Bugger. As the prospective beneficiaries of buckets of election bribes, we’ve been done no favours by the opening of the Govt’s books. The Treasury’s economic and fiscal projections brace us for negligible growth in the year to March 2009 (before the economy picks up to around 3% GDP growth in 2010), unemployment rising above 5%, and house prices shedding up to 25% from their peak. They also portend a rise in Crown gross debt (to around 22% by the 2011 general election) and budget deficits over the next 10 years. Because the forecasts were prepared some weeks before the latest upheaval in world finance markets, our prospects could well be worse. This calls for belt-tightening (National responded by trimming its tax-cut promises and removing some of KiwiSaver’s plumage). More critically, it calls for party leaders to place less reliance on who has the better package of tax cuts; rather, they must persuade us they have the right policies to increase GDP growth to something greater than a very modest 3%.

Don’t Hold Your Breath. The Labour Party home page highlights “news” which over-rides the grim stuff from the Treasury. Quoting Finance Minister Michael Cullen, it brays the Govt’s 2007/08 Financial Statements “show the Crown in a strong financial position ahead of the challenging international economic times ahead…” Look up the contents on “Economic Transformation,” and you are told these reflect the policies and actions of Labour in Govt. Detailed policy for the next Parliamentary term and beyond “will be released closer to the election.” The web-page will be revised at that time.

Blank Space. National’s web-site has nothing under economic development or transformation, and under trade we find a speech delivered last year by former diplomat Tim Groser. True, there are policies on energy and science. There’s policy on infrastructure, too (a commitment to close the infrastructure deficit in “this vital area of investment”), although earlier spending commitments have been diluted in light of the Treasury’s fiscal forebodings. But 10 years of projected budgeted deficits show up in the projections simply because the Treasury’s forecasting model is geared to annual GDP growth of no more than 3%. This doesn’t mean the economy can’t grow more strongly, and if NZ can do better than 3%, the deficits would soon become surpluses again. Then we could revisit tax cuts without worrying about the threat to education and health spending or the public debt.

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