Editorial: On balance, 2005 a very good year

Opinion

Looking back on 2005 we can count it a good year for New Zealand, another year of seemingly endless economic health.

Jobs abounded, skills were in demand, unions claimed 5 per cent pay rises, house values were impervious to counter-inflationary interest rates. Oil prices spiked and business confidence was suspended as the Reserve Bank stepped harder on the brakes, but households continued to borrow and spend as though it did not matter.

We might pay the price next year, but equally we might not. If the dollar stays high consumer confidence could carry the country through another year. If the dollar drops as it should, the exporting industries will get a much-needed boost. This is an adaptable economy now, evidenced by six successive years of riding smoothly over fluctuations in commodity prices, exchange rates, immigration and, this year, an oil shock.

It was also election year and despite the continuing economic sunshine, the country considered a change of Government. After 10 years of Budget surpluses the case for tax cuts became compelling, but the Government was slow to read the mood. Michael Cullen failed to dampen expectations, and his Budget disappointed them. He broke Helen Clark's golden rule: Under-promise and over-deliver.

It was a golden opportunity for the National Party, which seemed to have lost the momentum of the previous year's appeal to mono-culturalism. Orewa II, as Don Brash's 2005 speech was dubbed, advocated child adoption as an alternative to the domestic purposes benefit but it did not give the party the same lift. Tax cuts did the trick, helped by the propensity of a new Labour minister, David Benson-Pope, to put his foot where he allegedly put tennis balls as a teacher.

With the polls running for National and tax relief, Labour dispensed with fiscal rectitude. First it promised to scrap interest on student loans for borrowers who stayed in the country. Then it devised a $1.5 billion package of tax credits for low and middle income earners. National, still to announce the detail of its cuts, hastily absorbed Labour's offer into its own proposal and emerged with $3.9 billion of cuts for all. For the first time since the start of serious economic reform, an election had become an auction.

National's rising star, finance spokesman John Key, pointed out that everyone, including students with loans, would be better off with the tax cut, and he was prepared to increase public debt to pay for it. But on election day the hip pocket, by a narrow margin, did not prevail. Labour survived by 2 per cent and the decision of two small conservative parties, New Zealand First and United Future, to support the party that was first past the post.

Helen Clark thus became the first Labour Prime Minister to win a third election, an achievement too little noted amid the post-electoral bargaining that made Winston Peters foreign minister though not, he insists, part of the Government. He and Peter Dunne ensured the Greens were shut out of power, and the Greens' year was soon to get worse with the sudden death of co-leader Rod Donald.

The year also brought the death of David Lange, the imprisonment of Donna Awatere Huata, the defeat of John Tamihere and the demise of Paul Holmes, first casualty of a 7pm television war.

We welcomed the right to host the Rugby World; admitted an independent Maori Party to Parliament; farewelled Judy Bailey; and worried about police performance, oversized pylons, new school exams, TVNZ, a troubled tertiary "wananga" and a celebrity drug ring.

The year had more than its share of disasters abroad but not here. It was another year of economic resilience, political stability, national progress. May the new year be as happy.