But English's most intriguing admission was that he had appointed former Treasury boss Graham Scott – and a panel of economists – to work on a new economic strategy.

Econonists. Oh, great . ITE, that's a bit like hearing that the politburo have engaged a crack team of Marxist-Leninist theoreticians…

I need to do some more numbercrunching, but it looks like Eurozone states with an AA- rating pay maybe 1% – 1.5% more on their government debt than AAA states.

Also, that only actually cuts in when the government rolls over debt or…

Update 2: Less money for Super Fund = Less money for Super

Gee, that flu pandemic's looking like a better idea than we first gave it credit eh?

How can a recession be ferocious?

And, the standard of the poor be so timely?

But English's most intriguing admission was that he had appointed former Treasury boss Graham Scott – and a panel of economists – to work on a new economic strategy.

This is either a shocking admission that English doesn't know what to do next, or…

But like just one chopstick without its mate, avoiding a ratings downgrade was necessary (and welcome) but insufficient. To fuel New Zealand’s economic growth and make it stronger coming out of the recession than before, the Budget also needed…

Bear in mind though that a large percentage of the Nats probably support many of ACT's policies but stick with the Nats for other reasons

This may be true. But by the same token, a large percentage of National voters were won over from Labour at the last election, and…

But a large number of people (maybe even the majority) support tax cuts, harsher penalties for crims, freedom from the "nanny state" etc.…

Again, I'm going to take issue with your analysis. Fairness means different things to different people.

Yes, it does – and the post you are responding to acknowledges that. At the same time, the version of fairness subscribed to by the vast majority of people in this country is not…

In that worldview, public intervention may be immoral if it distorts or thwarts that prime motivation. However, only the most loony…

Sure – but the concept of fairness broadly (but not exclusively) held in New Zealand is a left-wing one, focused on substance rather than mere process, and favouring the little guy over the Big Corporate.

Again, I'm going to take issue with your analysis. Fairness means different things to different…

Something totally out of the ordinary as I'm not sure if most of us want to go down that path again.

Oh ain't you glad that we live on an island,

me an' Janet Frame
and I don't like Mondays neither... :-)

yrs
Cobol Byte-Byte
Character Support

__''Oh ain't you glad that we live on an island,
You can choose your own way of being killed,
You can jump off a cliff and get drowned in the sea,
Or be dashed 'gainst the rocks and get split,
And it could happen to you (no it…

Surely fairness is not a concept exclusive to any political perspective – they just disagree about what is fair and what is not.

Sure – but the concept of fairness broadly (but not exclusively) held in New Zealand is a left-wing one, focused on substance rather than mere process, and…

The dominance by National governments post-war is not merely a symptom of the FPP electoral system. It also possibly reflects other features of the Kiwi psyche, such as conservatism, a dislike of interfering governments, and a distrust of outsiders.

Sure, but a) FPP is a very important part of that…

Legal aid has been chronically underfunded for years. Funding was increased in the last budget, but has been cut back again in this budget. This means hourly rates for legal…

I/S graphs the effect on the Super fund.

No no no. The Labour Research Unit graphs the effect on the Super fund; I steal it.

Make NZ a prison island.

Only if we get those nifty menacing big white balloons for offshore security, though...

yrs
John Drake
No. 6

Make NZ a prison island.

Then we could tell Obama there is room for all Gitmo detainees , for a price.

Make NZ a prison island.

John Carpenter's Escape From Otara – coming to cinemas soon!

WANTED: gib fixers, roading contractors, and prison wardens.

oh oh oh. I just worked out a way for NZ to make money. Sell our prison services overseas. Make NZ a prison island. That way we can all work for International Correction Inc. Building new prisons, keeping the prisoners in line.…

The money "spent" means that our national debt is incredibly low, in fact, Don Brash argued vehemently it was too low not so long ago. It…

economic xenophobia

Craig, it's cos they're bankers , not foreigners.

Even when they promise tax cuts a well educated 12 year old could identify as completely unviable.

So are you diagnosing an epidemic of underage voting last year?

I simply don't believe we can make any reliable statement about where on the political spectrum NZers sit as a group. Other than somewhere between John Minto and Garth George.

I/S & ScottY: the 8 Tribes is a reminder of the unwritten class divide.

Speaking of Minto, what would in this…

where on the political spectrum NZers sit as a group

That's if they're on the spectrum at all. Most of them (us) find politics a total snore because it consists mainly of two parties slugging out the lamest argument ever. "More government!" "Less government!" "More spending" "Less spending"

That is…

THIS is beyond the pail

sorry to tie up loose threads
but THIS is beyond the pale : )

and that's intertwinement

yrs
P. Alice Aide
Stakeholder in
the Pedant Patrol

"Jam tomorrow"

Just as well. Despite what we were told, this sandwich doesn't taste like Nutella to me.

1. CRIs are probably quite pleased with the 20% increase in funding to the CRI Capability Fund

2. The Marsden Fund received its biggest ever funding…

a fiscal chastity belt – successive governments just have to fight the temptation to hunt for the key.

Nice metaphor – but wasn't that what boomer superannuation pre-funding was meant to be, given the efforts that supposedly went into negotiating a durable cross-party consensus?

When the people who are in charge of delivering the funding consistently underspend their budget, and see it…

What's eventualism?

I have no idea. You better ask Labour.

Every time I ask their MPs and activists when they're going to get around to (insert reasonable idea here) they tell me they can't do everything at once, and they'd like to do it eventually some time in the distant…

What's eventualism?

"Jam tomorrow"

MMP means No More NeoLiberalism.

Shit acronym then.

New Zealand…

pragmatic eventualism

What's eventualism?

They've cut a lot of things, but one thing they're spending large on is roads.

$10.7 billion of roading projects.

Gag. Splutter. Puke.

It's also testament to how Labour's pragmatic eventualism (re)established gradual change as the accepted model.

And redefined the political centre. Working For Families, Kiwisaver, and anti-privatisation are now political facts National has to accept (or change only very, very gradually).

I looked long at hard at National election criticism of Labour for not increasing New Zealand productivity versus their lack of any policies to change that. I guess neutering the RMA…

That there are very few things in the budget that can be labelled 'radical' is testament to the political environment.

Yeah, but that same environment is also a hurdle for disruptive changes like change the tax base towards non-productive activities and consumption...

Forecasts past the next Parliamentary term are pointless anyway – basically all we've had is National telling S&P "honest man, we'll spend HEAPS less if we're around in 10 years". It's borderline nonsense.

Heh, I spent half of last night arguing that point. It's about drawing a set of targets which…

Pfffft, egg heads. Who needs them to develop an economy?

Exactly. Looking at National's budget priorities, I can't help seeing a big employment ad: WANTED: gib fixers, roading contractors, and prison wardens. It's not a terribly inspiring prospect, is it? Then again, considering the rest of National's stated bugbears --…

We have MMP to thank for this, I think. under FPP, an election like 2008 would have produced an enormous majority, with all the arrogance that entails. But by ensuring the distribution of seats in the House reflects the…

Those of us who are working toward the academic life, on the other hand, might not have much of a choice.

I know that academics are already up and leaving. I'm not sure this will slow things.

They always have, of course, for bigger, better, and different things. But New…

I'm not going overseas, and there are much bigger factors IMO than Govt policy in THAT decision

Those of us who are working toward the academic life, on the other hand, might not have much of a choice.

I know this sounds hyperbolic (is that a word?)

It's more than just a word. It's a super-mega-fantastic word.

but it's this sort of approach that is more inclined to "force me offshore" than anything the previous Govt were doing. A complete lack of investment in growth…

nor am I suggesting completely ignoring R'nD was a great idea

I have to say, this Budget exceeds my worst fears for its total lack of commitment to anything knowledge related. Slashed funding for academics' salaries. Abolished R&D credits. Replacing the Fast Forward Fund with some nonsense food industry funding that's…

Yes. But it can't go up forever, right? So the fact that it's coming down is not necessarily catastrophic.

Agreed, it just has to be clearly articulated at such – we are going to have less money each year to spend on services. TBH I'm not too against that (spending…

It would save a lot of time if you just linked to the Labour Party talking points, or at least properly attributed.

If you could point out anything factually incorrect in what I wrote I'd be grateful.

otherwise STFU

k

thnx.

It pains me to say…

It would save a lot of time if you just linked to the Labour Party talking points, or at least properly attributed.

For example, the boost in ORRS funding for disabled students is welcome after years of the Labs dragging the chain, but I notice what seems to be a large cut in funding for equipment and housing modifications (unless the responsiblity has been quietly transferred to DHBs).

Re ORRS. Not quite…

National has a perfect…

Stupid stupid me. I really hope Michael Cullen is somewhere quitetly cringing at the "Bill English sucked dirty foreign banker dick" crowd.

Still, Telecom did pick a hell to…

PPPs are just an expensive way for the government to pretend its not borrowing.

Monbiot on PPP's in the UK.

No, sir. I'm agin 'em.

And just out of interest, I note that the tax legislation is being repealed 'under urgency'.

Is there any legislation passed under this government that…

For example, the boost in ORRS funding for disabled students is welcome after years of the Labs dragging the chain

It had been boosted by more money in the last Cullen budget, no? But sitll no result from the Special Needs Resourcing Review, and what is needed there is a…

Having said that, one thing that people will feel is the Nat's use of fiscal drag to effectively raise taxes for the foreseeable future. Full points for irony!

Except that for a while anyway – perhaps beyond this term – it will be lowering average taxes as wages drop...

Having said that, one thing that people will feel is the Nat's use of fiscal drag to effectively raise taxes for the foreseeable future. Full points for irony!

It's going to be painfully obvious at every subsequent budget

Especially with expert fisking like this – thanks, Keith. Don't know if you've also seen The Standard's simple graph of average hourly wage rates based on the Budget projections. Voters just might notice that trend in their wallets.

Fascinating and very useful analysis Keith. I should have listened to what you were saying more closely in the lockup.

Heh, nah – you were sitting right next to me, which meant that you heard my argument while it was still in its Rainman-phase. "Narrrh! Narrrh! 88 billion over 14…

Standard & Poors delivered their verdict at about 4 p.m. What time did Bill English sit down? Fast readers, eh?

Nah. Everyone at the lock up had a copy since 10am. That's quite a bit of nerd-time.

This will mean the 90's sinking cap all over again, the deferral of maintenance, the underfunding of public services for a decade. But doing it this way means they don't have to announcethey're doing it.

I agree that it's basically a sinking cap, but I think it's going to be…

On this basis the government should just borrow a trillion dollars, invest it, and keep the one billion profit that it makes after a year.

You get diminishing returns on investment (i.e. Your first billion would be invested in the best places, but by the thousandth billion, there'd only be…

Long on bean counting, short on vision and driven by the Treasury. I don't know why people bother voting for National, all they do is elect a bunch of pin stripes from the Terrace.

Hey, don't fall into the trap of dismissing experts when you disagree with them. Otherwise, all…

Debt is bad. Not worse-than-Hitler bad, but it's not a trivial issue that only matters for high-flying/falling financiers.

When I looked at the first graph, I thought "wow, good thing we're starting from a base of close to zero".

Spending growth will in fact be negative in real terms (and going backwards as a percentage of GDP). So someone in fact got more than their "cap spending at inflation" demand.

Yes. But it can't go up forever, right? So the fact that it's coming down is not necessarily catastrophic.

firstly, that graph assumes no growth forever, right? If we can actually recover from this recession, then we'd expect debt to fall.

No, it doesn't assume that, but if growth was better than expected, then yes, the debt position will become better.

secondly, 60% debt/GDP would only put us where…

Shouldn't it be $88 billion plus the interest accruing on that debt? So there may be even bigger spending cuts ahead?

Nope. It's $88b of savings, rather than debt, so it goes the other way.

Same applies to PPPs. Govt can borrow at a lower rate than business. If it makes sense for business to borrow and invest in public infrastructure, why not for government?

Because voters might look at only the debt side of the balance sheet, without seeing the productive asset that debt…

Am I reading the budget financial statements right? National budget for a $1billion increase in spending on Govt personnel compared with…

Ooops, didn't notice.

I feel all dirty now.

Thank God. I thought you'd become one of Them.

The press release you linked to is from the Libertarianz.

Ooops, didn't notice.

I feel all dirty now.

All the real work is done by the reduced operating allowance. It's impact will be felt more and more as time goes on.

/me climbs onto hobby horse

Which is why, as a country we have to ween ourselves off an unnecessary addiction to Microsoft products. $100s millions being siphoned…

Come on George – don't you remember the near hysterical pitch the calls for tax cuts got to just last year?

I wasn't in the country last year. I can only imagine that it was horrible to experience.

Politics is about the possible you know.

Well we will never know…

Tom you are right, could you imagine how much of an uber hole we would be in if Don Brash et al had got in in 2005?

The Treasury 2005, started to think huge operating surpluses. Labour and National adopted this thinking going into the election 2005, one promising big…

Politics is about…

He did try, but even the mention of it got shouted down by all in sundry.

He did not try.

In 2005 he described a capital gains tax on non-family homes as a "potty" idea. He was strongly opposed, and shot it down every time the Greens discussed it with…

Given no tax sweeties, and Garret's wanting to stop them packin' heat, we may see cleavage before the next election. (phnaar, phnaar)

The press release you linked to is from the Libertarianz. It's possibly not the most authoritative source for what ACT and Garrett are doing.

But you're right about…

the fiscal hawk in me is quite satisfied with the depth of cuts in this Budget

I don't buy that fiscal stringency is all about government cashflow. I think it's more about not stoking bubbles and baling us out of recessions.

Right now, we're in a *deep* recession. Inflation isn't…

Last I looked, DPF was being the good soldier, and his crazier correspondents were declaring war.

Some erstwhile Actoids on my Facebook are incandescent. Given no tax sweeties, and Garret's wanting to stop them packin' heat, we may see cleavage before the next election. (phnaar, phnaar)

The counter argument to not borrowing to invest, is that borrowing to invest is the key driver of the private sector. Leverage is entirely where it's at — ask Graeme Hart or any property investor. Judgement is a thorny thing though.

Well put.

Same applies to PPPs. Govt can borrow…

He did try, but even the mention of it got shouted down by all in sundry.

My inner Machiavellian thinks that the solution would be to actively encourage subprime lenders to set up shop here, then sit back and watch McMansionville collapse under its own weight.

Seriously though, removing tax…

Agreeing with both your paragraphs there, Gio.

And you know how much I love giving credit to Tories, right? My teeth were gritted so hard I've since had to be booked in for maxillo-facial surgery.

After nine years of consistently refusing to implement any kind of capital gains tax. Which would have damped house prices, meaning more money spent in other areas, and encouraged money to flow into the productive sectors of the economy.

He did try, but even the mention of it got shouted…

I hope everyone pauses and has a little grateful prayer of thanks to Michael Cullen, whose refusal to feed the bubble with tax cuts is the only thing between us and Iceland.

I won't.

After nine years of consistently refusing to implement any kind of capital gains tax. Which would…

All in all, am I allowed to say that I feared worse from this…

Many years ago (pre-internet) I had a temp job as a lowly messenger/clerk in a London financial company, and found that it's the people at the bottom who get to know…

Yup. particularly in health and education, which combined need an extra $1.25 billion a year just to stay level.

This will mean the 90's sinking cap all…

Back when I was a kid, we lived in uninsulated houses, ran up huge deficits, spent big on 'essential' infrastructure projects, and made promises about superannuation that locked in future Governments for decades to come.

And it never hurt me.

Oh, hang on ...

International credit rating agency Standard and Poor's has given a favourable verdict on the budget, upgrading New Zealand's outlook from negative to stable.

In both political and economic terms, that's a result.

You mean we would be able to get French (8.8%) or British (7.1%) or American (8.9%) levels of unemployment, as opposed to our current 5%.

Paradoxically, the bolshie nature of French trade unions has led to high productivity through machines replacing humans. Here in NZ, companies are still content to…

Harden up.

Yeah.

Back when I was a kid, we lived in uninsulated houses, ran up huge deficits, spent big on 'essential' infrastructure projects, and made promises about superannuation that locked in future Governments for decades to come.

It puts most of the newspaper commentators to shame.

No mean feat, seeing as, as far as I can tell, they have no shame.

So, how are DPF, C.Slater, etc spinning this ? Are they wetting their pants with excitement ?

Last I looked, DPF was being the good soldier, and his crazier correspondents were declaring war.

Excellent analysis, btw, Keith. It puts most of the newspaper commentators to shame.

You mean we would be able to get French (8.8%) or British (7.1%) or American (8.9%) levels of unemployment, as opposed to our current 5%.

It's only a matter of time according to Bill English treasury executive summary (page 13). The next twelve months look really bad. Let's hope the…

I had a look at the Herald's "Your Views" response to the fudge-it and it was a mixture of "what a meanie" and "a strong response to years of wasteful spending by Labour",…

It's less about…

The answer of course, is that for most people in NZ, it wouldn't really matter if we had 50% or 60% debt/GDP. We'd have to pay a bit more tax and slightly higher interest rates, but that would be more than outweighed by stable and secure jobs.

You mean we…

Rod Oram suggested that the long-term returns on the NZSF will be actually be greater than the cost of borrowing – i.e. that borrowing to invest in the NZSF *is* profitable.

On this basis the government should just borrow a trillion dollars, invest it, and keep the one billion profit…

aiming to be just like Iceland or Ireland isn't so smart either.

How about Germany, France or Switzerland then? They all have ratios in the over 40% range, and are doing better than we are.

I hope the media see through the "delay/defer" spin on tax cuts.

Yep, these were the "fully costed and funded" tax cuts that absolutely could and would happen.

In the words of a Tui billboard....

Maybe I've completely missed the point, but I thought the lesson of the worldwide recession was having massive amounts of…

$10.7 billion of roading projects.

I have delayed producing my great novel, but ... you know, it's all there, it just may have to be written posthumously.

Long on bean counting, short on vision and driven by the Treasury. I don't know why people bother voting for National, all they do is elect a bunch of pin stripes from the Terrace.

Even I could have predicted those two. Equally surprising are more cops on the street and more prison beds. Laura Norder is the winner on…

So, how has National managed to reduce future debt? By cutting a fuckload of future government spending.

Spending growth will in fact be negative in real terms (and going backwards as a percentage of GDP). So someone in fact got more than their "cap spending at inflation" demand.

– secondly, 60% debt/GDP would only put us where most developed nations are now. Why should we be the only ones with tiny government debt,…