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Is it time for a change?

Wednesday, September 14th 2005, 7:13PM 4 Comments

by Philip Macalister

After my last post I have been having an interesting discussion with an adviser - who suggests I keep out of politics! More seriously he suggests one votes on what is good for the long-term future of the country not what is good for our industry.

His view is that Cullen inherited an economic structure put together by the last National government and Roger Douglas before that and they simply rode a wave of good luck.

Clark is insufferably arrogant. Cullen is insufferably arrogant.

"Having said that I was low key Nat supporter until threee weeks ago now I think they all suck - they forget they work for us," he says.

His view is that the only way forward for New Zealand is two terms Labour and two terms National - a lurch left and then a lurch right and so on.

"Never give them three terms - the arrogance takes over."

He also thinks Labour lost all credibility when they said there is no spare money and then came out with the (not costed) student loan bribe.

I don't disagree about the arrogance. Is arrogance reason enough to throw out a government which has presided over six good years? To me it seems to be a toss up between arrogance and known factor v bumbler and ditherer. With Brash it seems to be the problem of teaching old dog new tricks.

I reckon that the Nats aren't ready yet, but in three years time they will be. If you put them in now lacking experience and with a worsening economy they will only be a weak one-term government.

Where we do agree is that I don't have a lot of time for either lot at the present and I am sick of bribes and the petrol tax one the worst especially coming from Brash the economist.

As for Labour and its hand out - I disagree with that and suggest that the media, economists and commentators let us down by not showing that in the budget there was all this unallocated money to spend.

What's best for the long-term future of the country is certainly the key and I don't think one-off short term tax cuts are the answer (be different if they were corporate tax cuts). The key is to increase productivity and wages.
One piece I enjoyed as it summed things up well is this one written by Rod Oram.

The idea of the blog was to get people talking - I figure the industry are mainly right leaning (or in some cases lying on their right hand side) and it would be good to challenge their thinking. Your comments are welcome.

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Comments from our readers

On 16 September 2005 at 4:07 am The B said:

There is a bridge on Main North Road in Christchurch that has been under construction for at least 12 months. This bridge simply crosses a railway line. It's not a big bridge.

In any other OECD country I can think of, this project would have taken 3 or 4 months tops. There are some very fundamental shortcomings in the way infrastructure is planned, paid for and built in NZ.

John Key is the only politician of any stripe who acknowledges that the sensible way to pay for these assets (which will after all benefit NZ for 50 or 100 years) is to borrow the cost today and pay it off over time. Almost no Kiwis would be able to buy their own home without doing the same thing.

Most of us in this industry advise our clients that there is nothing wrong with debt if it is used to create more wealth in the future.

We all know the transport problems which already exist in Auckland, Wellington and Christchurch, and we can all see that failing to plan ahead will lead to massively worse problems in the future.

Where are political parties' visions for viable mass public transport, be it light rail, bus, train, tram (or even bicycle)? I worry that without getting the basics right, all the other flannel about tax cuts, handouts, petrol prices, Studentloangate, Brethrengate and all the rest will really prove to be so much pointless waffle.

On 16 September 2005 at 4:31 am Philip said:

Thanks Mr B

Your post is interesting as it seems to capture the thoughts of two incompatible parties.

I agree that Key is correct in using debt to fund long term assets as that way the people who get benefit of their use of time are paying for them.

If the bridge is built today and funded out of this year's accounts then the taxpayer of today is paying for the whole life of the asset.

The Greens are the party who are really focussed on viable public transport. It is a totally sensible policy to push - particularly with the way petrol is going.

So which is more important the way assets are funded and paid for or the need to develop long-term public transport solutions?

It is a shame that this election has been side tracked by issues which are not the most relevant.

On 16 September 2005 at 11:38 am Jens Meder said:

Basically, where transport solutions need long term capital investment, the NZ Super Fund would be a less inflationary source than foreign capital, and let there be discussion if there is doubt about it.

Operating subsidies should come out of current taxation, and the soundest finance for fast depreciating rolling stock beyond what cannot be paid for by cash, is short term credit, preferably repaid before the asset is to be written off.

A pity Cullen did not use the windfall surplus to pay off debt. Now Key wants to give it away in tax reductions so investors could help to finance infrastructure, which means users and taxpayers will have to repay it to them, instead of to their own universal super cashflow and security.

It is a blessing the Center parties might be able to cut back some of Key's and Cullen's consumption extravaganza to a more modest level - and perhaps restore the efforts towards accelerated economic growth through a higher domestic savings and investment rate. I believe responsible labourites would secretly be happy to see it happen. Jens.

On 20 September 2005 at 5:31 am Jens Meder said:

With a near draw between the competing spendthrift options, Labour (and business) will need now more urgently than before practical economic growth initiatives to prevent a drift towards the turmoil resulting from the Muldoonist promises of 1975.

It will be irresponsible not to thoroughly debate or study the increased taxable income potential through more NZSF investment in NZ, including foreign financed(mortgage) debt reduction, plus the taxation revenue expenditure released from financing universal super right now instead of in the 2020s, through allocating the NZSF to personal accounts as soon as possible. Jens.

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