Less spending or more debt

Election year Budgets are usually more generous but the high, and growing, level of government debt shows why this year’s one won’t be.

Finance Minsiter Bill English says private credit growth has flattened over the past two years as businesses and households increase savings.

But government debt is still rising and is forecast to peak at $73.4 billion in 2016/2017.

That’s not a pretty picture but we can do something about it.

We want to lift our national savings – that’s households, businesses and the Government – because it reduces New Zealand’s vulnerability to foreign lenders, reduces pressure on inflation and interest rates and helps exporters by taking pressure off the Kiwi dollar.

However to achieve this the Government needs to reduce its own borrowing, which is forecast to drive up New Zealand’s national debt over the next few years.

We’ll have a real choice at the election between National’s plans to reduce government debt or any of the parties on the left which will give us a borrow-and-spend-more Labour-led government.

6 Responses to Less spending or more debt

  1. Robert says:

    Rather I would have thought we should be winding our export businesses up into top gear. I just cannot understand why people like you don’t understand the only place money is generated is by business making, selling preferably to export or import substitution. Its really very simple.
    No amount of saving will do the job.
    Give business in NZ the boost it needs. 100% depreciation on new fixed plant, all R& D to be an expense and so on.
    More and more money into export promotion and a whol;e heap less into import growth.

    Youth wages so we can produce trained young people fit for industry, reduce Local Govt. tax take and change the RMA as promised.

    Failure to lead by the money men.

  2. homepaddock says:

    Robert I do understand that Government spending is only part of the problem.

    I agree with you that exports or import sustitution are the only ways to generate money and that is easier when the burden of government – central and local – is lower.

  3. adam2314 says:

    Robert.

    ALL ( Most ) countries are desperately trying to EXPORT themselves out of this GFC.

    Are you saying that our exporters are not doing their best to increase their companies bottom line ??

    Are you calling for subsidies ??

    Import substitution !!..

    Name something that we import that can be produced cheaper here.. Carpets ???.. Wool or otherwise..
    Pork !!.. Noodles .. Olive oil.. CARS !!.. Avocado !!.. Tiki’s.. !!.. Post cards..

    If you can Robert.. I have money available for a good proposition..:-))

  4. adam2314 says:

    Sorry HP.

    Import substitution is very hard to do..

    Knowledge.. !!.. Yes we can.. ( to coin a phrase )..

    We are an educated country.. Despite so many here not taking up the challenge !!..

    Adam.

  5. homepaddock says:

    Hard but not impossible, Adam. For example, there’s a company in Oamaru which makes electronic components for scales for domestic and overseas markets.

  6. Robert says:

    subsidies? Hell no.
    Having grown up and worked and owned business in an industry that was controlled by the state via subsidies that’s the last place Id go.

    Incentives are better.Remove the barriers to doing business and let us get on with it. The RMA needs fixing, we can’t dig a decent hole in the ground without all the Greens and their broken arsed followers whinging and moaning.
    We export logs like there is no tomorrow to China just to buy them back as plywood. Why, well its cheaper because the Chinese Govt. subsidize their industry while we allow various bankers and such to overvalue our production plants for the ongoing borrowing allowing them tax deductions for interest just to have bigger empires. Not knocking anyone for using the system but it doesn’t work for NZ.
    Easy to make people redundant when you don’t have to carry the cost longterm.
    We allow Fonterra to market our product that in real terms has decreased in value since 1970 and then allow farmers to borrow to the hilt to make capital gains to cover the shortfall.
    We can’t use caol to generate electricity that would smelt all our iron sands because the 3% Greens will make such a fuss and no pollie has the guts to tell them to FO but would rather sell the coal to China cheap so they can sell us steel back just like they do plywood.
    Does that begin to point out how useless we are at ensuring that the Most Important Place for NZ is NZ and we need to be a lot more Nationalistic in our approach to things.
    We allow anyone who wants to jus import using hard earned oversea’s funds any rubbish they like. TV tonight. Where are 50% of Valantines day roses Grown India of course and imported by the Wharehouse and the Supermarkets. Not for NZ profit.
    Where does a lot of our food now come from China to the detrement of our populations health and our industry. So we paid a bit more when it was grown here but most of us were healthier and paid less tax.
    Cheaper is not always best and until you have a product that someone copies and goes to China to get made so they can run you out of the market you won’t understand why Kiwi’s don’t bother much anymore.
    A few random thoughts which no doubt you will decide don’t fit your world scenario that hasn’t isn’t and won’t work for Kiwi’s which is why there are 600k in Aussie alone.

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