When Standard & Poor’s exposes our savings problem, we can bank on the Maori Party providing a solution

You’ve got to admire the Maori Party’s zeal and gall, and its readiness to seize on any issue to promote a Maori approach to doing things.

Take savings, for example.

Savings (or our lack of them) has been the subject of heated discussion in recent days, since the Standard and Poor’s mob put the frighteners into us about our debt.

The topic popped up on the agenda, for the second day in succession, at Question Time yesterday.

The questioning was kicked off by Alf’s colleague, Aaron Gilmore, who wanted to know what Bill English believes will be the main features of the economic recovery under the Government’s admirable programme to encourage more savings and investment.

Hon BILL ENGLISH (Minister of Finance) : I think it is now obvious that the economic conditions in the years leading up to 2008 were not normal, because we saw excessive consumption and housing speculation, and borrowing to finance both. Looking ahead, New Zealand’s economic growth will need to be considerably different from the growth that occurred during those years. It will need to be based on savings and investment and led by the earning side of our economy, especially the export sector. That is why the Government’s economic policy programme is designed to encourage savings, investment, exports, and new jobs.

English recalled that five years to March 2008 were an unusual period. The growth in private consumption was about 4.5 percent a year, almost twice its long-run average. House prices doubled, and credit (mortgages, credit cards, and other forms of credit) grew by 83 percent.

By the end of that period, households were borrowing $10 billion a year to finance consumption, and we had record balance of payment deficits.

Ah, but then the electorate had the good sense to vote for a National-led Government.

And so –

Aaron Gilmore: What trends have been evident in the New Zealand economy since 2008?

Hon BILL ENGLISH: Since 2008, fortunately, those trends have reversed. Households have become strongly averse to debt. They have lifted their savings and are trying to restore their balance sheets. The housing market and credit demand have stalled; in fact, credit growth is close to zero. The banks realise that they were overextended with too much foreign borrowing, and the balance of payments has dramatically improved. The policy challenge now is to lock in the long-term benefits of this sharp correction.

Labour’s David Cunliffe popped up at this point to ask how come the New Zealand Institute of Economic Research was forecasting national savings to collapse to minus 1.2 percent in 2015, compared with a positive 5.2 percent in 2004?

It was easily kicked into touch.

Hon BILL ENGLISH: I have no idea why the New Zealand Institute of Economic Research is forecasting that. The forecasting is, I think, a bit of a mystery even to the forecasters who are doing it. What is pretty clear is that New Zealanders are saving more now and not spending. That is one of the reasons that the economic recovery is a bit flatter than was expected, but that is a good thing. New Zealand needs to have more savings.

And then – out of left field – comes Te Ururoa Flavell to play the bloody race card.

His question:

Has the Minister seen mention in the report of the Welfare Working Group of a recent review of social services in Masterton that found that many Pākehā preferred Māori-provided services because they offer a more family-based approach, and will he respond to this finding by seeking to encourage more investment and subsequent long-term savings in the Whānau Ora approach?

Alf was thinking about raising a point of order, but Bill handled it comfortably:

Hon BILL ENGLISH: We are a Government that prefers people, including those who use social services, to be able to exercise some kind of choice. I am interested to hear that in Masterton, a number of Pākehā families prefer Māori providers because they do a better job. It may well be that as many Māori families prefer non-Māori providers because they believe the same thing. Either way, we want to foster that kind of choice, and, of course, the development of Whānau Ora means there will be considerably more choice for families in need of social support. That is a good thing.

Alf is not so sure this had anything much to do with savings, really.

But Flavall got away with it.

Next thing you know, the pressure will be on again to have the Government pour money into a Maori bank.

Earlier this year Pita Sharples was reported to be considering a bank or fund to lend to Maori businesses.

His Maori Affairs Economic Taskforce was “investigating this issue, along with a range of other initiatives to foster Maori economic participation and success”.

In 2003, Leith Comer, the chief executive of Te Puni Kokiri, the Maori Development Ministry, floated the idea of a bank to increase investment in the Maori economy.

Maori Party co-leader Tariana Turia said last year that the party wanted to set up a bank to provide loans to Maori and their small businesses.

Watch this space.

Alf is opposed to having race-based electoral systems and all sorts of other bits of race-based nonsense that involve public expenditure.

If Maori want to set up a bank, let ’em go right ahead. They should try Masterton for starters.

But don’t expect the taxpayers to cough up.

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