Armstrong on Labour’s spending
October 18th, 2008 at 11:51 am by David FarrarThank God some media are focusing on the substance of policies and spending promises, rather than merely the style of symbolism.
John Armstrong does a first class analysis:
Increasingly, the story of the 2008 election is a tale of two election campaigns.
The first campaign has everyone pretending nothing has changed and it is business as usual. The other campaign accepts everything has changed in the wake of the global financial crisis.
Stuck fast in the first campaign are most of Parliament’s minor parties. They are becoming increasingly irrelevant to the main action. They are in denial that the party is over.
They continue to promise to spend money on this or that. But they are not going to be able to extract the requisite cash from the two big parties in post-election talks. There simply is not going to be any money spare.
ACT is probably the only minor party happy about this – they want to cut spending. With a decade of deficits there is not enough money for the major parties spending priorities, let alone the minor parties.
The minor parties have not adjusted to that reality. As a result they are finding themselves ignored.
The minors should concentrate on policies that go beyond spending. I know this will be very hard for the Greens, but money does not grow on trees – not even carbon credit generating trees.
It is a different story for the major parties. National accepts the party’s over. Labour knows the party’s over. But it is hoping some voters haven’t noticed.
In the pretend campaign, Labour continues to spend money it does not really have, this week targeting students, their parents, beneficiaries in part-time work and the elderly.
There is no way Labour can deliver on their promises, unless they hike taxes which in a recession is suicidal. Labour knows a fourth term would be their final term anyway, so they don’t care about broken promises, so long as they get that magical fourth term.
The spending was clearly planned before international financial markets went into free-fall and the Treasury produced far gloomier forecasts of the state of the Government accounts.
Despite Budget surpluses turning into ongoing deficits, Labour continues to roll out new spending, using the fig-leaf of a three-to-four year phase-in period for new policies to try to hide its embarrassment from those questioning how this squares with the party’s claim to be fiscally responsible.
And remember PREFU was done before the latest developments in the credit crisis with global credit drying up.
National is justifiably arguing that Labour is asking voters to write it a blank cheque. Without figures or forecasts, voters are flying blind.
Labour is behind in this election, however. It has to go for broke.
National is being far more cautious because it is the one looking more likely to have to clean up the mess. Its stimulus is principally $1.4 billion-worth of tax cuts which it would bring forward to next April, when it believes the economy will most need it.
National is being transparent about how big its stimulus will be. Labour isn’t. Only a week or two ago Labour accused National of being fiscally reckless with its tax cuts. National can now fire that charge straight back.
Labour is going for broke – but it is the country that will be broke. Ten years of deficits is close to the deficit being structural. Add on an extended recession and Labour’s billions of extra spending and you mey get that structural deficit we had in the 70s and 80s – endless borrowing and debt – wiping out the gains of the last two decades.
Related posts:
- Armstrong on Labour Spending
- Counting up Labour’s borrow and spend
- Herald on Spending
- Union spending in the campaign
October 18th, 2008 at 12:06 pm
Labour knows a fourth term would be their final term anyway, so they don’t care about broken promises, so long as they get that magical fourth term.
Very true. A fourth term would be extraordinary anyway. The last time an NZ Govt won a fourth term was almost 40 years ago (1969). But the last time a Govt won a fifth term was more than 80 years ago (1925) and that was with the Opposition deeply split between Labour (27%) and the National Party (21%) NOTE: Not the same as the modern National Party, this was really the old Libreral Party with a short-lived new name. Both were unelectable, while the Reform Govt had an apparently fabulous new leader in Gordon “coats off” Coates (a good and decent man who ultimately proved a hopeless politician).
Vote:October 18th, 2008 at 12:09 pm
Oh my god the media are waking up!
But is it too late to wake this country of sleepwalkers up?
Vote:October 18th, 2008 at 12:34 pm
The state of the Nations Finances don’t matter , if you have a high country sheep station for sale name your own price but be quick sale needs to go through befor Nov 4th.
Vote:October 18th, 2008 at 12:42 pm
Poor old John Armstrong … off Helen’s Xmas card list. How sad, never mind, move on.
Cullen is being rolled and rolled magnificantly in Labour’s raid of the Treasury money box.
Never mind our countries future.
The end always justifies the means.
I could almost bring myself to say “F****G SOCIALIST S**M”.
But I won’t because some of them arn’t
Not many mind you.
Vote:October 18th, 2008 at 12:48 pm
Of interest in this regard as well is Fran O’Sullivan’s article to day, which does not appear to be on line as yet, but if DPF will excuse the link in this instance I have commented on here:-
http://adamsmith.wordpress.com/2008/10/18/8475/
If Ms O’Sullivan is correct in her thesis then I would suggest it is a matter which deserves wider publicity and much greater interest from the media, but I will not hold my breath
Vote:October 18th, 2008 at 1:10 pm
“Thank God some media are focusing on the substance of policies and spending promises, rather than merely the style of symbolism”
Maybe the National party could do the same – every announcement it has come up with has been spur of the moment and drafted by speech writers looking for good slogans rather than through any policy development process and you know it.
Vote:October 18th, 2008 at 1:29 pm
From Fran’s article – thanks adam: “But unlike the Australian scheme, the New Zealand Government’s guarantee does not cover funds the banks access from international wholesale markets, a factor which will leave the banks short of vital cash to loan to customers unless something is done.”
Fuck I didn’t know that. That’s the whole point of the friggin thing.
Those bastards. Hulun and Cullen are risking OUR economy for political purposes (see the article for why). You utter wankers.
Vote:October 18th, 2008 at 2:02 pm
“…..John Armstrong does a first class analysis:……”
HELL FREEZES OVER……..!!!!!!!
Vote:October 18th, 2008 at 2:16 pm
The Fran o’Sullivan article is now up at the NZ Herald website
Vote:October 18th, 2008 at 2:24 pm
DPF, that conclusion of your analysis is RIGHT ON THE NAIL:
I Quote:
“……Labour is going for broke – but it is the country that will be broke. Ten years of deficits is close to the deficit being structural. Add on an extended recession and Labour’s billions of extra spending and you may get that structural deficit we had in the 70s and 80s – endless borrowing and debt – wiping out the gains of the last two decades.”
ABSOLUTELY. That is exactly what needs to be understood by one and all, that is exactly how the history books should describe THIS DISGRACEFUL Labour government, and that is exactly what they should teach the kids at school.
I actually WANT Helen Clark to cling to power THIS TIME by way of a messy coalition including the Greens, so that the issue is decided conclusively and beyond doubt. If we now get a National Government with one hand tied behind its back thanks to all the “mee-too” promises it has had to make to keep the stupid, stupid, stupid sheeple of NZ from being frightened off, they will be able to make very little difference AND Labour in opposition with the media pissing in their pocket all the way, will be able to shift a great deal of the blame that was actually entirely theirs.
I believe that because of international credit drying up, an NZ government with a tax revenue shortfall will NOT be able to borrow to fund wages of its civil servants, beneficiaries, doctors, police, to keep the power on, let alone to “fund tax cuts”. It is a question whether having a National Government may stave off that day of reckoning; in any case, if it happened on John Key’s watch he will be unfairly blamed for it, and if it happens with a Labour government FOLLOWING 3 years of John Key, John Key will STILL be blamed for it. The best option is for us to get a crazy Green-policy-driven coalition government now to administer a swift death with absolutely NO DOUBT who is to blame. Then we can have a whole paradigm shift in NZ “natural party of government” terms.
The Nats ahould absolutely draw a line in the sand now, and regurgitate the “dead rats” they have swallowed, tell us the unpalateable TRUTH about the crisis we face, tell us they will NEED to sell assetts, they will NEED to take a chainsaw to the public service and to welfare…….they need to tell the people of NZ that if they do not get a MANDATE NOW to do whatever it takes, they are NOT INTERESTED IN GOVERNING. Then in the event that they end up in opposition, they can spend 3 years ON THE ATTACK telling the people of NZ and the MEDIA and the socialists, “We Told You So”.
They will DEFINITELY win the NEXT election and the socialists and the Greens will be GONE FOR DECADES. THAT is what NZ NEEDS, not a whole lot of messy ambiguity for the next decade or more.
The only OTHER result now that would possibly work, would be for the smartest 20% or so AT LEAST of voters to give ACT a HUGE mandate, so that the resulting coalition with the Nats would have every justification for adopting the policies we need.
Vote:October 18th, 2008 at 2:59 pm
PhilBest – your analysis presumes that a fourth term wouldn’t see a mass exodus of taxpayers who have propped up this country to-date, but refuse to do this any more. I’m in that camp.
Vote:October 18th, 2008 at 3:50 pm
getstaffed, I certainly think THAT TOO would hasten the “end” for the socialists…….a milder version of “Atlas Shrugged”….
Vote:October 18th, 2008 at 4:47 pm
getstaffed
There is another way – employers to deny a Liabour coalition their tax revenue – no cash – no nothing – revolutionary – yes – will it work – by lunchtime.
Vote:October 18th, 2008 at 7:41 pm
Mikhael and Hulun are disgusting because they know what they are doing is wrong.
But they are prepared to drop their moral and ethical trousers to get another term.
IF they did get another term they wouldnt spend as theyd *gasp* find the cupboard was bare and *gasp* due to unprecedented impacto fthe global economic crisis we have had to defer some policy….
In summary, Hulun and Mikhael are lying whores.
Vote:October 19th, 2008 at 8:26 am
Tax, borrow and spend. NZ Labour are once again borrowing from the Gordon Brown play book.
It’s interesting to note that the next Scottish By-Election is on 6 November. I’ll be all electioned out with the US poll on 4 Nov, Scottish By-election on 6 Nov and NZ poll on 8 Nov.
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