Where's the money coming from?
QUESTION: "Where's the money coming from?" (Kate Stewart.10 Sept.) ANSWER: From the future, Kate. From the future!
Apart from the NZ Democrats for Social Credit Party, all the political parties are committed to debt-funding our public sector i.e. borrowing on the capital markets, the debts to be serviced mainly by future generations under the pretext of intergenerational equity - even if our descendants do not want the projects we have borrowed for today.
There are three aspects of this borrowing which voters need to understand. Firstly there is Crown debt - surely a misnomer as "Crown" is supposed to stand for this nation's sovereignty while "debt" means subservience to foreign money-lenders. Problem is that our politicians think there is a government ATM machine somewhere. We pay our taxes into it, then the Minister of Finance allocates them in the annual Budget.
Well. it can't be found in Treasury. Treasury is not a bank, though National did set up a Debt Management Office (the NZDMO) there "to manage the government's borrowing".
Over the road IS a bank, called the RBNZ - it is equipped to credit-fund our public education, railroads, DHBs etc. but that is not the policy of any of the parties currently in Parliament.Another way to burden future generations with debt is per our State Owned Enterprises - a cunning way the Lange/Labour government found to put several government responsibilities under the corporate model so requiring them to borrow heavily from private lenders who were, around the 1987 financial melt-down, pressuring governments everywhere to give them access to secure returns from essential infrastructures like electricity distribution and from the share sell-offs by Meridian and Mighty River Power. A similar story when Rodney Hide's Local Government Borrowing Bill was passed in 2011, with full support from Labour and the Greens. The Local Government Funding Agency proposed in the Bill has borrowed over $8 billion to date - and people wonder why rates keep increasing.
Hang on! Nearly forgot the fourth way to tax the future, so making the next Budget look more benign. Arrange Public-Private-Partnerships (PPPs) to build schools, hospitals, roads. Private corporations do the construction, then we pay rent until (perhaps) we one day buy back using that elusive "ATM" machine, or borrow more from the financiers.
We can expect approval for such a scheme from National. But shocking to hear the Labour leadership giving it the nod!Sad to think that very few young folk are aware of how the parties are competing with each other to lure them into future debt.
The good news is that some enlightened economists around the world now advocate central bank credit-funding for the public sector.
Okay with you, Kate Stewart?
Heather Marion Smith
(Footnote: Heather is the Seniors Advocate, and East Coast Electorate list candidate for NZ Democrats for Social Credit)
Published: September 2017