Damien Grant: Four reasons NZ will not become the Athens of the Pacific


We live in the best of times - interest-free student loans, pensions for all, free health care, free education for our children and free ferry rides for our grandparents.

Interest rates are low, our dairy remains in demand, our banking system is untainted by the winds buffeting global finance and our civil service is the envy of the developed world. We are going to catch Australia within a generation.

Yet, we also live in the worst of times - of unsustainable government deficits, a declining relative standard of living and ballooning government debt. Our best and brightest are abandoning Aotearoa, leaving behind only beneficiaries and unpaid student debt. We have generations of people living in perpetual dependency and a culture of entitlement and petty envy. We are spiralling into a Grecian quagmire.

The hope of catching Australia has been dropped from this government's agenda, and despite the hyperbole by some, there are four reasons we will not become the Athens of the South Pacific.

Tax Collection: A large part of the Greek problem is that tax laws are not enforced. More than 40 per cent of their taxes are not being collected. This does not happen here.

Fiscal Transparency: To keep borrowing well past what was fiscally prudent, Greece fudged its accounts. Our civil service, and especially the Treasury, has a strong culture of integrity and independence.

Political Resolve: It is deeply frustrating to see a deficit equal to 4 per cent of GDP when the economy is growing but our political class is aware of the importance of maintaining debt to GDP ratio at a sustainable level. The government has done an adequate, if uninspiring, job of reducing the level of state spending.

The Kiwi: Greece borrowed Euros and must repay Euros. We have borrowed New Zealand dollars. If we ever found ourselves where Greece is today, we could re-write the agreement with the Governor of the Reserve Bank and our debt would be gone by lunchtime.

Key and English are conservative managers of our affairs. However, they are not taking the steps needed to break the culture of dependency, shrink the size of the state and unlock our economic potential.

Key claimed he was ambitious for New Zealand. This Budget shows no sign of that ambition. He knows what needs to be done to catch Australia, even if it costs him a third term. It would be a far better thing for him to do and will earn him a far better legacy.

- Herald on Sunday

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