Thursday, 28 May 2009

The Budget of Fear

Bill English's Budget in four words: "Nobody moves, nobody gets hurt."

FEAR. That’s what Bill English’s first Budget is all about. Fear of the electorate to which John Key presented National as a reformed and reliable party of caring conservatives just seven months ago. Fear of what will happen to the Government’s popularity (and electability) if the people who so emphatically voted it into office, begin to suspect that they have been deceived.

That is why so little has been done – why so little could be done – in this Budget. English had to protect his boss, the man who, more than any other person in the National team, secured the Treasury benches for the Right. If John Key is transformed from a figure of lightness and hope, into a symbol of heavy-handed fiscal discipline and despair, the National Government won’t make it past 2011.

So, English has been forced to keep all of the safety-nets in good condition. Nothing off the pension. Nothing off Working for Families. Nothing off the unemployment and welfare entitlements. Good Lord! They didn’t even reactivate the interest payments on student loans! English offered up a believable inflation/population adjustment for health, and a not-quite-so-believable adjustment for education. There was even a feel-good (and, let’s be fair, a real-good) gesture towards home insulation.

As Key almost said, New Zealanders can sleep easy in their beds tonight – because, in the face of the worst economic conditions since 1930, all their entitlements are still in place.

But for how long? And at what cost?

The tax cuts have gone – and good riddance. But a ten-year suspension of payments to the Superannuation Fund? That undermines the expectations of the aging Baby Boom Generation, and sets up a truly vicious social conflict in the decades ahead. Because surely Generation X and Y will balk at supporting their elders with a pension that, in all likelihood, they will not be in a position to pay themselves?

And that's the real problem with Budget 2009, by allowing the voters to lie easy in their beds this year, English and Key have merely pushed out the day when something more than maintaining the status-quo will be demanded of them.

Treasury’s forecasts make it clear that New Zealand’s economic fortunes are not going to improve anytime soon. The number of people out of work is predicted to rise to 8 percent – and that’s the hopeful estimate. The nation’s indebtedness will continue to rise inexorably (the price of maintaining all those entitlements without increasing taxes) and with it the expectation of New Zealand’s creditors that, somehow, this country is going to come up with a plan for paying it back.

Aye, and there’s the rub. Where is the money in this Budget for R&D, for skills training, for apprenticeships? Where’s the "greenprint" for a revived and renovated New Zealand economy? The push for a more creative approach to marrying infrastructure development with export growth? Where’s the incentive for this country’s employers to come up with a better way of securing their profits than simply slashing the real wages of their workers?

The truth is, this Government lacks the imagination to answer any of those questions. Consequently, Bill English’s Budget can be distilled into four words: "Nobody moves, nobody gets hurt."

Still, he’s bought his boss some time – and his boss knows it.

Watching poor Phil Goff perspiring manfully at full volume, and then watching Key, relaxed and informal, cracking jokes, and beaming reassurance to the voters at full wattage: it was painful. When the networks’ news editors are through repackaging this afternoon’s verbal jousting for the 6 O’clock News, New Zealanders will be in no doubt as to which leader remained in the saddle.

Sufficient unto the day is the evil thereof – you might say. But, the question that will be gnawing away at Key and English in the dark watches of the next 365 nights is as inescapable as it is terrifying:

What the hell do we do next?


Bevanjs said...

“The government will make contributions to the Fund from available surpluses. Where these are insufficient for making the required contribution a reduced contribution would be made. If this were the case, the government would need to specify how it would make up for the reduced contribution in future.”

millsy said...

Thank heaven for small mercies, Chris. This could have been the slash and burn budget to end them all. It could have made Ruth look Stalinist in comparison. Certainly, the 5th National government had the justification and the mandate to wipe the rest of the welfare state of the planet, sell the remaining SOE's, and dismantle ACC. It had Roger egging them on, the wealthy donors, everything.

rouppe said...

I was fairly sure this budget would be an long-awaited opportunity for you to restart your whining. I was right.

However I have not heard any thing from either you or Phil Goff (an even bigger whiner) on what they would do differently - and just as importantly - how they would pay for it.

You are right, WFF and student loans had to be kept in the status quo. I think they should have been adjusted. However the last 10 years of Labour government has meant that there is a majority of the population who have an expectation of sucking from the public teat. People who would scream and throw a major tantrum (in true infantile style) if these programmes were made less generous.

And be honest with us, Chris. If Bill had (for example) cut WFF eligibility for anyone earning over $50,000, and introduced interest on student loans even at the risk free (government bond) rate, you would have taken the opportunity to slate them for that.

Working for Families and interest free student loans are like leases on expensive toys. They cost a lot of cashflow to keep. Now that the economy has tanked, the logical thing to do would be to dump the toys, much like this family has done.

Unfortunately beause of this teat-fetish of the greedy masses the country is unable to do the same thing.

Anonymous said...

So rouppe,

Do you want to force families to live in their cars instead. Because that is what would happen if WFF was dumped. People like you are more greedy, wanting people to live on the streets, because you begrudge every single cent that low income earners get.

Tom Semmens said...

it is SOOOO funny watching the 3% Mussolinis throw their toys.

rouppe said...

Nice to know you're confident in yourself, anonymous - not.

It's a typical lefty response to put words in other people's mouths. Where did I say I wanted people living in their cars? Where is the evidence that people earning over $50,000 who no longer got WFF would be forced to live in their cars? There isn't any because people like you just make stuff up. The people who end up in cars are those that only earn (or collect) $10k, or $15k or even $25k. Not $50k.

What I DID say was WFF had to be kept because of the negative response - and yours is typical - that would ensue. Stick with the facts. If you're too scared to sign your name, stay away.

aj said...

The mentality behind that family's problems is exactly what's wrong with people in this country and has nothing to do with government. It is individual's profligate spending.

rouppe said...


The link was to draw a metaphor to government. That family engaged in profligate spending, as you said, and now they are in the crapper, they are getting rid of the toys as well as halting more profligate spending.

The previous government also engaged in profligate spending. However now that we are all in the crapper, the mentality in this country means that getting rid of all the toys is untenable.

aj said...

Chris, that's the budget in 5 words not four?

rouppe, I understand your intent, but sucessive governments have reduced it's tax take by giving tax breaks to those who least need them and despite being one of the least taxed countries in the world. Many of us would rather pay a little extra in tax and reduce the borrowing needed to fill vital government programs such as the super fund

Chris Trotter said...

Ah, but is it? The words used are, nobody, moves, get and hurt - which is four. You could, of course, say there are four words plus one repeated word, and that would equal five. I agonised over which number to choose, because I just knew someone was going to correct me - regardless of whether I wrote four or five. And they have.