Guest Post by Don Richards
While there is sympathy for the plight of striking NZ teachers seeking better pay and conditions, the common belief is that there is no more money available. Nothing can be further from the truth if our Labour government followed the lead set by the first Labour Government in 1936.
Michael Joseph Savage’s Government used Reserve Bank Credit to finance the construction of state houses and vital infrastructure which injected millions of pounds into the economy and enabled New Zealand to emerge from the Great Depression sooner than most countries.
The Hansard record (page 157) of the parliamentary debate that introduced the legislation had the following quote from our then Prime Minister: “I was accused by the previous speaker of saying, during the election campaign, that we were going to increase wages, pensions, and the like. I plead guilty, and I want to know from the right honourable gentleman what else is worth living for?”
This 1930s election advertisement could almost apply to the current day as the then Labour Government built thousands of state houses with Reserve Bank Credit.
Returning to the 1930s, the injection of Government money into the economy put money in people’s pockets and freed up tax money to finance a Social Welfare system that became the envy of the world. Such a thing was unthinkable a mere three years prior to the introduction of the legislation.
While things have certainly changed since the 1930s, an IMF discussion paper titled The Chicago Plan Revisited, issued in 2012 endorsed a similar approach to that taken by our first Labour government. In fact, it went even further.
The IMF paper said that a system where the central Bank (our Reserve Bank) issued the currency would smooth out the boom and bust cycles, eliminate runs on the bank and dramatically reduce both public and private debt. In addition, it would provide productivity gains of 10% and steady state inflation would drop to zero.
We do not need to restrict the legitimate pay claims of our public servants. All that needs to be done is repeat what worked before and enable our Reserve Bank to issue credit for housing and infrastructure projects. A parliamentary petition, calling on the House of Representatives to consider such a move, is being circulated and you can access it at http://www.positivemoney.org.nz/Site/petition/.
Such a move will free up tax money for other purposes including providing our public servants with proper wages and conditions and stemming the tide of those leaving our shores in search of decent pay.
Don Richards is the National Spokesperson for Positive Money New Zealand which is part of the International Movement for Monetary Reform. The movement is committed to having a monetary system that works for society and not against it.