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HomeOpinionLabour's BSHIT Budget

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Chris Leitch
Chris Leitchhttps://www.socialcredit.nz/
Chris Leitch has been a campaigner for monetary reform since 1972. He is a former elected member of the Auckland Regional Services Trust set up in 1992 to own Auckland services companies like the buses, the Ports of Auckland, the water supply, and to manage millions of dollars of downtown Auckland property. It paid off millions of dollars of debt while successfully keeping the revenue-earning assets in public ownership. He was also elected to the Waitemata Electricity Trust, and has been chairman of the Whangarei Youth Centre and the Onerahi School Board. He was the first ever Alliance candidate, standing in the Tamaki by-election in 1992 and is the Social Credit's Whangarei candidate.

Labour’s BSHIT Budget

BSHIT budger news

Bank shareholders, speculators, investors, and ticket clippers will be partying for days over the enormous profits they’ll be expecting following Labour’s budget reveal this week.

After a 48 percent increase in profits in 2021, banks in particular will see another massive jump in their profits as they crank up the money printing presses to purchase the bonds the government will issue to fund its enormous $25 billion per year borrowing programme for the next three years.

Those money printing presses will also create, out of thin air, the money other investors and speculators will borrow to fund their purchase of government bonds and the Public Private Partnerships and ‘Private Sector Participation’ in infrastructure building.

More than $5 billion each year in interest payments on that government borrowing will come out of money paid by taxpayers and be funnelled straight into the pockets of bank shareholders, speculators, investors, and ticket clippers.

That tax money is being taken away from reducing child poverty, giving nurses, doctors and other health care workers the pay increases they deserve, building state houses to get thousands out of motels, sheds, and garages into decent homes, and boosting Pharmac’s budget so that Kiwis can access life saving drugs.

Instead of letting the commercial banks create that money, the government could have accessed those funds from its own bank – the Reserve Bank.

As Social Credit has been at pains to point out, Reserve Bank financing could provide the funds the government needs at no cost, without saddling Kiwis with massive additional debt and interest, freeing up tax dollars to be spent on health, education, housing and poverty reduction.

That would have provided the government with an additional $5 billion every year.

That view is supported by a report, jointly written by Treasury and the Reserve Bank, presented to Finance Minister Grant Robertson in May 2020.

The aide-memoire, titled “Quantitative Easing and Monetary Financing Compared” (download here) lays out the benefits of monetary finance compared with quantitative easing or QE (the Reserve Bank buying bonds previously purchased by the commercial banks).

The report says that Monetary Finance could be used to “meet specific funding needs of the Government at lower cost and with greater certainty than QE”.

It’s also obviously at a lower cost than borrowing ‘fairy dust’ from the commercial banks because that ‘fairy dust’ has to be paid back with interest.

Treasury and the Reserve Bank have confirmed that it’s perfectly possible for the Reserve Bank to fund the government directly saving taxpayers billions – something called for by former BERL chief economist Ganesh Nana in 2020 – “The government can borrow from the Reserve Bank. To be technical, it’s literally borrowing from itself”.

Former Finance Minister Michael Cullen (now deceased) agreed, as did Economist Shamubeel Eaqub – “I don’t see why we don’t jump straight to the RBNZ buying bonds from Treasury direct”.

Former Senior Lecturer at the School of Economics and Finance at Victoria University Dr Geoff Bertram also joined the list of those calling for different financing saying “This is not wild radicalism. It is mainstream, even conservative, economics”.

That call was been echoed by economics commentators Bernard Hickey and former Waikato University Vice-Chancellor, Bryan Gould.

Instead, Labour’s BSHIT Budget, has again thrown a few crumbs to those in poverty, those without housing, those desperately needing health care, those most needy in New Zealand, while backing the wealthy.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of DTNZ.

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5 COMMENTS

  1. Grand Robber is falsely claiming that we have only a small debt compared to other OECD countries. He knows the public debt is very high but does not want to talk about it. Given that the US/UK debts are very high, and they reached a level of non-repayment, the only way to manage is to let inflation run very high creating more and more poverty or collapse the whole economy and restart. The latter is very likely, and the head winds of a Western economic collapse will cripple NZ. War mongering is also going to speed up this collapse.

    • A socialist government will always attempt to spread poverty evenly. Comparing NZ to other OECD economies which have real, big scale industries and vast consumer markets seems irrelevant.

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