Contra Celsum has decided to present John Key, Prime Minister of New Zealand with an S-Award.
Citation
The Government has opened a first front to combat the economic downturn in New Zealand. John Key recently announced a cluster of changes aimed at helping smaller businesses with cash flow, by reducing or removing some of the more onerous and draconian provisions of the tax system.
Critics have slammed the changes as a pathetic whimper, when a big bang is required. But for our money, Key has got it exactly right.
1. "Micro" is where the real action is. Removing some of the senseless and unnecessary dead weight of bureaucracy from business and freeing up cash flow may not seem like much to those wedded to the grand, the symbolic, and the titanesque, but it is precisely what needs to be done. While it may be acceptable for big-box retailers to shout "Big Is Good" we believe it is completely unacceptable for governments to adopt a similar posture. Such grandiloquence, we suspect, has more to assuage their own demands for the historic and the need to manufacture their own moments of destiny.
Key shows that he understands that it is private capital and private labour that generates sustainable, long-term economic wealth and economic growth. Government can help by getting out of the way as much as possible.
2. Key has stated clearly what he believes the true role of government is in these times. He has also made clear what it is not. This is a salutary change. He has artgued that it is not the role of the government to become the economic engine of the country. One shudders to think where former Prime Minister Clark and her coterie would have led us by now. (Drastic slash and burn measures, huge increases in government spending, empty symbolic actions like nationalising key industries, higher taxes, and so forth. And, oh, we forgot--parading like mutton dressed as lamb around the world stage.)
Read carefully the following account of Key's remarks in the New Zealand Herald and you will get a sense of just how commonsensical and realistic he appears to be in tackling this challenge.
Speaking after outlining a $480 million relief package for small business, John Key said the role of the Government was not to become the economic engine of the country "but to do all it could to keep the engine humming, tuned and free to go up a gear".
And its actions to stave off the crisis should not undermine the economy in the future.
"This is a very fine balancing act between doing more, ensuring confidence is out there, but also making sure we don't blow up the Crown," he said.
"There is a limit here to what can happen. There has got to be a balance so we don't get downgraded as a country or at least don't precipitate a downgrade.
"A short-term sugar fix today could lead to a diet of debt later."
3. Key is not wasting his time and energy blaming the previous government for the problems--although there is plenty that could be sheeted home fairly and properly. However tempting, he has avoided the trap. (One groans to recall how the previous government, even after being in government nine years, routinely blamed the former National government for every continuing problem, or answered criticisms by claiming, "Yes, but we are better than they were." What a relief to be freed from such public and dispiriting peurility.)
4. If Key continues in the "removing impediments to the economy" vein, and focuses upon the details, the micro-economic realities, the positive impact will be far greater and extensive than all who are wedded to statist solutions could possibly conceive. It is at the micro-level that true wealth creation takes place. To remove impediments at the micro-level is like removing leg irons from a marathon runner--and not just "a" marathon runner, but hundreds of thousands of them. Every one of them is likely to perform better as a result.
5. Finally, we wish to acknowledge that Key has a Douglas-esque mantle about him. Sure, different personality, different style. But he conveys a clear conviction and sense about what needs to be done and where we need to go to address the fundamental problems. There is a realism that inspires confidence. He does not waste time trying to gild the lily. But neither does he sensationalise.
He reminds us a great deal of Roger Douglas at his best--albeit without the "shock and awe components" although to be fair to Douglas, the Muldoonist garotte that was choking the life out of New Zealand required radical action. Douglas delivered--warts and all. We are intrigued to see that political commentator, John Armstrong sees the influence of Douglas upon Key in this most recent announcement and that it is not a bad thing.
Been there, done that. Sir Roger Douglas had some sage advice for John Key prior to the Prime Minister unveiling his Government's $480 million small and medium business "relief package" yesterday.
Whatever critics might say about Labour's most radical and most polarising finance minister, there is no dispute Sir Roger was a dab hand at selling his policies to voters during difficult economic times in the 1980s.
He suggested the Government - likely facing deep and prolonged recession - follow his example and take the public into its confidence. It should explain exactly what was happening to the economy, what it was doing about that and be honest about the downsides, as well as the upsides, of policies tackling the crisis.
Otherwise, the public would start thinking there was a vacuum.
Key has called the government's approach to the economic challenges as a "rolling maul", which for those of you who do not understand the game of rugby, refers to a team of rugby forwards keeping in tight formation, holding the ball up off the ground, and rumbling forward in different shapes and directions, depending upon what the opposition are trying to do. Keeping in tight formation yet responding and adapting as things unfold and eventuate is the essence.
John Key, Prime Minister of New Zealand: S-Award, Class I for actions in the course of public duty that have been Smart, Sound, and Salutary.
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