Andrew Dickens: When you hear deficits, that means borrowing

The last thing I did before the Waitangi day holiday was talk to Kieran McAnulty about the financial strife surrounding Kainga Ora, and it's bugged me ever since. 

The Labour Housing Spokesperson denied the agency was in financial difficulty. 

He told me that Housing New Zealand's asset base was so large there was no problem borrowing more money to keep its construction schedule on track. 

And that bugged a lot of you too. 

The typical response was typical socialist – just borrow more and more to fund your ideological programme. 

But it doesn't really have anything to do with your political bent, it's basic fiscal management. 

The world is full of people who have the assets to borrow whatever they like, but the devil in the detail is whether they have the capacity to pay it back. 

Increasingly we don't. 

Yes, our debt is internationally insignificant and still not at an extreme level. 

We're not the UK or the United States who have debt ratios over 100% of GDP, and we're certainly not like Japan who has a debt of over 250% of GDP – a country that's stuck with stagflation and has been since the 1990s. 

But we're still heavily indebted and our cashflow is poor. 

And what Kieran and the Labour Party don't realise is that is the principal reason they no longer control the Treasury benches. 

Yes, there were sideshows like the gender war, Māori relations, and benefit levels. 

But at the core of Labour's electoral collapse was the feeling that they were not fiscally prudent and that recklessness with debt was not the right direction for the country. 

It's a lesson for the current government, who, for all their posturing that they are the most prudent fiscal managers, are still running deficits, falling further into debt, and the timing of future surpluses is sliding ever further into the future. 

Deficits mean borrowing, and New Zealanders are not happy voting for anyone who commit us to that track. 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
So the last thing I did before the White Tunging
Day holiday was taught to Kiera macanulty about the financial
strife surrounding Kaying Order, and that interview has bugged me
ever since. The Labor Housing spokesperson denied the agency was
in financial difficulty. He told me that Housing New Zealand's
asset base was so large there was no problem borrowing

(00:21):
more money to keep its construction schedule on track. And
that response bugged a lot of you too. And the
typical thing I got on the text machine was augh
typical socialists, just borrow more and more to fund your
ideological program. But you know what, it doesn't really have
anything to do with your political bent, whether you're left
or right. It's basic fiscal management. The world is full

(00:43):
of people who have the assets to borrow whatever they like,
but the devil in the detail is whether they have
the capacity to pay it back, and increasingly as a nation,
we don't. Yes, our debt is internationally insignificant and not
at an extreme level. We're not like the u U
or the United States, who have debt ratios over one
hundred percent of GDP, and we certainly not like Japan,

(01:05):
who has a debt of over two hundred and fifty
percent of GDP, and that's a country that's stuck with
stagflation and has been since the nineties. But still we
are heavily indebted and our cash flow is poor because
the economy is poor. And what Karin and the Labour
Party don't realize is that is the principal reason they
no longer control the Treasury benches. Sure at the last

(01:27):
election there were side shows like the gender war, of
Maori relations and benefit levels, but at the core of
Labour's electoral collapse was the feeling that they were not
fiscally prudent and that recklessness with debt was not the
right direction for the country. So we voted them out.
And I think this is a lesson for the current government, who,

(01:48):
for all their posturing that they are the most prudent
fiscal managers, are still running deficits, falling further into debt
and the timing of future surpluses is sliding ever further
into the future. Always remember this deficits mean borrowing. And
I know and you know that New Zealanders are not

(02:10):
happy voting for anyone who commits us to that sort
of track. For more from Early Edition with Ryan Bridge.
Listen live to news talks it Be from five am weekdays,
or follow the podcast on iHeartRadio