Thursday, March 05, 2009

The same scam

Last month, we saw National mounting a systematic attempt to blame the previous government for the budget cuts it intends to make, by accusing them of failing to allocate funds for its promises. The accusation was thoroughly refuted by David Cunliffe - the short version is that that's what the Budget outyear contingency is for - but now National is trying to run the same scam with Kiwirail, claiming that Labour had made promises totalling $3 billion, but allocated only $120 million. There are two points to be made here: firstly, that that $3 billion (which dishonestly includes not just Kiwirail's $1 billion to remedy previous private owners running down of the network, but also the cost of regional council funded upgrades to the Auckland and Wellington suburban networks) will be spread over a number of years, while the $120 million (actually $200 million; English seems to be ignoring Labour's initial $80 million investment to make his figures look that little bit better) was only a first installment. Secondly, the timing of the purchase in July 2008 meant that any long-term capital investment program could not be appropriated until Budget 2009. So as with National's previous claims, rather than being a case of unfunded promises, this is simply a normal part of the budget cycle.

But National's wild accusations are a smokescreen for what's really going on here: the running down of a public asset. Back in July 2008 Labour announced that it would invest $121 million in buying new locomtives and carriages for the transscenic service. National froze that funding the moment it entered office. Now it has cynically reannounced it while labelling it a "stimulus" measure (despite there being no new money involved). Except now, Kiwirail will actually get only $40 million; the other $75 million it will have to borrow. So National's "stimulus" actually consists of a funding cut, and the loading of a public asset with debt. Yeah, that'll get the economy moving...