John Key has a problem.
In four long years National has failed to meet almost every economic target it has set for itself.
New Zealand’s economy is shattered. Unemployment is up sharply. 1,000 Kiwis are leaving every week for Australia. Exported goods have just collapsed by a horrific 17%. Now, apparently, students, the sick and the elderly are going to have their pockets picked by the government too.
Yet while some writers have always seen through the spin – economists Bernard Hickey and Gareth Morgan deserve particular mention – Key has kept much of the commentariat on-side by endlessly promising he has a plan for sustained economic growth.
Well no more, because the prime minister’s had a long-overdue credibility cut.
Historians will say Budget 2012 marked a watershed for this National government. They’ll say it’s when John Key lost his cheerleaders in the press; when opinion leaders began to concede National never had any economic literacy, any vision, or any plan. The scribes will write Key off as a typical National prime minister who burdened the poorest and most vulnerable with new taxes, and who slashed every public service he could, for no deeper reason than to fund tax cuts and special deals for the rich. They’ll record how, just like Rob Muldoon, Key lumbered the next Labour government with a destroyed economy and how every New Zealander was the loser from National’s economic vandalism.
Of course I don’t agree with everything the commentators are writing now. Far from it. But what’s changed is they are really testing Key’s spin and reporting their findings unvarnished – and I applaud the country’s journalists for their professionalism.
Take a look for yourself:
- “The major problem is that there is no clear economic growth agenda”, Fran O’Sullivan, New Zealand Herald.
- “The Budget delivered yesterday by the Minister of Finance, Bill English, had a distinctly underwhelming feel”, New Zealand Herald editorial.
- “It was billed as a Zero Budget, and that’s what we got”, Tim Hunter, Fairfax.
- “The Budget is contradictory. Fiscal policy will subtract from demand and from growth not just next year but for the next four years”, Brian Fallow, New Zealand Herald.
- “As far as ambitious measures to growth the economy, this Budget is a little light”, Corin Dann, TVNZ.
- “A fiscal surplus is not a growth strategy. While the Budget does allocate more money to science and innovation, the restraint on spending has meant the Government is unable to make the kind of quantum leap in industry assistance that would have justified the amalgamation of several Government departments into the new ‘super’ economic development ministry”, John Armstrong, New Zealand Herald.
- “The figures are essentially meaningless… It is still forecasting growth of more than 3 per cent by early 2014. Growth has not been that high for four years and is now at a meagre 1.1 per cent. The growth rate is crucial. A single percentage point under the required rate and a $200 million surplus can be a $2 billion deficit before you can say ‘Standard & Poors’. On such flimsy foundations is the central political component of this Budget built”, John Armstrong, New Zealand Herald.
- “In the face of the negative realities – which are causing misery in households up and down the country – what English had to offer was a series of tweakings and Peter-to-Paul transfers that plugged a few holes here, and scratched an ideological itch there”, Gordon Campbell, Scoop.
- “There has been much speculation over the last 12 months on the merits of a capital gains tax and the anomaly that its absence presents from a tax policy perspective. New Zealand is unique among OECD countries in this regard… if there was ever a time to introduce a CGT it is now”, Greg Thompson, National Business Review.
- “Bill English’s fourth Budget pinches the pennies, raids nearly every piggy bank and even plunders the Government’s rainy-day fund. No-one, it seems, is safe – even kids with an after-school job have been frisked for extra revenue to help fill Government coffers”, Tracey Watkins, Fairfax.
So all in all it’s a thumbs-down for Key.
Please tell us what Budget 2012 has meant for your family.