The thinking that underpins the governments increasing trend to borrow is this- eventually things will come good, the budget will produce a surplus, and the debt will slowly be paid back.
Why do we need to borrow? Because the government prefers this to selling off assets or reducing govt expenditure. Bill English-
“the Government has sought to minimise the increase in debt in the face of difficult circumstances by controlling its spending very carefully, at the same time as improving public services and supporting the most vulnerable. We believe that we have got the balance about right.”
Taxpayers need to pay the interest on this debt. That’s roughly $10.4 million per day or close to $4 billion for the year. Money we pay to preserve the socialist status quo. Money that could be spent on so many other things or even better left in the pockets of the producers who earned it.
So that is one down side to English and Key’s debt expansion policy. Its a policy that has seen debt grow by $51 billion since National came to power. (Christchurch earthquakes accounts for only $15 billion)
The glaringly obvious question in all of this is “what happens if things don’t get better?”. Its the answer to this that drives so much of the governments policies and propaganda offensive. It is absolutely essential that things do “get better”. That’s why we’re selling out to Communist China. That’s why we have a flurry of govt press releases, one after the other, all telling us how good things are going. Key and English have taken a huge gamble on NZ’s future and if the economic improvements they have gambled on do not eventuate, we’re in big trouble.
Tony Abbot didn’t want to take this gamble and his policies are not designed to preserve the status quo but to pay off debt now. The future will tell us who was right, but a weekly deluge of pronouncements about how well the economy is doing from people who obviously desperately hope they will be self fulfilling, are not convincing me that there’s any light at the end of the tunnel. Especially when the government’s own predictions show debt rising and existing for a long time to come. Getting out of this mess without a Greek style economic earthquake will be a lot harder than Key and English are letting on, and the bottom line is, if there is any global economic downturn, we won’t.
TrueblueNZ 
3 responses to “NZ Debt levels- high stakes gamble that relies heavily on improving global economy”
Fact is that running deficits and pump priming never works, never has worked, & never will work. What it does do is breed a nation of state dependance & state dependants. It does consume seed capital, the results of the hard work of the productive. It consumes the future, today. Robbing Peter to pay Paul, is a huge disincentive. A continual kick in the guts to those carrying the load.
It does tell me that Key & English & co do think that they know best. A common failing amongst despots, socialist’s & control freaks.
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Its as if Helen Clark was till running the country, only worse.
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Well said Peter.
The answer is to get debt free as soon as possible.
When no longer a debt slave you will not require as much income to live. You can then concentrate on cutting your expenses and earning the bare minimum required.
Not popular with the Government as they require economic growth to show how successful we are.
This is achieved buy getting people to borrow and spend, borrow more and spend more mostly on rubbish they do not need.
This may go against your work ethic, but it is better than propping up a ponzie scheme and as you put it carrying the load and continually getting kicked in the guts.
We spent two years receiving WFF and effectively paid no TAX. Then business took off, apart from the huge increase in compliance costs, regulations etc etc etc. We had worked harder earned more paid more TAX lost WFF and other benefits and were no better off.
When the music stops there will not be enough chairs for everybody.
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