Labour’s fiddling while the economy burns

October 9, 2008

Yesterday I asked: 

Who’re we going to trust – Labour, who already knew what was happening and still don’t know what to do about it, or National who have assessed the situation and acted?

The Herald has also noticed that National came up with a plan two days after the books were opened but Labour, which ought to have been known about the sad state of the national accounts, has done nothing.

There has been a striking contrast in the response of the two main parties to the disturbing news that after 14 years of budget surpluses the Treasury now calculates the public accounts are set for a decade of deficits.

An announcement such as that, of which governments have ample warning, would normally be accompanied by some urgent decisions aimed at restoring the fiscal balance somewhat sooner. Instead, Finance Minister Michael Cullen merely congratulated himself again on having saved previous surpluses for a “rainy day” and looked forward to the problems it would cause for National’s intended tax cuts.

There was evidently nothing he thought necessary to change, either in his own programme of reluctant tax cuts that started this month or in the Government’s spending programmes that might have seemed affordable in better times. If Labour’s “rainy day” could last 10 years, as the Treasury forecasts, Dr Cullen and his colleagues seemed strangely relaxed about it.

He even observed that had he known in the May Budget how bad things would become, his tax cuts might not have been as generous. Evidently he can do nothing about those scheduled two and three years ahead. There could be no clearer admission that Labour does not expect the next few years to be its problem.

Has Cullen thrown in the towel or has he absolutely no idea what to do when faced with an economic crisis?

Keeping Stock also comments on the editorial.

Now you’ve got a choice

October 9, 2008

Mary Holm says National’s policy won’t undermine KiwiSaver:

The National Party’s proposed changes to KiwiSaver would considerably reduce two of the biggest gripes about the scheme – that some people can’t afford it and that it ties up savings.

They also show National is broadly supportive of KiwiSaver, allaying fears that the party would make it not worthwhile to join if it became the government.

True, the freezing of employer contributions at 2 per cent of pay from next April – rather than rising to 4 per cent by 2011 – would make KiwiSaver somewhat less attractive for employees.

But with the government kick-start, tax credits and other incentives unchanged, KiwiSaver would still be the best way for most employees to save.

. . . For the self-employed and non-employees, including children, KiwiSaver would be unchanged under a National government.

The reduction of the minimum employee contribution from 4 per cent to 2 per cent of pay means it would be easier to afford KiwiSaver, especially after taking tax cuts into account. People earning $40,000 or less have already received tax cuts from October 1 that would more than cover 2 per cent KiwiSaver contributions, and those on higher incomes aren’t far behind.

By the time National’s April 2009 tax cuts took effect, everyone’s pay would have increased by considerably more than 2 per cent.

People reluctant to tie up 4 per cent of their pay – usually until they buy their first home or reach NZ Super age – could tie up only half that amount and still receive the incentives. They could continue to save the other 2 per cent in a non-KiwiSaver vehicle, with the money accessible at any time.

Many would find this 2 per cent option attractive. It would enable them to take out savings to start a business or to help out family or friends – things they can’t do with KiwiSaver money, although it can be withdrawn if the member suffers serious illness, financial hardship or goes overseas.

Anyone who would prefer to tie up their money, because they would otherwise spend it, could continue to contribute 4 or 8 per cent of pay to KiwiSaver.

Lowering the minimum employee contribution to 2% makes it easier for those with less money to spare for savings and those who can afford more can contribute more if they choose to or invest the extra savings where they aren’t tied up until retirement.

National trusts us enough to give us more choice.

UPDATE: Keeping Stock agrees 2% may attract more savers.

UPDATE 2: so does Barnsley Bill.

It’s the economy, stupid

October 9, 2008

The Nelson Mail :

Over the next month the major parties must temper the usual promises to perform better than the other lot with explanations of what they intend to do so that New Zealand can best weather this economic storm and the extended period of recovery to come. The time for election bribes is over. The choice is not so much between old hands and new brooms as in electing a government that will pull parties together to soberly guide the country through hard times.

The Press:

Clark has said this election will be one of trust. If this is so, then the question for voters will be who do you trust in the turbulent world we now face? With these tax cuts, and with some detail of its longer-term economic plans, National has placed its cards on the table. It has produced figures to show that its plans are fiscally responsible. Voters must decide whether Key and his colleagues can be trusted to deliver on them, or whether Labour can be trusted to manage difficult times as well as good ones.

The Timaru Herald: 

AS the economic news darkens by the day, voters’ thinking towards the election should also be changing. This should not be an election with any emphasis on such relatively trivial issues as the anti-smacking legislation, electoral spending, Winston Peters, the fate of the Maori seats, or how Helen Clark and John Key look. The vital issue is who should lead New Zealand through the economic storms ahead.

. . . But has Labour’s economic management been that flash? It is easy to sail in the fair weather that the New Zealand economy has enjoyed over the last nine years. Dr Cullen has not been exposed to a financial storm. And voters told that their tax cuts pose a risk to the economy will wonder why they didn’t benefit through the good times.

. . .There is little left in the budget pot over the next three years for grandiose plans, and parties that make such promises should be treated with disdain. Now is not the time to throw open the public purse for other than essential spending.

Who do we trust? The party which got us into this mess, or the one with a plan to stimulate economic growth which is the best way to get us out of it?

Who? Where?

October 9, 2008

A Timaru Herald vox pop survey on the streets of Geraldine showed seven out of 10 people still don’t know which electorate they’re in and only two knew who the Labour and National candidates are.

The size of the Waitaki Electorate (34,888 square kilometres) and the fact it has no logical centre of interest is part of the problem.

The Electoral Finance Act which has dampened campaigning is also at fault.

But regardless of those factors, if people take their right to vote seriously they have a responsibility to know basic information like which electorate they’re in and who the candidates are.

For the record, Otago MP Jacqui Dean is the National candidate and list MP David Parker is Labour’s.

And in case someone’s upset I’m only mentioning that Labour and National candidates – that’s because the wee parties don’t even pretend they’re trying to win the electorate.

$1m in a day

October 9, 2008

Southland’s new bank, Invercargill-based SBS, received more than $1m in new investments after only 24 hours of trading, chief executive Ross Smith said.

We have had numerous people come in … some branches, where an additional $1 million has been invested. We are seeing hundreds and hundreds of thousands of dollars being invested,” he said.

He believed the key to people’s confidence was SBS’ 139-year history, combined with a loss of confidence in other banks, which were foundering in an unstable international economic market.

The Southland Times applauds the Southland Building Society gaining bank status and notes:

It is inevitable that on the day SBS took delivery of its bank registration, some of the key players in the 1991 campaign that blocked a proposed sale of the society to Westpac bathed once again in the wisdom of that decision.

Those who spearheaded that campaign can indeed take much credit for resisting the fearfulness of the time. That decision stands as a reminder that conservatism can at times be the braver, wiser, and more adventurous course.

Sleeping on it

October 9, 2008

30 more sleeps . . .

October 9, 2008

. . .  until the election and candidate nominations open today.

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