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The title of this Blog says it all. It's been a struggle to do economic commentary under the new Coalition, since there's so little new and creative, there's not much to talk about. How come? The National Party under Chris Luxon is a photocopy of National under John Key when it comes to economics. Could the following facts be the reason why?

  1. Chris Luxon's Chief Economic Adviser, Matt Burgess, was Bill English's Chief Economic Adviser. Burgess worked at the NZ Initiative for a time.

  2. After graduation, Finance Minister Nicola Willis worked as Research & Policy Advisor for Bill English & Senior Advisor to John Key in 2008. Willis has brought back Bill English's Social Investment Approach (she's Minister). Willis has also brought back Bill English's preferred "single mandate" of price stability for the Reserve Bank.

  3. Associate Finance Minister, Chris Bishop, was an adviser to National Leader, John Key. He has brought back John Key & Bill English's Roads of National Significance.

  4. The NZ Initiative, which was the think tank for the National Party under John Key, supplying it with ready-made policies, is the think-tank for the National Party under Chris Luxon, supplying it with ready-made policies.

  5. The NZ Initiative's Senior Fellow, Mike Johnson, was recently appointed by the Nats to Chair the Government’s newly established Ministerial Advisory Group to review the Primary School English, Maths & Statistics Curricula.

  6. The Nats recently appointed their own former leader, Simon Bridges, to be Chair of the NZ Transport Agency.

  7. The Nats recently appointed their own former Cabinet Minister, Steven Joyce, to be Chair of the Coalition's “Expert Advisory Panel” on infrastructure.

  8. The Nats recently appointed their own former Leader, Bill English, to be Chair of the Review of Kāinga Ora, the government's social housing landlord.

  9. The Nats recently appointed their own Former Deputy PM, Paula Bennett, to be the new Pharmac Chair.

  10. The Nats recently appointed former National Party Minister, Murray McCully, to review public school buildings.

Given Luxon told One News' Jack Tame he speaks to John Key every other week, it has become embarrassing, even for those of us who want them to succeed. From transport to infrastructure, housing to health, education to the Reserve Bank, and more - its a Return to the Fathers (Bill & John). Except, instead of giving their son, David Seymour, a few Charter Schools (like when they were last in power), they're now giving him some more, since he's picked up more seats in Parliament. By the way, what's this trend for former (National & Labour) politicians to take big jobs for which they're unqualified, other than at playing politics? In Bennett's case, one day you're buying houses for Baileys Real Estate & the next drugs for Pharmac. Much the same deal, I suppose. Position. Position. Position. (And let's not remind ourselves of Grant Robertson's new gig as Crown Prince of Otago University).

So predicting this week's budget is easy. Just ask: what would John & Bill do? Here goes: they'd give some tax relief. When that duo started in power they cut the top income tax rate from 39% to 33%. As its not politically correct to do so in these harsher times, relief this week goes to the "squeezed middle". Key & English would also trim public spending to work toward a balanced budget - that's what they did after being elected in 2008. Is there much else? No - since although English wasn't too bad as a Finance Minister, economics to him can be summed up as follows: Governments spend, G, and tax, T .. We should try making G=T (budget balance), and also try cutting G & T, since both are baddies. I wish that was all of economics - then I wouldn't have had to spend 20 years trying to understand it. Darn.

How tone deaf of the Reserve Bank Governor to say this Wed 22 May that the Bank will eventually "win the day" with its choke-hold monetary policy. The folks who lose the day will, of course, be everyone in the country who has borrowed money. As is accepted by independent observers - and not accepted by the RBNZ inflation deniers - the Bank blundered its way into creating the rising prices we are experiencing by printing money & throwing the notes onto the inflationary bonfire, fanning it in all directions. The Bank is now suffocating us by sucking the oxygen out of NZ, trying to halt the fire it ignited, with high Official Cash Rates. What seems most important to the RBNZ is that it becomes "the winner" out of this mess, and by implication, regular New Zealanders end up the losers.

The Governor claimed this Wednesday 22 May that the last leg of inflation has proven sticky around the world and hard to graft down. As always, Orr blames everyone but himself - he once blamed Putin & bad weather due to climate change for NZ's inflation. The weather has been pretty good lately - what's the excuse now? How ironic that on the very same day the RBNZ was arguing everyone else is in the same inflationary mess as us, the front page news in the UK declared how inflation had fallen to 2.3% (within our RBNZ 1-3% target). The BBC reported on 22 May, as the RBNZ Governor was speaking, "UK Inflation falls to 2.3% as energy prices cool" and The Financial Times reported, "Well, Inflation Has Been Defeated". Number 10 Downing Street issued this Press Release, signed off by the Prime Minister:

This graph is the reason why the UK PM called a snap election yesterday. How embarrassing for the RBNZ to caught out telling a porker about how the rest of the world is like us, when it is not. How tone deaf of the RBNZ to claim it will be the (eventual) victor in this fight - that it will be the below-the-belt boxer who wins - whilst turning 5.2 million Kiwis, by implication, into the knock-out collateral damage losers. When will this RBNZ horror story end?

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Robert MacCulloch

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