Sunday, November 20, 2011

GST now off tripe

Looking at Europe's troubles, shouldn't debt be paid down a whole lot faster than you or National plan?

It's a huge reason for making some fundamental changes in the way we run our economy, which we have put up our hand and said we're about to do. We know the world is a fragile place at the moment. Today it is the European debt crisis; what happens tomorrow if the Chinese economy slows down? We've got to put our economy on a strong financial basis and that's why we've taken the hard decisions about GST.

What is your policy on GST?

The GST will come off fresh fruit and vegetables - the whole 15 per cent - costing about $300m a year, for the dual purpose of taking a bit of pressure off the budget of families but, more importantly, sending an economic signal about families needing to make healthy choices in their foods.

Yep that's right- the whole 15% off our veg. Way to go Phil. That's really putting your hand.... somewhere.

Paying down debt via "fundamental changes in our economy" by making carrots cheaper- all in one seamless step. It's so cunningly simple you have to wonder if he is getting his policies from the Blackadder School of Economics.

Quick Phil, phone the Greeks straight away. It will come as a big relief to them that they can get out of the shit by simply lowering the price of olives.

The bigger question is- does this GST exempt tripe actually count as political/economic policy reporting?
Or as an opportunity to hand Goff a free headline.


kevin said...

First prize for useless non-policy policy. What a load of crap. Really. Another lol; game-changer.

Anonymous said...

Of course, this nonsensical policy will only work if Labour also legislates to control prices.

The whole thing is fundamentally flawed, but do they care if it will gain a few votes.

Desperate measures from a desperate party.

Mort said...

once again Lou you point out the single biggest issue that faces NZ today, and that is the Govt debt, and the servicing of that debt.
The country is at a cross roads.
I thought things were bad but I got my butt handed to me last night over at keeping stock, seems I was out by a factor of 30%... even my glasses were rose tinted, and I thought I was using scaremonger tactics....

here is the real story....

It's even worst than that Mort. Billy's Budget May 2011 projected debt serving cost of $3,231,738,000.00 ($3.2 billion) for FY2011/12 with average interest rate of 5.6% for 10-year bonds, this being 4.0% of total spending (the fourth biggest Govt item after SW, Health & Education), total nett debt to be at $54.9 billion. Projected Total debt to reach $72.9 billion with service cost of $4.5 billion (5.8% of spending) by FY2015 with 10-year interest rate of 6.0% (and assumes GDP growth of 4.0%, inflation = 2.0% and unemployment down from 6.9% to 4.5%, I'll leave the merit of these Treasury projections to your own imaginations).

Actuals from PREFU (Nov 2012 just six months after budget):
Nett debt to reach $59.5 billion for FY2011 (8% increase).
Debt servicing cost = $3.5 billion (9% increase).
10-year bond rate = 5.9% (6% increase).

At the current rate of increase we will spend more on debt servicing than Education by FY2016. And that's assuming the global economy doesn't go into "Financial Crisis-II the sequel: This time it's serious".

those figures are for a continuance of the Double Dipper's policies, imagine how bad they would be under Goff-off. The downgrade we just suffered would be get 2 or 3 more rungs pulled from underneath it (although if DDoD carries on then he too will drag the country down a peg or 3 more).

This election needs to be about getting out of deficit and fast.