It took a foreign newspaper to finally say what I've been saying for months. The question is: Why didn't local newspapers write this piece months ago?
Forgive me if I feel a little vindication reading the Wall St Journal's piece on National's approach to the recession.
The interview with John Key that appeared in the Journal over the weekend clearly states that the government's approach to the global recession has been unusual by world standards. It begins:
These days, you have to travel far to find a national leader who is talking about market-based approaches to the global recession. All the way to the other side of the world.
"We don't tell New Zealanders we can stop the global recession, because we can't," says Prime Minister John Key, leaning forward in his armchair at his office in the Beehive, the executive wing of New Zealand's parliament. "What we do tell them is we can use this time to transform the economy to make us stronger so that when the world starts growing again we can be running faster than other countries we compete with."
That idea -- growing a nation out of recession by improving productivity -- puts Mr. Key and his conservative National Party at odds with Washington, Tokyo and Canberra. Those capitals are rolling out billions of dollars in stimulus packages -- with taxpayers' money -- to try to prop up growth. That's "risky," Mr. Key says. "You've saddled future generations with an enormous amount of debt that then they have to repay," he explains. "There is actually a limit to what governments can do."
At last, it's been said by the "mainstream" media. New Zealand's approach to the recession is out of whack with most of the western world.
What's been simply remarkable, is that the New Zealand media has failed to comprehend or report what the Journal has stated as self-evident. With straight faces they've let ministers talk up the size of our stimulus package and compared it to those in the US and Australia, when they should have been pointing out the contrast. Perhaps some distance from the debate gives a clearer view. Or perhaps our local media are enjoying National's honeymoon too much.
I've felt somewhat isolated in my repeated assertions – here, here and as far back as December – that New Zealand is forging a path quite at odds with the one most of the western world is following.
I won't hark back over my argument, but in short whereas most of our largest trading partners are using public money to stimulate their struggling economies, New Zealand is holding back on expenditure, putting almost all its chips on tax cuts and tax cuts alone. (Labour, it must be noted, was charting a similar course).
The government has spun and spun a sense of urgency and a commitment to fiscal stimulus. But as the Journal says, our government is not introducing new financial regulations like most others (indeed, it's loosening them) and it's not using taxpayer funds to prop up growth and save jobs now.
As Key says in the piece, that's a "risky" approach that passes a burden of debt down the line. And he's right. What he doesn't say is that not stimulating the economy now has its own heavy risks, such as double-digit unemployment, growing numbers of businesses failing, loss of value and companies from the stock market, and so on. Instead he talks about transforming the country's economy without offering any new ideas about how to do that. Reforming the RMA and delaying the ETS are not transformational, Prime Minister.
Given the Journal's monetarist leanings, it glories in Key's approach. Journalist Mary Kissel writes, "He won't label it supply-side economics", clearly giving her readers a nudge and a wink that of course supply-side economics is exactly what it is.
Rogernomics – "a formula for prosperity," Kissel reckons – gets all the credit for New Zealand's economic growth since the late 1980s, but none of the blame for our economy's failings. Australia's economy, supposedly, took off over the past nine years because of its economic liberalisation, while New Zealand's stagnated. There's no mention of the extreme liberalisation we undertook in the 80s while Australia chose a more moderate course and the wage gap that resulted. And heck, it's as if the minerals boom of the past decade never happened.
Before the end of the piece, there's just time for Key to get his words tangled, Bush-style. Asked if New Zealand's approach could teach the Obama administration a thing or two, Key answers that that would be "presumptive". (He meant presumptuous).
Well done to the Journal though, for getting some clearer answers from the PM. A few journalists in our own gallery might want to read the piece to see how it's done.