It Is More Than Dismal Now

Tom Hunter
No Minister

More likely a Labour-Green coalition will take power in 2017, pick up the departments, ministries and all the rest of the machinery of state that National has so kindly retained for them and blow into that whatever money can be sucked out of the private sector

Damien Grant has an article published in the dying Stuff news site (when will he move to Substack?), but I’ve purloined it from the Not PC blog. He starts with a blunt assessment of our situation:

Meanwhile, global rating agency Fitch confirmed [this] gloomy assessment by downgrading the outlook for New Zealand from dismal to hopeless. I am paraphrasing.

They noted that our promised return to fiscal surplus is perpetually delayed due to weak economic growth and expenditure proving more persistent than anticipated. …

Grant’s article pivots off the current fuel crisis caused by the US/Israel-Iran war, where Iran’s threats on the Strait of Hormuz has effectively destroyed the marine insurance cover for that region, by stating that this is a positive opportunity for our National-led government:

It is chance for the Prime Minister to explain that we cannot borrow our way out of every economic shock. That the path back to fiscal solvency and economic vitality lies not in leveraging the sliver of headroom on the Crown’s balance sheet to avoid addressing our structural deficiencies but in aggressively dealing with those deficiencies.
…
That will be real leadership.

Real leadership from Luxon and his National-led government.

You can stop laughing now.

I think Grant is really stretching to be positive and optimistic about all this, when he knows better than most that this government, like its National-led predecessors and pure National governments of the pre-MMP era, just wants to manage, not transform. He damns them with faint praise:

I do not mean to diminish the real progress his administration has been achieved but the underlying structural issues of over-regulation and lax fiscal discipline mean all we are doing is slowing the rate of decline.

I’m sorry but what progress? They’ve merely stopped lefty ideas that were not fully embedded, while allowing others that are embedded to simply continue, (“underlying structural issues”), producing the following:

… the price of construction is the highest in the OECD, more than double the average, and … the cost of capital formation ‘…which covers machinery, equipment and construction – is 70 per cent above average in New Zealand and also the highest in the OECD.’

More than two decades of that has resulted in this situation, which should scare the shit out of anyone who still has kids here in the country:

New Zealand does not possess the people, the capital, or the institutional settings to maintain our first world status. We are moving from the bottom of the OECD to the top of the developing world.

Which is going to result in a situation where, one day sooner than you think, we’re not going to be able to outbid a nation like the Philippines for all those lovely, educated young women who keep our retirement homes working.

My personal perspective on all this is much darker than Grant’s. We have consistently failed to meet the challenges of the future over the last 25 years and each decade (or even half-decade) has felt more constrained, stressful and gloomy than the one before it, which is partly why I don’t often write here about my own country.

The Covid era perhaps accelerated all that, creating a debt-load that we are not working our way out of as we did earlier ones, as Grant and Fitch explicitly identify.

I don’t think we can get out of this, for the simple reason that nothing so far has changed this trajectory. I was not alone in making the following predictions in…

2008 (Kiwiblog)

What is National going to do should it win this November beyond babysitting the institutions of Labour and the Left. Nursing those things along, tiring all the time and steadily losing votes simply by being in Government and getting blamed for the insanities of those self-same institutions. Until the day comes, one or two election cycles down the road, when a revitalised Labour gets back into power and gets to push forward some more. Ratchet Socialism at its best.

====================

2010 (Kiwiblog)

A whole bunch of suggestions for National, which I’ll bullet-point here (from a post by DPF where he boasted about how National’s “Fiscal Discipline pays off”), starting with the message that Key and company needed to push:

That message is simple:
– for their own sake, people cannot depend on government to the degree they do now.
– if this continues then sooner or later government will fail them, as it failed them in the 1970s and 1980s, and they will actually be worse off, not better.
– people must be given the chance and the incentives to begin supporting themselves and their loved ones, with the emphasis on making that support grow and strengthen steadily over time.

I suggested that this message had to be reinforced by actions taken in three key areas affecting people’s lives – retirement, education, healthcare – with four specific actions in each case which were not a Rogernomics-style, shock-therapy revolution:

1. Point out what has happened in these areas failing to live up to their socialist promises, and failing expensively.
   
2. Show how these areas will continue to degenerate if we keep doing what we’re doing now.
   
3. Give individuals the financial incentives and legal defences to enable them to first augment and then supplant those public services with private replacements – acknowledging that we’ll always need some public healthcare and education for people who fail.
   
4. Use a device that I don’t normally support – tax credits – to enable all this because not only does it give people a chance to use the private sector but they turn the left’s primary electoral argument against them – in that voting for the left will mean losing your tax credits for (health insurance, retirement investments, etc, etc).

Instead, the left will be forced into making a choice between the privileges they prefer – direct government benefits and support via government departments – and individualised privileges already locked in that people are using to support their own choices, or the usual fantasy land where endless amounts of money will feed both choices.

In short, give people the means to at least start controlling their own solutions and their own lives, as some already are. Do that and the area that the left wish to play on will steadily shrink.

====================

2012 (Kiwiblog)

But even by a couple of years later I knew (as I wrote in 2010) that National would never even attempt this, and I commented on another boastful post by DPF, where he took much satisfaction from long-time lefty Matt McCarten’s critique of Labour’s ongoing uselessness in the face of the Mighty Key.

While I agreed – also pointing out that a big part of this was Labour hitting the limits of its tax-and-spend philosophy (something the British Labour government has encountered in spades) – I made this point about National:

So here NZ sits, stuck in this middling status quo: hoping against hope that something will turn up, that if we carefully count our pennies and are tight-arsed enough about spending for long enough, that the private economy will continue to creep along and narrow the gap between what we spend and what we can afford. I suppose if one could imagine a scenario where National remain in power for seven or eight consecutive terms, that that would be a pragmatically acceptable scenario. But who can believe such a scenario?

More likely a Labour-Green coalition will take power in 2017, pick up the departments, ministries and all the rest of the machinery of state that National has so kindly retained for them and blow into that whatever money can be sucked out of the private sector…But given the very different economic world being presented by almost all our major trading partners – many of whom face exactly the same problems with very dark economic clouds on the horizon – I doubt they’ll be as lucky as Clark and Cullen were in 2000.

Say hello 2026 and Damien Grant.

This article was originally published by No Minister.