By Bernard Hickey
Prime Minister John Key proved this week he is our enabler-in-chief.
He was like the nation’s reassuring friend who calmed our fears and nerves about spending more than earn.
Don’t worry so much, said John Key this week, as he justified the sale of our largest privately owned group of dairy farms and foreshadowed heavier foreign borrowing over the next couple of years.
Relax.
We can always borrow some more and sell some assets, he said in a soothing tone. After all, he said, we’ve only sold 1% of our land so far.
Chill.
Our foreign creditors will keep lending to us because we are the friendly, smiling borrowers who have everything under control, he crooned.
We are the lucky country with grass galore, close connections to China, a flexible currency and the ability to grow our way out of trouble, he said.
But excuses and reasons are easy when you’re trying to justify holding on to an addiction. Foreign debt and asset sales to foreigners are the nation’s enablers.
New Zealand has been spending much more than it has earned since around 2000.
In the last 12 years we added around NZ$100 billion of foreign debt and sold off a bevy of private assets to ensure we could maintain our lifestyles.
All the while falling productivity and the growth of government undermined our ability to export our way back to prosperity.
When is someone going to stage an intervention to shake us out of our trance?
John Key is not the Prime Minister to do it. He has presided over a government that has financed a blowout in its deficits funded by foreign creditors, including the Chinese Sovereign Wealth Fund that has bought our bonds, along with Kim Dotcom.
Key campaigned to extend a programme of state asset sales that will see significant portions end up in foreign hands.
The only way to end our addiction to over-spending is to throw out the enablers of foreign borrowing and selling assets to foreign interests. The proportion of our national income that has to be siphoned off to foreign creditors and asset owners has risen from 2% of GDP in the early 1970s to around 8% now.
Eventually we will not be allowed to borrow more and will not have anything left to sell.
Who will reassure us and enable us then?
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