Draconian austerity measures introduced to fend off economic collapse in heavily indebted Britain, Ireland, Greece, Portugal, and Spain, and the imminent introduction of the similar measures in many other European countries could well be coming to a town near you, and sooner than you expect.

 

The murmurings of reassurance uttered by our Prime Minister and echoed by his Minister of Finance amount to little more than a paternal pat on the head to protect us from the hard truth. It is after all election year, and New Zealanders have been lulled carefully into a false sense of security.

 

New Zealand is heavily in debt and continues to borrow vast sums. The weekly debt tally varies in line with requirements but can be anywhere between $350 million per week, as it was for most weeks earlier this year, and $950 million per week. Borrowing on such a massive scale is not a formula for a secure future, no matter how reassuringly the Minister of Finance presents his case. Debts must be repaid, with interest, over a very long time.

 

Alongside our debt, overseas investor demand remains strong: a record $2.8 billion was raised in March alone. Foreign interests are viewing New Zealand assets with hungry eyes. Rumour has it that the China Investment Corporation may be intending to invest about $6 billion of its substantial foreign exchange reserves in New Zealand assets. Even our massive $16 billion deficit has failed to deter overseas interest in New Zealand bond issues and New Zealand assets, leaving us uncomfortably dependent on foreign borrowings and foreign investment to prop up an ailing, failing economy.

 

Fortunately, public concern is mounting over the level of Government borrowing and the growing burden of ever-deepening public, private and household debt. It’s no wonder people are worried: the average debt for each man, woman, and child in New Zealand was calculated as at June 2010 to be $102,923. That figure has risen dramatically with the New Zealand Debt Management Office (NZDMO) alone issuing $20 billion of debt this June financial year: that’s another $4,500 per person.

 

It is clear that this programme of excessive borrowing is an unsustainable consequence of the banking system’s almost unlimited ability to increase cash in circulation by producing more interest-bearing debt. Debt servicing can, and does, cripple national economies and individual households alike. And New Zealand is no exception.

 

It is equally clear that the present Government and the Opposition parties are bereft of any realistic plan for a genuine economic recovery. Instead, recent announcements indicate the prospect of savage cuts to social spending, asset sales, retrenchment, and all the human misery those draconian measures produce.  

 

There is some good news though. The Democrats for Social Credit programme of new economics would jettison the present Government’s failing bank-centred monetarism policies in favour of a social credit economy designed to benefit everyone, not just the privileged few.

 

The cornerstone of our programme is to vest in an independent authority which is answerable to parliament, on behalf of the people, the authority to create, issue and cancel money the same way banks do, instead of borrowing it from them. There is no reason why the government cannot finance itself to invest in domestic production within the physical economy. Direct government funding to build, repair, and maintain public infrastructure makes good sense as it would eliminate the need for tax or debt based funding- a measure which is essential for the Christchurch rebuild.