Friday, 5 December 2008

Cut your coat according to your tattered cloth

MEMO to Phil Goff:  This is nota healthy set of books.”

A decade of projected government deficits.
Unemployment and welfare payments set to rise as recession hits.
Tax receipts set to fall as recession bites further.
News yesterday that there’s a 2.5 billion dollar hole in ACC accounts.
And news just out today that the government’s surplus has now plunged by five billion dollars, from a $1.5 surplus to a $3.5 billion deficit.

So at what point does the new government say “We can’t afford the status quo.” At what point does it point out that government spending at the levels it is now is unaffordable.  That it must be cut, and cut seriously.  I’m not talking “razor gangs” here.  I’m not just talking about “trimming the fat.” I’m talking slash and burn gangs.  I’m talking about cutting the fat and muscle and bone – and even ripping out several of those unnecessary organs that have gone necrotic, and are making the rest of us anaemic. 

Cutting spending beyond the bone is urgently necessary – even more urgently necessary now that we know how bad are these books.  In parlous economic times, a government going into debt should not even be an option: there are only three ways a government can raise money to meet exploding deficits, either by taxing more, by borrowing even more, or by printing money.  All of these is destructive.  All of them take money out of the pockets of the productive (on whom we’re relying for a genuine recovery).  None of them should be seriously considered by any responsible government.

So how about a MEMO to Bill English, explaining that any government that had any sort of aspiration to responsibility should now be looking at their accounts saying, “Where do we cut? 

That this lot are not and will not be doing that tells you all you need to know about how responsible they are.


  1. The late Aaron Wildavsky (my prof at UC Berkeley) was an expert on budgeting and wrote the seminal work "The Politics of the Budgetary Process".

    HIs conclusion was that the only way to cut Government spending with any long term certainty of outcome was to completely eliminate the department.
    Either eliminate it or privatise it.
    Sinking lids etc don 't work for long. Remarkably the budgetary behaviour of any department simply followed a straight line equation – upwards.

  2. Regrettably there is no point at which this or any other government will say 'enough!' and start cutting expenditure.

    The National voters are even worse than the Labour least the Labour ones were honest.

  3. I note that few who castigated Cullen for dismissing Treasury reports as "ideological burps" have nailed English for basically saying the same thing.


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