Wednesday, August 31, 2011


The news yesterday that the cost of the Christchurch earthquake had doubled, pushing the deficit to a record $18 billion ought to be sobering. Whoever is in power after November 26 is going to have some tough choices to make. And we deserve to know what those choices will be, before the election.

As the Dim-Post pointed out yesterday, the options are basically tax-increases or more austerity (or a ratings downgrade, leading to the same). National's previous policy was austerity, using the earthquake as an excuse to pursue their nakedly ideological programme of shrinking the state. But they've gone about as far as they can go with that; any further and their spin that they're just cutting fat and that actual service delivery will not be affected will be unsustainable. Its hard to claim you're "protecting the frontline" when people are seeing their schoolteachers go on strike, their local hospital is being closed down, and you can't find a police officer because their numbers have been cut. And that's without even considering the macroeconomic effects of austerity prolonging the recession. If National stays true to form, the result, for all of us, will be very, very unpleasant. Sadly, that's probably not going to stop them.

The alternative, of course, is tax increases - either a special-purpose earthquake levy, or a rise in general taxation. Its the best-solution, one which avoids austerity-induced recessions, and which spreads the burden according to ability to pay rather than whether you live in an electorate which voted for the government or not (because lets be honest: the government is not going to cut services to its own voters if it can help it). Even uber-right winger Fran O'Sullivan can see that; the question is whether the government can.

Meanwhile, this is a clear opportunity for Labour to seize the agenda (and maybe some votes) by presenting a solution. The question is whether they will - or whether they'll sit back and leave it to the government again.