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Source: ONE News
The election campaign's side-shows of squabbles over teacup talks and defaced National party billboards prompted politicians to chastise the media. Get serious, they say. Let's back to debating the policies.
Fair enough. An election is supposed to be about a contest of ideas and at a time when commentators are warning of a catastrophe looming in some of the world's largest economies, we need to know what any potential government plans to do to steer us through the potential fallout.
They all claim to have a plan, of course. But do those plans tackle the issue of debt - regarded as akin to the original sin by international markets at the moment and arguably the one factor making us more vulnerable than we need to be - seriously enough? Or has it been treated as something of a sideshow itself?
To be fair it hardly makes a catchy election slogan. Debt is a dreary dread-filled word and getting out of it is a dreary dread-inducing process. National gives it a go with catchcries including 'Balance the books sooner'. I sometimes wonder though, do people know what that means, or know why they should care?
During the campaign the issue of debt has by no means been ignored, though. In fact it's has been used to justify unpopular policies like partial asset sales, capital gains taxes and raising the age of pension entitlement.
That would be all well and good if that actually solved the problem, but Bernard Hickey from interest.co.nz says it doesn't, not by a long shot.
He argues if they really want to deal with it, they need to get rid of policies like Working For Families and the interest-free student loan scheme because they have caused a structural deficit that's 'baked in'. That is, the Christchurch earthquake and the recession may have blown out the Government's debt, but they were one-offs whereas these policies are not.
"We're sailing into the election when no one is really addressing this issue at a time where we face not just a recession but something potentially catastrophically worse in Europe and the rest of the world. Blithely our politicians are saying we can afford these middle class welfare items when actually, we can't," Hickey says.
Expensive policies
We can thank Labour for introducing them both in 2005, when the Government's books were in surplus. But National's responsible for pledging to maintain them in the 2008 election and has done so again this year, even though both schemes arguably go against the fundamental principles of the party.
National did make changes to both schemes in this year's budget, but small ones, especially in the context of the total cost of them. According to figures in the budget, Working for Families currently costs about $2.7 billion a year, the Student Loan scheme costs more than $700 million a year.
They're clearly expensive policies, but they also affect a huge number of voters and therefore doing away with them would surely, unequivocally, be an election loser. I mean, what would convince people to vote to give up the policies that make them better off, or in some cases, allow them to make ends meet?
Hickey's argument is essentially based on greater good and the big picture. "You can keep control of your own economy and you can keep control of your own Government and you can actually make sure that in 10, 20 years time when your kids are growing up and paying taxes that they're not going to be landed with all this debt that's being issued right now".
However convincing people to worry about their future grown-up children when they're struggling to provide for their current infant ones is a hard sell. Convincing people to vote to get poorer is surely an impossible task.
That said, it's still a valid argument.
I don't mean to say I believe the poor and middle class should bear the brunt of cutting our debt and making our economy less vulnerable, but we also cannot afford to continue to live beyond our means. If the European crisis has shown us anything it's the consequences of that. International lenders' tolerance for countries with high debt levels is waning by the day; when that tolerance runs out, things get nasty and bond markets force a country's interest rates up, just as we've seen in Portugal, Ireland and Greece - except they had big brother Germany, the Eurozone and the IMF to ride to the rescue.
Italy wouldn't be that lucky, and neither would we. For us, it's as simple as this: If borrowing becomes harder and more expensive, life gets much harder and we'll be much poorer. Then, debt will be no sideshow. The consequences of having too much of it will well and truly be the main event.
Read more Nadine Chalmers-Ross opinion
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Add a Comment:
Post new commentnztifosi said on 2011-06-03 @ 17:26 NZDT: Report abusive post
Just when my family was making headway financially the government chose to cut tax and put GST up. At the same time funding to the school I work at was cut resulting in an hours cut for me. Result? We are now worse off than ever before! And now we are supposed to spend, save, donate to Canterbury and every other charity as if the current situation were the working man's fault. It is the speculaters and the financiers along with the government who got us into this mess! -now they can get us out!
deltics said on 2011-05-19 @ 12:38 NZDT: Report abusive post
Saving isn't what NZ needs right now, it needs to pay off it's debt AND increase spending. Money paid into KiwiSaver doesn't reduce our current debts and doesn't circulate around or stimulate the economy! So it actually makes a lot of sense for the government to reduce the incentives to pay into KiwiSaver whilst emphasising the need to be more prudent in our spending (paying down debt) without closing our purse strings too tightly in the process.
ceejaygee said on 2011-05-15 @ 12:33 NZDT: Report abusive post
i currently pay 4% into kiwi saver i would like to pay 6% unfortunately there is no provision for that hopefully the govt have thought about that. as to the tax credit cut not a clever idea, maybe they could make it totally tax free then we could really save for our retirement then they could cut the tax credit altogether
Danthetaxpayer said on 2011-05-14 @ 19:10 NZDT: Report abusive post
I would also like to ask how is it retirement savings are even a priority when we fail so badly as a country to take care of our children? Children who are meant to be our future taxpayers helping to fund future NZ Super? Children who are often neglected, illiterate & who struggle to get the medical assistance they need due to health care shortages and whose families often have to fundraise? Why are these things not a priority?
Danthetaxpayer said on 2011-05-14 @ 19:07 NZDT: Report abusive post
I'm confused: how is it saving when most of the 1.67 odd million people with Kiwisaver are probably receiving some kind of government assistance. Assistance is for hardship and to meet basic needs - food, clothing, shelter only. If they have enough spare to put into Kiwisaver which then gets matched by more taxpayer funds earned by the hard work of others, then isn't this the horse before the cart? Further, how can it truly be savings when we are borrowing $300 million each week?