If she is serious about balancing the books, and restoring Pay Equity, Labour’s finance spokesperson, Barbara Edmonds, cannot avoid imposing austerity on her party’s own voters.
The first thing that jumps out at me from Edmonnd’s speech was
“And because I am so determined to grow the economy,”
Really!.
it will take more than those weasel words from a Labour minister to convince me of that. What is her plan for that. She plans to reward productive investment. Is that it. We will wait with interest for her plan for growth to be unveiled over the coming months.
Labours first claim to fame will be reinstating the pay equity claims. I can understand the fairness to workers that Labour strives to support, but National stopped it because in the present climate we couldn’t afford it. Even if we could afford it, that will have only been possible because of Nationals agenda to try and alleviate hard debt without stifling growth. Whether the pay equity claims are justified or not they are essentially non productive and would be inflationary. One might argue that more pay will encourage more productive work but that’s a vague assumption in my book. Yes her plans for growth will need to be very believable indeed and I for one won’t believe anything she says until it materialised in real time.
I have always known Hipkins is no great brain- nor is anyone else in Labour. How anyone can think they might re-take the government completely escapes me.
Don’t these same restrictions apply to all political parties.
I know you refer to expanding the money supply as the magic solution, but all that will do is increase inflation, just as it did in the covid monetary expansion. Because that memory is so recent, it is not a practical political option.
In short, the choices are to restrict expenditure or increase taxes or borrow more money. It is worth noting that governments can run continuing deficits and borrow to cover the deficit without any real consequence. Provided the borrowing is less than the combination of inflation and real growth then the debt as a percentage of GDP will not change and in fact may decrease. This is effectively what Nicola Willis has done. The debt, as a percentage of GDP, has not increased notwithstanding her continuing deficits.
So Barbara Edmonds has more choices than you suggest. From what I understand Labour intends to borrow significantly more than National, with the consequence that net debt will be 50% of GDP rather than the current 47%. It is worth noting that an increase of 3% in net debt (as a percentage of GDP) is around $14 billion. So Labour, in 3 years, will spend about $15 billion more than National, taking into account the increased debt and the initial revenue from CGT.
It also seems unlikely, based on what Hipkins has been saying, that Labour will reinstate the full pay equity regime, so the cost of that will be more likely $4 to 6 billion, rather than $12 billion.
So voters will have a clear choice.
Either a continuation of the Willis approach or the significantly more expensive Labour approach, though at the cost of increased debt as a percentage of GDP. Labour will argue the increase in debt relates to increased capital expenditure, but that won’t be wholly or even largely true. The biggest fraction will be ongoing annual expenditure such as increased staff and salaries.
The voters can choose which path they prefer and which path they believe is more sustainable or more equitable.
I would add I am surprised that neither of the major parties has promised to fully replace Middlemore hospital. Quite a lot of it dates back to the hasty construction of WW 2. Having been there recently it is a real rabbit warren.
A full replacement would be $4 billion given it needs to be at least twice the size of Dunedin Hospital, but it is time it was done. Obviously the cost can be fully attributed to capital rather than ongoing operational.
Wayne summarises the likely depressing situtaion well although ignoring the consequential increased debt sericing. A further gentle slide into what may become unsustainable debt by one of two mothers who both should know better. To be fair neither was to blame for the apalling waste in the name of Covid. This expenditure with little or nothing to show for it has removed the financial headroom which could have justified the choices above. Nevertheless, choices may well distinguissh the main centrist parties. Do we pay for illusory carbon credits to satisfy ideological fantasies or new hospitals and do we engage in the usual NZ battle over slices of shrinking pie to address alleged historical inequalities and where do we stop with these?
The same challenges face National. Education and health workers are not going to accept no pay rises, and those fields would cover a fair chunk of pay equity claims.
We cannot renege on our Paris agreement for trade access reasons, despite Willis short term tunnel vision.
Pretty fair commentary. I have two points of contention:
1. reading the documentation about the covid stimulus on the RBNZ website reveals that it was not the government who “created money” during COVID. That privilege was and has long been left in the hands of private banks who make a profit from issuing debt, mostly in the form of mortgages (this is what fueled the property price spike). Rather than direct monetary financing, at low or zero interest, which was floated as a possibility, but rejected.
2. Reinstating pay equity payments to those who claimed them would not “suck $13 billion” out of the economy. It is very much the opposite. If government makes those payments, they will go to people who will largely spend much or most of it within the economy. This is just as Richard Murphy explains. But yes, if the government (very stupidly and unnecessarily) decides it has to balance its books, that money has to be found elsewhere.
Whatever it takes to negate the horror of willis who has destroyed careful planning. and of course, Trotter has no raise for a real economist. Hey, CT--I'm waiting for you to critique wicola.
I believe I have done that, Kate. Are you sure you're not asking me to criticise the Finance Minister?
The problem with that option lies in the fact that the person seeking to replace her, Labour's Barbara Edmonds, would not deviate by any serious margin from the economic course Willis is following. To criticise one is to criticise the other.
If anything merits the sternest criticism, it is that fact. That New Zealanders are not being presented with a credible economic alternative.
Chris you are living in the 1960s. Barbara is the least of our worries.
Fisher and Paykel, Mainfreight and a few other big companies can't provide NZ with a future. Labour dont want oil, gas, minerals, dairy, meat or free trade. They want to spend on social welfare which produces nothing. Cellphones in classes, education reversals, two health departments
departments, defunding of police and defense with their mates Greens.
Seems like both old parties are committed to more austerity. I wonder what that will do to the flow of Kiwis to Australia? We need a new approach based on growing the economy. A continuous pipeline of infrastructure projects, funded by the direct monetary financing, might be a useful underpinning.
Just quit Paris as a first step
Yeah , then we can trade with North Korea, and no one else. Trump is emboldening the dinosaurs , but he won't last long.
Keep on with your delusion quitting Paris will have zero effect on trade
i'd be happy if you can show me one trade expert that agrees with you .
every single one that promotes this viewpoint also pushed safe an effective.
Huh?
The first thing that jumps out at me from Edmonnd’s speech was
“And because I am so determined to grow the economy,”
Really!.
it will take more than those weasel words from a Labour minister to convince me of that. What is her plan for that. She plans to reward productive investment. Is that it. We will wait with interest for her plan for growth to be unveiled over the coming months.
Labours first claim to fame will be reinstating the pay equity claims. I can understand the fairness to workers that Labour strives to support, but National stopped it because in the present climate we couldn’t afford it. Even if we could afford it, that will have only been possible because of Nationals agenda to try and alleviate hard debt without stifling growth. Whether the pay equity claims are justified or not they are essentially non productive and would be inflationary. One might argue that more pay will encourage more productive work but that’s a vague assumption in my book. Yes her plans for growth will need to be very believable indeed and I for one won’t believe anything she says until it materialised in real time.
Based on this, only a fool would vote for NZ Labour.
I didn’t realise how much of a fool Chris Hipkins was.
I know he’s a Liar, as he stated “ No one in NZ was coerced into taking a vaccine “.
I have always known Hipkins is no great brain- nor is anyone else in Labour. How anyone can think they might re-take the government completely escapes me.
I would say Edmonds is more economically literate then Willis , just a tad. But that ain't hard.
Hmmmm...not so sure.
The trouble is, Eileen, "no great brain[s] " vote Labour.
False. and no great empathy in the right, even for their own children!
Don’t these same restrictions apply to all political parties.
I know you refer to expanding the money supply as the magic solution, but all that will do is increase inflation, just as it did in the covid monetary expansion. Because that memory is so recent, it is not a practical political option.
In short, the choices are to restrict expenditure or increase taxes or borrow more money. It is worth noting that governments can run continuing deficits and borrow to cover the deficit without any real consequence. Provided the borrowing is less than the combination of inflation and real growth then the debt as a percentage of GDP will not change and in fact may decrease. This is effectively what Nicola Willis has done. The debt, as a percentage of GDP, has not increased notwithstanding her continuing deficits.
So Barbara Edmonds has more choices than you suggest. From what I understand Labour intends to borrow significantly more than National, with the consequence that net debt will be 50% of GDP rather than the current 47%. It is worth noting that an increase of 3% in net debt (as a percentage of GDP) is around $14 billion. So Labour, in 3 years, will spend about $15 billion more than National, taking into account the increased debt and the initial revenue from CGT.
It also seems unlikely, based on what Hipkins has been saying, that Labour will reinstate the full pay equity regime, so the cost of that will be more likely $4 to 6 billion, rather than $12 billion.
So voters will have a clear choice.
Either a continuation of the Willis approach or the significantly more expensive Labour approach, though at the cost of increased debt as a percentage of GDP. Labour will argue the increase in debt relates to increased capital expenditure, but that won’t be wholly or even largely true. The biggest fraction will be ongoing annual expenditure such as increased staff and salaries.
The voters can choose which path they prefer and which path they believe is more sustainable or more equitable.
I would add I am surprised that neither of the major parties has promised to fully replace Middlemore hospital. Quite a lot of it dates back to the hasty construction of WW 2. Having been there recently it is a real rabbit warren.
A full replacement would be $4 billion given it needs to be at least twice the size of Dunedin Hospital, but it is time it was done. Obviously the cost can be fully attributed to capital rather than ongoing operational.
Wayne summarises the likely depressing situtaion well although ignoring the consequential increased debt sericing. A further gentle slide into what may become unsustainable debt by one of two mothers who both should know better. To be fair neither was to blame for the apalling waste in the name of Covid. This expenditure with little or nothing to show for it has removed the financial headroom which could have justified the choices above. Nevertheless, choices may well distinguissh the main centrist parties. Do we pay for illusory carbon credits to satisfy ideological fantasies or new hospitals and do we engage in the usual NZ battle over slices of shrinking pie to address alleged historical inequalities and where do we stop with these?
Thanks for sharing this for free! It was very useful and informative.
The same challenges face National. Education and health workers are not going to accept no pay rises, and those fields would cover a fair chunk of pay equity claims.
We cannot renege on our Paris agreement for trade access reasons, despite Willis short term tunnel vision.
What are we on about here? Get the Yr 9 Econimcs class at Wellington College to give her some lessons!
Pretty fair commentary. I have two points of contention:
1. reading the documentation about the covid stimulus on the RBNZ website reveals that it was not the government who “created money” during COVID. That privilege was and has long been left in the hands of private banks who make a profit from issuing debt, mostly in the form of mortgages (this is what fueled the property price spike). Rather than direct monetary financing, at low or zero interest, which was floated as a possibility, but rejected.
2. Reinstating pay equity payments to those who claimed them would not “suck $13 billion” out of the economy. It is very much the opposite. If government makes those payments, they will go to people who will largely spend much or most of it within the economy. This is just as Richard Murphy explains. But yes, if the government (very stupidly and unnecessarily) decides it has to balance its books, that money has to be found elsewhere.
Whatever it takes to negate the horror of willis who has destroyed careful planning. and of course, Trotter has no raise for a real economist. Hey, CT--I'm waiting for you to critique wicola.
I believe I have done that, Kate. Are you sure you're not asking me to criticise the Finance Minister?
The problem with that option lies in the fact that the person seeking to replace her, Labour's Barbara Edmonds, would not deviate by any serious margin from the economic course Willis is following. To criticise one is to criticise the other.
If anything merits the sternest criticism, it is that fact. That New Zealanders are not being presented with a credible economic alternative.
Chris you are living in the 1960s. Barbara is the least of our worries.
Fisher and Paykel, Mainfreight and a few other big companies can't provide NZ with a future. Labour dont want oil, gas, minerals, dairy, meat or free trade. They want to spend on social welfare which produces nothing. Cellphones in classes, education reversals, two health departments
departments, defunding of police and defense with their mates Greens.
Seems like both old parties are committed to more austerity. I wonder what that will do to the flow of Kiwis to Australia? We need a new approach based on growing the economy. A continuous pipeline of infrastructure projects, funded by the direct monetary financing, might be a useful underpinning.
Spot on!