The big business

This post has nothing to do with rugby, but limiting myself to blogging about one subject has become awfully boring...


I know that many of you who know me and read this will be surprised and perhaps even a little disappointed but I think that National’s policy to fund the needed upgrade in the country’s infrastructure by borrowing is brilliant.

And what’s more I think that many of those who are opposed to the idea simply do not understand the workings of our economy well enough to appreciate it.

It is a concept of basic accounting principles but one that inspires fear in many.

Using debt to finance an asset is a good idea when that asset has future potential to earn a return that would be more than the costs of that debt, whether that profit is financial or a more intangible return, like economic growth.

Those who are scared by this idea are almost always the ones who think blindly that national debt is a four-letter word. It is ironic, however, that these are often the same people who sign themselves to a mountain load of debt for the next 25 years, simply to place their name a piece of paper that says they own a peice of land.

Somehow it is okay for these people to feather their nests while our roads, broadband connections and public systems deteriote further. I just don’t get it because although we will all be responsible for paying back any loans our government takes out, the government can in fact borrow at a much lower price than the private sector would have to pay.

We complain that our economy and resources are under-funded and under-performing and yet, somehow, we think that we should be doing better, in fact we are always trying to measure ourselves against our trans-tasman cousins.

Increasingly people are leaving New Zealand because our country’s economic growth is being held by the reserve bank’s focus of keeping inflation down through a tight money policy and a lack of investment in crucial infrastructure. If our economy is not growing how are we meant to increase wages, job numbers and financial stability.

Too often we hear news reports telling stories of families who have moved to bronzed shores of Australia, chasing the dream of a high standard of living, home ownership and financial freedom. Why, because Australia’s economy is still growing from years of investment, even in these tough times.

We have become a community of keeping up with Jones’ and yet we think that John Key’s proposal to send our country further into debt is a hideously bad idea because it means that we will owe millions of dollars.

People are scared, naievely so because they do not understand. I , however, think the idea is brilliant and forward-thinking.

It is a good idea because if we are do not stimulate our economy so that we can all benefit we will be left to flounder in this no-mans land of mediocre growth, poor wages and our over reliance on agriculture – more specifically the dairy industry.

Sure we are seeing high times and good returns in the dairy industry at the moment but like anything there is always the danger of the downward cycle, in economics what comes up must go down. Do we really what to be so dependent on one industry for our country’s future export earnings?

Simply slipping a few pennies into upgrading our infrastructure when we have the spare cash is no longer cutting it and we are being left behind.

If we do not invest in our infrastructure now our economy will grind to a halt and we will all be left to eke out an existence. It is matter of borrowing to solidify against any future trends, fortifying our individual potential to each earn a reasonable wage and protecting our ability to compete with other growing nations.

In these dark times with our county fast heading towards the expected recession we must fortify against the side effects and hopefully dispel any economic depression.

The credit crunch has taken its toll on economic growth and this is now impacting on the employment market. While we are yet to see figures that will document a decrease in employment, we are all aware that the job market is tightening and if we do not do anything we are destined to spiral downwards.

Investing in our country through debt is a good idea provided because it means that you and I will have the option to stay in New Zealand and bring up our children in a financially stable environment in a land we know and love.

We do not, however, want to just throw money at a black hole, hoping to increase our productivity and growth by chance. We need a well thought-out plan for advancement and a government willing to be courageous in the tough times.

And while I back this policy it does not mean that I will support the National Party come election time, but I happy that one party is thinking about our economic future.