Tomorrow is Budget Day. Tomorrow we’ll find out whether National actually does have anything resembling a pro-growth agenda, or whether it will all just be cost cutting.
We will also find out who gets what, and whether National will continue its habit of favouring the very wealthy at the expense of the broader community with its unaffordable tax cuts.
New Zealand’s Budget debate will occur against the background of a fierce battle around austerity economics vs growth economics.
Here’s a selection of articles which undermine the zero National Government’s spin on zero Budgets:
- The Economist says austerity Budgets in small countries, without fixing the broader international system problems, will simply undermine growth and jobs.
- Nobel Prize winning economist Joseph Stiglitz argues European austerity Budgets fail both economic and social fairness tests, and can drive economies into double-dip recession.
- The Financial Times balances this by noting small economies cannot simply spend their way out of a mess. Lax fiscal policy in small open economies can result in demand leaking offshore without resolving local structural problems.
- Writing in The Guardian, Professor Mariana Mazzucato, says small states can help drive growth and jobs by investing in innovation and skills, reducing risk for private sector commercialisation and growth.
- Will Hutton devastates the UK Conservatives’ zero Budget for their ignoring the role of the state in mitigating risk and creating jobs through driving innovation.
Tomorrow, National will argue that New Zealand needs a zero Budget. Labour believes a zero Budget is what you get when you have zero growth in your economy, and zero plan for delivering the growth that’s needed to create jobs.
Responsible fiscal policy is important – Labour would always be careful and prudent with the state’s finances – but a zero Budget is not the only success test when you’re talking about the finances of a country that real people live in.
The articles show this is a global debate, not a local one. New Zealanders need to understand the lessons of history, not repeat them.