Is it just me, or is there something a little unnerving about the grey suits from the ratings agencies poring over our Budget before we've had a look?
The men from Standard and Poor's are in the country, and Moody's has also been on the blower to Finance Minister Bill English.
The Government has admitted that English has had discussions with the ratings agencies over what it needs to do to avoid a credit downgrade from the current AA-negative watch rating.
And on Friday, it also admitted that English would give a presentation to Standard and Poor's about the content of the Budget, along with people from the Treasury.
Now, I do have a slight problem with that. Why are Treasury and English telling a London-based ratings agency what is in the Budget before we know - and before his own caucus knows?
And exactly how much say has Standard and Poor's had in the writing of the Budget? Because it's pretty clear it's been designed to stave off a credit downgrade. Therefore, there must have been a few nods and winks about what would be acceptable.
To what level, I wonder? Did English say "Is this level of health expenditure acceptable?'' Did he ask whether it would be OK to keep contributions to the NZ Super Fund or whether the agency would prefer them removed in the meantime? Tax cuts gone or just delayed? Just how much pruned from core government departmental spending?
Would sir like the country returned to surpluses over four years, five, or would six be acceptable? What level of debt to GDP would sir prefer?
Am I being facetious? Sure. But it's a genuine point. To what level do we let others dictate how we write the Budget?
Now, you might say all kinds of external influences dictate this. America's decision to re-introduce export subsidies on dairy products certainly hasn't helped. Neither did the near-collapse of its banking system. Traders buy and sell the Kiwi dollar every day, which has an impact on our lives and on the economy.
But this just seems a little more ... prescriptive. A little more direct. And it's a relatively new issue, at least in recent years. Labour didn't have to worry about what the ratings agencies thought because it was banking multibillion-dollar surpluses. I also accept that this situation is unique because of the extent of the global recession. And I know that New Zealand needs a credit downgrade like a hole in the head.
Nonetheless, as Budget Day approaches, I would like to know precisely what level of horse-trading took place between English and Standard and Poor's over the precise amount of spending cuts, the debt track, and the operating balance. The confidence of both John Key and Bill English that a downgrade has been averted convinces me that indeed some assurances have been obtained that Standard and Poor's is comfortable with what has been proposed.
The Herald quotes one of the agency men this morning as saying the Government needs to get the books out of the red within five years. Funnily enough, that's exactly what John Key then said on breakfast television.
I'm also interested as to whether this is something commonplace elsewhere. Can Standard and Poor's also influence the Chancellor of the Exchequer? Because the British Government has just brought down a Budget with a debt-to-GDP by 2013 of 80%. That's miles worse than ours, which is predicted to be around 35% by then. America's ratio is well over 100%. Will their books be in the black in five years? Is our fiscal position really that much worse than anyone else's?
Or are we, as the OECD and other various international organisations have found from time to time, just easier to push around?
The men from Standard and Poor's are in the country, and Moody's has also been on the blower to Finance Minister Bill English.
The Government has admitted that English has had discussions with the ratings agencies over what it needs to do to avoid a credit downgrade from the current AA-negative watch rating.
And on Friday, it also admitted that English would give a presentation to Standard and Poor's about the content of the Budget, along with people from the Treasury.
Now, I do have a slight problem with that. Why are Treasury and English telling a London-based ratings agency what is in the Budget before we know - and before his own caucus knows?
And exactly how much say has Standard and Poor's had in the writing of the Budget? Because it's pretty clear it's been designed to stave off a credit downgrade. Therefore, there must have been a few nods and winks about what would be acceptable.
To what level, I wonder? Did English say "Is this level of health expenditure acceptable?'' Did he ask whether it would be OK to keep contributions to the NZ Super Fund or whether the agency would prefer them removed in the meantime? Tax cuts gone or just delayed? Just how much pruned from core government departmental spending?
Would sir like the country returned to surpluses over four years, five, or would six be acceptable? What level of debt to GDP would sir prefer?
Am I being facetious? Sure. But it's a genuine point. To what level do we let others dictate how we write the Budget?
Now, you might say all kinds of external influences dictate this. America's decision to re-introduce export subsidies on dairy products certainly hasn't helped. Neither did the near-collapse of its banking system. Traders buy and sell the Kiwi dollar every day, which has an impact on our lives and on the economy.
But this just seems a little more ... prescriptive. A little more direct. And it's a relatively new issue, at least in recent years. Labour didn't have to worry about what the ratings agencies thought because it was banking multibillion-dollar surpluses. I also accept that this situation is unique because of the extent of the global recession. And I know that New Zealand needs a credit downgrade like a hole in the head.
Nonetheless, as Budget Day approaches, I would like to know precisely what level of horse-trading took place between English and Standard and Poor's over the precise amount of spending cuts, the debt track, and the operating balance. The confidence of both John Key and Bill English that a downgrade has been averted convinces me that indeed some assurances have been obtained that Standard and Poor's is comfortable with what has been proposed.
The Herald quotes one of the agency men this morning as saying the Government needs to get the books out of the red within five years. Funnily enough, that's exactly what John Key then said on breakfast television.
I'm also interested as to whether this is something commonplace elsewhere. Can Standard and Poor's also influence the Chancellor of the Exchequer? Because the British Government has just brought down a Budget with a debt-to-GDP by 2013 of 80%. That's miles worse than ours, which is predicted to be around 35% by then. America's ratio is well over 100%. Will their books be in the black in five years? Is our fiscal position really that much worse than anyone else's?
Or are we, as the OECD and other various international organisations have found from time to time, just easier to push around?
