It’s great to see former ministers of finance and a former prime minister offering advice on how to turn the Government’s “going for growth” rhetoric into GDP growth and a lift in our general well-being.
They have all chipped in after New Zealand’s economy shrunk by 0.9% in the June quarter –
- John Key says Minister Willis should get a better grip on the control of interest rates.
- Ruth Richardson says she should get Big Government’s foot off the throat of the economy and deal with the high levels of deficit and debt.
- Roger Douglas says she should get another job.
Nicola Willis, let’s not forget, is Minister for Economic Growth as well as Minister of Finance.
How should we measure her performance in the growth portfolio?
A raft of company announcements of plant shut-downs in recent times gives us an idea of what not to measure – closures, redundancies and lay-off.
But wait – Willis is making it clear the Government is not to blame.
She hastened to tell of an economy buffeted by the trade repercussions of US President Donald Trump’s tariffs,
If she takes the advice of former PM John Key, however, Willis would learn from Trump and get a better grip on the central bank and the management of monetary policy.
Trump, who is feverishly ridding government institutions of administrators who are not loyal to him, has fired one governor of the US Federal Reserve and persistently has threatened to fire its chairman for not lowering interest rates as quickly and as amply as he reckons is required.
Key – it might be remembered – favoured Trump during the US presidential election campaign. He said Trump would be a better economic manager than the Democrat Party contender.
Now he is parrotting Trump’s squawks about central bankers getting in the way of his easing the cost of living by keeping official interest rates too high.
PoO today noted a Stuff report beneath a headline which declared:
John Key backs Nicola Willis, says Government ‘hasn’t had a mate in the Reserve Bank’
Former Prime Minister John Key has taken aim at the Reserve Bank after Finance Minister Nicola Willis faced calls to resign from the Opposition on Thursday, over New Zealand’s shrinking GDP.
Stuff sourced this advice to something which Key had said when speaking to Newstalk ZB’s Mike Hosking.
He quoted former Finance Minister Ruth Richardson’s saying that “monetary policy needs mates” and told Hosking that the Government has been “working hard” to grow the economy.
“It hasn’t had a mate in the Reserve Bank and the Reserve Bank’s job very clearly over time has been to say interest rates need to come down,” Key said.
“Two months ago, I got hammered for saying interest rates need to come down 100 basis points.
“Well, they came down 25%, they’re gonna come down another 50%.
“You can put a ring around it in the next monetary policy statement – and they’ll come down another 25% by Christmas,” Key said.
“So the person that’s not doing the job, or the people that are not doing their job, are the Reserve Bank.”
Key agreed the Government should pull the levers that are within its control.
Cutting waste and fast tracking changes to the Resource Management Act would help, but it would take time to flow through.
Key also said Christopher Luxon needed to tell New Zealanders that the future was brighter.
“What’s coming in front of us is a lot better, but we need to get our mojo back, we need to start feeling confidence again,” Key said.
He blamed the previous Labour government for the “mess” the economy was in, and suggested that if voters brought them back, New Zealand would be in for more of the same.
And he advised Luxon that Willis was the best person for the Finance job.
Former Finance Minister Ruth Richardson – speaking as chair of the Taxpayers’ Union – called on Nicola Willis to present a ‘Spring Statement’ to decidedly reset the economy on a growth path before this year’s Half Year Economic and Fiscal Update.
She called for this
“… in light of yesterday’s alarming GDP figures and the failure of the Government’s current fiscal and economic approach.
“Two years into the Government’s economic agenda, it is clear the current plan is failing and it’s time for a bold change in direction.”
First, she advised, the Government must get Big Government’s foot off the throat of the economy.
Despite running on a platform of cutting the previous government’s bloated spending, Nicola Willis had actually increased government spending as a proportion of the economy, she said.
“She is perpetuating high levels of deficit and debt, which are dragging the economy down.”
Richardson recalled taking a ‘short and sharp’ approach when she faced similar fiscal challenges in the early 1990s.
“That approach set the scene for a growth rate of 5 percent – it’s better to be short and sharp than this long, painful torture of continuing the last government’s fiscal recklessness. Yesterday’s numbers are vindication of my high-growth choice.”
New Zealanders could not afford to stick with failing policies, Richardson insisted.
“A course correction is urgently needed. The best way to do it is a Spring Statement to correct the fiscal path, get spending under control and give the private sector room to grow again.
“The Government must stop pretending that the current approach will work. The attacks on me and others who are pointing out the fiscal elephants in the room do Ms Willis, and all New Zealanders, a disservice. Moving government spending back to, say, the levels of Ardern’s ‘wellbeing budget’ isn’t ‘slash and burn’, it’s responsible and necessary.
“Treasury are making clear that the situation is getting worse, not better. The Government says they are on a path to ‘surplus’, but it’s spin over substance. The amount being borrowed per day now is higher than when the Government entered office.
“It’s time for a hard reset, a shift in priorities towards fiscal responsibility and economic stability.
“The longer we wait, the deeper the hole. A Spring Statement is necessary.”
And so to an RNZ report headed
Former finance minister Sir Roger Douglas calls for Finance Minister Nicola Willis to resign
Douglas and Robert MacCulloch, University of Auckland Matthew Abel chair of macroeconomics, said the June quarter contraction in GDP stemmed from Willis “sending New Zealand bankrupt by failing to get to grips with our ballooning fiscal deficits and public debt”.
“Her own Treasury contradicts her claim that NZ is on a path to surplus. It is not. Treasury’s long term fiscal forecasts show out-of-control deficits due to pensions and health-care spending from an ageing population,” they said in a statement.
“Willis is not up to the job and is not levelling with the New Zealand public.”
MacCulloch said Willis kept saying the country was returning to surplus.
“The books are not improving. And this surplus she talked about today, that’s a creative accounting trick. She changed the way the accounts were being measured… she keeps saying they’re getting better, it’s not true.”
MacCulloch said it was disingenuous to blame the global picture.
“She mentioned the tariffs hitting much harder here – that makes no sense at all. In fact, most countries overseas had far higher tariff uncertainty than New Zealand.”
Willis told RNZ she would not take up the pair’s advice.
Bob Edlin is a veteran journalist and editor for the Point of Order blog HERE. - where this article was sourced.
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