Leaders misguided on economic policy

 "I've been internalising a complicated situation in my head."

So says actor Darcey-Ray Flavell-Hudson in an ad designed to thwart drunk driving. The ad is filled with fantasy images of Flavell-Hudson's mate as a ghost due to drunk driving and an inevitable "crashee". Me too. Internalising, I mean. The complex situation leading to the economic equivalent of a "crashee" is the habit of New Zealand's current government of practising austerity in the face of an economic downturn.

This economic policy is the one which focuses on debt to the exclusion of revenue and is similar to the diehard position of right-wing Republicans in the US and similar politicians in the UK and Europe. Just at the time that business slow-down resulting from dodgy dealings in the financial sector was causing layoffs and plant closures, some governments both here and abroad went on a financial diet emphasising abstinence of government funding.

There's a misapplication here of a famous Aesop fable with the governments trying to look like industrious ants striving for greater productivity. In reality this austerity is more grasshopper-like in that it applies short-term solutions that weaken the long-term of necessary investment in safeguarding the future of the country.

New Zealand has already seen a loss in preparedness of our navy due to manpower cuts and consequent shortages of trained personnel. The push to pare down costs has been expressed in falling investment in education, especially of early childhood education. Hekia Parata's proposals to increase class sizes exemplify the tunnel vision that accompanies ideology free of fact or inquiry.

In contrast, James Heckman, a Nobel Laureate in Economics for his statistical models to eliminate bias in social policy proposals, has shown that $1 invested in childhood education returns between $7 and $11 in long-term economic benefit.

Education and military preparedness are areas of short-term gain at long-term cost.

There's the regulatory degradation implicit in pushing the local councils to speed up resource consents. The short-term gain will inevitably be outweighed by the long-term risk costs as haste makes waste both literally and figuratively - as we've already seen locally. Moreover, locally, we've also experienced the loss of jobs as DOC and other agencies are "consolidated" elsewhere. The same process motivated by unnecessary austerity policies underpins the continuing campaign by the Ministry of Health and our over-compliant DHB to regionalise services.

The goal of a single administration is being rationalised through the bureaucratise of "efficiency of operation" - read line staff reductions. The clinical outcomes are likely to be exactly the opposite.

At the national level, effects of the austerity policies are best seen in unemployment figures which have reached 7.3 per cent. While Mr Key assures us with his usual blithe spirit that jobs are being created as quickly as others are being lost, the figures say something entirely different. As far as the rest of the developed countries are concerned, the figures for results of austerity ought to be cautionary. Europe which has been engaged in belt-tightening for three years now has an unemployment average rate of 11.1 per cent. The UK's Conservative government, having instituted similar policies, has seen continuing flat-lining of its growth rate, a rate just barely above recession.

Unwilling to look at the facts, our advocates of austerity tell us our debt, which is modest in comparison, ought to make us fearful of becoming like Greece. Instead if we are to worry, it's that we might end up looking like Europe.

One complicated situation that I'm having trouble internalising is the persistent popularity of the PM and, by extension, his party. What we need is the equivalent of an intervention, one where everyone concerned or affected by these policies can let the politicians know how they feel and how they intend to express those feelings at the polling booth in the only poll that matters. Friends don't let friends drive in a manner that will become a "crashee". As the ads say it, preventing the destruction is the stuff of legend.