The ‘L’ word looms on the horizon

In her column in the NZ Herald today Fran O’Sullivan raises the spectre of the ‘L’ word - not Labour, but legacy as in political legacy - possibly two of the most scary words in English when coupled together.

O’Sullivan starts with:

The Government is clearly determined to underpin its own political legacy by spending up large on major taxpayer-funded projects in election year.

She then reminds us of past vainglorious attempts, in this regard, with:-

Think about it as a 21st century version of Think Big - the raft of energy projects launched by Sir Robert Muldoon’s National Government to try and protect the economy from the threat of future oil shocks.

The current Government’s projects have yet to be drawn under a common umbrella or even given a slogan.

But they are sufficiently statist in nature to reinforce this Government’s determination to ensure the State increases its footprint over the New Zealand economy.

It is that last sentence, which Adam has bolded, that is frightening as it is another example of how the Government, aided and abetted by the Greens and the appalling NZ First, is slowly eroding enterprise in business and freedom of expression.

As an illustration of xenophobia and ludicrous thinking see this press release from NZ First, from Doug Woolerton. I will post more later on this but just consider this:

“While we are disappointed that a small minority of shareholders voted in favour of the sale, it was not unexpected given the board’s ‘bob each way’ position on the deal.

Personally as regards the free float, i. e. in this case the non -council holders, I think it is pretty clear that the majority, including the Cullen Fund and Infratil, made a rational economic decision regarding an asset they held. This asset incidentally was sold by the Government in 1998, so the rubbish about strategic assets is merely political posturing for populist purposes, to attack John Key and keep Winston Peters onside.

“As nice as the Canadians are as investors, the fundamental question remains – why would we want to send the profits of a New Zealand business or asset to anyone offshore? As a country, we cannot prosper if the fruits of our labour and assets are skimmed off by foreigners.

Well Doug that has been going on for a very long time, indeed much of the original investment in NZ was foreign. The banks have been foreign owned for a long time, for example and many successful NZ business owners are only too happy to sell out to those nasty people from overseas. By the way Doug we need their money as we do not earn enough ourselves, so irritating them with silly statements like yours does not help. Not only that, we seek to invest overseas also through the Cullen Fund, Infratil, Fisher & Paykel, Fletchers etc - so be careful, as others may do to us what you would do to them.O’Sullivan lists the following:-

* The first major public-private partnership - a proposed $2 billion tunnel under suburban Mt Albert-Waterview to complete Auckland’s Western ring route motorway.

Co-incidentally in the PM’s constituency.

* A proposal for the Government to buy back the railways from Australia’s Toll Holdings.

* Major housing projects and shared equity schemes to help New Zealanders into affordable houses.

* A new $700 million fund to increase research and development in the primary sector.

Behind the scenes, the Government is also investigating a proposal to electrify Auckland’s suburban rail network, and plans for a major investment in this country’s broadband infrastructure.

She notes that when you take these moves in conjunction with the Air New Zealand rescue, Cullen Fund, Kiwi-Saver coupled with huge planned investments in Auckland transport, a picture emerges of a government spending up large as it’s legacy. Indeed one might say in some areas profligate spending, particularly when the Working for Families package is taken into consideration as well. A benefit handout which Cullen and Clark now market as a tax cut.

Ms O’Sullivan then suggests that all Labour then needs to do is offer new voter bribes and they are truly differentiated from National. e.g. writing off loans to graduates trying to buy houses perhaps? Then she points out:-

In 1990, the then Labour Government left the Treasury coffers so bare that an incoming National Government was forced to rescind its own big budget policies and slash spending to redress a fiscal crisis.

The effect of Cullen’s big spending strategy will be to reduce the fiscal options available to future Governments. The upshot will be that National will also come under pressure to say what programmes it will cut to fund its own policies.

Potentially, therefore if National wins the election and it is a big if, they will have limited, if any, scope for action.

Indeed given the current crisis in world financial markets their problems may make 1990 look like a mere blip and the actions required to remedy the position far more draconian.

If Labour retain the Treasury benches, then Cullen will find ways to manipulate the numbers and raise costs to carry on as now. All the while taking greater and greater control over the economy.

I suspect though that the current spend policy is a scorched earth approach as some at the top do not expect the regime to retain control.

Whilst no great fan of Telecom, the way the Government has behaved to them, why bother to nationalise when by administrative fiat you can destroy wealth and take effective control.

O’Sullivan points out that National were poor in their response. Key was not sure of himself. Yet again John Key bumbled and was verbally unclear. This is not the performance of the man who got the better of Cullen in 2005.

Bill English and John Key have got to be faster in response, keep the message simple and clear and deliver it in a way which brings home the problems with what Labour is doing. They are not doing this.

Fran O’Sullivan concludes, after giving National limited credit for finally launching a riposte over the Auckland Airport and drawing a line in the sand over public service staff numbers, with this:-

Where the Labour Government may be vulnerable is on the costings of its own major projects.

Cabinet ministers will certainly be hoping their projects won’t ultimately be criticised as a waste of taxpayers’ money in the way Think Big ultimately became tarred.

Cullen clearly put too much Government cash into buying the Auckland suburban rail network from Tranz Rail. Toll Holdings will be an even harder negotiator.

In my view she is right on the money with that comment.

This massive spend, and there will be more to come, plus huge cost increases to pay for the spend and the ill thought out emissions trading scheme will drag the economy down.

Tags: Auckland Airport, Bill English, Clark's legacy.Taxes, Cullen, Cullen Fund, Doug Woolerton, John Key, Nationalisation, NZ Herald, state control, Waste, Xenophobia