The More Things Change.

Is Treasury suggesting we change everything – to make sure nothing changes?

REWIND THE CLOCK 40 YEARS. It’s 1986. The economic reforms of the Fourth Labour Government are just kicking-in. There is no Internet. Smartphones are still a long way off. Social media has yet to take over our lives. The Soviet Union and its Warsaw Pact satellites are still going strong. Geopolitics remains frozen in the Cold War. Iraq is an ally of the United States. Saddam Hussein is waging a brutal war against Iran on behalf of the Reagan Administration. China is still poor. At night a single skyscraper towers above the dark streets of Guangzhou. Nobody sensible believes that history is about to end.

Forecasting the shape of a world moulded by the events of forty consecutive years is a ridiculous exercise. In a global society shaped by continuous technological innovation and all the social, economic, and political changes that follow in its wake, predicting the future is an exercise better suited to charlatans than economists and politicians.

Undaunted by the absurdity of the exercise, the New Zealand Treasury has for the past 24 years devoted time and resources to compiling what it calls He Tirohanga Mokopuna - the Long-term Fiscal Statement. To be fair to its authors, this four-yearly exercise is not presented to its readers as a prediction of the future. The document is simply a description of what the fiscal situation would look like 40 years hence “if spending and revenue policies were left unchanged”.

Get that? This is what the economic models developed by the Treasury are projecting for New Zealand if nothing changes.