Cambpell on Key(nesian) economic policy

Gordon Campbell sums up National’s economic policy announcements very neatly — “‘Vote National: Mortgage Your Children’ was the message in a nutshell.”

I’ve already posted on this more than once, but Campbell adds some interesting angles. Here’s the crux of it:

“What this means is that the public/private partnerships that are the favoured format for delivering the Think Big projects that National has in mind will have to function to near perfection in order to fit within the extra 2% debt ratio parameters. This is unlikely. Why ? Because a Key government is also planning to cut back its regulatory oversight of the economy – just as the PPPs will need to be highly and competently regulated in order to save taxpayers from being rorted by their big business project partners. All up, something like a 25 % debt ratio seems a far more realistic figure in future This will add significantly – a billion a year, the Labour-Green supporting Standard website estimates – to debt servicing costs. In each successive year, such costs alone will create a chronic pressure to cut social services.”

So, while both parties are offering tax cuts, it’s National’s that are proligate, forcing us to borrow overseas to pay for them. And to “strip mine” state assets later, regardless of their performance.

We now know a great deal more about the privatisation part of the plan thanks to a National conference goer with a recorder.

Guess who suffers when National flogs off Kiwibank? Not hard to answer, of course. As Consumer New Zealand CEO Sue Chetwin points out: “Kiwibank mainly targets more modest or low income people but it has actually been very competitive in what it does.”

Chetwin thinks that Kiwibank plays a significant role in keeping mortgage rates down and has kept some of the bigger banks from closing their branches outside the cities. If Kiwibank was sold to an off-shore company, the internationally owned banks would have “an even more cosier relationship then they do now.”

As well National is also looking at private prisons and roads, and privatising water and waste water services.

All this so that “ordinary New Zealanders” earning $100,000+ can enjoy bigger tax cuts. And National’s ideological fringe doesn’t get so “angsty”.

It wouldn’t be so bad if the announced policies were going to fix the growth problem. As Campbell notes, “a striking omission from the Key/English vision statements was the lack of any programme to boost productivity – beyond cut taxes, borrow from foreign bankers to cover the shortfall, cross your fingers and hope.” (He seemed to miss the reference to higher productivity arising from more roads, but this would only be a short-term increase anyway.)

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Tags: John Key, National Party