Mendacity – a policy choice, not the economy

Mendacity is an interesting word. “Are you aware, my lord, that mendacity is an organized body, a kind of association of those who have nothing against those who have everything; an association in …” www.thefreedictionary.com .

So what is the agenda for our government practicing mendacity, or at least willingly portraying itself as such? Take for instance being told we are part of a budget emergency, and the sky if falling. Attempting to instil fear into the population. Then outside bodies tell us, in financial terms Australia is reported to be one of only 6 countries in the world with an AAA reporting agency rating. The rating is enduring from the previous Government. What parallels can we make with other countries? Are the same issues facing them and how do or did they handle the financial pressures verses social responsibility?

In wanting to determine our story we only had to look across the ditch – the ditch is a colloquial term used by New Zealand to describe the body of water separating Australia and New Zealand. The recent federal budgets of the two countries draws a line on the difference in government style and puts forward that very similar conditions underline what is facing each country. Yet, the fiscal responses are different for each. It gets even more interesting when you consider the two governments’ are regarded as conservative – it gets truly bazaar.

What is different about New Zealand? Maybe it is all covered in the story “New Zealand forecasts 2014-15 surplus in budget that bears striking difference to Australia’s”. By New Zealand correspondent Dominique Schwartz :

In Australia we have been asked to go through pain. Whereas in New Zealand has been “served up one of the rarest of economic dishes: a forecast budget surplus of $NZ372 million ($340 million) in 2014-15, after a $NZ2.4 billion ($2.2 billion) deficit this financial year. Also on the menu were election year sweeteners including extended parental leave, and free doctor’s visits and prescriptions for children up to 13 years old.

By contrast, Federal Treasurer Joe Hockey delivered a hard-to-swallow $50 billion deficit accompanied by a collection of bitter pills, among them, co-payments for GP visits and cuts to welfare, family benefits and the public service.”

So as to balance the viewpoints, it is worth taking note of PricewaterhouseCoopers (PwC) New Zealand partner and corporate tax leader Geof Nightingale. From the Schwartz story it was said:

“I don’t think it’s a tale of two different economies, I think it’s a tale of two different policy choices,”

“The fundamentals of each country are quite similar. Australia’s forecasting economic growth of 2.5 to 3 per cent. New Zealand is much the same.

“Australia is forecasting to get unemployment down to about 4 per cent, New Zealand’s much the same.

“Australian politicians have ridden the mineral boom and failed to address the country’s deficits. What’s happened is corporate tax revenue has fallen off but structural spending has increased and so the deficit got wider”

Noting what the New Zealand prime minister John Key says: “His government has kept spending at about the same levels for five or six years as the country claws its way back from the global financial crisis and the Christchurch earthquakes.

We’ll be racking up $NZ7.5 billion worth of surpluses in the next three or four years; Australia will have amassed about $100 billion in debt.”

Mr Key continued that “the Australian economy is still reasonably robust and is not in crisis, but he warns the economy could face a crisis of confidence.”

Co2Land Org takes particular note of the issue being described as of a crisis of confidence.

Two important indicators are showing a genuine movement away from Australian:

A growing number of New Zealanders living in Australia are choosing to return to the greener pastures of home, and fewer are crossing the Tasman in the first place. The drift over the ditch has fallen from around 3,000 New Zealanders moving to Australia a few years ago to less than 350 now.

Mr Key says: “So what people are responding to is that they see a strong growing economy in New Zealand.”

According to Johnny Weiss, the founder of the Trans-Tasman Business Circle, reported Business is also making the move:

“We’ve seen quite a bit of relocation of Australian business to New Zealand.

As New Zealand maintains a competitive edge [regarding] pricing, costing and scalability it will be a very attractive place.

Business confidence is much stronger here than in Australia, so companies that want to move quickly find in New Zealand very good talent and quick decision making.”

Another difference is the Key government has not lifted the retirement age, nor are you subject to a means test your pension.

Nor does New Zealand budget to pay down net government debt, which is expected to peak at $NZ66 billion ($57 billion) in 2016-17, or 26 per cent of gross domestic product (GDP). Why do they not worry? Because they understand that: “The net debt gets smaller as a percentage of GDP [only] as the economy grows past it.

Why worry about Australia: Australia is one of New Zealand’s major trading partners, accounting for 40 per cent of all Kiwi exports.

So no matter how much Mr Key enjoys talking up New Zealand’s rockstar economy at the expense of Australia, he knows his nation’s fortunes will rise or fall along with those across the Tasman.

And Mr Key says he sees no storm clouds on the horizon. But we read into this that more confidence in Australia would be helpful for all of us. And, we need to add in New Zealand they raised the GST a few years back without affecting welfare of its citizens. Can we assume the agenda in Australia is to raise the GST to 15%, but they are so addicted to being fear raises they did not know how to be nice!

 

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