The Write Direction: Economic dithering

THE economists got it right again, and up went the interest rates.

However this only proves that the Government is dithering and doesn’t want to offend voters.

The government has an agenda of buying votes in order to secure its future, and has chosen to do this by flinging money at everything it thinks electors might feel positive towards.

The problem is that it is either printing or borrowing those funds, creating more and more debt.

As the debt piles up for the average Sam and Sue to pay off in future years, the additional interest rate rises it creates can only hurt our ability to repay.

Even the Reserve Bank’s board voted five to four to increase interest rates.

This means the “namby-pamby don’t offend the voters’ scenario” has again kicked in.

Rather than getting the economic situation on the road to recovery, they have chosen the “slow bleed” method.

Instead of putting us all through the pain of economic death by many acts of “tinkering around the edges”, wouldn’t it be better to solve the issue of blindly spending and get back on a positive track?

To do that, a quick cure could be considered.

Firstly, the government needs to reduce spending to what it has available within its income.

In other words, stop throwing money at non-productive outcomes for its political purposes and then hit interest rates hard for a short period of time.

This should stop unnecessary spending until the debt issue can be relieved.

Do it quickly and change the economic direction so the pain being felt by the community is short lived, rather than being dragged out in the present manner that affects everyone over a long period of time.

Currently we have a government playing politics by delaying economic recovery so as not to offend its voters.

The alternative is to look after the population and secure our longer-term sustainability by taking action now, even if there is negative reaction from punters.

By John BLACKBOURN