Busy day today, so I only managed to catch up with John Key’s interview on Q and A just now. It seems the big story is that the (revised) new spending allowance in the Budget is gone.
GUYON Are you still going to spend $800 million more in the May Budget?
JOHN Well, I think the answer to that is no. What we are going to do is spend more on health and education. That may well be in the order of 600, 700, 800 million, but we are asking ministers and what they are working on is looking to reduce expenditure in other areas so that can be reprioritised to pay for the more in health and education we want and ultimately the Christchurch earthquake.
Leaving aside, for a moment, the thought of what is going to be cut in other areas (think housing, social development, Police etv) it could be easy to say, thank goodness that health and education will get more money. But with the sums of money John Key is talking about this will effectively be a massive cut for both sectors.
Let’s take Health. Before last year’s Budget , the CTU calculated just for spending to stand still it would take at least $555 million a year of new spending. The Budget fell at least short on that figure by more than $150 million a year, and that has delivered health cuts across the sector.
Add that investment deficit to what is required for this year just to stand still and John Key’s delightfully vague numbers above indicate that there is no chance of health getting anything like the money it needs. And remember that is not for any new services, wage increases etc. It is just to stand still.
We are going to hear a lot of spin in the next month or two about money going to health and education, but on the PMs words today it is cuts on the way. There will also be spin that anyone who proposes government spending is somehow committing economic heresy.
Of course we need to adjust to the new reality of the economy post-earthquake. It does require careful economic management, which might actually include sensible investments (spending) in our future. It needs to include support for innovation and job growth, and to give opportunities to future generations. What it does not need is a slash and burn mentality.
Actually think, Ministry of Waman’s Affairs, Ministry of Pacific Island Affairs, Families Commission and a thousand other quangos funded by us – the ever suffering tax payer – against our will.
You are.
*Women’s
“There will also be spin that anyone who proposes government spending is somehow committing economic heresy.”
Indeed, Grant. Of course, this continues the rhetoric they’ve spouted since becoming government.
pink – actually I’m quite happy for my taxes to fund these agencies.
My Uber left leaning Sister in Law works for a Govt Dept in Wellington. Even she says and I quote ” I honestly don’t know what most of my team do. They are never there, constantly on sick leave and there is zero accountability”
The purpose of her team is nonsense in the first place, but hear her talk like this stuns me!
Time for some serious surgery I’m sorry!
@ Just Right, and Johnboy’s ’silver bullet’ to fix Christchurch is to set up ‘another government department’? You Tories must be nearing total despair with these freaks in charge?
Just Right
You’ve just described most workplaces in NZ to a greater or lesser extent
“Ministry of Waman’s Affairs, Ministry of Pacific Island Affairs, Families Commission”
For over a hundred years EVERY Ministry has been the de facto Ministry of white mens Affairs. Never heard a white man complain once about it.
But there’s enough money for a lawn that gets played on for a few Satudays in winter.
We are going to hear a lot of spin in the next month or two about money going to health and education, but on the PMs words today it is cuts on the way.
Quite right Grant, Cuts are coming and National will try and spin that fact so the public doesn’t notice before December.
There will also be spin that anyone who proposes government spending is somehow committing economic heresy.
Obviously, should the current government gain a second term, they will be pushing this line completely. In fact, I believe they will extend this line to include their plans to sell State Owned Enterprises in the second term. No matter how little long-term sense such sales would make.
Good on you for standing up for increased government spending in this difficult economic climate, Grant.
But with billions to be spent on the Christchurch rebuild, and already Labour’s promises mounting over $5 billion, where does Labour propose the money is going to come from? We still haven’t had any detail about how much extra tax Labour is going to raise to pay for it, or how, have we?
It is all very well to promise more government spending in your high priority wish-list of more public servants, but this is election year. You had better come up with a plan to pay for it, otherwise people will start accusing you of undermining your leader and finance spokesman by making irresponsible promises you know can’t be kept.
I bet the rest of NZ will get mightily sick of things being blamed on the ChCh earthquake. I live in ChCh and I don’t want us to be an excuse for cutting in vital areas.
Key, English and Brownlee will sweep a stackload of crap under the carpet and try to disguise this as prioritising the re-build of ChCh when in actual fact most of this re-build will be funded by EQC and overseas insurance agencies.
What ChCh people need right now are people in other areas with brain-space to continue to fight on these issues. The other HUGE elephant in the room is what will be the over-ruling of democratic processes in ChCh. We didn’t vote Brownlee in as King of ChCh – there are some great Councillors ready and already taking up leadership roles in their communities that will be sidelined and harrassed into submission by Brownlee and his cronies. HELP!
@ Giarne, thanks for speaking out so clearly. I hear that young Councillor, Carter if I recall, is a good one. Sadly, it looks like you folks are going to be used as patsies for the Tory agenda. Funny how immediately after the 22 February quake, Key was saying ‘no worries’ about paying the bill, that EQC has $6b and another $5.5b in reinsurance, and the private guys have way more than that. Even Bob is saying their infrastructure is covered by private insurance. Looks like Key and English and Big Jerry are rorting us, again, to the tune of $5b?
Pinko, they’ll do it like Ireland – cut the salaries of the public servants, then will wonder why there are 1000 people leaving per week – doctors, nurses, teacher, prison officers, etc. till only the tories are left – left wondering how they will survive without the skilled people the country needs.
@ian… do you really think they’ll notice? they will have all the cheap labour they want trapped in our dozens of prisons.
by then, nz will have become a retirement and holiday home for the ultra wealthy. they won’t want to have to waste money on plebs… not when there are golf courses and spas to be payed for…
contract the jobs out to asian companies, and temporarily import the skilled labour to build them, then get on with the really important tasks of enjoying their wealth properly… it’s beautiful…
Cutting $800 million in new spending is hardly indicative of a slash and burn mentality Grant – at the moment it simply requires a halt on borrowing for three weeks!
I remember that not long ago ’sustainability’ was the catch-word of the day – I don’t see anything sustainable about borrowing $300 million a week.
Chuck in Phil Goff’s promise of $5 billion in new spending ($100 million a week) if Labour wins the election, add the Canterbury rebuild and things are looking tough. How do you propose paying for it all, Grant?
Do we really have a health department that requires over HALF A BILLION DOLLARS EACH YEAR just to maintain parity, or is that just a conveinient number to support your assertion, given it comes from the CTU.
If that is true, can the CTU enlighten us as to where the extra money will keep coming from?
David Carter has already claimed that the takeover of Canterbury Environment resulted in a drop in effluent being dumped in waterways. Of course that’s not true. The decline kicked in prior to this over throwing of democracy, but hey, it’s election year, he doesnt want to let facts get in the way of re-election.
I posted this on the Standard site hoping to get some comments, maybe I’ll get some here. This seems to be a chance for those with the expertise to counter Keys economic rational
Q & A.
This is the first time I have heard Key actually suggest that Government spending should be reduced because of the private sector being “crowded out” by the public sector. There will be better qualified people, following this site, than me to talk about so called “crowding out” but it is interesting to read the following on Wikipedia.
“However, this crowding-out effect might be moderated by the fact that government spending sometimes expands the market for private-sector products through the multiplier and thus stimulates – or “crowds in” – fixed investment (via the “accelerator effect”). This accelerator effect is most important when business suffers from unused industrial capacity, i.e., during a serious recession or a depression.”
http://en.wikipedia.org/wiki/Crowding_out_%28economics%29
This seems to support the view that increasing Government jobs in a recession actually helps to increase the number of private sector jobs. (David Hall, Director of the Public Services International Research)
@ tracey says: March 21, 2011 at 11:17 am
Just Right – You’ve just described most workplaces in NZ to a greater or lesser extent
Not any workplace I have worked in Tracey. Never worked in the Public Sector though… I have worked for some of New Zealand’s largest companies and never once encountered reports of such ‘fiscal mismanagement’ Guess that’s what you can get when organisations and the members of those organisations get divorced from ‘who pays’. Removal of a profit motive and the absence of a ‘doing more with less’ attitude leads to situations as I described earlier in the day…
As a taxpayer, I find these types of situations are outrageous. When our Government is borrowing so heavily to fund entitlements it is insane that this sort of stuff goes on.
Might be commonplace in the public sector… doesn’t make it right or moral
@Just Right you are Just Wrong – government is borrowing to fund the most outrageous tax cuts (5% ofF top rate)I have ever come across in 50 years. This government is fiscally irresponsible and an economic and social disaster. A disaster we need like a hole in the head having such ghastly natural disasters as well. Typical private sector blaming public sector lest their self serving agenda comes a cropper.
Please Mr Goff – do not buy into the borrow mentality that Mr Key is involved in. Many of my friends/listeners to National Radio and even people who respond to yahoo news would rather have a short term tax increase then more borrowing. Australia has done this very successfully. If putto the public properly would be a good thing. Please get the pulse of the nation before you start borrowing. Didn’t know where to put this comment and this article was the best fit. Jo
JustRight you claimed your sister in law said
“I honestly don’t know what most of my team do. They are never there, constantly on sick leave and there is zero accountability”
THIS exists to a greater or lesser extent in every place *I* have ever worked at. I have never worked in the public sector. You didnt refer to “fiscal mismanagement” per se.
If you think we should run government and private business based on such “solid proof” as “my uber left sister in law says” whatever the heck that means, then you are as fiscally irresponsible as those you condemn at your sister-in-law’s workplace on her say so.
Gee I have a “uber right leaning brother” who takes cash payments for work to avoid GST, who drove while disqualified from driving, and so on and so on. It doesnt prove anything other than a couple of things my brother does.
“worked for some of New Zealand’s largest companies” … and never noticed sickies being taken, by the same people over and over? Never noticed some people seem to do way less than others, and some nothing at all? Did you work in a team of one?
And as for zero accountability? I’m not sure exactly what that means in this context but will guess it’s that no one jumps on the constant sickie taker or the people who seem to do bugger all?
@Jo – Tell that to the people who are struggling to put food on the table, including middle income earners!
I don’t think the public would buy it at all!
If you and your mates want to donate your money of your own free will then go ahead, but please don’t speak for the rest of us who are already on struggle street.
Just wondering – never actually seen how the bill from Chch breaks down? John Key seems to e leaving people with the impression that he has to sign a cheque for 10-20 billion this year. Does this figure not relate to a 5-10year rebuild, given the availability of staff and resources. When spending on the staff and resources do they not recycle back tax and GST into the govt coffers?
And what exactly are they paying for? Apparently none or few of the residential housing (EQC & insurance) so why would they pay to rebuild commercial buildings (uninsured)? If they do want a bail out is the plan to settle the mortgage for the landlord (ie mitigate loss) and have them sort the building out with the bank and new tenants, or are we stumping up for the lost rent on their investment (ie covering risk and covering profits)?
Someone please tell me there is no govt money going to the insurance companies just to do what they have already been paid to do?
I have no problem with the govt stepping in for infrastructure, clean up, demolition, or costs when forced to move. Assistance should be available for the monuments (cathedral etc) but surly we don’t expect them to e paid for in one year?
Lastly just to over commit the economic heresy, has treasury figured how much money we can print (in a recession). For some reason we just leave this to the banks, but a limited one off issue could help a lot to mitigate the bill, without inflation kicking in.
Any other creative solutions – bond issue, one year reverse tax cuts, land tax, boat mooring tax, carbon tax, import tax, reverse subsidy for private schools? keep people out of jail.
P.S. pay for the little girl in Auckland. How dare the govt (read Labor) tell a New Zealander that they don’t belong here (Just as the German Govt told the German Jews).
The source of the money to rebuild Christchurch (and maintain core government services) is easy – just don’t build the Holiday Highway. There’s $1.4 billion allocated to that particular pork-barrel project, and a total of $10.7 billion committed to the Roads of National Party Significance over the next decade – practically all of which have a negative cost/benefit ratio.
So the choice is easy, it seems – we either build a bunch of roads to make it easier for National Party cabinet ministers to get to their holiday baches, or we rebuild the second largest city in the country. It should be an easy choice, but given that the Nats accepted $55,000 in “donations” from the trucking lobbyists – headed by an ex-National Party cabinet minister – at the 2008 election, it seems likely that the Holiday Highway will get the nod and Christchurch’s rebuild will be paid for by cuts at your local hospital.
We need to be given an understanding of the breakdown of costs for Christchurch and how much is covered by insurance.
I’ve heard (anecdotal only) that a number of businesses didnt have insurance. My question is why not?