Finance Minister Grant Robertson drew diverse — and conflicting — responses to his announcement in a pre-budget speech that he has moved the Labour-led Coalition’s debt target from 20% of GDP to a range of between 15% and 25%, in the interests (he said) of greater flexibility to economic conditions.
From the Left, the CTU welcomed the move but said the government should go further and faster in relaxing the Budget Responsibility Rules because
“ … it is neither prudent nor responsible to privilege exceptionally low debt levels over major social, human, environmental and economic needs”.
From the Right, National’s Amy Adams insisted Robertson had “thrown in the towel” on the rules and is loosening the purse strings by tens of billions of dollars. Continue reading “Robertson changes the debt target and extols the fiscal virtues of flexibility”
CTU economist Bill Rosenberg has pitched into the question of ‘business confidence’ and whether it is really falling.
Writing in his 100th CTU Economic Bulletin, he asks whether business confidence surveys are anything more than opinion polls among some chief executives about what they think of the Government of the day or to get their impressions (“which may not be any more accurate than yours or mine”) of where the economy is going?
Rosenberg acknowledges that business decision-makers need confidence when thinking about investing or hiring new staff, to decide if they can take a punt on whether they can increase sales to justify the additional cost.
But in practice confidence cannot be directly observed and survey results are affected by many things that may be irrelevant to those decisions, he says. Its relevance therefore comes down to whether stronger investment and employment follows higher confidence ratings.
The evidence that it does do this “is at best weak; often it is just not true”. Continue reading “CTU economist shakes the confidence we place in confidence surveys”