Monday, November 18, 2013
National's Position Desperate
There is an air of desperation around the National led Government, they are no closer to balancing the books than they were a few years ago and debt continues to be high (36% of GDP). Our current account deficit is still one of the largest in the OECD (as a country we annually earn around 10% less than we spend).
The Government has never had a broad economic strategy but instead have put all their faith in get rich quick schemes and supporting already successful businesses. The collapse of Solid Energy and the dairy scares have made us very vulnerable. We cannot call the boom in property prices and the construction activity in Chrischurch a sustainable economic recovery, no matter how much it is talked up. The $12 billion motorway spending has been exposed as having very limited economic benefit as has spending on irrigation schemes to encourage dairy intensification. Even their attempt to introduce ultrafast broadband has ended up to be an expensive mess.
Selling state assets, despite strong public condemnation, is more proof of desperation. The Government's tax cuts to the rich cost them around $2 billion a year in lost revenue and the need for a cash injection has meant they are even prepared to sell shares in a restricted market against treasury advice.
Across the board cuts to the state sector have resulted in security failures, unreliable service and the poorly implemented Novopay. Cutting 3500 high qualified jobs has also impacted on the Wellington economy and the regions.
On top of all of this National realizes that they now have no strong coalition partners and their steady support in the polls is partly due to the demise of Act, United Future and the Maori Party. National is now the only conservative party left to support. If Act and United Future were still credible and had around 4% each of voter support, National would only be polling in the 30s. Desperation is evident when Colin Craig and the Conservative Party suddenly look like coalition material. Despite one of the best funded campaigns in the last election, Colin Graig's extreme policies did not resonate with the voters and yet National is prepared to build their importance to fill a gap. It was bad enough giving John Banks more power than he deserved but to support even more extreme ideologies, just to remain in Government, is a concern.
The National Party is desperately talking up everything that appears successful and throwing abuse at anyone who questions their management, but the cracks are becoming more evident and the economic liquefaction is bubbling up around their feet. It will take more than Colin Craig (or the Student Army) to save them.