New Health Funding Applauded
The additional $4 billion in health funding and an increased budget for Pharmac are fantastic moves which Social Credit has been calling for, for a long time.
In 2018, nurses went through a prolonged series of strikes in order to get better wages and conditions and an additional 500 nurses employed to reduce the shortage and consequent stress on existing nursing staff. That deal worth an estimated $520 million dollars is not due for completion until August this year.
In January 2019, 3300 junior doctors started 5 rounds of strike action to address issues around fatigue, good patient care, training, and under-staffing. That was finally resolved in August.
Yet we've been expecting them to be on the frontline of dealing with a virus crisis when our health services across the board have been seriously under-funded.
It took numerous offers from the government and DHB's before agreement was finally reached. They were repeatedly told there was no more money.
Now, it has miraculously appeared in the government’s piggy bank.
The one negative is that funding of the rescue package will be done through an economic merry-go-round of buying and selling bonds that will see a massive transfer of wealth from taxpayers to the mainly overseas shareholders of the country’s banks and investment funds.
The result will be kiwis saddled with enormous additional debt and interest payments when it could have cost nothing – freeing up tax dollars to be spent on health, education, housing and infrastructure.
The final step the government needs to make is to direct fund its rescue package from the Reserve Bank – something called for in recent weeks by former Senior Lecturer at the School of Economics and Finance at Victoria University Dr Geoff Bertram.
That call has been echoed by economists Ganesh Nana, Raf Manji and Shamubeel Eaqub and economics commentators Bernard Hickey and Bryan Gould.
“This is not wild radicalism. It is mainstream, even conservative, economics,” according to Dr Bertram.
It could do so without incurring any cost to taxpayers.
$5 billion dollars of taxpayers’ money already goes every year to pay interest on existing government debt – money that could be spent on health services, solving the housing crisis by building rent to own homes, providing free dental care, or a multitude of other possibilities.
“The government can borrow from the Reserve Bank. To be technical, it’s literally borrowing from itself. We should not close off any [options] just because somebody told us 30 years ago that it was bad.” Ganesh Nana - Radio NZ Morning Report 16.04.20.
“There’s no reason why you don’t get the Reserve Bank to effectively print the money and lend it to the government, just as [it] did in 1935, when it lent money to the government to build state houses.” Bernard Hickey - Radio NZ National 19.03.20.
“Issuing money in the current circumstances has impeccable support from mainstream economic thinking. In the current context it is the correct, most efficacious way to proceed. [Govt] should not be prisoners of outmoded, arch-conservative political doctrines.” Dr Geoff Bertram - BERL website 06.04.20 & NZ Herald 13.04.20
“What the Reserve Bank needs to do now is to make clear that it can and will purchase government bonds directly from the Treasury at 0%. These funds should be used to fund the current and forthcoming economic support packages.” Raf Manji - Interest.co.nz 23.03.20
“A sovereign country need never be short of money. We may, in particular instances, be short of the materials, skills, and labour needed for production, but governments can create money whenever we want and wherever it is needed.” Bryan Gould - Blog 21.03.20
Canada’s central bank purchases approximately 20 percent of government bonds issued every year on a regular basis.
The first Labour government financed the building of thousands of state houses with Reserve Bank money.
The Commonwealth Bank (Australia’s central bank at the time) supplied the Australian government with funding for major infrastructure development.
China finances the majority of its government owned companies and major projects like its Belt and Road projects from its central bank.