National fails with the important stuff

The health and resilience of our economy, our people and our environment are the important stuff any government should have as overarching priorities. The National Party is approaching eight years in government and its record in these three key areas is not particularly good. Our rivers are becoming increasingly polluted, we have one of the lowest GHG reduction targets and almost 1/3 of our children live in relative poverty.

National Governments do not have any historical reputation for championing social causes or lifting environmental standards, but they survive because of the perception that they can be trusted to manage our economy.

Displaying some rational economic vision and leadership is important for our ongoing survival as a nation in an often turbulent global economy. The Great Financial Crisis came about because of loose regulations and giving too much rope to financial institutions. New Zealand came through that crisis relatively unscathed but I would have thought that the lesson to be learned from the GFC would be to avoid regulatory regimes that encourage exploitation and greed.

New Zealand has developed into one of the most accessible economies in the developed world and it is either through extreme naivety, or putting profit before being a good global citizen, that has allowed us to become one of the worlds popular havens for avoiding tax and laundering criminal funds. The National Government ignored 2013 IRD advice about closing loopholes and has even promoted the profits available in the foreign trust industry (around $24 million a year).

We also have increasing numbers of foreign investors who are able to buy New Zealand houses and farms for easy capital gain. Obviously this overseas pressure lifts the price of our houses beyond the budgets of most New Zealanders, making us the most unaffordable housing market in the world. A buoyant housing market that provides good returns for investors (foreign or otherwise) is more important than affordability for this Government. It is also concerning that investment into property is encouraged rather than into productive industries that would increase employment.

Governments should also have a role in determining and supporting broad economic priorities for the country that will generate useful (and hopefully sustainable) economic activity that will benefit the the majority of its citizens.

In 2008 the National Party came into power wanting to emulate the Australian economy. National's "Brighter Future" included increased mining (sexy coal) and oil exploration. Australia's economy had boomed through its coal exports to China and the oil industry was highly profitable. Despite the fact that climate change was a growing issue, and the shift to clean renewable energy was well underway,  the National Government opened up vast areas of our territorial waters and conservation estate for exploration. Solid Energy was encouraged to borrow and think big and oil companies were given tax breaks and subsidies to see what they could find.

The promotion of a future in fossil fuel crashed and burned. Solid Energy collapsed spectacularly owing hundreds of millions and losing hundreds of jobs. Despite tax cuts, subsidised seismic surveys and letting oil companies set their own safety rules the collapse in oil prices and fracking has made off shore drilling unprofitable.

National's generous 2009 and 2010 tax cuts hugely benefited the already rich and were supposed to encourage investment in growing employment. The fact that tax fraud costs us around $8 billion a year and most of our wealthy benefit from untaxed capital gain didn't influence the decision. Little of the tax windfall created more jobs and most was obviously spent on luxury cars and even more property. The average size of the houses we are building are the third largest in the world. The tax cuts also caused a loss of around $2 billion a year in tax income and this loss has had to be made up by demanding more in dividends from SOEs, selling state assets, reducing the investment in Kiwi Saver and cutting expenditure.

National stopped funding the Buy Kiwi Made campaign and Government procurement increasingly favoured cheaper overseas manufacturers. New Zealand has consequently lost previously successful manufacturing businesses, like Dunedin's Hillside Workshops, that employed skilled labour.

In 2011 the National Party promoted a major $11 billion investment into motorways despite no prior cost benefit analysis. Few of the motorways have proved to be cost effective since and instead there has been growing demand for investment into more efficient public transport systems, especially in Auckland.

National abandoned its previous goal of matching Australia by increasing average incomes and Bill English began promoting the advantages of a low wage economy. Over $3 billion is now being spent on the Working for Families tax credit that is necessary to compensate for the low wages that many families struggle to live on.

In 2014 the National Party campaigned with a goal of doubling the value of farm exports with a major focus on increasing dairy production. $800 million was budgeted for irrigation schemes so that dairy farmers could grow herd numbers and intensify the industry further. The advice to spend more on research and development and concentrate on adding value was ignored and growing imports of fertilizer and feed supplements supported a higher input (but more vulnerable) industry, but greater volumes of milk.

Obviously little was learned from the Solid Energy debacle and a glut in the global milk supply saw the bottom drop out of the dairy markets and many who had been encouraged by the Government to invest in ongoing expansion were badly caught out. We have also been left with costly environmental damage (compacted land and polluted rivers) with little income to manage it.

This National Government will go down in history as the one that increased public debt by over $50 billion and substantially increased inequality. It will be known as a Government that was plagued by conflicts of interest and growing our levels of corruption. The historical evidence will also show an inability to build a resilient and sustainable economy and an unhealthy enthusiasm to support sunset industries and 'boom and bust' economics. Rather than lead and manage the economy for the benefit of all it chose to let it be exploited by a privileged few.

This National Government can't be trusted with the important stuff.


Armchair Critic said…
For National the important stuff is to be elected I to government, and to remain in government. Everything else is secondary to that. History shows that they are better than any other party in NZ at the important stuff.
Unfortunately they are also a fairly competent opposition.
Whether they are or do much good once they are in government is a separate matter.
bsprout said…
I agree AC. You have to take your hat off to National, they do not waste their time on developing sound, evidence based policy or long-term strategies but do 'political control ' very well. They continually poll around anything they do so that they largely remain on the side of the voters and ensure their massive PR machine does the damage control really well. They also spend a good deal of time finding the weaknesses in the opposition (imagined or otherwise) and make sure they continually hit them hard.

Keeping in power isn't really about substance, but image (and the ability to shift blame when things turn belly up).
robertguyton said…
There's still a lot of pointless bickering going on in the Homepaddock, Dave.
It's so 2015.
bsprout said…
However it is still a very useful gauge of what many National supporters are thinking, what arguments they are using and how their thinking is shifting.

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