Paul Holmes on New Zealand

Paul Holmes is an award-winning Herald columnist

Paul Holmes: We had it all, then we spent it all

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Shopkeepers are feeling the economic chill. Photo / Janna Dixon
Shopkeepers are feeling the economic chill. Photo / Janna Dixon

Last week when I told you the economy was tanking, I expected a sound drubbing from people telling me I was talking the country down.

And I meant what I said. It was based on my own experience at the Auckland Food Show and on both anecdotal and official evidence that was coming to light.

In fact, the response was amazing. We got 50 replies to the column. Fifty people wrote to the editor, only two of them in disagreement. It's the biggest response I've had since Dennis Conner. Better, in fact. With Conner it was 80:20 against me.

But last Sunday, John Banks phoned me in absolute agreement. Things were very tough, he said. He said there had not been one new manufacturing job in Auckland in the last 18 months.

He mentioned a vocational guidance officer at a prominent girls' college who told him that whereas last year she would get five calls a week from employers looking for bright prospects, this year she had received only two such calls.

Another teacher had told Banks that she spent a lot of her time helping the girls fill out dole forms.

Usually someone like me writing stuff about the economy would be laughed off the block by the economic commentators. This week that didn't happen. Even the economists shut up. Even the economists must be realising the game is up.

Let me tell you about economists, in particular those we hear on the radio and on television and read in the newspapers. They are fundamentally, intellectually dishonest. They are not to be trusted because they are deeply compromised.

For a start, they know nothing anyway. Flash talk never necessarily means a person knows anything. They know no more than you or me. What's more, they've never run a business where you buy something over there and have to sell it over here for a better price and so make a profit.

The economists have an unspoken code. They will never talk the economy down. Despite our wanting to know the truth, and despite what is staring at them in the face, they will lie to us.

The truth is, they cannot say what they really think because most of them work for the big banks and the last thing the big banks are going to allow is one of their own out there talking down their book and talking down the economy.

If they don't work for the big banks, they work for a group of analysts whose company names include words like "institute" and "research"' and "independent".

They have nothing to do with institutes or research and they are anything but independent, because their existence depends on the big companies paying them a ridiculous amount of money to hear the economists' own special economic gobbledygook.

That is all it is. You would be better off listening to the cackle of chooks or trying to interpret the squeal of dolphins.

The only people who know what is going on, fundamentally, are the shopkeepers and Fonterra. And Fonterra's news is heading south. And the shopkeepers are already feeling the chill or are quitting.

I thought I would buy a nice warm jersey yesterday and went into Newmarket to find Hallensteins, only to be told it was gone. All of which makes the Reserve Bank Governor's recent decision to hike the interest rates highly questionable.

God knows who the man listens to. He should hire a Toyota Corolla and drive round the country for a fortnight.

Here is the news: no one is buying. Everyone is kicking tyres.

But, as I said last week, there is nothing anyone can do. Not at this end. We have to wait for the great economies to start spending again.

We just have to get by, handing out the money and piddling it away on the least productive, those who expect to get it for sitting on their backsides because that is the way they've always got it, sitting on their backsides, and who for some reason simply cannot bear to contemplate the idea of work.

We just have to tolerate that and wait for the economic cycle to turn again in the world. When that happens, once again we'll depend on those with basic human pride to get busy and see opportunities and get to work making a dollar.

Well, we assume those people are going to be here. Wrong. They are young and they are going or are gone. They look at their own country with contempt and hopelessness and a feeling of having seen it all before.

It wasn't always so. If it had not been for the useless, drunken, ill-tempered and stupid economic thug, Robert Muldoon, we might have had a scheme that would have made us one of the smartest outfits in the world. Muldoon was the worst creature, the troll from the filthy swamps, who ever got control of this country.

This week, a friend gave me a copy of a brilliant piece written by Brian Gaynor and published in the New Zealand Herald almost exactly three years ago. Gaynor regards Muldoon's abandonment of Labour's far-sighted and ahead-of-its-time superannuation scheme, set up in 1974, as the worst decision taken by any New Zealand government in the past 40 years.

Muldoon campaigned on abolishing the scheme in the 1975 election. He said it would turn us into a Soviet clone. Hence the Cossacks on television. The Yacht Squadrons reeled in horror.

It worked a treat. Rowling was gone and, true to his word, Muldoon abolished the scheme some weeks later. But what stupidity.

Gaynor works out that if we had stuck with the scheme, New Zealand would now be "an Antipodean Tiger".

The superannuation scheme would conservatively be worth $240 billion. In other words, we would have savings enough to swim in. We would be flooded with money.

It was a good scheme. Employees and bosses between them put 8 per cent of your gross income into it. Everybody owned their own individual accounts. The scheme had nice flexibility. When you retired you could cash in a sum to reward yourself, take a trip, whatever, but you kept the rest as a pension. Sounds quite modern when you look back.

And that conservative figure of $240 billion, writes Gaynor, would represent 150 per cent of our GDP, whereas Australia's super scheme represents only 82 per cent of GDP. (Only? We should be so unlucky!) We would have led the world in savings.

Oh, by the way, this year the Government will have to cover a national superannuation bill of about $9 billion and we'll have to find it out of cash. Hopeless, isn't it? Not flash at all. Digging in the cash tin to pay the super. That is the way this country now lives.

Pathetic, aren't we? Had it all and spent it all. Up in smoke. Not that governments didn't try. Kirk and Rowling obviously did and got smashed by a charismatic thug, Muldoon, the oaf and megalomanic fool.

Roger Douglas tried new ways of doing things and, as he always said, destroyed more privilege than any finance minister in New Zealand history but we were already broke when he got the opportunity and he got no thanks for it anyway.

Jim Bolger and Ruth Richardson tried but no one could stand Ruth and they wouldn't take it from a private school girl from Canterbury, so that was that.

Bolger, figuring the better part of it was being there, got rid of Ruth and things settled down and we have, sorry to say, gone nice and nowhere for a very long time.

But the best and the brightest got tired of waiting, I think, and have gone. Our mountains are lovely and the light is wonderful and the air is clean but what the hell, there are plenty of stunningly beautiful places on earth and sorry, but no one owes us a living because Ed Hillary climbed a hill.

- Herald on Sunday

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