I do not mind much really, the mental health of Helen Elizabeth Clark will not matter much to me in a few short weeks. Were it not for her spiteful personality I just might have a nanosecond of concern for her. But I don’t. The old bat can go completely bonkers for all I care.

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  11. riki (234 comments) says:

    I remember Garth in the Herald predicting the down fall of the National party.

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  12. GPT1 (2,042 comments) says:

    Have you ever blogged a Labour conference/asked to blog one?

    [DPF: No, but have thought about applying one year. I understand they have less of their conference in public sessions, so there may be less to blog]

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  13. Lipper (2,207 comments) says:

    I have have a tape of secrets, and it reveals that Labour has confirmed the following policies to be undertaken AFTER the election.

    Nothing will be released before the Election Date, in case National try to steal them. Beside which, they have announced on the 7th that the economy is in good hands! Tui Advert!

    Ready?

    1) Introduce massive taxpayer funding of certain political parties.(one to be precise!)
    2) Give all employees the right to examine employers bank details in order to negotiate wage awards
    3) Introduce legislation to make any anti-gay references a new crime. Treasonable Crime
    4) Make it compulsory for all the populace to have Maori lessons to reach NCEA level 1 within one year. No exceptions.
    5) Make the Electoral Finance Act more robust to mean that any members of non government parties are excluded from working in any sector of the economy
    6) Allow the secrecy of the Cook Islands tax bunkers to protect Political Harvesting
    7) Sack teachers who allow a child to compete.
    8) Ensure that the Speaker of Parliament is thoroughly vetted, and understands The Governments Strategic Requirements.
    9) Have Pharmac spend $25million on more Viagra
    10) Ban the use of fire, after all the books have been burned at F451.
    11) Lower GST to 30%
    12) Ensure fair distribution of wealth with income tax on earnings over $100k at a marginal rate of 88%. (Except Govt. and Civil Serpents)
    13) Make employer kiwisaver deductions a compulsory 10% for all workers
    14 An oath of allegiance to Helen Clark mandatory at every workplace and educational centre every morning
    15) NZ to become a republic under President Clark one month after our pledges of support (Election)
    16) Introduce a fat tax, a fart tax, and a fucku tax
    17) Lower the age of suffrage to 12
    18) Nationalise significant infrastructure, and then sell it to the Chinese, and ban Canadians from owning anything.
    19) Make all contibutors to political blogs disclose real names and addresses, and deposit one member of their family into a Gulag.
    20) Take ownership of newspapers such as the Dominion and New Zealand Herald, and sell them to the Chinese, and never to any Canadians!

    This is all my own work, and you heard it here first!

    21) The National Party are going to try and steal most of this, aided by their wicked Canadian Cronies. Remember Chines good Canadian Bad

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  14. Lee C (4,516 comments) says:

    “The reality is the secret agenda meme is all about trying to associate a negative brand with a party. I will touch more on this next week, but is is the equivalent of the “Have you stopped beating your wife” question.”
    Hi David – I am working on the same thing – have already suggested that the VDS is in the grip of a ‘faux’ paranoid delusion – please see first of a series of offerings:

    The Paranoid Style – Is it For real? (1)

    I want to explore the style of campaign that some on the ‘left’ are employing during this political campaign, and ask ‘Is it for real’? …..
    warning – it’s a long(ish) post!

    http://monkeyswithtypewriter.blogspot.com/

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  15. grumpyoldhori (2,410 comments) says:

    The borrowing is not for social spending ?
    What is corporate welfare to telecom companies if it is not social spending ?
    The amusing part is that the Nats greatest supporters here in the rural
    areas will still be getting the dirty end of the stick when it comes to broadband.
    Fibre to the country, yeah right

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