There's a certain inevitability about talking up tax cuts as soon as we're within coo-ee of a general election. And no sooner are council elections out of the way than the next cycle starts with such cuts dangled as a possible prize.
Not that we can afford them. But being able or not able to afford something never stops politicians telling voters they can have it if it helps them win re-election.
New Zealand is one year away from seeing whether National can win four terms straight, a feat not achieved since the Holyoake years (1960-1972) when the country was a very different place to what it is now: heavily-subsidised, straitjacketed in regulation, yet living comparatively well in semi-isolation off the fat of the land.
It was the greatest socialist democracy on Earth, with the public owning around 74 per cent of everything. The aptly-named quarter-acre half-gallon pavlova paradise, with full employment, virtually no overseas debt, and health and education statistics the envy of almost every other country.
And that was under a National government. How times change.
Now we have lost 90 per cent of our public assets for no tangible return, have a permanent true unemployment rate of around 10 per cent, a galloping debt crisis with around $500 billion owed (public and private), and are plunging rapidly down the table in health and education statistics. Not to mention the loss of the ability for the young to gain that quarter-acre home of their own.
Again, under a National government.
The difference is the Holyoake era came at the apex of Keynesian economics, which principally expected government to be the main controlling influence of an economy. Whereas once the neoliberal Friedman school took hold in the 1980s, government was expected to reduce both in size and influence, leaving "the markets" in control and the public at their mercy.
Not the smartest idea, but one that has taken hold so vigorously that despite shocks like the recent GFC causing a brief lurch back to the Keynesian approach, Prime Minister John Key can still parrot this week "we philosophically believe in less tax and smaller government".
But as John Maynard Keynes observed, "Capitalism is the astounding belief that the wickedest of men will do the wickedest of things for the greatest good of everyone."
So as soon as creative accounting manufactures an apparent budget surplus, the first thought is not to build more hospitals or schools, or support industry to employ more people, or improve the lot of the homeless and working poor, or even to resume government contributions (as Bill English promised he would) to the NZ Super Fund; no, the first thought is, "let's have a tax cut".
After all (they reason), a tax cut will keep us in power, doing less at greater cost - a cost that means more of the pie for our mates. What could be better?
But the announced $1.8 billion operating surplus ignores there are significant "actuarial" holes in the accounts totalling nearly $10b: $5.1b for ACC losses, $2b Cullen Super Fund losses, $1.5b Emissions Trading Scheme liability from increased carbon cost, plus another $1.3b in net Crown debt. So in reality there's no extra money, only extra liabilities.
When Key's government took power, Nick Smith called a similar $4.8b hole in Labour's books a "financial crisis". But that won't stop National pulling Key's guestimate of $3b out of the virtual hat next year for an election bribe tax cut, will it?
Nor, sadly, stop voters believing we can afford it. Seems only another Great Depression could now shake the myth of neoliberal competence.
Sourced from www.nzherald.co.nz