KEY POINTS:
Policy made on the hoof is rarely good policy. Never is this more evident than in the final days of election campaigns, when parties are wrestling for votes.
Many a pre-election pledge has fallen victim to a more considered judgment in the aftermath of the contest. That will almost certainly happen to unemployment relief packages released this week by the two major parties.
With recession aggravated by the international credit crisis, National and Labour have been falling over each other to reassure those fearful of losing their jobs. They have also been falling over themselves.
National was first out of the blocks with a vague proposal to help highly mortgaged people keep their homes while temporarily unemployed. Labour responded with a plan to help working couples with a job search allowance if one of them was made redundant.
Haste came at a cost, however. The Prime Minister, whose command of policy is normally impeccable, yesterday accused the Herald of misreporting one of the details.
In fact, she was wrong. Obviously Labour's scheme had been thrown together too quickly for her to fully acquaint herself with its abatement regime. Such are the perils of policy made on the hoof.
National's plan, refined a little since party leader John Key floated it last weekend, would top up the Working for Families tax credit and provide a $100-a-week boost to the weekly accommodation supplement for laid-off workers.
The latter benefit, said Mr Key, was "specifically aimed at people who may find it hard to pay their rent or mortgage".
The boost to the supplement may be viewed by some as a humanitarian gesture. Others will see it as a means of underpinning house prices. But it also has the hallmarks of policy rushed out in haste and without due consideration. Most damagingly, it ignores the moral hazard of shielding people from reckless risk-taking.
Many of those who will find it hard to pay their mortgage if they are made redundant are the same people who disregarded the Reserve Bank Governor, Alan Bollard, when he repeatedly warned debt-laden households of the dangers of an ongoing spending spree. They abandoned common sense, convinced themselves house prices would always rise, and kept on buying.
The scant information National released yesterday did not disclose whether the accommodation supplement would be available only for family homes, and not for rental properties. Hopefully, this will be the case.
Even so, taxpayers who adopted a more prudent perspective would, under National's $42 million package, be required to dip into their pockets to bail out people who indulged in risky investments of their own free accord.
Recessions in the past have always claimed victims. This one may or may not be as severe as those. But even before that is known, National plans to provide a cavalry to rescue people from risks they willingly took.
Moral hazard is implicit, too, in largesse that would see the guaranteeing of trading banks' borrowing from wholesale sources abroad, in addition to the guarantee of retail deposits.
Dr Bollard also warned them about imprudent lending practices, such as 100 per cent mortgages.
He was ignored, and the banks hampered his attempts to tighten monetary policy. It is, therefore, reasonable of Mr Key to ask them to repay Government generosity by extending the same spirit to customers in financial strife.
That is more logical than a rescue package which embeds a message that risky behaviour has no consequences - and which makes reckless activity more likely when the good times return.
