NZ POLITICS DAILY: Too much debt, or not enough work to go around?

Jobs and growth versus fiscal responsibility - that’s the major dichotomy characterising political analysis and debate in the lead up to this week’s Budget.

Brian Fallow asks today in the Herald, "Which is the economy’s biggest problem right now: too much debt or not enough work to go around? That is the basic question the Government faced as it prepared this week’s Budget" – see: Dealing with debt key to recovery.

Similarly, today’s Herald editorial says, "Governments around the world are in the same dilemma: whether to give lacklustre economies an even greater stimulus or demonstrate budgetary control" – see: Budget likely to test resolve on economy.

This government has clearly chosen in favour of fiscal responsibility, and that’s going to be the key message pushed all week.

In contrast, Labour, the Greens and other critics are going to be pushing for a priority to be placed on creating economic growth – and to a lesser extent, jobs. You can see a foretaste of this in David Shearer’s very nice catchphrase: A ‘zero Budget this week is a recipe for zero growth’ – see: Adam Bennett’s Zero Budget means zero growth – Shearer.

John Armstrong also says that the focus of debate "will shift to the adequacy or otherwise of National's economic growth strategy" – see: Backlash lurking in Govt austerity march. According to Armstrong, National is going to have to rely on "Steven 'Minister of Everything' Joyce" and his new super-ministry to create the required growth and jobs.

Labour’s not alone in pushing for greater job creation, interestingly, Business New Zealand’s Chief executive Phil O'Reilly has called for a "much sharper focus on job creation" – see RNZ’s Business NZ to hold Govt to its goal of returning to surplus.

Another criticism of the government’s Budget will concentrate on its moderate and middling nature. You can already see Labour’s talking points on the issue in a very good blog post on the Standard: Mr Key’s remarkable lack of ambition, which reminds us of the more positive language that John Key and National once used ("ambitious for New Zealand"; "brighter future") and criticises the focus on returning to surplus as "a simple accounting goal".

Instead, "Its purpose is to paper over the lack of anything useful – any policy programme for real jobs, growth, and economic rebalancing".

Similarly, today’s Dominion Post editorial (Budget to confirm Govt's shrinking ambition) laments the fact that that "Key and his ministers are reduced to tinkering for the sake of looking busy" and predicts that all we’ll see on Thursday is "a bit of belt-tightening here to fund extra spending there, a bit of tinkering with this and rearrangement of that".

So what will be the electoral cost of this week’s black Budget? After all, there is no doubt that Bill English’s prescription will be very negative – it will contain more austerity, more cuts, more pain, etc.

But will this cost the National government popular support? Probably not.

This is because the public has already had its expectations lowered, the austerity measures of Europe are helping the government appear reasonable, and the parliamentary opposition is still not pushing a strong enough alternative vision to compete with Bill English.

These points are made very well in Tracy Watkins’ Kiwis are tolerating moderate austerity and John Armstrong’s Backlash lurking in Govt austerity march. Watkins points out that "Labour has struggled so far to run a coherent argument against National's management of the books – the danger has always been that protesting any cuts to date look not only shrill, but profligate".

She also says that "Europe helps Bill English's cause. It maintains a sense of crisis while the sight of workers marching in the streets only underscores the gentle and low-fuss nature of our own austerity drive".

But Watkins also warns that "Key may also ponder how quickly the public mood can turn against austerity measures even in the face of a general public appetite for restraint".

Similarly, Armstrong says that "the backlash accordingly edges closer", and "Sooner or later, New Zealand voters will likewise tire of the messages of restraint".

But for the moment, "National has managed to carry voters with it", and that Bill English has received from voters a "licence to cut spending. But not too much".

Audrey Young also argues that the government is on the right (electoral) track in focusing on fiscal responsibility: "It plays well to the electorate which has largely lost its appetite for debt and to lenders and investors who want to see that a Government has things under control" – see: Budget 2012: Trust hinges on fiscal deadline.

She also nicely tracks the government’s changing language usage about fiscal matters – showing that the focus on fiscal responsibility is a relatively new one for the Government.

Business is likely to be fairly happy with the Budget, and already businesses are said to be supporting "the government's 'business-friendly' policies" – with one survey showing "quite high levels of satisfaction with the government, certainly the highest it's ever been for the current government" – see TVNZ’s Small Kiwi firms back a thrifty Budget.

More evidence that Labour will fail to profit from Budget criticism this week can be seen in Vernon Small’s Labour cops debt blame – with survey research suggesting that ‘voters blame Labour more than National for the country's current debt levels’.

Race Relations Commissioner Joris de Bres has become increasingly outspoken about politics recently – using his public office to adjudicate on highly political and partisan issues.

His latest pronouncements have been on the ACT Party’s finances and the Nelson City Council’s lack of Maori seats. De Bres suggests ACT should not be accepting donations from its biggest donor, Louis Crimp, who has been exposed as having extreme views on Maori – see David Fisher’s Act backer: We all dislike Maori and Teuila Fuatai’s Act 'must distance from donor'.

In terms of local government Maori seats, de Bres has expressed his disappointment that Nelson residents voted in a referendum against establishing such seats. And he’s gone further by criticising the use of referenda for such issues, saying "the law should be changed so Maori seats are a right, rather than subject to a vote of the majority" – see RNZ’s Nelson MP rejects making Maori seats on councils a right and Law change on Maori representation urged.

Regardless of the correctness or otherwise of his pronouncements, some will be uncomfortable with an office of the state being so interventionist.

Other important or interesting political items today include:

The health vote is always one of the most problematic sectors for governments drawing up budgets in recessionary times, and relating to this, Andrea Vance has a very good profile on Health Minister Tony Ryall – see: Smart performer's healing touch. Vance shows that although Ryall’s ministerial performance is highly regarded, there are criticisms that he’s "championed popular causes" rather than pursuing reforms that come out of, what one health professional says is a ‘coherent strategy for health’. There’s also some explanation of "Ryall's flamboyant shirt and tie combinations". Also on health, Paul Little is scathing of National’s claims that they are "boosting funding" in this sector, saying that "noted economists as Lewis Carroll and Spike Milligan would be proud to claim authorship of such an initiative" – see: Health industry depends on people being ill.

Labour is now feeling the heat for its role in the Bill Liu affair – currently before the courts. This is covered very well in Andrea Vance’s Case of a well-connected millionaire, Adam Bennett’s Pressure on Jones over citizenship case, and the Herald’s Shearer accepts assurances in immigration case. Under particular pressure are MP Shane Jones and Labour leader David Shearer for arguably taking a different stance towards Jones than he has towards errant MPs in similar situations – see David Farrar’s Shearer defends Jones. Labour’s defence of Bill Liu is currently being left to ex-MP Dover Samuels, who has accused New Zealand officials of a ‘hatchet job’ on Liu, saying they were "vindictive". Samuels also suggests that Liu has been persecuted by the Chinese Government due to his Falun Gong religious beliefs.

Upcoming local government reforms were discussed in the weekend on TVNZ’s Q+A, in an interview with Minister David Carter - video, and a panel discussion – video. The most controversial element was the suggestion that local authorities might follow the Government’s partial privatisation plans – see Vernon Small’s Councils get nudge on asset sales.

Government departments are under increasing scrutiny these days. Jared Savage looks at the travel expenses of public service bosses in State sector chiefs spend millions flying the flag; Marika Hill looks at the changing staff demographics of government departments in Minorities shut out of public service, and Fran O’Sullivan explains why Murray McCully is holding back Cabinet papers from his chief executive in Big picture lost in bureaucratic brouhaha. For more on the Mfat restricting, you can listen to Radio New Zealand’s programme Terence O’Brien - Meltdown at MFAT.

The government’s plans for welfare reform were the subject of RNZ’s Insight for 20 May 2012 - Welfare Reforms and TVNZ’s Q+A Interview with Paula Rebstock.

Is Sky TV the new Telecom? That’s what Liam Dann asks in his article, Sky's dominance echoes fall of Telecom. With potential regulatory pressure being applied, see also Liam Napier’s article Sky TV's sports influence comes into question.

The latest Roy Morgan political poll shows that support for National is falling – the party is down 2.5% to 44.5% - see Adam Bennett’s National support slips further – poll. But should we really take such individual poll results seriously? Danyl Mclauchlan of the Dim Post blog says no, and he’s set up a permanent Tracking poll page which gives an overall view of the trends in party popularity.

Finally, Jane Clifton comes in to bat for beleaguered Labour leader David Shearer, making the case that he’s slowly but surely reinventing Labour against the odds. What’s more, "The contrast between Shearer’s measured earnestness and Key’s glib smart-arse routine in Parliament is potential election-campaign gold" – see: Relitigating Labour shibboleths?.

Bryce Edwards

NZPD Editor (bryce.edwards@nzpoliticsdaily.co.nz)