Derek Mackie: An economics masterclass....well, not entirely

Grant Robertson was interviewed today on TVOne’s Q & A by Jack Tame and was asked why inflation is “soaring” in New Zealand. 

 Grant blamed it on “circumstances beyond his control”. Maybe he’s right but, suspiciously, this is standard politician-speak for “it’s all my fault, really, but I’ll never admit it”. 

He claims the increase in inflation is entirely due to high global demand for goods and services. Now I’m not saying that that isn’t a factor but is it really the only one? 

 Grant is adamant that rising inflation is most definitely NOT caused by the government’s huge Covid borrowing and spending programme. I’m certainly no economist, so I can’t contradict him, but there are apparently two schools of thought on this. Unsurprisingly, one thinks government stimulus packages will cause inflation and the other thinks it won’t. 

And that’s economics in a nutshell, I suppose. More of an art than a science. You can choose any outcome you want and someone will back you up. 

 So, let’s be generous and assume Grant knows what he’s talking about and that he is entirely blameless on the inflation front. If he’d left it at that then he could have completed the interview with most of the audience either unsure or giving him the benefit of the doubt. 

 But, then he ruined his credibility by saying “Of course the Government needs to be careful about how we spend our money – we always are.”

Whoa there! I may not know much about economics but I can recognise a big fat lie when I hear one. 

•  Spending $55m on buying off the mainstream media 
• Spending over $100 million of the Covid fund on dubious and whacko arts grants and research. 
• Spending about $50 million on feasibility studies to build the Auckland Cycle Bridge, which has now been cancelled….or has it? 
• Pouring hundreds of millions into a raft of Maori authorities and organisations, with little or no accountability and negligible outcomes. 

 This is only a small selection of profligate Labour government spending of taxpayers money and flies in the face of Grant’s statement which would appear to be entirely spurious. 

 Grant then went on to say “But we’re not going to lower the price of petrol by cutting health spending”. Now, I found this very interesting. 

This government, like all governments before it, always entirely blame petrol price rises on the big bad oil companies. What they are loath to tell you, and this is also the position taken by our MSM, is that at least half of the petrol price is made up by taxes, and regular increases usually fly under the radar. 

 Grant’s statement suggests to me that he’s perhaps made a Freudian slip. He seems to be admitting that he can take less government taxes from fuel and reduce the price, with a beneficial flow-on effect to pretty much all sectors of the economy, but then he’d have to spend less on healthcare.

Credit where credit's due, he has got the maths right. 

Of course, it doesn’t have to be health that gets cut, although cancelling the new Maori Health Authority will certainly save hundreds of millions of dollars with no appreciable reduction in healthcare. 

Any areas could be targeted but Grant’s picked the most emotive one. 

 I’m not sure his boss will be entirely happy with that statement. It sounds awfully like the government has admitted to a lot of control over petrol prices, independent of the international oil price, but chooses to let Kiwis suffer financially, while at the same time wasting our taxes hand-over-fist on minority projects and their separatist He Puapua agenda. 

 So, Grant was most definitely not entirely convincing or truthful but I’m sure Jack was entirely satisfied with the interview. 

Derek Mackie is a geologist with a keen interest in current affairs.