Risks and scenarios – are we heading for a political “perfect storm”?

Further to Be careful what you wish for:

Brian Fallow from the New Zealand Herald writes about the fiscal risks facing the New Zealand Government.

The chapter on ‘Risks and Scenarios” from the Budget Economic & Fiscal Update 2008 makes for interesting reading too.

What worries me is that we might be heading for a political “perfect storm”: A right-wing (National) government, governing without the encumbrance of coalition partners, facing a recession and a (tax-cut caused) fiscal crisis, amplified by an Exchange Rate crisis (forcing interest rate rises that compound the recession) etc…in such circumstances I’d be willing to bet on deep and extensive privatisation of State assets (education, health, water, Kiwibank); benefit system “restructuring” (i.e. cuts); and other expenditure cuts (e.g health, education, social services).

Throw in a couple of extreme weather events, and given the level of our external debt, we might end up on the phone to the IMF begging for structural readjustment.

Let’s hope not!

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