Thursday, October 02, 2008



Reality bites

The media is alive this morning with concern that National may not be able to meet public expectations for tax cuts, or even its promise of $50 a week for the "average" kiwi (note: definitions of "average" may vary). As someone who thinks that taxes are the price you pay for living in a civilised society (with roads, hospitals, schools, a welfare system and stuff), the constant obsession with tax cuts bores the crap out of me. But Vernon Small's article highlights a more general problem: the government has spent all the money, leaving little scope for either party to offer expensive policies during the election campaign unless they either borrow or cut spending elsewhere.

National has already said it is quite happy to borrow for tax cuts (sorry, "infrastructure", but as The Standard has pointed out, this is a nonsensical claim; they would not have to borrow if they weren't planning to cut taxes), which given the current international credit crisis, could turn into a very expensive proposition. Labour has been quiet on what it plans to do, but people expect some sort of election year surprise to match its 2005 student loan policy, and National's desire to borrow gives them some scope to move away from their normal fiscal responsibility. And so we're likely to see an election campaign centred on mortgaging the country's future to pay for election-year bribes. As someone who remembers Muldoon, that's not a prospect I particularly welcome.

Meanwhile, the international financial crisis could fundamentally alter the ground. With more and more people talking about the prospect of "another Great Depression", people will be wondering what it means for them. And that in turn will push social welfare and employment law issues to the fore. In New Zealand, people still look to the government to help them in times of need, and they ought to be thinking now about who will do a better job of it if the worst happens. And I really don't see how that's a contest National can win.