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That was Then, This is Now #19 – A “Decade of Deficits”

By   /  December 20, 2013  /  11 Comments

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19. decade of deficits




Previous related blogpost

That was Then, This is Now #18


Fairfax media: Nats blame Labour for ‘decade of deficits’

TVNZ: Breakfast Show

National: Government Share Offer



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  1. Gosman says:

    I’m not sure what your point is here. Are you attempting to state that NZ was not presented with a fiscal situation that projected a decade of deficits from 2008, (leading to a bigger increase in the public debt than we now have) ?

    National would love it if the Labour party made the next election about their fiscal and economic management. They will point out that the last Labour led government’s spending would have generated more debt and they cleaned up the mess while they have rebalanced the economy towards sustained growth and lower debt over the long term.

    • No, Gosman, a Labour Government would not have generated more debt. That is supposition based on no information, but on spin.

      A Labour government would not have recklessly cut taxes (2009, 2010), forcing them to borrow up to $380 million a week.

      • Gosman says:

        I don’t think you are comprehending what the preelection statement by Treasury in 2008 actually meant. It was that there was predicted to be over a decade of fiscal deficits based on what the settings, (put in place by the Labour led government), was at that time. These deficits had NOTHING to do with National. National had to deal with them and have done so in such a way that the deficits will disappear three or four years before they were predicted to have gone.

        • Gosman, I posted a full, detailed precis of Treasury reports on this issue on December 19, 2013 at 11:00 pm on my blogpost “According to David Farrar, John Key must resign!” (https://thedailyblog.co.nz/2013/12/19/according-to-david-farrar-john-key-must-resign/).

          You’ve either missed it, or have wilfully ignored it.

          If you’ve chosen to ignore it, that indicates you are so obsessed with your viewpoint that you ignore evidence-based information, and continue your bogus argument here, on another blogpost.

          Please read it before pursuing and parroting National’s spin on a “decade of deficits caused by Labour’s policies”.

          Otherwise you’re only demonstrating your willing ignorance.

          • Gosman says:

            No you didn’t. Your analysis on this issue is focused on the debt not on the deficit. You have failed to address this key issue.

            • FFS! Read the Treasury reports I linked to, you halfwit.

              • Gosman says:

                I’ve read it Frank. You seem to have missed this section


                and this section


                Please note the negative outlook predicted by the Treasury in 2008 BEFORE National took office

                Why do you keep avoiding the predicited deficits from 2008 onwards?

                • Gosman – those are the same links I gave you! *facepalm*

                  You’ve cherry-picked only two parts to an overall picture painted by Treasury, to wit,

                  The preceding parts of the Fiscal Outlook chapter have focused on the fiscal forecasts covering the period 2008/09 to 2012/13. This section provides medium-term fiscal projections, covering the subsequent 10 years… (2013/14 to 2022/23).

                  Your link: http://www.treasury.govt.nz/budget/forecasts/prefu2008/027.htm#sthash.ASpIc5IV.dpuf

                  That report then points to additional information here, at the 6 October 2008 PREFU,


                  Then click on

                  Pre-Election Economic and Fiscal Update 2008

                  Pre-election Economic and Fiscal Update
                  1 Economic and Tax Outlook
                  Weaker Growth as Global Economy Adjusts to Imbalances”

                  (link: http://www.treasury.govt.nz/budget/forecasts/prefu2008/010.htm)

                  Which states, in part,

                  The sub-prime mortgage crisis, which developed in the United States (US) in mid-2007, was the trigger for the unwinding of these imbalances and the world economy, especially the US economy, is now undergoing the necessary adjustment. House prices have fallen in many countries and market interest rates have increased. High commodity prices, particularly for food and fuel, are impacting on household budgets in both developed and developing economies. Production costs are increasing in the developing economies, making them a source of inflation rather than deflation in the world economy. Trade imbalances are being corrected as the pattern of growth in developed economies shifts away from consumption towards exports. This process of adjustment is expected to be protracted and to involve both developing and developed economies.

                  Yes, Treasury did predict a “decade of deficits”. That prediction was based on the ” sub-prime mortgage crisis, which developed in the United States (US) in mid-2007″ – not Labour’s policies.

                  In fact, at one point, Key even admitted this,on TVNZ’s “Breakfast” @ 2.45

                  “If you go back to 2005, when the previous government were in office, they had a number, you know, a little bit less than ours, but not a lot less, there was a 180,000 children in poverty, I think this shows 240,000 on that measure.

                  Back then, New Zealand recorded the biggest surplus in New Zealand’s history…”

                  Link: http://tvnz.co.nz/breakfast-news/mind-gap-key-tackles-child-poverty-video-5766147

                  So stop cherry-picking and take all the information together. It’s pretty damned clear to anyone with two interconnecting neurons.

                • Priss says:

                  Gosman, are you being deliberately obtuse? Really, you don’t come across half as smart as you think you are.

                  I’m no economist, but I’ve read the stuff Frank has posted and followed the links he’s provided and he’s proved his point better than you have.

  2. Molly says:

    While I agree with the identification of flawed economic policy from National – where is the $8 billion figure from? I can only find the $18.86 billion from the Reserve Bank government debt figure.

    I commented on another site a few days ago about how to track the government debt:

    Government debt statistics could easily be found in this spreadsheet from Reserve Bank but that form of reporting was discontinued – along with a lot of other useful info in June this year. (Just in time to make it difficult to track the escalating debt up to 2014?) December 2008 had the official government debt at $18.86 billion.

    Now you have to visit Statistics NZ, Open/download the Balance of Payments and International Investment position Quarterly report, select:
    Table 11: International financial assets and liabilities
    then add two figures together to get the debt:
    Add Line 29 General Government + Line 30 Monetary Authorities to get the same data that has been reported in the discontinued Reserve Bank report.

    To save some time (and sanity) the latest figures are below:
    2012 Dec $52.481 billion (same as final data on Reserve Bank spreadsheet)
    2013 Mar $56.773 billion
    2013 June $50.913 billion

  3. While I agree with the identification of flawed economic policy from National – where is the $8 billion figure from? I can only find the $18.86 billion from the Reserve Bank government debt figure.

    I’m not sure where Key got that $8 billion figure from, Molly. Like many of his public utterances, I’m guessing he pulled the figure out of thin air. He has ‘form’ for that kind of thing.

    The figures on debt that I use are Treasury – link: http://www.treasury.govt.nz/government/financialstatements/yearend/jun10/09.htm/

    The chart puts net government debt in 2008 at $10,258 millions (5.6% of GDP), and gross government debt at $31,390 millions (17.2% of GDP). Based on these figures, Dear Leader was $2 billion out. Probably his recurring memory problems kicking in again, I’d say…

    Thanks for the info on Statistics NZ and the Balance of Payments and International Investment position Quarterly report, that’ll be mighty handy to have.

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