Wednesday, August 20, 2014

Fiscal rectitude and false books

It also seems to be fiscal rectitude day, with both major opposition parties promising to "live within our means" and run bigger surpluses than National. But while they're both promising balanced books, that doesn't mean conforming to National's austerity madness; instead, both parties are offering to increase government revenue through capital gains taxes and higher taxes on the rich. Which, given that 97% of kiwis aren't rich and never will be, should be popular.

Running balanced books is a Good Thing. So is borrowing for investment, and to cover necessary costs during disasters or times of economic trouble. Labour has a good record on this - while National likes to paint it as nine years of profligate spending, the fact is that Michael Cullen consistently delivered surpluses, which were reinvested in building better social services for ordinary kiwis. I think we can trust them and the Greens to do the same if elected.

Assuming of course that they aren't dealt a BNZ-scale surprise by National fiddling the books. Campbell Live reported last night that EQC had failed to file financial projections for next year (in violation of the Crown Entities Act), and that this could have a significant effect on the government's balance-sheet. No-one from the government would front up to explain this, which suggests they're hiding something (namely, a billion dollar budget hole). Meanwhile, the government published its Pre-Election Fiscal Update, showing they'd meet their surplus target. But given the government's refusal to front on the EQC news, I'm not sure that we can trust it.

The government needs to front up on this. It also needs to enforce the law on EQC. Failure to file those statements is a fundamental failure by the EQC board to do their job, as well as contravention of statute. They need to be sacked and prosecuted. Knowingly preparing a false or misleading PREFU is a criminal offence punishable by 12 months imprisonment. If Treasury has any suggestion that EQC's financial position is worse than that stated, then they should be looking at the inside of a jail cell.

Correction 25/08/2014: I've since realised that EQC did not breach its statutory reporting requirements. A full correction is posted here.