We have finally seen a response to New Zealand's economic problems in the National Government's Budget (problems that were clearly illustrated in the Budget document). But it is hardly a brave and decisive response, delivering only small changes to the state's subsidies for the KiwiSaver savings scheme, slightly less generous conditions on borrowing under the Student Loans scheme (but it is still interest free) and slight adjustments to the Working for Families welfare-for-all scheme that Prime Minister John Key called "Communism by stealth" when he was Leader of the Opposition. None of these things will go far in addressing the New Zealand Government's huge operating deficit. The Government claims it will go into surplus in 2014 but this is dependent on achieving 4% p.a. growth in GDP - an unlikely prospect if the country's recent economic performance is anything to go by.
And what of the Labour Party's policies? Since the Budget Phil Goff, Leader of the Opposition, has announced that Labour will:
1) Establish a Ministry of Children
2) Restore research and development tax credits that National abolished
3) Pay for the above by bringing agriculture into the comprehensive Emissions Trading Scheme (ETS) two years earlier than planned.
Of these policies only the second is likely to have any beneficial economic effect. Establishing a Ministry of Children will be a cost with no benefits (not even to children's welfare, in my opinion) and extending the ETS earlier than planned will only increase the direct costs to the economy of this pernicious scheme, again with no benefits (given New Zealand produces just 0.2% of total global anthropogenic carbon emissions).
So neither party's policies are going to address New Zealand's slide into the sort of economic hardship of the type currently being suffered by the PIIGS countries (as discussed in this blog). This is because neither party contains any politicians with the intestinal fortitude to tackle the problem. Our politicians of all persuasions are pathetic, poll-driven, moral pygmies who would rather see our country become destitute than risk their popularity to implement the reforms that are necessary to generate economic growth.
I believe our politicians grossly underestimate New Zealanders' intelligence and integrity. I believe most New Zealanders understand our current economic plight, especially since the Christchurch earthquakes, and are willing to accept far greater austerity measures than this Government has introduced with its Budget. But it would take a leader with more courage than John Key or Phil Goff have ever shown to risk his or her political career to do what needs to be done.