Dom Post on change not wanted

February 17th, 2014 at 11:00 am by David Farrar

The Dom Post editorial:

John Key’s Government came into office in the midst of the global financial crisis. Nobody was expecting things to improve quickly. Most people expected them rather to get worse. Mr Key made no promises of instant gains.

On the other hand, his Government’s management of the was a moderate one and did not go for a hard dose of austerity. It reduced the deficit over two terms rather than bringing it back to nothing with a bump. The result was that our economic pain was relatively mild, at least compared with Britain and the United States.

The Key Government’s response to inheriting a structural deficit wasn’t to slash and burn with a frenzy of spending cuts. It was very moderate and middle of the road. Initially some infrastructure spending was accelerated to help soften the recession, and then new spending was slowed down. The extreme response came from Labour who went on the record opposing every single measure of fiscal restraint. They said a cap on public sector employees would be a disaster. They opposed saving money through efficiencies in back office functions.  I can’t think of a single act of fiscal restraint that they haven’t opposed.

Now the Government is signalling a less stringent approach to the budget, with increased spending in areas like paid parental leave. It recognises that the voters feel they have done their penance and a modest pay-off is in order. 

As we head back into surplus, we gain choices again. Deficits do not give you much choice. There are broadly three things you can “spend” a surplus on – debt reduction, extra spending and tax cuts.

A moderate balanced party will propose all three. I expect parties may disagree with each other about the exact proportions, but the extremists will only push those that fit with their ideology. Will Labour go against the 70% who don’t support tax increases and go into the election only promising tax increases, and not offering any tax cuts?

Labour leader David Cunliffe has not produced a big turnaround in the party’s fortunes, and time is running out.

National’s slogan this year will be some version of “Don’t put it all at risk”, and at present the signs are that it will work. There is not yet a deep-rooted feeling of economic dissatisfaction. There is not yet a widespread dislike of the Government. So the basic competing slogan – “it’s time for a change” – is not decisive.

Labour are promising to expand welfare payments to families earning up to $150,000 a year. Policies like that are what will put it at risk.

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22 Responses to “Dom Post on change not wanted”

  1. Joanne (177 comments) says:

    Labour/Greens seemed to have lurched themselves into the never never land territory. Labour/Greens seem to be going to hell in a hand basket.

    Very easy to kill argument of Greens/Labour policies by using fact rather than their fiction. Dotcom must have written the policy where $150k is the threshold.

    I don’t believe there will be a change in government.

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  2. EAD (315 comments) says:

    Lets get a bit of truth in the reporting here.

    Govt debt when the Nats took power – 17.4% of GDP
    Govt Debt 2013 – 35.9% of GDP
    Source: http://www.tradingeconomics.com/new-zealand/government-debt-to-gdp
    .
    Is our latest boom real?
    Growth of the M3 Broad Money index over the last 2 years by more than 6% p.a. suggest that rather than a healthy economy, we’re just going through another illusory credit boom. That Broad money supply growth is why inflation is much higher than the reported 2% the government tells us it is. The thing with Credit booms is that they are always followed by credit busts.

    source: http://www.tradingeconomics.com/new-zealand/money-supply-m3

    We need to radically shrink the size of the government to something more sustainable: (thought for the day – why don’t the Greens ever talk about our Finances being sustainable?? )

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  3. chris (460 comments) says:

    why don’t the Greens ever talk about our Finances being sustainable??

    I like your thinking, but they probably *do* think their finances are sustainable. Tax tax and tax some more so they can spend like there’s no tomorrow. You can always create more taxes.

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  4. Sir Cullen's Sidekick (522 comments) says:

    Don’t forget the fact that Kiwis have the belief that paying extra tax for free education and health is really good. They voted for this arrangement in 1999 and kept paying higher tax happily for next 9 years. I believe any party which goes to the poll with a promise of increased tax in return for free education and healthcare is a winner.

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  5. emmess (1,333 comments) says:

    There are broadly three things you can “spend” a surplus on – debt reduction, extra spending and tax cuts.

    No, there is one thing – government spending.
    Debt reduction does not reduce the surplus so it is not spending it.
    And tax cuts are not spending, the money did not belong to the government in the first place.

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  6. dime (8,752 comments) says:

    A tax cut at the top end is needed. Get us back to paying our FAIR SHARE. Unlike now where we pay our fair share PLUS.

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  7. big bruv (12,352 comments) says:

    I can see Key leading his government into their fourth term. Labour are fucked, the messiah that is supposed to be Cuntliffe has become a laughing stock in the eyes of the public. That same public are not fooled by the man, he is smug, uber arrogant and smarmy.

    What makes me laugh even harder is that the ABC club think that Grant Robertson is the real answer to Labour’s woes. There is no way in hell that the public of NZ are going to elect an openly gay man to be the PM.

    The next Labour PM (if there is ever going to be one) is not yet in the house.

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  8. Nigel Kearney (747 comments) says:

    What National have done is not even close to austerity. They have accepted and locked in the Clark era spending and just not added to it very much. The baseline should be, at most, the level of real per capita spending in 1999 when National were last in power. Any more than that is an acceptance that Labour’s slow march to socialism is bound to succeed.

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  9. Alan (910 comments) says:

    National needs to be firm and run on a policy of paying down the debt they’ve borrowed over the last 6 years. In their time in office, they’ve more than doubled the debt. You can argue there was a case for this additional borrowing, although I don’t agree with it.

    If we have an election which turns into a lolly scramble of tax cuts vs public spending, then the party offering public spending will win. I offer 2005 as the proof of this.

    National needs to run on a promise of 3 more years of zero budgets.

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  10. berend (1,600 comments) says:

    DPF: They said a cap on public sector employees would be a disaster.

    What cap? When I last looked the number of public sector employees at the end of Labour’s term is about what it is now.

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  11. tvb (3,939 comments) says:

    There will be no tax reductions from Labour only tax increases, some spending reductions in superannuation but in many years hence and some increase in welfare entitlements, (called helping the poor). But National cannot campaign on steady as she goes. They have to promise something for the future. But MMP can still deliver a coalition of the losers to grab Government, so the message is if you do not want change then you must give your party vote to National.

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  12. EAD (315 comments) says:

    Excellent point Emmess – a classic example of Orwell’s “Newspeak” being deployed in order to give words different meanings and corrupt our language in order to reduce our range of thought. Our language has become so corrupted:

    Quantitative Easing – The mere act of printing money made to sound complex and technical so it is not questioned by the populace.
    Punishing Austerity – living within ones means
    Government “investment” – Anything the Government spends money on no matter how wasteful.
    Liberal – a Totalitarian
    Free Speech – Free to say whatever you want as long as you agree with the “liberal” position
    Politically Correct – Censorship
    Diversity is our strength – By being alone and not united you are stronger.

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  13. dime (8,752 comments) says:

    “That same public are not fooled by the man, he is smug, uber arrogant and smarmy.

    What makes me laugh even harder is that the ABC club think that Grant Robertson is the real answer to Labour’s woes. There is no way in hell that the public of NZ are going to elect an openly gay man to be the PM.”

    GR is also smug, uber arrogant and smarmy. Hes also embarrassed by his partner which is weird “oh, hes not here tonight” as hes 3 feet away. Weird.

    Shane Jones is their only hope. Prime Masturbater.

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  14. igm (859 comments) says:

    Radio also think rainbow Robertson is the answer, not a bulletin has gone by today without his effeminate voice polluting the airwaves . . . disgraceful.

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  15. Harriet (4,010 comments) says:

    The next term of government is about ‘national productivity’ – because if you don’t get that right you will face huge inflation in an expanding economy as the only people currently left without a job are youth – who can’t really work in most jobs that become available in an expanding economy because they don’t have any experiance.

    National has done next to nothing on this matter in either the public service or the private sector – infact – they’ve not only passed the problem to the private sector but increased the problem; by paying the private sector to do unnessecery work – job placement providers are a very good example, these people get jobs and money for ‘placing people in work’ – where an expanding economy would have naturally done that job.

    Those working as placement providers should be doing something else instead in the private sector, and by doing so help keep inflation down. They are ust another example of tax and churn. Fucken pathetic from National really.

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  16. peterwn (2,935 comments) says:

    It is vital for ministers to make sure that there is not an increasing dislike of government as occurred on Jim Bolger’s watch – eg an extreme ideological plan to ‘privatise’ roads (effectively a land grab), clumsy attempt to reform the Fire Service and allowing IRD to introduce a draconian penalties regime (which Labour had to pull back). This is the sort of thing that causes party members and activists not to bother renewing subs, attending meetings or door banging or putting up hoardings. Hence the implosion of National’s 2002 vote.

    The current one festering away is the 5 year passport issue – IMO the annoyance factor to the electorate outweighs the alleged benefits that the bureaucrats put up.

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  17. Sir Cullen's Sidekick (522 comments) says:

    See my point? Dime is happy to pay more tax. We need more people like Dime. Good on you mate.

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  18. tvb (3,939 comments) says:

    The Government must keep coming up with a forward plan. They could do worse than listen to their membership. They must not let the civil service take over with their initiatives. The sort of things that peterwn above came up with look to be straight out of the civil service playbook.

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  19. dime (8,752 comments) says:

    Sir Cullen’s Sidekick – i gotta be honest, i skip your posts.. but i saw my name mentioned.. you may want to reread what i said…

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  20. emmess (1,333 comments) says:

    If we have an election which turns into a lolly scramble of tax cuts vs public spending, then the party offering public spending will win. I offer 2005 as the proof of this.

    I don’t agree
    2005 was unique set of variables and events which favoured Labour and they only just squeaked in

    Public spending is just not that popular as opposed to tax cuts.
    http://find.ipsos.co.nz/Fairfax-Ipsos/14.02/Poll14.02.15/baby-bonus.html
    I think less so now that ten years ago

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  21. Alan (910 comments) says:

    Public spending can be targeted at niche groups to drive turnout, tax cuts are more universal in their nature so the impact is less.

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  22. ShawnLH (1,932 comments) says:

    “I believe any party which goes to the poll with a promise of increased tax in return for free education and healthcare is a winner.”

    Love that. In order to have “free” education and health care, we have to pay more. Ummm………

    Does anyone on the left understand that A; there is no such thing as free when it comes to public spending, and that B; paying tax for something means it is NOT free?

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