Bet the left don't wax lyrical this time

The left wing has been feteing Bernard Hickey for some time since he started attacking the government, but I bet you they won’t be publicising his latest column where he prescribes some hard medicine for New Zealand.

So here are five ways New Zealand Inc can stop this slide into poverty.

1. Cut the middle-class welfare

Dropping Working for Families, interest-free student loans and “free” early childcare would be the fastest way to reduce the budget deficit. It would also reverse one of the great deceptions of the 2000s: we convinced ourselves we could afford these improvements to our standard of living, but we hadn’t earned it. As a nation we borrowed to consume – it is not sustainable.

2. Introduce land and capital gains taxes

The International Monetary Fund and the Tax Working Group have told the Government that these taxes are needed to quickly and fairly bring the budget deficit under control. They would take back some the windfall gains from the property boom and some of the air out of New Zealand’s property bubble.

3. Bring the NZ dollar down

Everyone, including the IMF, argues that New Zealand’s currency is about 15-20 per cent overvalued.

The Reserve Bank should take on the speculators and drag the currency down. It has done it before. It can do it again.

4. Restrict bank funding and lending, and companies borrowing offshore

The Reserve Bank is already looking at various macro-prudential options to restrict our banks from borrowing hot money offshore and pumping it into our housing market. The Government could also impose a tax on New Zealand corporates borrowing overseas, as the Brazilians have done. Many New Zealand companies have leaped offshore in the past six months to borrow cheaply from markets where official rates are near zero. Those companies include Transpower and Kiwibank.

5. Invest heavily in infrastructure

The Government and businesses should invest in the physical and intellectual infrastructure needed to improve our productivity. That means better broadband networks, roads, rail, power, education, more staff training and a more aggressive approach to lifting output per hour worked.

Most importantly, we need leadership to convince New Zealanders to take some pain now for sustainable gain later. Is our Government up to it?

The pinkos will especially hate number 1 and 5. Number 1 is a definite, Working for Families is a trap and an economic landmine laid by Labour when Michael Cullen mistakenly believed that surplus’ were structural.

I’m not sure even Labour has the stomach to push for a capital gains tax but I think it is something at least worth investigating. It is interesting that Bernard Hickey wants to first bring the dollar down and the restrict access to overseas markets for lending. One of the reasons why our exchange rate is high is our higher than the rest of the OECD interest rates, which is also why institutions look to borrow off-shore where it is cheaper even considering the exchange risk.

Of coursr the Reserve Bank standing in the market and lowering our exchange rate will raise the cost of things that we import, like fuel, which again raises the costs of things in our stores leading to further erosion of our purchasing power by inflation.

I don’t think Bernard has thought too hard about this prescription of changes. Still even just doing number 1 and number 5 would be a good start for John Key.

 


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story.  And when he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet.   Cam Slater doesn’t do quiet, and as a result he is a polarising, controversial but highly effective journalist that takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him.  But you can’t ignore him.

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