Pushing the economy off a cliff

May 29, 2020

New Zealand has achieved a new and most unwelcome record number of job losses:

Job numbers fell by a record 37,500 in April 2020, as COVID-19 effects and restricted trading began to impact on the economy, Stats NZ said today.

In seasonally adjusted terms, total filled jobs fell 1.7 percent in April 2020 compared with March 2020, when it was flat.

April’s fall is the largest in percentage terms and by number since the filled jobs series began more than 20 years ago, in 1999.

“With the country in lockdown throughout most of April 2020, the impact of COVID-19 is now being seen in falling job numbers,” economic statistics manager Sue Chapman said.

“Non-essential businesses closed during the lockdown, though some people were able to work from home.”

The government decreed what were essential businesses and permitted them to operate rather than allowing any that could operate safely to do so and this sharp number of job losses is the result.

Stats NZ calculates filled jobs by averaging weekly jobs paid during the month, based on tax data. Filled jobs include jobs paid by employers who are being subsidised by the COVID-19 wage subsidy scheme.

“While a fall in filled jobs does not necessarily mean employment has ceased in all cases, we saw a rise of over 30,000 people claiming the government’s Jobseeker Support benefit in April,” Ms Chapman said. . .

This month’s figures could be even worse with more than 6,500 job losses this week.

The record number of job losses adds credence to Adam Creighton, writing in The Australian, who says no national leader has been as feted as Jacinda Ardern during this pandemic. But while she might have popular support, the facts are she is pushing the NZ economy off a cliff.

New Zealand’s economy is in strife. Without major change, our constitutional cousin is in decline. Its public finances are in tatters, its biggest export, tourism, has been obliterated — Air New Zealand announced 4000 job losses this week — and New Zealand police now can enter people’s homes without a warrant.

“New Zealand is going backwards, falling behind the vast ­majority of our OECD partners in virtually every social and economic measure that matters,” said Roger Douglas, a former New Zealand Labour treasurer and the famed architect of Rogernomics.

New Zealand ranks fourth last in the OECD for labour productivity growth, and last for multi-factor productivity growth, according to economist Michael Reddell, based on OECD data. Health and education are gobbling up more of the budget as the population ages, with less and less to show for it.

That was happening anyway and has been exacerbated by the harder by the lockdown that used the arbitrary criteria of necessary rather than safe in deeming what we can and can’t do.

The country’s Massey University reckons economic activity will tank 16 per cent in the second quarter, while government forecasts pencil in a 4.6 per cent decline this year ahead of an 8.2 per cent rebound in 2022.

“I doubt the economy will bounce back as the government hopes; and the Treasury forecasts, as bad as they are, will prove optimistic,” former NZ Treasury secretary Graham Scott said.

In one year, New Zealand has blown 30 years of hard-fought ­fiscal rectitude. Its public debt will explode from the equivalent of 19 per cent of gross domestic product last year to 54 per cent by 2022, on the government’s own figures.

Successive governments have been criticised for the 30 years of hard-fought fiscal rectitude. How much worse the current situation would be had they not followed that path,

Scott said expanding the deficit, expected to blow out to 10 per cent this year, was the right thing to do. “But looking further out, comparisons with other countries, such as the US and UK, are no basis to justify our large debt ratios; we’re a small, open economy with vulnerable export industries,” he said, noting the share of exports in GDP had been falling steadily for nine years.

That makes Labour’s ban on oil and gas exploration all the more bizarre. With 0.3 per cent of global GDP, New Zealand can only shoot itself in the foot by shunning fossil fuels. The Prime Minister and Finance Minister, who have not worked in the private sector, spruik the totems of modern left governments — renewable energy, trees, higher tax, equality — but without much to show for it. Plans for a billion trees and 100,000 houses have come close to almost naught, and a capital-gains tax was dumped. Labour made a song and dance about reducing child poverty too, but on six out of nine measures tracked by Statistics New Zealand it is unchanged or worse since 2017, including the share of children living in “material hardship”, which has risen to 13.4 per cent. . .

This column had attracted 102 comments when I read it, a couple of days ago including this gem from Alfred:

The world doesn’t need more examples of the progressive social direction of NZ so we can learn from their utter failure sad as it is. She’s all hat and no cattle, just a charismatic executioner of her country’s future prospects. 

Jacinda Ardern has unprecedented praise from around the world for her response to crisis but before the Covid-19 response the government she leads had made little or no headway on its key policy planks.

She, and they, have taken the praise for dealing with the health crisis and must take responsibility for the economic one we now face.

But given they didn’t manage to deliver on their promises in normal times they can’t be trusted to come up with, and deliver on, policies to reverse the economic catastrophe for which their insistence on a harder and more prolonger lockdown are partially responsible.


If it were done

May 21, 2020

Macbeth was talking about murder when he said, If it were done when ’tis done, then ’twere well It were done quickly.

That also applies to leadership tussles and National leader Simon Bridges has made the right call in summoning his caucus to settle the matter on Friday.

Every day’s delay is a day more when the issue festers with all the negative media attention that accompanies it leaving little clear air left to hold the government to account.

I am not going to give my opinion on who should be leader.

I support the party and whoever leads it and will continue to do so whether that is Simon with Paula Bennett as his deputy or Todd Muller and Nikki Kaye.

But I will say that whatever the outcome of the caucus vote, all MPs must be loyal to the leader and the party.

The leaking, the criticism and any show of disunity and disloyalty must stop.

Just a few months ago National was polling higher than Labour.

What changed was Covid-19 and the response to it.

The government’s abysmal record of doing very little it said it would until then has not changed.

KiwiBuild, child poverty, climate change  . . . it’s been lots of talk and very, very little action.

What has also changed is the economy.

The lockdown flattened the Covid curve and in the process has flattened the economy.

The government has voted itself so much money in response most of us can’t comprehend the amount. But worse, it doesn’t have a clear plan on how to spend it and at least as important, it doesn’t have a plan on how to repay it.

As Heather Roy explains in a letter to her children:

. . .By way of explanation, this is why I am sorry about your inheritance. Debt is what you have to look forward to and growth will take some time to return. In the short-term, New Zealand is facing a large rise in unemployment, predicted to peak at nearly 10 percent before falling back to 4.6% in 2022 (optimistic I suspect). Government debt will explode to more than 53 percent of GDP, up from 19% now. . . 

Not all debt is bad of course. It often allows you (and countries) to invest wisely in areas that will be of benefit later, but I fear the lack of vision and planning associated with the government borrowing an additional $160 billion means ‘wisely’ isn’t part of this equation. Vision and hope are important for people. We need to know where we are going – what the end game looks like and that the pain is worth bearing because a better life awaits. Hope too, is important. People will endure a lot if they have hope. I’m afraid I saw neither in the Budget last week. There was lots of talk of jobs, and lots of picking winners but not much in the offing for those already struggling and those who will inevitably lose their jobs when businesses go under.

Figures are tricky things. If you say them quickly, especially the billions, they don’t sound so bad. Most people can imagine what they could spend a million dollars on. Billions are a different kettle of fish. Many of us have to stop and think, how many 0’s in a billion? When figures are inconceivable, people give up trying to work out what they mean. After all, the politicians will look after the money side of things, won’t they? I hope you realise that is very dangerous thinking. To start with it’s not the government’s money – it’s yours and mine, hard earned and handed over to the government for custodial purposes.  We hope it will be spent wisely on health, education, social welfare, but after we’ve voted every three years, we don’t have any say on where it goes.

Beware of those saying we can afford to borrow this much money. Just as when we borrow from the bank to buy a car or house, when government’s borrow, repayments must be made and this limits the amount in the pot for spending in extra areas. The state of our economy is your inheritance: to contribute to your tertiary education, to educate your future children, to provide medicines and hospital treatments when you are sick, to help those who for whatever reason have no income. A mountain of debt places the prosperity of your children in peril.

Picking winners is dangerous too. Government’s love picking winners, especially in an election year. Election year budgets often resemble a lolly scramble with media reporting the “winners and losers”.  The simple fact is when you confer advantage on one group everyone else is automatically disadvantaged. Giving to the vulnerable is understandable but private industry winners are not. As an example, those who had been promised Keytruda (last year) to treat their lung cancer only to have that rug whipped out from underneath them now must be devastated to see the racing industry handed $74 million to build/rebuild horse racing tracks around the country. Flogging a dead horse instead of funding up to date medical treatments is folly and unfair in a humane society. 

I know fairness and equity are important to you all. Your generation has a more egalitarian outlook on life. Partly I think this is because you have not experienced real poverty and why New Zealand’s debt doesn’t bother you as much as it does me.

I have recently read two excellent writings by people I respect and I want to share them with you. The first is a report written by Sir Roger Douglas and two colleagues called “The March towards Poverty”. . . 

The report concludes “ For too long, we have lived with the fiction that we are doing well, lulled by successive governments into believing we truly do have a ‘rock star’ economy. Nothing could be further from the truth. Starting with Grant Robertson’s post-Covid budget, we must admit to the problems facing our economy and begin to deal with them. Otherwise, current inequalities will remain entrenched, we will continue to fall further behind our OECD partners, and the prosperity of our younger generations will be placed at peril”.

While I’m on the topic of legacies, the second article I want to share is by Chris Finlayson, Attorney General in the Key/English Governments for 9 years starting when I was also a Minister. I’ve been worried about the legality of many of the impositions we have experienced since the country was plunged into lockdown. I know you sometimes think all this theoretical  stuff isn’t that important, but in a well functioning democracy how the law is made and enforced is central to an orderly society we can have faith in. Chris has eloquently described these matters much better than I can in his opinion piece  on the rule of law:

“Some readers will no doubt respond that this rule of law stuff is all very interesting for the legal profession and retired politicians but is hardly of any practical impact given what New Zealand has just avoided.

I disagree. The former Chief Justice, Sian Elias, once said that if only judges and lawyers concern themselves with the rule of law, New Zealand is in trouble. She was right. Adherence to the concept of the rule of law would have helped avoid some of the basic failures of the past eight weeks – failures that should give all New Zealanders pause for thought.”

I’m afraid it’s too late to put Ardern’s debt genie back in the bottle. I apologise on behalf of my generation and older that you and your kids will carry this debt for all of us. My advice to you is to do what this government should have done. Cut costs and minimise your liabilities. Spend only on the essentials and invest in assets that will produce a safe dividend. Perhaps most important of all, stay engaged in our democracy and encourage your friends to do the same. If COVID-19 has taught the world anything it is this: politicians need to be closely scrutinised at all times but especially in crises like these.

The government’s arrogance was exposed a couple of weeks ago when ministers were ordered not to speak in the wake of the Covid document dump. It’s carried on this week when Tourism Minister Kelvin Davis refused to attend the Epidemic response Committee because, doing a Facebook Live session instead.

The country needs an opposition focussed on the government’s mistakes and formulating a plan to do much, much better, not on itself and a leadership struggle.

Whatever happens at Friday’s caucus meeting, this is what National must be doing, and doing it together in step with the leader.

And whether or not there’s a change of leader, one thing must not change – and that’s the decision to rule out any deal with New Zealand First.


More self-confidence than self-knowledge

January 12, 2014

Self-confidence is one of the necessary attributes for politicians.

Unfortunately many don’t also have self-knowledge.

That’s the quality that helps them know if it’s right to stage a come-back and when it’s time to go.

Rodney Hide has got it.

. . . I loved being MP for Epsom. The people were very good to me. It was a tremendous privilege to get to know the diverse communities and neighbourhoods in such a great part of our greatest city.

In my time, thousands of people came to see me from across the political spectrum, very often at the end of their tether. I was usually able to help. It was satisfying work.

I didn’t want to go when I got the sack. As a minister in Government I was able to help Epsom people better than ever before and I finally had legislation under way to ensure better and more-principled government.

But that’s politics. It wasn’t to be.

And now the position of Act candidate for Epsom is open again. I am very pleased Act has excellent candidates in prospect. I have concluded it can’t be me. . . .

Hide was a good local MP, and he also became a minister. He then paid a high price for taking a perk after gaining a justified reputation as a perk-buster.

But he’s been there and done that and there are far more examples of people who make the mistake of going back than those who make a come-back work.

If Act is to survive it needs fresh faces.

In his own party, Roger Douglas and John Banks are good examples of returns which fell flat.

Hide brings up another:

There was a time when Winston Peters could rattle an entire government, bringing ministers to their knees. Now, even junior ministers get the better of him.

I think it’s sad. Peters appears like some aged rock star who has partied way too hard and is now up on stage trying to relive the glory days. Or perhaps a champion boxer who has stayed too long in the ring. I wouldn’t want that.

I thought the worst thing for Peters was getting dumped in 2008. No. The worst thing for Peters was getting back in 2011.

New MPs snigger at him. There was a time he would have swatted them down like flies.

I prefer to remember Peters as he was. He’s a salutary lesson. . .

He too has been there and done that but he doesn’t know when to let go.

He’s holding on, collecting the pay, warming a seat and occasionally venturing out to dog whistle to the disaffected.

But if he had a fraction of the self-knowledge to match his self-confidence he’d know it’s time to go.


Where’s the context?

April 26, 2013

Critics of Margaret Thatcher and her policies have long lists of what she did wrong and those who were worse off as a consequence.

But few of the criticisms I’ve come across in the wake of her death have put what she did in context.

The British economy was in a parlous state and the country was hostage to militant unions which led regular and prolonged strikes.

Something had to be done and Thatcher did it.

Whether she did the right things in the right way can be argued, but that she needed to act is beyond dispute.

Critics of “failed” policies of the 80s and 90s in New Zealand and their architects Roger Douglas and Ruth Richardson take a similarly blinkered view.

They too have a list of what was wrong without even a nod as to why it was needed. The dire economic situation in which New Zealand found itself after years of over generous public funding, Budget deficits and protectionism required urgent action.

There might have been other ways in which to tackle the problems  but had they had to be tackled and more of what caused them would not have provided a cure.

The policies which caused the problems won’t work now either but the LabourGreen lurch to the left threatens to impose them on us again.


Stealing from the future

March 23, 2011

My parents generation came through the Depression with the very firm belief that saving for a rainy day was better than borrowing to enjoy the sun today.

My generation got a reminder of the good sense of that when the ag-sag of the 1980s hit.

We didn’t like it at the time but the tough prescription of Roger Douglas’s Budgets were a very necessary correction of the policies of successive governments from the early 1970s. They spent more than they earned, taking the country into debt which was in effect stealing from future generations.

Reducing the burden of the state and freeing the economy to allow better growth were worthy aims which were subverted by Labour from 1999. Michael Cullen reduced public debt and achieved Budget surpluses but he also increased government spending, gave welfare to people in want rather than need and increased taxes.

The worst damage was done by the extravagant promises which Helen Clark used to win the 2008 election. The productive sector was in recession but it was disguised by high government spending and consumer spending and escalating property prices fuelled by borrowing.

We were already in recession when the global financial crisis hit. Recovery has been patchy at best and the economic impact of the Christchurch earthquake has been the last straw.

The government has recognised the seriousness of the situation and is making it clear there will be no pre-election lolly scramble. There won’t be any increased spending at all – if there is more in one area it will have to come from less in another.

The left either can’t or won’t see the sense in this which gives voters a very real choice in the election.

Labour and its potential allies  want to steal more from the future. National knows the lesson the Depression taught my parents still hold true.


Still only 9/10

September 30, 2009

Missed one question in the Dominion Post’s political quiz again.

I didn’t know the name of Roger Douglas’s book.

Kiwiblog got another 10/10.


1984’s crisis provided opportunity for change

July 16, 2009

Kiwiblog reminded me  it was 25 years ago yesterday that the Lange government came to power.

One of the fascinating aspects of the radical changes made by his government is that generally centre right and right wing people accept the need for them while those on the left do not.

Many of those in the previous government and their supporters who like to call them the “failed policies of the 80s” display selective memory, because they supported them at the time. They also fail to acknowledge that few of the fundamental policies the Lange-Douglas government introduced, and subsequent National administrations under Jim Bolger and Jenny Shipley built, on have been reversed.

Labour governments from 1999 tinkered with some of the legislation which dragged us into the real world, tempering it a bit, but they left the foundations on which our economy now stands untouched.

It took a crisis to bring those changes about. The situation we’re facing now isn’t as bad as it was then, but 10 years of deficits is a very gloomy prospect.

Could the government use that as an opportunity to develop a plan for more radical changes and if so would MMP allow them to be implemented?


Bill said then they said then Bill said

March 3, 2009

Bill English has just made a ministerial statement about the report which concluded the $1.5 billion hole in the ACC accounts should have been disclosed before the election.

The responses were illuminating:

Labour accepted no responsiblity and criticised National.

Russel Norman used it as an excuse to argue against privatising ACC and also said that a fixed election date would make it easier to comply with the Public Finance Act.  I favour a fixed date but am not sure that it would make a difference to ministers who weren’t inclined to full disclosure.

Tariana Turia listed some of Labour’s other breaches of trust including illgal spending of public money on their election campaign then changing the law to retrospectively validate it.

Roger Douglas attacked Michael Cullen and Helen Clark for failing to abide by disclosure requirements.

Peter Dunne said the important point was how to ensure ACC was funded properly.

In his response Bill agreed with Dunne. He then laid the blame at Cullen’s feet and said that everytime Labour criticises National in the next three years for not funding something,  he will be able to say if they had disclosed the problem and done something to solve it there would be $1.5 billion more in the public purse.

Cullen was wrong when he said, “We’ve spent the lot.” He should have said, “We’ve spent more than the lot.”

UPDATE: Rob Hosking  is scathing:

New Zealand has that pre-election economic and fiscal update for good reasons. Too many governments have lied.

The Treasury is the guardian of the public purse and is also supposed to be ministers’ consciences on these matters. It failed.

At least, though, it has admitted it was at fault. Secretary of the Treasury John Whitehead today issued what amounts to a mea culpa on behalf of his department.

Former Labour ministers have failed to admit any fault: instead raising the privatisation bogey.

Which is balderdash. . .

 The NBR explains the consequences for breaching the Public Finance Act.


Are they trying?

October 29, 2008

When it’s the party vote that counts those of us in the provinces tend to get overlooked by politicians in pursuit of power who find a much greater concentration of potential voters in a much smaller area in the cities.

Because of this I haven’t been surprised that only National’s Jacqui Dean is seeking both electorate and party votes in my electorate, Waitaki.

However, I do find it strange that the other parties are almost invisible. I’ve seen a few Labour and Act hoardings – and I do mean a few, maybe half a dozen – and I’ve covered a fair bit of the electorate’s 34,888 square kilometres in the last couple of weeks.

I’ve had a brochure with John Key’s commitments in the mail but nothing at all from any of the other parties.

I thought it was just because it was too hard to campaign in such a big electorate, but others are reporting a similar lack of action in smaller electorates.

Stranded in Reality  in Hunua has a hoarding with Paul Hutchison and John Key outside her house:

 And the only other signs I have seen in Hunua are promoting Roger Douglas and Jim Anderton. They haven’t been defaced. I have not seen one Labour Party or  other party billboard. No  pamphlets apart from National Party ones have been delivered.  How lazy can you get? You deserve to lose.

And Linley Boniface who lives in Wellington Central says she’s being wooed by National’s Stephen Franks but:

Grant Robertson, current Labour candidate for Wellington Central, has kept such a low profile in my area that I assume he’s the first person ever to run for Parliament while being in a witness protection programme.

If there’s little sign of other parties campaigning in what is probably the most politically aware electorate in the country you have to ask what’s going on?

I can think of four possibilities:

1) The Electoral Finance Act is stifling activity.

2) The other parties are saving their onslaught for the very end.

3) The other parties don’t have enough members and money to run campaigns.

4) The other parties don’t want to win.


400 people 6 politicians

October 29, 2008

I started my journalism career in an election year – 1981 when politicians still faced the public at meetings and the public still turned up in good numbers – several hundred people – to hear them.

After attending two meet the candidates forums in the past fortnight with fewer than 25 people in each audience I’d begun to wonder if this form of democratic interaction was dying.

However, a report on a meeting  in Queenstown gives me hope.

The ODT reports that 400 people turned out to hear six politicians: National deputy leader Bill English, his Labour counterpart Michael Cullen, Progressive MP Jim Anderton, Act candidate Roger Douglas, Greens co-leader Russel Norman and NZ First leader Winston Peters.

All parliamentary parties had been invited to send a representative and while I understand that wee parties’ MPs can’t be everywhere, it’s a poor reflection on both United Future and the Maori Party that they couldn’t find a candidate to represent them at the forum.

The ODt says that Queenstown Lakes Mayor Clive Geddis received sustained applause from the audience when he told the politicians:

“. . . if you can run the economy of New Zealand for the next decade as these people out here have run the economy of the Lakes District for the past decade, the GDP will be 30% greater . . . than it is today.

“Close to 400 people here this evening have paid to come and hear politicians. It’s a sobering thought and what is behind that is a genuine interest.”

Mr Geddes said those who had turned out felt they had ownership of their community, had a say in the way it was managed and felt they were in charge of their own economy.

“People who are prepared to front on a cold, rainy night, pay 30 bucks to hear you . . . but more importantly that you take away from them the message that this town has got something you can learn from them.”

The paper also noted the best one-liners:

Bill English on the anti-smacking legislation: It’s going to be the nanny state on P.

Russel Norman reacting after being criticised for being an Australian representing a New Zealand party in an election: Hey, I’m a citizen, mate. There are a lot of migrants in this country. Get used to it.

Michael Cullen after being asked about the proposed location of the new Frankton school: I don’t have a briefing on that, I assume they’re planning for future growth.

MC Jim Hopkins reacting to Dr Cullen’s comment: Hold the press . . . a politician has just admitted he doesn’t know something.

Winston Peters after being asked to confirm a rumour a deal had been done between New Zealand First and Labour that if NZ First did not get in, Mr Peters would be appointed Right Honourable Consul of Monaco: You came all the way tonight and that’s your best shot? Sit down and be a good lad.

Maybe you had to be there to appreciate it, but if that’s the best Peters can do the standard of his repartee is down with his standard of accountability.


Clark & Key the winners

October 27, 2008

The winners of tonight’s leaders’ debate were John Key and Helen Clark who very sensibly declined to take part with the wee parties’ leaders.

It was difficult enough for everyone to say much with six of them, another two would have added nothing positive.

Rodney Hide was on-message, clear and realistic – he accepts that John Key doesn’t want Roger Douglas in his cabinet.

Peter Dunne fence sat as he often does, but was also quite firm on a few points – including lower taxes.

Tariana Turia knows what she believes in, I’m not sure if she knows how to get it though. I’m relieved she thinks they can get all the post-election hui over in a week so we won’t be hanging on indefinitely if the Maori Party holds the balance of power.

Every time Jeanette Fitzsimons mentions getting out of cars and on to bikes or buses I wonder how she can live in the country without realising that public transport is almost non-existant outside cities and it’s usually too far to wherever we’re going to cycle.

But she was firm about not wanting to work with Winston Peters, and the highlight was the look on his face as she said this – he looked as if he was about to throw up.

Update: Roarprawn was impressed with Tariana but says the wee parties can’t hold country to ransom.

Fairfacts Media at No Minister is underwhelmed.

The Hive gives her verdict and still thinks Peters is ill.

There was another bloke in a red tie there but he’s part of Labour so doesn’t count.


Only 6/8 for multi-party debate in Queenstown

October 6, 2008

Only six of the eight parties in parliament will be represented at an election debate in Queenstown.

Deputy Prime Minister Michael Cullen will represent Labour. Other speakers scheduled are Deputy National Party leader Bill English, New Zealand First leader Winston Peters, Progressive leader Jim Anderton, Greens co-leader Russell Norman and Act candidate Roger Douglas.

The wee parties complained they’re not getting a fair go from TV and Peter Dunne was one of the most vocal critics. But United Future isn’t bothering to turn up for this mulit-party opportunity, nor is the Maori Party.

It’s understandable that the leaders can’t be everywhere but surely they have a candidate who wouldn’t disgrace themselves or their parties who could turn up to fly the flag.

Under MMP every vote is supposed to count but this is further evidence that provincial votes don’t count as much as those in the big cities.


Labour’s Next Leader

July 8, 2008

Dene Mackenzine looks at the people who could be the next Labour leader:

The contest to replace Prime Minister Helen Clark might be less brutal and more clear cut than previous leadership challenges, depending on the outcome of the election this year.

Less brutal leadership change? Now there’s an oxymoron.

If, as Miss Clark continues to believe, Labour can cobble together a coalition government, then she remains safe and can leave in her own time, having taken Labour to a historic fourth-term win.

But if Labour loses and the election result is close, party sources believe Trade Minister Phil Goff is the principal candidate for the job.

He is seen as a safe replacement who would not shift Labour markedly away from its centre-left position.

Although he is tainted with having been an MP in the Rogernomics era, many of Labour’s supporters are too young to remember Sir Roger Douglas and his ideas in the David Lange-led government.

If a week is a long time in politics, two decades is ancient history.

Police Minister Annette King is seen as the logical deputy leader for Mr Goff, to give the party a gender balance and an Auckland-Wellington split.

Pity about the mess she created in health, the EFA and last week’s Road User Charge debacle. And let’s not forget blaming crime on the full moon and sunny weather.

The last four opinion polls published show National’s support at more than 50% and its lead over Labour at more than 20 points.

If the polls hold up, Labour could lose up to 18 MPs, including electorate members.

Polls usually tighten before an election – although this time Labour might be where National was in 2002.

If the defeat is not too broad, Mr Goff will be challenged by Health Minister David Cunliffe and Labour Minister Trevor Mallard.

Both would bring with them an image problem.

Mr Cunliffe was identified early in his career as a potential leader, but has earned the disdain of some colleagues for his “superior” attitude.

That has mellowed somewhat and as health minister, and also as communications minister, he has shown a preparedness to take a hands-on approach to his portfolios.

But over at Craig Foss we see that those hands haven’t always done the right thing.

However, that’s another story so back to the ODT:

Mr Mallard was demoted for punching National Party MP Tau Henare, but retains strong friendships in the Labour caucus and is deputy finance minister.

As a former chief whip, he knows how to gather the numbers for a close vote.

A decimation of Labour will see other candidates chancing their arm in the belief that it will take Labour six years, or two terms, to win office.

Energy Minister David Parker and Immigration Minister Clayton Cosgrove will mount challenges.

Neither is particularly popular with colleagues, and Mr Cosgrove will be a fiercer competitor than Mr Parker.

Mr Cosgrove has been a member of the party since he was 14, and is a protege of former prime minister Mike Moore.

Mr Parker is seen more in the mould of former prime minister Sir Wallace (Bill) Rowling, and would offer a leadership style out of step with modern politics.

That’s the one who looked more surprised than anyone else when he won Otago in 2002 and few were surprised when he lost it to Jacqui Dean three years later.

Also in the mix at this level will be Building and Construction Minister Shane Jones, a Maori MP of whom was expected great things.

He is said to be “hugely bright” but pompous and obviously ambitious.

Not a good combination if you’re trying to win a leaderhsip contest.

Clark successors?

•Labour wins: Helen Clark stays as prime minister.

•Labour loses narrowly: Phil Goff takes over early next year.

•Labour loses moderately: Mr Goff, David Cunliffe and Trevor Mallard fight it out.

•Labour thumped: Free for all, with David Parker, Clayton Cosgrove and Shane Jones fancying their chances.

All very interesting, but the really fascinating point is that this discussion is being had at all. A few months ago leadership change woudn’t have been on anyone’s radar.


Recession Similar But Positively Different in Provinces

July 4, 2008

Brian Fallow  quotes Split Enz: History never repeats.

There is always some difference that makes a difference. But the similarities can be instructive, too.

A couple of Reserve Bank economists, Michael Reddell and Cath Sleeman, have been looking at six previous recessions in New Zealand – the imbalances which preceded them, what triggered them and what made them worse.

They draw no conclusions about the situation now, beyond saying that “there is nothing in the material in this article to suggest any greater reason for optimism” than the downbeat view expressed in the bank’s June monetary policy statement.

They note the mitigating factors – fiscal stimulus and commodity boom – but say these factors “have much to mitigate”.

By my count 12, maybe 13, of the 17 recessionary factors they list are at work now, two of them – a global credit squeeze and a large rise in oil prices – in spades.

The recession which made the deepest impression on me was that of the mid 1980s. There are several differences between then and now.

Our economy was a mess before then – subsidies, tarrifs and import duties protected producers and manufacturers and increased costs for consumers; just about everything was regulated and/or taxed. Then came the 1984 Lange Government and Roger Douglas’s first budget.

Subsidies ended and farmers were brought kicking and screaming into the real world. The dollar was floated and rose on the back of high interest rates – at one stage we were paying more than 25% on seasonal finance –  inflation raged, commodity prices fell but tarrifs kept the price of inputs up and the labour market was still heavily regulated.

North Otago was particularly hard hit by the ag-sag because too many farms were too small to be economic anyway and there was not much irrigation so we were forever suffering from recurring droughts. At one stage it cost more to transport stock to the freezing works than they were worth. Property prices plummeted and a lot of us were technically bankrupt, owing more than the value of what we owned.

As farmers retrenched those who worked for, serviced or supplied us were hit too and the problems spread to provincial towns. Meanwhile cities were booming on the back rising property prices and the sharemarket. It was only when the market crashed in October 1987 that cities began to feel the country’s pain.

A lot of economic fundamentals have changed since then. A small economy like New Zealand’s will always be at the mercy of international factors, but thanks to those “failed policies of the 80s and 90s” we are in a much stronger position to withstand the worst impact of them.

Another difference is that this time the problems are starting in the cities and, the impact of drought aside, the country is still doing well. Even though sheep farmers have had an appalling season, falling income has been cushioned by rising land prices.

While people are worried about what’s happening elsewhere, the North Otago economy is still growing and property prices are rising. There hasn’t been an empty shop on the main street for a couple of years and a retailer told me he’d paid more GST in the past two months than at any other time since he’d been in business.

People on low fixed incomes, and some earning more, are struggling with steeping rising prices of fuel and food. But the district’s economy as a whole is benefitting from development associated with increased irrigation and the dairy boom.

If we are in a recession right now, as many economists believe, it won’t be official until the June GDP figures are released in September.

And if the statistics mirror anecdotal evidence they will show that this time the recession is starting in the cities and the picture in the provinces is sitll pretty positive.


Campaign Trail Can Be Lonely

June 24, 2008

Oh dear, it’s a lonely life for would-be Mps. Only six people attended a meeting with Act candidate and former Labour Finance Minister Sir Roger Douglas in Invercargill yesterday – including Sir Roger and his off-sider.

 

Maybe that’s why he turned up at the South Island Dairy Event later in the day – there are more than 600 people attending that conference providing a ready-made audience.


Budget medicine

May 22, 2008

The first Budget I remember listening to (yes, listening on the radio in the evening because – as Poneke reminded me – that was how you first received the news and when Budgets were delivered) was in 1975, my first year at university.

 

I was hoping for increased help for students. That we already got our fees paid; a living away from home allowance if our course necessitated moving from home to study; A or B Bursaries of $150 and $100 respectively (when weekly rents were about $7); anyone who had a vague notion that they might one day entertain the possible thought of teaching applied for and almost always received a studentship; and that people on pretty modest incomes were paying 60% taxes in part to fund all this largesse, was irrelevant.

 

I’ve forgotten what, if anything students received which supports the contention that we don’t appreciate what Government’s give us; and I don’t recall anything about subsequent Budgets until Roger Douglas’s first in 1984. That was the one was brought farmers kicking and screaming in to the real world by removing subsidies.

 

The sudden removal would have been difficult enough but the impact was worsened by raging inflation, high interest rates, a relatively high dollar and low commodity prices. While we had to face the real world, the labour market was still strictly regulated and there were tariffs on imports so while our incomes went down costs did not. The damage was compounded in North Otago where we were also facing another of the recurring droughts which dogged the district.

 

The economic and social deterioration of the ag-sag compounded as inflation and interest rates climbed, buoyed mostly by city property prices and the share market. Meanwhile farm prices plummeted and many of us found we’d gone from having reasonable equity to theoretical bankruptcy as our debts became greater than the value of what we owned.

 

Perhaps we were fortunate there was safety in numbers. Stock and station firms and banks to whom we owed so much knew that if they pushed a few they might start a landslide which would only aggravate the situation. By the end of 1987 the share market crash meant it was no longer just farmers and rural communities which were in financial disarray.

 

It took years to recover but the changes Douglas, and subsequently Ruth Richardson, made helped contribute to that recovery. So while we didn’t like Douglas’s medicine at the time and could argue about the method and timing of its delivery, few would disagree that farming and New Zealand are economically healthier because of it.

 

 

 


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