Obama's former budget chief says New Zealand alone has done it right

One of US President Barack Obama’s top financial advisors has given New Zealand a ringing endorsement for the way the National Government is handling the deepening world debt crisis,  State Owned Enterprises and Health Minister Tony Ryall said.

‘This week, in a major international BBC debate on rescuing the world economy, Peter Orszag, Obama’s Director of the Office of Management and Budget until 2010, opposed the austerity only position taken by the IMF’s Chairman Christine Lagarde, and Wolfgang Schauble, German Minister of Finance,’ Mr Ryall said.

‘Mrs Lagarde and Mr Schauble said cutting spending was difficult but necessary.  But Mr Orszag said it was better to take a mixed approach – with stimulus for the economy combined with deficit reduction that is put in place now but which takes effect over time.

‘President Obama’s former senior aide singled out New Zealand alone as the model for its balanced approach to the deepening international debt crisis,’ Mr Ryall said.

‘Mr Orszag said: … “for most countries it’s better to combine deficit reduction that you put in place now but that takes effect over time, with if anything, additional support, and that means stimulus, for the economy, effective immediately. And what’s interesting about the fiscal monitor the IMF published also as part of these meetings, is if you look across all the developed countries, there is only one country… which has actually done that, which is New Zealand- who have coupled additional stimulus with medium-term fiscal consolidation. That’s the right policy combination.”(BBC ‘World Debate - Rescuing the Global Economy – What Next?’)

‘This statement by one of President Obama’s top advisors acknowledged the balanced approach taken by the Key led Government over the last four years. The National government has borrowed to take the sharp edges off recession, at the same time maintaining strong fiscal discipline,’ said Mr Ryall.

‘Around $2 billion of borrowings over the last four years have been to protect and grow public health services.  This has contributed to the improved health services New Zealanders are seeing every day, including free doctors’ visits for children under 6, and 35,000 more patients getting elective surgery a year than four years ago. 

‘It is also important the Government completes its government share offer programme, so that we can control our debt, and build the hospitals and schools and broadband we need ,but would otherwise have to borrow to complete.

Link to the BBC debate:

http://www.imf.org/external/mmedia/view.aspx?vid=1897632939001