Plain economic truth cuts both ways

By John Armstrong

Yawn. All the numbers in yesterday's pre-election economic and fiscal update add up to only one thing - political stalemate.

The "prefu" is a suitably unspectacular document for a (so far) uninspiring election campaign. The no-surprises report card reveals an economy not so weak as to worry National too much; but neither is it strong enough to let National crow too loud.

The document forecasts modest, post-recession growth of around 3 per cent a year over the next three years. Hardly rip-roaring stuff.

The growth is partly based on assumptions of a sudden upturn in exports. Should the world economy instead weaken, the Treasury still expects growth, albeit sluggish.

There is an awful prediction for the current account deficit. Then again, the election will not be won or lost over a balance-of-payments crisis that has yet to happen.

Inflation and unemployment projections are not that hot. But National can breathe easier with no obvious howler to cripple its "good economic manager" sales pitch. The prefu is no snafu.

The lukewarm nature of the document was compounded yesterday by the relaxed performance of the Treasurer, Bill English. Just a day after another 300 jobs disappeared from the clothing industry, his press conference contrasted with the relentlessly upbeat Bill Birch, his predecessor.

Sir William ritually applied copious amounts of gloss to any half-decent figure. Mr English was more on the level, admitting the figures were not necessarily as good as they could be. But National must persuade voters this is not as good as it gets. The absence of any startlingly positive forecast put the Treasurer on the defensive.

He argued that only National's policies gave the economy the resilience to weather crises like the Asian downturn and bad drought.

He claimed that Opposition policies - higher taxes, weakening of the Employment Contracts Act - would not create one extra job. Yet, neither will higher interest rates foreshadowed in the prefu.

Opposition parties could not have it both ways. "They can't say the books are in bad shape and at the same time claim they're going to be able to spend a lot more money."

But neither can Mr English have it both ways, expecting an attack on Labour's spending plans to stick when his figures give Labour the flexibility to spend up to $1.2 billion extra in its first year in Government.

So Michael Cullen could say the prefu has no problems for Labour. But neither does it offer much that is new with which to flay the Treasurer.