[Hat-tip, John Robb; source NZ Listener]
7 months ago
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Wednesday, March 21, 2012
Rogernomics: As Damaging As "20 Christchurch Earthquakes ... and counting"!
[Hat-tip, John Robb; source NZ Listener]
Saturday, February 18, 2012
A Man Whose Economic Forecasting Makes Astrology Look Respectable
I see Bill English has just admitted he made up some of the figures on asset sales.
He's also said that the fiscal impact of the sales will be "roughly neutral" and will leave us with "less debt".
Well that sounds familiar. Where have we heard Bill English talking about "fiscally neutral" "debt-reducing" economic programs before.
Oh that's right, it was those "fiscally neutral tax cuts" that put a $1.1billion hole in the books.
Surely that's a one-off. Highly trained economics professionals and an experienced finance minister aren't in the business of putting out fallacious figures and then sheepishly revising them when they're caught out ... are they?
Unfortunately, yes they are.
Note what happened there. Before the election, our competent economic managers were talking about 3.4% growth for the next year. Post-election, it's 2.8%. That might not sound like much, but by my amateur calculations, that indicates Treasury was out by something like 17%. Hardly reassuring.
But don't despair! We may have screwed up and over-estimated how well the recovery'd be going by now by nearly a fifth ... but there is good news! We're actually going to grow by 3.8% the year after that! Not 3.3% like we previously claimed!
Again, these are figures out by an amount of less than twenty per cent, although this time in the government's favour. This might ordinarily sound plausible, but consider why Treasury revised its figures for growth till March '13 downward. It reckoned it had overestimated the economic benefits of the Christchurch rebuild and underestimated the severity of the ongoing Eurozone crisis.
This would be the already-much-vaunted Christchurch rebuild that's apparently going to account for 1.25% of GDP growth over the next five years, and the Eurozone crisis every man and his dog (although apparently not every minister and his lapdogs) has been witnessing deteriorate for months now.
But wait ... it gets worse.
Pandering to National's base, pre-election English's ministry was claiming it'd be able to deliver a $1.45 billion surplus for 2014-15. Post-election it's claiming it will be able to deliver a $370 million surplus.
Wow. The Nats have somehow managed to lose more than a billion imaginary dollars out of their "Brighter Future." Presumably that's even after the well-above-valuation revenue they're expecting to reap from those well-mandated asset sales we keep hearing about.
Anyway, my point is simple. Governor Mario Cuomo pithily stated that "you campaign in poetry; you govern in prose". Or, put another way, from the perspective of a Minister of Finance wishing to maintain his ministerial salary, it's fiscally prudent to over-state how well he's doing before the election ... but the closer one's forecasts come to fruition, the more prudent it becomes to revise them downward toward reality.
Not that GDP growth forecasts from the boy who cried fiscal stimulus package actually have much worth anyway.
Of course, it's one thing to fudge one's economic forecasting; in that case Treasury's economic sooth-sayers can, as they have done, plead ignorance of changing circumstances in a "dynamic environment" as explanation (even though this looks these days more like a case of the Austrian economists burying their collective head in the sand).
It's quite another thing to simply make up numbers.
Or, being charitable to English, merely repeat made-up numbers from the year before in the hope nobody's noticed the continuing falsehood.
However, in fairness, these numbers tend to come from Treasury - a department which, as Harold Wilson observed "could not, with any marked success, run a fish and chip shop." We have thus come to expect a certain level of incompetence in the numbers department from the people we presumably pay to be reasonably accurate about the economy. With this in mind, the standard gNat line of defence when called on the frequently wild inaccuracy of a Treasury entrail reading is to pass the buck and point out that the Minister did not come up with the projection and that it's therefore someone else's fault.
Witness English's response above. When Guyon Espiner calls him on the credibility of the 170,000 jobs figure, English retreats and insists Treasury forecasting is "done independent of the government"; despite the fact he shares a "sense of confidence" in those forecasts.
With respect, the Minister should not be able to have it both ways. He can't put forward a made-up number as evidence the economic policy contained in his Budget is working (and, presumably, has been working for some years given the figure's repetition), then when called on the question as to whether it's predicting job growth for this or some other, more successful economy state that Treasury, not him, did the portent-reading. He especially can't do it when it turns out that his own government is patently unaware of any hard evidence for the number in question. Either he has confidence in his forecasting or he doesn't, and taking the above statements at face value, he patently does.
Thus, whichever way you look at it, this is a government whose economic forecasting makes astrology look respectable, which leads me to the unfortunate conclusion that a Maori economic axiom from the 1860s still holds true today. Namely, NEVER TRUST THE ENGLISH.
He's also said that the fiscal impact of the sales will be "roughly neutral" and will leave us with "less debt".
Well that sounds familiar. Where have we heard Bill English talking about "fiscally neutral" "debt-reducing" economic programs before.
Oh that's right, it was those "fiscally neutral tax cuts" that put a $1.1billion hole in the books.
Surely that's a one-off. Highly trained economics professionals and an experienced finance minister aren't in the business of putting out fallacious figures and then sheepishly revising them when they're caught out ... are they?
Unfortunately, yes they are.
Note what happened there. Before the election, our competent economic managers were talking about 3.4% growth for the next year. Post-election, it's 2.8%. That might not sound like much, but by my amateur calculations, that indicates Treasury was out by something like 17%. Hardly reassuring.
But don't despair! We may have screwed up and over-estimated how well the recovery'd be going by now by nearly a fifth ... but there is good news! We're actually going to grow by 3.8% the year after that! Not 3.3% like we previously claimed!
Again, these are figures out by an amount of less than twenty per cent, although this time in the government's favour. This might ordinarily sound plausible, but consider why Treasury revised its figures for growth till March '13 downward. It reckoned it had overestimated the economic benefits of the Christchurch rebuild and underestimated the severity of the ongoing Eurozone crisis.
This would be the already-much-vaunted Christchurch rebuild that's apparently going to account for 1.25% of GDP growth over the next five years, and the Eurozone crisis every man and his dog (although apparently not every minister and his lapdogs) has been witnessing deteriorate for months now.
But wait ... it gets worse.
Pandering to National's base, pre-election English's ministry was claiming it'd be able to deliver a $1.45 billion surplus for 2014-15. Post-election it's claiming it will be able to deliver a $370 million surplus.
Wow. The Nats have somehow managed to lose more than a billion imaginary dollars out of their "Brighter Future." Presumably that's even after the well-above-valuation revenue they're expecting to reap from those well-mandated asset sales we keep hearing about.
Anyway, my point is simple. Governor Mario Cuomo pithily stated that "you campaign in poetry; you govern in prose". Or, put another way, from the perspective of a Minister of Finance wishing to maintain his ministerial salary, it's fiscally prudent to over-state how well he's doing before the election ... but the closer one's forecasts come to fruition, the more prudent it becomes to revise them downward toward reality.
Not that GDP growth forecasts from the boy who cried fiscal stimulus package actually have much worth anyway.
Of course, it's one thing to fudge one's economic forecasting; in that case Treasury's economic sooth-sayers can, as they have done, plead ignorance of changing circumstances in a "dynamic environment" as explanation (even though this looks these days more like a case of the Austrian economists burying their collective head in the sand).
It's quite another thing to simply make up numbers.
Or, being charitable to English, merely repeat made-up numbers from the year before in the hope nobody's noticed the continuing falsehood.
However, in fairness, these numbers tend to come from Treasury - a department which, as Harold Wilson observed "could not, with any marked success, run a fish and chip shop." We have thus come to expect a certain level of incompetence in the numbers department from the people we presumably pay to be reasonably accurate about the economy. With this in mind, the standard gNat line of defence when called on the frequently wild inaccuracy of a Treasury entrail reading is to pass the buck and point out that the Minister did not come up with the projection and that it's therefore someone else's fault.
Witness English's response above. When Guyon Espiner calls him on the credibility of the 170,000 jobs figure, English retreats and insists Treasury forecasting is "done independent of the government"; despite the fact he shares a "sense of confidence" in those forecasts.
With respect, the Minister should not be able to have it both ways. He can't put forward a made-up number as evidence the economic policy contained in his Budget is working (and, presumably, has been working for some years given the figure's repetition), then when called on the question as to whether it's predicting job growth for this or some other, more successful economy state that Treasury, not him, did the portent-reading. He especially can't do it when it turns out that his own government is patently unaware of any hard evidence for the number in question. Either he has confidence in his forecasting or he doesn't, and taking the above statements at face value, he patently does.
Thus, whichever way you look at it, this is a government whose economic forecasting makes astrology look respectable, which leads me to the unfortunate conclusion that a Maori economic axiom from the 1860s still holds true today. Namely, NEVER TRUST THE ENGLISH.
Thursday, June 2, 2011
7 Steps to Recovery
Step 1: Savings
You are taxed on income; and then you are taxed on the interest your savings earn.
With inflation running at, at least 5%, where can ordinary people save with security and still get a reasonable rate of return?
The answer is nowhere!
New Zealand First will introduce:
A bold set of tax incentives to encourage private savings - the first $10,000 of interest earned would become tax free.
We will introduce government guaranteed inflation proof bonds - eligible to New Zealand citizens resident in New Zealand only - and that will pay the inflation rate (measured by the CPI) plus 2.5%
Step 2: Saving our Land
New Zealand First will impose strict restrictions on foreign land ownership.
This is not xenophobic - it's the same restrictions that Kiwis face if they want to buy land in many other countries.
Only New Zealand citizens will be able to buy land and that land already owned offshore can only be sold back to a New Zealand citizen.
Step 3 Foreign Ownership
We will also create a new agency The NZ Ownership Agency- with an initial budget of $500m.
This agency will have a specific mandate to promote New Zealand ownership - and would develop a comprehensive long term plan to buy back strategic assets.
Step 4 Manufacturing
We will have policies to actively support, encourage and where appropriate protect this sector.
There are too many jobs, skills and wealth creation at stake in manufacturing to allow the sector to wither and die.
For example, we will protect government sector contracts such as the building of railway wagons for our own rather than Chinese railway workshops.
Step 5: Student Debt
We will introduce a scheme where government will make a matching dollar for dollar payment on student debt.
So, if a student had a student loan of say $30,000 - (a not unlikely sum) and paid back, $15,000 government would match that sum to extinguish the debt provided that student stays and works in New Zealand.
A matching contribution scheme would effectively halve student debt and remove a big incentive for young Kiwis to go overseas.
Step 6: Aussie Banks
They have had a dream run in New Zealand.
And recall that is was those same four Aussie banks who had to repay $2 billion to the IRD for tax avoidance in late 2009.
As KiwiBank and TSB show we are perfectly capable of operating our own banks.
New Zealand First policy is to give all Government business to a locally owned bank.
Step 7: Infrastructure
There can be no clearer example of a wasteful approach to public investments than the Government's so called Roads of National Significance (RoNS) project.
This $12 billion plus project is actually all about building more motorways.
New Zealand First policy is to scrap the RoNS project and free up massive financial resources for public transport in both metropolitan and provincial areas.
These policies will be developed further as the year progresses.
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