The government has copped plenty of flak for not having a coherent strategy for getting us through this horrendous global recession, but what we do know is that they plan to borrow $40 billion over the next three years to keep the country afloat.
With the tax take falling dramatically, the government will have
to borrow and borrow heavily to maintain government services, from
health to welfare and just about everything in between.
The question has begun to be asked: Will there be anyone to lend such large sums to this country?
Economist Brian Easton said in a recent speech that the government dare not open its deficit any further "because it may not find willing lenders at reasonable cost". In his letter to British Prime Minister Gordon Brown, John Key noted that even countries like New Zealand with low public debt have limited scope to spend more due to "market pressures on access to funding".
On Q+A on Sunday, Finance Minister Bill English addressed this serious issue for the first time in a fascinating interview with Guyon Espiner, admitting that "it could be more difficult" for the nation to borrow in the current dire economic climate.
It's hard to imagine a fully-fledged, industrialised democracy being turned down by the world's bankers, but hey, this is a world where Iceland can essentially go bankrupt. We still can't say for sure how deep the credit crisis will ultimately be.
English told Espiner:
"...it's our job to make sure that New Zealand is able to constrain its debt raising so that it's quite clear that we're a good credit risk..."
Which sounds a lot like the end to National's promise of tax cuts next year and in 2011 and a fair few other government programmes as well.
Even the much-hyped cycleway was dismissed by the Finance Minister as only affordable over the long-term. Despite his boss's passion for the project, English said while it'll get started this year it won't grow bigger until "the economy improves".
Er, wasn't it meant to help us survive the recession? So much for the cycleway creating several thousand new jobs over the next 12 months when the recession is at its worst&
English went on to say that New Zealand needs to sell its story of restraint and sensible economic management to the world's credit rating agencies so that we maintain our AA+ rating. If we don't, the cost of borrowing goes up for the government, businesses and households alike. So they matter, but English said, "We shouldn't be stood over by the credit ratings agencies" and he doesn't think they will downgrade us.
Tough words, but the reality is that he will be batting his eyelids at the ratings agencies, just like every other finance minister around the world.
And while you may have seen other media covering the comments made by Peter Davis about how Helen Clark felt "rejected" after Labour's election loss in November, no-one picked up on what I thought was Clark's most interesting quote.
When Paul Holmes asked the new head of the United Nations Development Programme whether democracy works for every country, she replied:
"Some have never had it and I think sometimes it's a bit unrealistic to think you can transplant the institutions and the history we've got that underlies our institutions just holus bolus into countries with a different history."
I think she's absolutely right, you can't force democracy down people's throats. Just look at Iraq. And Pakistan. And most of the Middle East. And& you get my point.
But given that one of the UNDP's core tasks is to "advocate and support dialogue that contributes to democratic governance", it's a controversial statement.
A few eyebrows may have been raised in New York...
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Q+A - TV ONE, Sunday at 9am and live streaming on TVNZ.co.nz
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