Poverty of delivery BC & vision AC

Before Covid-19 (BC) the government was much better at media releases about their policies than delivering them.

Labour’s flagship policy KiwiBuild was a flop, child poverty worsened and the country was facing rising numbers on jobseeker benefits and forecast deficits even before Covid-19 struck.

While we can debate the when and how of the government’s response to the pandemic, we can be very grateful that there is no evidence of community transmission and, in spite of early mismanagement, new cases are being contained at the border.

While everything possible must be done to ensure that continues, now is the time to be formulating a plan for after Covid (AC).

The Labour leader’s warning not to expect big policies from her party this election is a mistake.

We need big policies. That doesn’t mean big-spending policies, it means big visionary ones and among them must be a strategy to repay the debt it is amassing:

With the election only weeks away, Labour needs to clearly explain to voters how it intends to repay the massive debt it is taking on to deal with Covid-19 – and whether its plan will involve higher taxes, National’s Finance spokesperson Paul Goldsmith says.

“Optimism is not a strategy for economic recovery,” Mr Goldsmith says. “So what is Labour’s target and timeframe for getting this country’s debt under control?

“Labour’s silence on the issue of a debt target is a telling sign that the only tricks up Grant Robertson sleeve is to keep spending and, eventually, reveal that he will have to hike taxes.

“Any responsible government will set a long-term target to get the huge amount of debt we are taking on under control so that the country can respond to the next crisis.

“We have said we will aim to get debt below 30 per cent of GDP in a decade or so.

“New Zealand can achieve this by striving for higher economic growth, by increasing government spending at a slightly slower rate than currently projected, and by halting contributions to the Super Fund.

“Rather than outlining any credible plan of her own this morning, Ms Ardern made false claims about the prospect of austerity under National. This is complete nonsense, and she knows it.

“National agrees with the Government that it is absolutely appropriate to spend more and borrow more during an economic crisis, such as we are seeing today.

“This is not the time for austerity, and nobody is suggesting it.”

Any government can borrow and spend. It takes a capable and disciplined one to spend the borrowed money wisely, make savings where necessary and plan to pay off debt to enable the country to cope with the next crisis.

The last National government inherited forecasts for a decade of deficits. It managed to get back into surplus while protecting the vulnerable from the worst effects of the Global Financial Crisis and dealing with the Canterbury earthquakes.

The current government inherited forecasts of surpluses, burned through them before Covid struck and is now planning to borrow big with no ideas about how to repay the debt.

This government had poverty of delivery BC and now Labour has poverty of vision AC. Parties that couldn’t deliver in relative good times can’t be trusted to deliver in bad times.

4 Responses to Poverty of delivery BC & vision AC

  1. adamsmith1922 says:

    Reblogged this on The Inquiring Mind.

  2. Roj Blake says:

    The current government inherited forecasts of surpluses, burned through them before Covid struck and is now planning to borrow big with no ideas about how to repay the debt.

    Still clinging to horse and buggy economics.

    When the government has a surplus, that means the economy has a deficit. Less money for households to spend, less money for business to invest.

    When the government has a deficit, that means there is a surplus in the economy. More money for households to spend, more money for business to invest.

    The government’s role is to ensure that its deficit does not add to inflation, but right now, inflation isn’t the problem, most of the developed world is suffering from stagflation.

    The govenment can choose to borrow, but it is not compelled to borrow. As the monopoly issuer of $NZ it can create as much money (within inflationary bounds) as it needs to fund programmes.

  3. homepaddock says:

    Roj, if creating money is this simple, why does the government need to tax us?

  4. Roj Blake says:

    Partly because governments do what governments have always done. There is a paucity of thinking about alternate ways to operate the nation to maximise the benefits for all.

    Taxation can also be used to level the playing field to an extent, to change behaviour, to control inflation. The government does not *need* to tax, except as an inflationary control.

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