Those Magic Moments … Budgeting At Three O’Clock in the Morning
Listener 26 July, 1997

Keywords: Macroeconomics & Money;

“I’m cold, James.”
The snoring figure on the other side of the bed rolled over. “What do you expect, Winifred? We have the heating off.”
“But why? When we formed our loving eternal partnership, you said you were rich.”
“Not that rich, not as rich as I thought we were.”
“And we’re not?”
“Our accountants said we were at the time. They said we would be making billions of dollars as far as they could see into the future.”
“Tell me about it.” Winifred snuggled up to lump that would really like to have gone back to sleep. “I like to hear the story about how we got together.”
“Well, it was – er – a stormy courtship, and there was this other fellow, a labourer, not a farmer. You looked at our merits, and – er – you liked me better.”
“Tell me about the treasure, James. That’s the bit I like.”
“Well, our accountants said we had lots, and …”
“You said I could spend it all,” Winifred squealed with delight. “I shall be so popular.”
“Not all, only five billion of it, and we are still going to.”
“Then why have we cut the heating, and all those other things?”
“I have explained before.” His voice said he had – at least a hundred times. “We have not got as much as we thought at the time.”
“You thought at the time.”
“No, what I was told at the time by the advisers. It turns out there is much less. The three billion dollar surplus looks as though it is going to be half that. The economy is not growing as fast as they thought, and that means less tax revenue. They thought that when we did all those nasty things they told us to do six years ago the economy would be magically transformed, grow rapidly, and generate lots of tax revenue.”
“Magically?”
“They could never explain it to me how these things would happen. If you believed in their magic, they said, had confidence in it, it would come right. and it did for a while.”
“So they were right.”
“No, it seems that the terrible things we did to the economy depressed it, and then it rebounded, recovered was the word, from the collapse their policies caused.”
“But it meant that there was a lot of growth, and a lot of tax revenue, and we were rich.”
“Yes, it seemed so. But it was just a cyclical upturn. I think that’s the term though it is hard to remember all the jargon at three o’clock in the morning.”
“But we still have got a billion and a half of net revenue. Cant we spend that? I know you keep saying we have to pay off our debt, but by international standards we already have a low level.”
“We are spending some of it, Winifred. Five billion of it.”
“But over three years, and you are not spending it the way we agreed. There is not much going on their health care. not as much as we said and the public wanted, and I do want to be liked by my friends.”
“There are more urgent needs. It seems that the finances of our hospitals are in a shambles. Most seem to be in permanent deficit, with their liabilities too high, and increasing. You remember how six years ago the twins, Simon and Ruth, said there would be a shambles if we did not corporatize the hospitals. We did, and it is still financial chaos. So we have to prop up the CHE balance sheets.”
“And so there is not more money for the sick. Why, why, why.” He could tell she was close to tears.
“Well we did put some money into the health care last year, and a little bit more this.”
“But how come you did not know about the financial disaster when we were courting?”
“We weren’t allowed to see the ministerial briefings either.”
“But surely you knew before the election. You were the government weren’t you?”
“I guess we were too busy courting the electorate. The advisers kept telling us everything would be coming right if we have faith. It hasn’t. And it wont. Nobody can give me an explanation I can understand, even when I am properly awake. They dont seem to understand themselves. The magic is not working.”
“It is not working in education either, so we have to spend the money you promised me on fixing up the schools. And we have to cut back on other spending too. Even the heating.”
“I suppose so, Winifred. And now the economy is stagnating, and the balance of payments looks terrible. Dont want to think about all this in the middle of the night. I need some sleep.” He rolled back, taking more than his share of the blankets with him.
“James. You still love me, dont you?”
He felt a sudden urge to get up and have a pee.