Kiwis focus on supply-side

Whilst governments in countries such as Australia and the USA are spending like drunken sailors in the hope that it will stimulate the economy, New Zealand appears to be taking what is at the moment a unique alternate approach. Rather than fiddling with the demand side of the equation they seem to be focused on the supply side.

An extract from a recent Wall Street Journal article:-

“We don’t tell New Zealanders we can stop the global recession, because we can’t,” says Prime Minister John Key, leaning forward in his armchair at his office in the Beehive, the executive wing of New Zealand’s parliament. “What we do tell them is we can use this time to transform the economy to make us stronger so that when the world starts growing again we can be running faster than other countries we compete with.”

That idea — growing a nation out of recession by improving productivity — puts Mr. Key and his conservative National Party at odds with Washington, Tokyo and Canberra. Those capitals are rolling out billions of dollars in stimulus packages — with taxpayers’ money — to try to prop up growth. That’s “risky,” Mr. Key says. “You’ve saddled future generations with an enormous amount of debt that then they have to repay,” he explains. “There is actually a limit to what governments can do.”

And whilst Australia experiments with ever higher amounts of public spending the New Zealand government includes a coalition partner, The ACT Party, that is pushing for Colorado style legislation that would put a cap on growth in government expenditure. An approach sometimes refered to as a Taxpayer Bill of Rights or TABOR.  According to the ACT / National agreement this looks set to be drafted as a legislative bill some time around May this year.

Current political and economic trends in New Zealand continue to be well worth watching.

10 thoughts on “Kiwis focus on supply-side

  1. He’s well trained of course. John at one stage was my trainee on a trading desk. I taught he everything he knows, so it stands to reason he would be doing the right thing now.

  2. No point, Jim. I was always very selective with trainees and judging from what i know and see of Rudd i wouldn’t bother even with a face to face interview. He’d fail.

  3. As a resident of Colorado, USA, I can tell you that TABOR was a great invention. It did not arrive in Colorado through the legislature, but by popular referendum directly to the voters. It took years to get on the ballot, with the political class using all its resources to keep it from the ballot and then from passing. But as warning, the details of the legislation is what matters.

    The courts of Colorado, which have some power to keep referendum off the ballot, forced language in TABOR which was less specific than desired. It has taken years since it passed, but the Legislature and Courts have used every means to interpret the language to add loopholes in the law that were never intended. My only advice, keep your Tabor law simple and direct, anticipate every device to misinterpret the law, and do not think the battle has ended if passed.

  4. Pingback: Governing on a fixed budget « Thoughts on Freedom

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