Presbyterian approach to recovery prudent

The ODT opines:

Even though the Treasury forecasts have been notoriously cautious for many years, there is a general feeling within the business and economic communities that New Zealand is about to start a purple patch of economic growth.

With the economy set to grow by 3.6% in the coming financial year, followed by annual growth of between 2.1% and 2.4% for the following two years, New Zealand’s economy may well be the envy of many in the Organisation of Economic Co-operation and Development. Mr English is rated with restoring the Crown accounts to surplus and doing more than his fair share of the heavy lifting on policy by the publication Trans Tasman. The deputy prime minister has driven reform in the state sector to use resources more effectively and deliver higher quality services. In the House, he has become a commanding performer, blunting Opposition attacks. . .

In past times of good fortune, government finance ministers have come under strong pressure to try to ensure re-election by making big-spending election promises. Those times have hopefully passed. The importance of having a sound economy, the growing of employment, certainty for businesses and households must overshadow the individual ambitions of politicians. . .

We must take the opportunity the sunnier outlook provides to make hay and put away a good harvest like good ants rather than squander it like grasshoppers.

The Southland Times also combines praise with the need for caution:

A slew of economic reports in the past week or two have shown an ever-sunnier view ahead for New Zealand, and especially Otago and Southland.

Business New Zealand’s latest surveys of services and manufacturing sectors showed strong expansion under way across the country but with stellar scores Otago-Southland region far eclipsing all other regions. In Westpac’s survey of regional economic confidence Southland scored second highest. . .

It is not hard to pick the source of the extra optimism here in the south. Take a bow, Mrs Cow. . .

The glow from the white gold is spreading throughout the economy, earning money and creating jobs not just on-farm but in servicing and supplying them and the people who live on them.

Treasury is forecasting economic growth next year of 3.6 per cent.

Barely a day later Statistics NZ announced that a 17 per cent surge in agricultural production had helped growth to hit 3.5 per cent already. Higher than Australia.

We can laugh at that, but it should be remembered that it is not unusual for New Zealand to grow faster than Australia, or even beat them at cricket. The problem is that it always proves a one-off. While the Kiwi economy puts on bursts of speed, the Aussie trucks along steadily and just like the fabled tortoise, wins the race.

Just as on the rugby field, the champion team is the one that performs consistently, week-in, week-out, not the one that plays the occasional blinder, then falls apart a week later. Graphs of New Zealand’s growth rate tend to be too much like Fiordland’s landscape: leaping and plunging in a fashion adventure tourism operators might appreciate but stolid Southlanders should not.

In the past, the attitude of both individuals and Governments has all too often been “Great! Crisis over. Lets go back to the bad habits that created it.”

That would be easy and wrong, not just for individuals but the country.

That is an important  message for the run-up to next year’s election.

A change in government would undo all the good that’s been done and take us back to the over taxing, over spending policies of the Labour-led government which put the country into recession before the rest of the world.

We still carry too much debt. We continue to run nasty current account deficits. And the evidence is that Aucklanders at least have not yet cured their mania for property bubbles.

It is easy to go on a diet, to quit smoking, to start saving for the future. The harder part is to keep doing it. The reward for losing a kilogram is a cream cake. And all too quickly, the old habits return.

The secret to sustained economic success is not a bottle of miracle oil, or a lucky puff of the economic trade winds. It is discipline and perseverance.

Solid southern men and women know that. We should set an example for those northerly types: eat the cupcake, but sell the cream.

We can celebrate the purple patch but can’t afford to squander the opportunities it will provide to strengthen the economy and help people most in need.

As the ODT says:

. . . Balancing the budget is important. Taking on less debt is important. Ensuring business confidence leads to job growth is important. Ensuring social justice remains a key part of the country’s psyche is important. Mr English knows the challenges. In 2014, he must balance the needs of the Government with the needs of the people.

A Presbyterian approach to the recovery is prudent and necessary to ensure we don’t return to the bad habits of the past and to provide weather-proofing to help us withstand the next storms.

The need for this isn’t just economic but social. A strong economy is the only sustainable way to provide first-world health, education and other services that address the needs of the people.

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