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www.mccully.co.nz - 10 October 2008

www.mccully.co.nz - 10 October 2008

A Weekly Report from the Keyboard of Murray McCully MP for East Coast Bays

The Government That Stopped Governing

Some time in early to mid-August of this year (and possibly even some weeks earlier), the Treasury will have started warning Finance Minister Michael Cullen that the fiscal position had taken a massive turn for the worse. The Pre-Election Fiscal Update (PREFU) released on Monday of this week reflects the Treasury’s view of the position based on information received up to August 28th. But the dire new official view will have been communicated cumulatively to Cullen and his advisors over previous weeks. A real Finance Minister would have seen this, as has been evidenced in other countries, as a spur to action. But to Michael Cullen it was nothing more than an opportunity to booby-trap his political opponents.

The PREFU, of course, is produced independently from the government of the day by the Treasury as a consequence of the Fiscal Responsibility Act passed in 1994 (now merged into the Public Finance Act). That legislation was passed because the incoming National Government in 1990 was confronted by a number of very nasty surprises that had been hidden by the outgoing Labour administration. The Fiscal Responsibility Act was designed to ensure that such electoral duplicity could not, in future, be replicated.

Armed with knowledge of the dramatically declining character of the Crown’s accounts, a Minister of Finance with his or her eye on the ball would have been expected to act. Cabinet should have been advised. New spending proposals should have been reined in. And a process commenced to ensure that any low-quality departmental expenditure was identified and restrained. But none of these things happened.

Rather than seeing the serious fiscal position as requiring serious action from the Government, to Clark and Cullen it was nothing more than a potential political trap for an opposition National Party, then ascendant in the polls. So, Michael Cullen sought to hide the dramatic shift in fortunes and delayed the announcement of the PREFU date for as long as humanly possible.

The purpose for this macabre manoeuvre was simple: if John Key and the National Party could be left to base their tax and fiscal commitments on massively erroneous Treasury information then in the public arena, there might be ground for a new political assault after the dire PREFU numbers were released. To hell with the economy. To hell with the country. Any faint prospect of political advantage should be exploited.

To the eternal frustration of Ms Clark and Dr Cullen the National Party and Mr Key did not oblige. The appalling numbers released on Monday provoked a re-think. A more modest tax package, that acknowledged the new fiscal forecasts, was prepared. Bigger tax cuts that would bring a greater growth dividend would take place over time.

The above saga speaks volumes of the current mindset of the rapidly deteriorating Clark/Cullen Government. This is a government that long ago stopped governing. Their behaviour has, for months, been more akin to that of an opposition. And not just any opposition. An opposition of the reckless, dangerous variety. How fortunate it is that in just four weeks time the public will have the opportunity to formalise that arrangement.

The Fiscal Responsibility Act

The Fiscal Responsibility Act was passed in 1994 in response to an appalling act of political deceit. A government had, in 1990, gone to the polls claiming that the Budget accounts were in the black. In fact, the accounts were headed for a massive deficit – over a billion dollar deficit to be precise. The Fiscal Responsibility Act (now in the Public Finance Act), requiring Treasury to present a pre-election opening of the books was designed to ensure that no such act of political treachery could ever occur again.

The government that perpetrated this act of deceit was, as readers would expect, a government of the Labour Party variety. The deputy Prime Minister in that Labour Government was one Helen Clark. Another senior minister was one Michael Cullen. How very very fortunate that the fiscal responsibility legislation denied Clark and Cullen the opportunity to repeat history in 2008, even though they have covered up the numbers until the last possible minute.

Unclean Act from Nanny State

New Zealanders have become desensitised to the prescriptive, Stalinist rules promoted by the Nanny State that rules our lives. There was barely a ripple recently when tuck shops around the country started closing as schools gave up trying to comply with the new National Administrative Guidelines (yes appropriately, ”nags” for short) governing the types of food they were able to offer.

But the latest offering from Nanny State really takes some beating: they have decided to clamp down firmly on cleanliness and personal hygiene. From next year new regulations will prescribe the amount of water that can flow through our showers – dramatically slashing the shower pressure that may currently be enjoyed in the average home. We can only imagine what activities are next for the Nanny State’s regulatory focus.

ENDS


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