Nicola Willis has discovered fiscal discipline. She has promised her budget will begin a process of reducing the public service headcount by nearly nine thousand and cutting most agencies operating budgets by 2% in the coming year and 5% in subsequent years.
I mean, she also announced a “larger envelope” for capital spending, a “major lift” in health funding and “targeted investments” in frontline spending on schools, police and corrections as well as “continued enhancement” into defence spending.
Like Charlie Brown, I have heard these promises before and know that Lucy always pulls the football away before he kicks it. Maybe this time will be different? I want to believe so I shall engage a willing suspension of disbelief confident in the knowledge that events will result in my disappointment.
I am used to disappointment. It has been my constant companion for many decades. My only consolation is that I have more years of disappointment behind me than in front.
Meanwhile, the Minister of Racing has been busy. Breathtakingly so. He wants to buy back the BNZ. Younger readers will be surprised at the use of the verb ‘back’. Did the Crown formally own the BNZ? Why, young Padawan, yes. Yes it did.
If we go a long way back in time; to the year that Winston was born and the War was ending, 1945, the Labour government decided to nationalise the Bank of New Zealand. The Minister of Finance, Walter Nash, had initially opposed bringing the bank under state control but changed his mind when the mood of his party shifted.
At the 1944 Labour Party conference Frank Langstone, a firebrand former cabinet minister quoted Archimedes “Give me a long enough lever and I will lift the world.” Langstone paused for effect before continuing; “Here’s the lever, Mr Nash. It will make it possible for the sunshine of economic prosperity to shine even in the darkest places.”
It didn’t.
Under state ownership the bank expanded. By the 1980s the BNZ was the largest trading bank by share of assets. As a Reserve Bank report in 2011 wrote “Large loans were often negotiated with little more than a handshake ….”
Things began to go wrong after the 1987 crash left the bank’s permissive and politically driven lending policies exposed. By 1990 the bank faced a $648 million loss; equivalent to nearly 1% of GDP at that time. The incoming Bolger government, which the young(ish) Winston Peters served as Minister of Māori Affairs, was forced to invest taxpayers’ money to prevent a collapse of the bank and the catastrophic economic contagion such a failure would have resulted.
In 1989 another state-owned financial institution, the Development Finance Corporation failed. The National Provident Fund, a predecessor to the Cullen Fund, owned 80% of this formerly state-owned enterprise. To preserve our international credit rating the Crown was obligated to bail out primarily overseas lenders, costing taxpayers in excess of $100 million of 1989 dollars.
And so now we come to Kiwibank. Created in 2001 to appease perpetual socialist and one time Deputy Prime Minister, Jim Anderton, the greatest achievement of this financial institution that it has yet to fail. Despite much hype, government backing and the kitschy name; New Zealanders do not want to deal with it.
Anecdotally, Kiwibank is competitive in both the rates it pays for deposits and in its mortgage offerings; but New Zealanders are not interested. It limps along, blaming its minimal impact on a lack of capital. The bank obtained permission last year to raise $500 million to expand before, wisely, deciding not to expose the taxpayer to further liability.
Peters declared that once back in state ownership “Every dollar of profit it makes will stay in this country, working for New Zealanders”. Given the track record of state-owned financial institution it would be equally true to say that every dollar of loss the bank makes will also stay in the country and be paid for by New Zealanders.
Thankfully this policy is marketing. To induce fools like me to give Peters column inches. Act could learn a few tricks from the cunning grey wolf of Lambton Quay.
Meanwhile, the nation waits upon Minister of Finance as she prepares to deliver her third budget. The economic tone has been sharper in recent months. The approach to the fuel crisis was impressively flinty and the stated intention to bring civil service numbers down by over ten percent is a serious commitment.......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
Like Charlie Brown, I have heard these promises before and know that Lucy always pulls the football away before he kicks it. Maybe this time will be different? I want to believe so I shall engage a willing suspension of disbelief confident in the knowledge that events will result in my disappointment.
I am used to disappointment. It has been my constant companion for many decades. My only consolation is that I have more years of disappointment behind me than in front.
Meanwhile, the Minister of Racing has been busy. Breathtakingly so. He wants to buy back the BNZ. Younger readers will be surprised at the use of the verb ‘back’. Did the Crown formally own the BNZ? Why, young Padawan, yes. Yes it did.
If we go a long way back in time; to the year that Winston was born and the War was ending, 1945, the Labour government decided to nationalise the Bank of New Zealand. The Minister of Finance, Walter Nash, had initially opposed bringing the bank under state control but changed his mind when the mood of his party shifted.
At the 1944 Labour Party conference Frank Langstone, a firebrand former cabinet minister quoted Archimedes “Give me a long enough lever and I will lift the world.” Langstone paused for effect before continuing; “Here’s the lever, Mr Nash. It will make it possible for the sunshine of economic prosperity to shine even in the darkest places.”
It didn’t.
Under state ownership the bank expanded. By the 1980s the BNZ was the largest trading bank by share of assets. As a Reserve Bank report in 2011 wrote “Large loans were often negotiated with little more than a handshake ….”
Things began to go wrong after the 1987 crash left the bank’s permissive and politically driven lending policies exposed. By 1990 the bank faced a $648 million loss; equivalent to nearly 1% of GDP at that time. The incoming Bolger government, which the young(ish) Winston Peters served as Minister of Māori Affairs, was forced to invest taxpayers’ money to prevent a collapse of the bank and the catastrophic economic contagion such a failure would have resulted.
In 1989 another state-owned financial institution, the Development Finance Corporation failed. The National Provident Fund, a predecessor to the Cullen Fund, owned 80% of this formerly state-owned enterprise. To preserve our international credit rating the Crown was obligated to bail out primarily overseas lenders, costing taxpayers in excess of $100 million of 1989 dollars.
And so now we come to Kiwibank. Created in 2001 to appease perpetual socialist and one time Deputy Prime Minister, Jim Anderton, the greatest achievement of this financial institution that it has yet to fail. Despite much hype, government backing and the kitschy name; New Zealanders do not want to deal with it.
Anecdotally, Kiwibank is competitive in both the rates it pays for deposits and in its mortgage offerings; but New Zealanders are not interested. It limps along, blaming its minimal impact on a lack of capital. The bank obtained permission last year to raise $500 million to expand before, wisely, deciding not to expose the taxpayer to further liability.
Peters declared that once back in state ownership “Every dollar of profit it makes will stay in this country, working for New Zealanders”. Given the track record of state-owned financial institution it would be equally true to say that every dollar of loss the bank makes will also stay in the country and be paid for by New Zealanders.
Thankfully this policy is marketing. To induce fools like me to give Peters column inches. Act could learn a few tricks from the cunning grey wolf of Lambton Quay.
Meanwhile, the nation waits upon Minister of Finance as she prepares to deliver her third budget. The economic tone has been sharper in recent months. The approach to the fuel crisis was impressively flinty and the stated intention to bring civil service numbers down by over ten percent is a serious commitment.......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
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