Government brakes on the economy

On ‘selection’ night Winston warned us of the dark clouds on the horizon and how the good times were coming to an end. He then added the disclaimer that no one should blame his new government for it. But nine months in, the dark clouds are most definitely on the horizon, but as the rest of the world seems mostly fine, and there is no global financial crisis or equivalent to it at this point in time, it is hard to know where else to look. Because, as Mike Hosking says, in 9 short months, the government has found the brake pedal for a successful economy, and is pressing down it with all its might. Newstalk ZB reports: Quote:

The latest services sector numbers as put out by the BNZ show the two worlds are colliding.

The services sector is what makes this country tick. It is us spending money, it accounts for two thirds of the New Zealand economy.

And when you see that number in trouble, we all have trouble.

That number as of this week is a reason to worry.

It’s 52.8, what that means is the sector is still expanding. That’s the good news, but not by much.

50 is treading water, below 50 and you’re contracting. The 52.8 is 4.3 down on last month, that’s your worry. End quote.

This means that people are battening down the hatches, in fear of an economic correction. It means people are not spending as much as usual. Spending is good. It keeps people employed, and it keeps businesses working. Stop spending on all but the essentials, and businesses start to suffer. At the moment, they are suffering needlessly. Quote:

The expansion is stopping. We are putting the brakes on. And that’s not sentiment, it’s real.

It’s real dollars, in real shops, that is no longer being spent. It’s orders that aren’t being placed. And in one of the sub-indices it’s jobs that aren’t being created or filled.

All five sub-indices are down, the employment index is down three points.

It has not been this slow since the middle of 2010. And in 2010 we were scrambling out of the GFC. End quote.

There is no Global Financial Crisis this time to use as an excuse. Confidence is plummeting everywhere because of government policy. Quote:

So, given these numbers, can we at last start to harden up a bit, and have a real chat about this government driving our country into a hole?

Can we start to acknowledge that the wage demands, the industrial action, the taxes, the spending and yet to be revealed workplace reform,is not good for the economy?

People don’t like it and they’re starting to react in a very tangible sort of way.

At some point the theory becomes reality, and it might be right here right now, and the reality is ugly.

We cannot blame the world, the world is okay. There is no GFC this time.

Returns for our exports are good, our trading partners are doing fine.

It’s us, in isolation, that is taking a remarkable economic record and throwing it in the bin. End quote.

This is the part that makes me so angry, I could scream. 9 months ago, our economy was the envy of most of the world. This is all needless. We could be still doing well, and feeling prosperous. While I accept that not everyone was benefiting from the ‘rock star economy’, the best way to help the downtrodden is to keep the tax take high. Because if the government is flush with cash, it can expand its social programmes. When there is no money, it cannot. Quote:

The services sector is driven at least in part and often a large part on sentiment. Spending is about feeling good, the moment you don’t feel good you close your wallet.

52.8 is a lot of wallets closing.

52.8 is bad enough, certainly bad enough to start asking a few hard questions of a government that only nine months in, has managed to find the economic brake pedal and slam its inept foot hard down on it. End quote.

  • Nurses strike.
  • Teachers strike.
  • IRD and MBIE on strike.
  • The end of the oil and gas industry.
  • The end of mining on conservation land.
  • No cochlear implants.
  • No mental health assistance at crime scenes.
  • Tertiary students from middle class families being given free fees for their first year of study.
  • Baby bonuses.

Welfare without any responsibility. I spoke to a client today that earns over $200,000 a year. His wife is expecting soon, and once her paid parental leave is over, she will receive $60 per week as a baby bonus. He agreed it is madness. As is the Acting Prime Minister receiving a winter heating allowance.

How did we end up with a government full of clowns? Why did Winston set out to destroy our economy? He said it on ‘selection’ night. He knew what he was doing.

But why?

 


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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

To read my previous articles click on my name in blue.

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