When you’re in a tunnel, any glimmer of light is welcome. So it was with the economy last week.
Thursday we learnt that in the 12 months to March the deficit on the balance of payments current account — New Zealand’s account with the rest of the world — had “improved” to 8.5 per cent of total output. We were spending “only” one-twelfth more than we were earning. And now we have a debt to the world equal to 85 per cent of a year’s total output.
Two important rules for ministers are: when in a hole, stop digging; when water comes over the side, start bailing.
Steve Maharey has spent most of this year bailing the “20 hours free” waka and might just keep it afloat and get it into calm waters a safe distance from the election. Damien O’Connor has spent most of this year digging, to the point that he is near out of sight down a hole. Any future shovelling would best be done from top.
One sign of a government on its way out is that its knee-jerks turn into convulsions and folks notice. We have just witnessed such an event.
A personal tragedy became a national crisis — or so the Prime Minister played it. A whole industry was threatened with a new regulation because one firm slipped up, on her reading of the facts. Of course, that it happened in Phillip Field’s electorate and to a Samoan were incidental.
John Key has flipped. John Howard has flipped. Now George Bush has flipped. What does it mean for our brand?
The flip is on climate change. Voters have shifted, business has been shifting and once-scoffing politicians are running to catch up.
Howard’s and Bush’s goal is to keep their countries rich. Howard says no jobs, even coal jobs, are to be jeopardised. Bush’s aim is security of energy supply for Americans, including, if needed, coal-petrol.
Roads are not free. But Aucklanders won’t pay tolls for new roads. Which has given the government a Green headache.
The government’s alternative to tolls is a very blunt, very old-fashioned regional fuel tax, for use in Auckland for passenger rail and new roads and in Wellington for the Transmission Gully inland road north. But the Greens won’t vote for it unless it is blocked from being used for Transmission Gully and earmarked instead for public transport — which Gully champion Peter Dunne says has funding in the existing budget.
Leading up to the 2002 election a small voice inside the Prime Minister’s circle argued in vain for an aspirational pitch. It was deemed unnecessary, inappropriate and out of step with voters’ mood.
The economy was up. Voters approved Helen Clark’s “correction” of 1990s policies. The National party was adrift. Steady-as-she-goes was a serviceable message for a reform-weary electorate. Daring or bold policy was out of fashion.
Michael Cullen’s self-proclaimed “bold” Budget last Thursday struck out an important principle. The question now is whether he will be bold enough to reinstate it next year. His junior partner, United Future, will push him to.
The principle was the one tepidly established in his 2005 Budget: indexation of personal tax thresholds to inflation — the so-called chewing gum tax cut. When — and some ministers insist it is a when not an if — he cuts personal tax next year, will he reinstate the 2005 initiative?
Michael Cullen’s Budgets have big print and small print. You can win on one and lose on the other. So with business in this Budget.
A 30 per cent tax rate is a big plus and matches Australia — better than matches if Australian add-ons are taken into account. Tax credits for research and development are a plus. There are handouts for some exporting and industry training.
Early in his parliamentary career Shane Jones, as newly minted chair of Parliament’s finance and expenditure committee, was manoeuvred by the National party into an inquiry into Television New Zealand.
The inquiry will be remembered not for a revitalised and bouncy TVNZ but for giving rise to a landmark “privilege” case in which Parliament, to its disgrace, fined the TVNZ board for disciplining outgoing chief executive Ian Fraser for bagging it at Jones’s committee.
The National party has dropped its opposition to the Kyoto protocol on climate change and is “looking at” a 50 per cent cut in greenhouse gas emissions by 2050. Quite a change of climate in a party which a year ago still herded with the sceptics.
John Key will spell out his thinking this coming weekend. But the new breeze is already blowing through the party.