Wednesday 13 October 2010

PM Mid-Term Report Card, Part I

Neither a Borrower Nor a Lender Be

There are some things we cannot stand about New Zealand's Prime Minister, John Key. In many ways we find him a deep disappointment--well, actually, that is an exaggeration. Our expectations were fairly low to begin with. Our disappointments are more of a "told you so" dimension.

But there are some things we appreciate, and do not take for granted. So, over the next few weeks we will endeavour to produce a mid-term report card.

So, here is our first tick. John Key is fiscally responsible (up to a point). We are grateful for this. He is aware of the long term destruction of government (national) deficits. He is far less likely to endeavour to curry popular favour by big entitlement spending programmes. Moreover, we believe he is far less likely to sacrifice the economic well-being of the nation upon the altar of his personal political ambition. "Nation before self" is a measure of the PM. (We will deal with this particular virtue more extensively later).

Now, we in New Zealand, have just endured a three term, nine-year Labour led government, under the stewardship of Helen Clark and Michael Cullen where things were very different to the cost of all. Whilst Dr Cullen as Treasurer commenced his time in office as a more careful and reserved spender, this soon disappeared as it became manifest that the Labour Government was hell-bent on using spending to buy electoral popularity. Bribery was its modus operandi. Corruption fast followed. In the end, reckless spending required more and more public money to the point of damaging and weakening the nation. We are now all suffering under the impact of this wilful vaunting of self and personal ambition over the nation, which characterised Clark and Cullen. They truly were the haters and wreckers of the past decade.

John Key is cut from very different cloth. We are thankful. Here is a classic instance of the difference. Two politicians: Len Brown, just elected mayor of the Auckland super-city, and John Key, PM of New Zealand. Brown is a curry-favour-by-public spending politician. Full speed ahead and damn the torpedoes of debt is his modus operandi. Upon electoral victory--almost inevitable given the deeply ingrained sense of entitlement in Auckland city--he immediately said two things. One--central government has to provide Auckland what it wanted because it is now big and because all along the collapsing of competing local bodies into one mega city administration was to make it easier for central government to deal with it. Auckland's one-united-voice bigness meant that central government must comply with our demands. It can no longer claim that it does not know what Auckland wants.  (Note the implicit entitlement mentality here: central government exists to give to Auckland.) 

Second--I have a vision, said Brown, (don't you just love this trendy lefty vision pablum) for rapid rail systems in Auckland. Central government (that is, non-Aucklanders) had therefore better step up with the money.

John Key: not likely, mate! Here is Key's retort to Brown, as reported in the NZ Herald:
The Prime Minister yesterday poured cold water on Super City Mayor-elect Len Brown's ambitious plans for rail, indicating the Government was closing its chequebook for extra projects.

John Key, who with Transport Minister Steven Joyce is prepared to spend an extra $1.6 billion on what has been dubbed the "holiday highway" from Puhoi to Wellsford, said ratepayers would have to pay for Mr Brown's plans to fast-track rail.

The PM said the Government shared the goal of an efficient transport system for Auckland, but "not all roads, or all rail tracks, can lead to the Government".

"There is no free lunch when it comes to any of this stuff," he said.

"The Government is spending $5 billion in Auckland. We're spending $1.6 billion on rail and that's a considerable contribution already."

Said Mr Key: "Ratepayers will also have to pay their fair share. I don't think Auckland can expect central Government to pay all of the costs. It's just not realistic because if we did that in Auckland, why wouldn't we do it around the rest of the country?"

Asked if he was concerned about the Auckland Council taking on debt to pay for rail projects, the Prime Minister said it was up to each council to decide on its debt levels.

"There are guidelines on how much debt they can realistically have and service. If they issue too much debt, rates have to go up to pay for that."
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Exactly. Money, Mr Brown does not grow on trees. Mr Key's fiscal responsibility is appreciated.

Now, of course, we are well aware what will happen. Central government funding of Mayor Brown's ambitions will become a major election platform of the Labour Party at the next national elections--for they still believe in reckless spending to secure power. In their case it is "full speed ahead and damn the nation". Labour will promise, promise, promise money for Brown's vision. They will seek once again to bribe their way to political power using your expropriated money. And the people will cheer wildly.

But in the meantime, we appreciate very much Key's fiscal prudence and his relative realism on the actual costs of central government spending that are paid by ordinary Kiwis.

Prime Ministerial Bouquet, No 1: John Key's relative fiscal prudence and responsibility.

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