Wednesday, July 14, 2010

ZenTiger Government Spending Still An Issue

Gordon Campbell on a scoop blog suggests government is not spending enough or growing large enough. His logic? We are only $4.7 Billion in debt for an 11 month period.

You see, he expected we'd be sitting at nearly 6 billion in debt, so onward! government spending. Any reason to show prudence at this stage, says Gordon would be an issue of ideology, rather than the "state of the economy".
Clearly, the cuts to government spending are being driven by ideology and not by the state of the economy. Yesterday’s figures revealed a government deficit of only $4.7 billion for the 11 months to May, which is an improvement of $1.1 billion on the position forecast in the May Budget.
Then he goes on to say the government should spend more tax payer money, because that will improve the economy. Well, surely that is going to entirely depend on how the money is spent. Raising Ministerial allowances may not help as much as he thinks. They may just use it to have more holidays overseas.

Indeed, Gordon Campbell goes on explain that he has lots of good ideas on where to target sensible government spending. He makes it clear that government spending is always a problem to the centre right, so we can dismiss any arguments they care to make. He can name other countries with bigger debts: "The United States, and several Eurozone countries". And they are alright aren't they??? Well Gordon, how about Greece, Spain and Italy? No, they are not alright, and we don't need to try to match them.

If Gordon is going to argue that we don't need to curb debt, then growing it doesn't necessarily mean a sensible response either. Capping it might also be reasonable. But capping what? If we look at the size of government growth over the last 10 years,we'll soon see that the growth rate has been high and consistent.

At the very least, now is not the time to blithely set upon a strategy of government spending. There are other options to be canvassed, and initiatives to drive our export market might be the first. In that regard, the ETS looks like it's going to reduce our competitiveness in terms of price unless we can create a stronger market for clean green produce, and try to convince the world we suckers paying higher ETS taxes has reversed AGW in this part of the world. Given that Gordon Campbell points out that the rest of the world is in a worse financial state than we are, that might be a very tough sell.

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