Government still in holiday mode on economy

Getting unions and business around the table is helpful, but there’s not much difference between the employment summit the government announced today and the economic holiday its been on for the last month, Wigram MP Jim Anderton says.

He says the government should be acting, not talking.
“Ministers were too lazy to do the preparation work for government, and they have been lazy in government. As a result, the government is confused over the right response to global challenges.

“While the government has been on holiday, the economy has not. Since the election business confidence levels have fallen to historic lows, forecasts for economic activity have worsened, the global outlook has darkened seriously, and hopes have faded for commodity prices to hold up for our exports. The only government response to the deterioration has been to call a meeting.

“The government still hasn’t made some basic decisions. It doesn’t know whether to stimulate the economy with a package of government spending and tax cuts, or to tighten the belt because of its reduced income. For example, the finance minister is saying, ‘any calls for further fiscal stimulus need to be weighed up against the consequences of taking on further debt’. [Press release 13 January 2009]. But the prime minister has said ‘This is the time not to overreact and stop government spending. We need to stimulate the economy when the private sector is unable to.’ [Bloomberg News, 22 December 2008].

“These policies cannot be reconciled by lazy evasions about the quality of spending. The issue the government needs to be clear about is whether the economy will be further stimulated or not.

“The National Government’s confusion mirrors the diametrically opposed positions National took in Opposition. Before the election Mr Key and Mr English argued simultaneously for lower taxes, more spending, lower deficits and more debt. National’s laziness in sorting out its economic policy in opposition has left it with confused ideas in government.

“There has been no sense of urgency from the government, other than an assurance from Mr Key that the economy is in good shape. That is not the tune he was singing before the election.”

Jim Anderton says the government should quickly form an infrastructure development bank to get on with accelerated infrastructure spending. It should bring forward spending plans focused on making sure that families most vulnerable to a downturn maintain their spending power, just as the Australian government has done for its most vulnerable citizens. It should change monetary policy to promote growth and competitiveness. And it should strengthen investment in economic development and innovation, especially in the primary sector, to ensure we are among the leading economies to recover.

“The first thing the government should do is reverse the huge increase in tax on research and development that it introduced just before Christmas.

“The global financial crisis was caused by global deregulation that helped to spark unsustainable booms, poor finance sector supervision, and in some cases breathtaking greed. The government could help restore confidence by reversing those failed policies National introduced in the 80s and 90s.”

ENDS

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