An article in a weekend newspaper featuring Grant Robertson talking about his $50 billion dollar bill showed just how little understanding he has of what is needed to get out of the canyon he has put us in. Referring to last week’s article by Audrey Young, it was stated that nothing gets done unless he and Ardern agree. After this week’s Budget, there’s either a lot of disagreement or a lack of know-how or both, because the reality is that nothing is getting done. Except opening the country’s largest wallet, the one that contains our hard-earned money.
Opening the wallet and spraying our money around is the easy bit as is running up billions in debt – it’s actually $62 billion all up, that’s around twenty per cent of annual GDP. When asked how the increased debt level would be repaid, Robertson swatted that away by saying it would be repaid over time as a result of the economy growing. What sort of a glib statement is that? Talk about the bleeding obvious.
What Robertson doesn’t explain is how he is going to grow the economy. There was zilch in the Budget. One can’t criticise the extension of the wage subsidy scheme but that is simply part of the rescue package. Preserving jobs is one thing but unless there is a pathway to growth, those jobs will disappear. Take tourism, the country’s number one income earner, currently on its knees. A Finance Minister cognisant of the effects of that would have singled the sector out for special attention. But no, all they got was a measly $400 million.
Maori received over twice as much. When Barry Soper asked Robertson why that was, the reply was the same old same old: they are depressed, deprived and disproportionately represented in the statistics. Which, apart from anything else, is an admission the Government has failed its voter base. One wonders what has happened to the Treaty settlement monies. Some has been used wisely to grow the Maori economy to the point where they should be able to look after themselves.
Robertson says he won’t be going down the austerity route as happened in the 80s and 90s. He says it was young people who bore the brunt of that and he’s determined it won’t happen to young people this time. By young does he mean pre-school because even they will be repaying the debt he’s just run up. The man deserves to be called stupid if he thinks the economy is going to launch like a rocket, which it will have to do if the young are to avoid being affected.
As ANZ chief economist Sharon Zollner pointed out, young people were already having a tough time because of what had happened to asset prices, particularly housing, and now they are the ones being saddled with this debt. Robertson appears oblivious to this, which shows his lack of understanding of economic matters. Thanks to him, the effect on the young will be far greater than the GFC shock or the earthquake crises. Bruce Bernacchi, head of financial services at KPMG, said he wouldn’t be surprised to see more taxes if the current Government was returned at the next election.
Neither would I. That reflects the extent of the economic thinking on the left of politics. It is simply ‘tax and spend’. As the Budget showed they have no vision or long term strategy because they are incapable of implementing one. This leads to uncertainty across all sectors of business. With that comes a lack of confidence. This is not the Government for the time. They only know how to handle the negative side of a problem; when it comes to executing something to assist the positive side they are lost.
Always have been. Always will be.
If you enjoyed this BFD article please consider sharing it with your friends.
