Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Ukrainian crisis proves need for fiscal discipline

Ukrainian crisis proves need for fiscal discipline

The crisis in the Ukraine is a perfect example of what people in my former profession, risk management, warn their clients about. As they say, you need to expect the unexpected. That means making sure your business (or country) will be resilient in the face of unforeseen shocks.

Many politicians and commentators nowadays are unjustifiably sceptical about the possibility of major conflicts and attendant economic crises. The Russian occupation of Crimea is an aggressive act which risks provoking a military response from the West or the new government in Ukraine.

The Russians under President Putin seized a good portion of Georgia and got away with it. But that was significantly different. The Georgians started the fighting. Georgia is a long way from Europe and not strategically significant. And Georgia had no treaties with anyone. None of that is true of Ukraine.

When the USSR broke up, Ukraine posed two military problems. The Russian Black Sea fleet was based in Ukraine and so were many nuclear weapons. The nuclear states did not want another nuclear-armed country and persuaded the Ukrainian government to give up its nuclear weapons. In return Russia, the USA and the UK pledged that Ukraine's borders would be respected.

If Russia can simply seize Crimea (perhaps by setting up a puppet regime) then why should any state, such as Iran, accept assurances from the nuclear powers? American and British credibility are on the line.

President Putin surely wants to avoid either war or civil war in the Ukraine A deal will probably be done. But we should not take it for granted. Twice last century Europe brought war to the entire world.

What does this risk mean for New Zealand? We cannot influence the direction of events in Ukraine but we can be affected by them. If the European economy is seriously affected, the knock-on effects will be felt around the world.

Resilience in the face of shocks requires capital (savings) – either your own or those of your insurer. The more indebted you are, the more vulnerable you are to shocks.

The New Zealand government’s debt has grown substantially in recent years. It is now projecting surpluses in the coming years. These should not be used to fund government spending on election bribes. They should be returned to taxpayers, either directly through tax cuts or by paying off government debt. Now is not the right time for tax and spend. Our government must be prudent.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Parliament Today:

The Kids: OECD Report Shows Huge Impact Of Poverty On Education

A new report from the OECD has again highlighted the negative effects of poverty, showing that disadvantaged children in New Zealand are more than six times more likely to underachieve in maths than children from wealthier homes. More>>

ALSO:

Pacific: NZ Pledges $500,000 To Help Address Zika

“With the Zika virus now confirmed in a number of Pacific countries, New Zealand is committed to helping limit the impact and spread of the virus in the region,” says Mr McCully. “New Zealand will provide $250,000 as a contribution to the WHO to implement the Pacific Zika Action Plan, and a further $250,000 to enable countries in the region to respond rapidly if required." More>>

ALSO:

Labour: Police Commissioner 'Doesn’t Get Force Needs'

The Police Commissioner has let down the public and his own force by insisting the police have what they need despite it taking a year to solve a burglary and overwhelming number of officers saying they are under-resourced, says Labour’s Police spokesman Stuart Nash. More>>

ALSO:

Gordon Campbell: On The US Pressure To Expand Our Role In Iraq

Foreign news services are being more forthcoming about what the “next 12 months” will entail – essentially, the defence ministers will be under US pressure to increase their “training” role preparatory to an assault on the city of Mosul in northern Iraq. More>>

ALSO:

Parliament Restarts: Prime Minister’s Statement

Our policy agenda and legislative programme will reflect the Government’s four priorities: • to responsibly manage the Government’s finances • to build a more competitive and productive economy • to deliver better public services to New Zealanders, an • to support the rebuilding of Christchurch. More>>

ALSO:

NZEI Survey Report: Special Needs Students Missing Out

The survey revealed that around 16 percent of students were on schools’ special needs registers, but nearly 90 percent of schools’ special needs coordinators did not believe there was adequate support for students and their learning... More>>

ALSO:

Interim Report: Waitangi Tribunal On Ture Whenua Legislation

Labour on Proposed changes to Maori land rules: “To have Treaty Negotiations Minister Chris Finlayson dismiss findings as ‘bizarre’ is totally disingenuous and disrespectful. What’s bizarre is Maori Development Minister Te Ururoa Flavell stubbornly pushing through this Bill before the Waitangi Tribunal has even completed its report..." More>>

ALSO:

Spy Update: Appointment Of GCSB Acting Director

GCSB Chief Legal Advisor Lisa Fong will become the Acting Director of the Government Communications Security Bureau (GCSB) from 15 February 2016, Minister Responsible for the GCSB Christopher Finlayson announced today. More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news