Home Viewpoints Getting Back In Black

Getting Back In Black

by fatweb

By Jonathon Taylor, editor for Magazines Today

John Key’s fourth budget has, as budgets tend to do, drawn more than its fair share of criticism. Political opponents rarely get better ammunition, served up on cue, than a government’s spreadsheet.

It’s the perfect opportunity to sink the boot in, decrying the lack of economic, social and moral nous the incumbent government’s numbers obviously represent.

But when it comes to this year’s little number cruncher, I think many may have protested too much, because the nay-sayers are ignoring how critical it is for New Zealand to get back in black.

The quest to balance the national books is, despite what the Government itself is saying, the prime motive behind this year’s budget. The plan is to return the national budget to surplus in 2014/15 and, when you look at how troublesome running massive deficits in less than predictable economic times is, then the theory is sound.

The debt level the US is now running is well into the realm of silly numbers.

Greece’s ability to turn a blind eye to the trouble it was creating for itself must now be the stuff of legends. But it’s alright – they’ve got lots of big, shiny, barely used stadia all over the shop; so plenty of places to run around in circles wondering where it all went so horribly wrong then.

In stark contrast, National’s 2012 budget verges on self-imposed austerity; banking for a rainy day opposed to a stimulus inducing cash injection. It is an entrenchment of the Government’s fiscal methodology. Ensuring net debt remains below 35 percent of GDP and any new spending being matched by a combination of saving and revenue initiatives.

One topic the critics have been a little hesitant to mention is our national credit rating.

Credit rating agency Standard & Poor’s, which cut our sovereign rating to AA last September, announced on the release of the budget, that the rating would hold as long as the government continues to work towards a surplus.

Finance Minister Bill English stated that, “Returning to surplus is important because New Zealand is one of the most indebted countries in the world as measured by our net international investment position. We need to start rebuilding a buffer for when the next global crisis comes. Surpluses give us choices we simply don’t have while we’re running deficits.”

Speaking of running deficits and the next global crisis, the Eurozone’s credit crunch simply isn’t abating and the smart money is [or rather isn’t] on Greece being the first domino to fall.

So we sought a soothsayer in the form of visiting Canadian economic analyst Nicole Foss, who looks at the ingredients for a perfect economic storm.

Her premise and subsequent dire predictions have their root cause in one simple scenario – debt. Greece will be the first of the Euro zone dominos to default and fall, followed by Portugal, Ireland, Spain and Italy with the potential for the rest of the Eurozone to follow.

Personally, I’m not so sure, but you can’t help but recognise the risk to any nation carrying crippling debt levels and this is why National’s belt tightening, to get us back in black within three years, is more than prudent, it’s vital.

Our cover features a man whose disposition is a tad more ‘glass half full’. Brent Mettrick talks about how he built his building business Stonewood Homes, what he believes is behind the rebuild’s slow progress and how we now need to construct homes quickly, without compromising quality.

And with London 2012 only weeks away, we sit down and chat to our champions’ champion; New Zealand Olympic Games chef de mission Dave Currie, on the eve of his final Olympic mission, about the state of the Games and those who play them.

There’s plenty here for all.


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