It’s either a heartfelt plea for realism, or a despairing polemic raging against the unfeeling night, but either way Stephen Franks is right on the money with his latest post about the political campaigns and spending promises of our major parties that blithely ignore the excellent chance that Europe will, sooner rather than later, fail to control its debt crisis, starting with Greece and Italy next.
Why, ask Stephen and his colleague Nikki Pender:
is the New Zealand media not hounding all parties with balloon puncturing questions? I have no real explanation. Nor can I explain the contrast between the straightfaced reporting of ludicrous tax and spending offers (especially by the Maori and Mana Parties) in comparison with the sustained mockery of Don Brash, leader of the only party which has consistently called for New Zealand to live within its means, lead by the man who produced the 2025 Task Force report on things we have to do to increase productivity. Both National and Labour costings claim to be based on the main forecasts in Treasury’s 2011 PREFU. Yet the PREFU indicates that the short term outlook is likely to be far less rosy than projected; or to use Treasury-speak, “the risks to our main forecasts are skewed to the downside”.
But even those risks are predicated on an increasingly optimistic assumption:
Even Treasury’s more pessimistic scenario assumed that Europe would be able to “manage the region’s debt issues and stabilise financial markets”.
Not much chance of that, as Stephen goes on to illuminate. So do Treasury outline what might happen if they don’t? Nope. So the parties have a free rein to ignore the possibility.
It is ironic at a time when private debt is increasingly under control, public debt is ballooning. Hard work trying to restrain politicians on the election trail, but just wait for the reversal the instant a government forms and, horror of horrors, suddenly becomes aware of Treasury’s failure to properly advise them on the downside risks so as to enable them to properly price their policies against income.
How could they possibly have known, the innocent wee lambkins?
Result: one or more scapegoat treasury officials, and large numbers of broken spending promises that the cynical might suspect were never truly intended to be kept.