The New Zealand economy, led by newly elected National Party PM, John Key, has expanded for the first time in six quarters in the three months to June 30, ending the nation’s worst recession in three decades.

The Australian reported a week ago that, “with a fraction of the stimulus spending outlaid by the Rudd government, the battered New Zealand economy is on the verge of emerging from recession.”

Australia’s first taste of the consequences from reckless spending has come in the form of a rates rise by the Reserve Bank this week. The message is clear; Australians will now pay for Rudd’s stimulus through higher interest repayments. New Zealand’s interest rates however, remain not only on hold but lower then ours.

The Australian also reports that “while Kevin Rudd concentrated on cash handouts and small-scale, shovel-ready projects, his cross-Tasman counterpart John Key took a different path, focusing on rebuilding confidence in the New Zealand economy, on seizing global opportunities and on eliminating low-quality spending and programs not aligned with the priorities of the new government".

Mr Key, who came to power at the height of the global meltdown, said four months ago: "It's not a time to be dieting on debt. We have to make sure we don't deliver deeper recession by allowing ourselves to blow our debt profile."

Economics and history teaches us one thing, high interests rates, remember Whiltam, Hawke and Keating, leads to deep recession. This latest round of interest rate hikes, plus future hikes, will lead to an economic slow down in the economy over the long term.

For short term gain Rudd has risked jobs and the ability for future generations to invest in their economies.

It is no secret that Coalition Governments fix the mistakes made by Labor Governments. The worst mistake Coalition Governments fix, the most devastating, is repaying huge debts racked up by Labor. It is true that the stimulus money helped our economy hold back some of the recession, but it didn’t have to be spent recklessly and plunge the country into such a hazardous long term debt position.

Most economists, including the Reserve Bank Governor, say that the recession could not have been avoided were it not for the shape our economy was left in after the Howard and Costello years; debt free.

Only the Liberal and National Parties actually have a plan to bring our Government out of debt and return Australia to sound economic footing. Only a Coalition Government can deliver true ‘economic conservatism’.

Released today, the Coalition’s Debt Reduction Strategy is based on four main pillars;

1. Reduce the level of waste, mismanagement and duplication in every corner of government spending, establish a Commission for Sustainable Finances, and put an end to Labor’s cash splashes.
2. Increase economic growth and productivity through a vigorous reform, infrastructure and innovation agenda and support for small business.
3. Control the growth of government and commit to a responsible long term objective of returning the government’s share of the economy to the level achieved by the previous Coalition Government – that is, reducing over time the share of government spending to less than 25% of GDP.
4. Ensure independent and accurate scrutiny of Australia’s public finances.

The main priority of the alternative Government should be to graphically illustrate for younger Australians the perils of Labor debt and show what a mess the Whitlam, Hawke, Keating and now Rudd Governments will get us into. I talk about debt and the generational perspectives in previous blogs.