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Christmas surprise

Welcome to Alan Bollard's Advent calendar.

his is the time of year when the Reserve Bank Governor has an especially significant daily peek through those little Advent calendar windows, not to find sprigs of holly and snowmen, but to keep track of serious seasonal indicators: retail spending, house prices, credit card debt and mortgage lending.

Alan Bollard usually approaches the task with a sense of dread. What he is most likely to spy behind the first window is ­Frenzied Consumer Spending, his least favourite thing.

But this Christmas, come the time to open the official cash rate window, the Guv found a nice surprise. Although house prices are again on the rise, mortgage lending is not keeping pace, despite recent interest-rate reductions. In other words, we are not responding in our usual gung-ho way to the sniff of capital gains by ramping up our borrowing on housing. We seem to be entering a period of consolidation, keeping up our mortgage payments, paying down debt, even trading down houses.

This is a lovely seasonal surprise for the Governor, who has for years been trying to convince us property is not the holy grail of prosperity, and indeed is the opposite when associated with vaulting debt. For the first time ever we seem to have taken the hint about what to get him for Christmas.

Bollard was so upbeat he sneaked a preview of a forthcoming Advent window and found a Meaningful Curb on Government Spending. This is cheating, of course, but it tells us he knows something we don't: that the Beehive has more ambitious plans than it has let on. Bollard has taken the big step of keeping the official cash rate at a record low until at least the middle of next year - the best gift many New Zealanders could have - because he is confident, he says, the Government will back this position with spending restraint.

Say what? This is the first we'd heard of it. Given the demeanours of the Prime Minister and Finance Minister every time the subject of serious fiscal reform has arisen - John Key a not-so-secret Santa, and Bill English a tortured Grinch - voters are entitled to wonder if tough decisions will ever be made. Apparently they will.

Bollard will be looking mistily towards Ireland, whose Government has just imposed sweeping arbitrary spending cuts, including pay cuts for all public servants, MPs included. But although this is one of the world's more radical recessionary responses, and certainly a beacon of moral leadership, it underlines the sticking-point for all fiscal reform: until you can affect the choices of private citizens and business, debt will remain an intractable problem.

We are changing, but in the only way we know how: by creating new mass-market opportunities. New books tell us how to consume less, and thriving industries supply us with the stuff we need to buy to consume less. Touchingly, the fashionable response to recession and global warming has been do the things our thrifty grandparents did, making and baking. But this has merely been an add-on. We haven't seriously reviewed our attachment to those now rather clichéd items that landed us in debt in the first place: the thirsty four-wheel drive and BMW; the "home theatre"; the indoor-outdoor flow, open-plan home makeovers designed for lifestyles and climates few of us actually have; the beach house we seldom get to; the designer dog the kids can't be bothered walking; the coffee-worship; the interactive computer games perversely replicating the old-fashioned experience of actively playing sport, when we could simply grab a bat and ball and go outside, saving ourselves hundreds of dollars. We may as well self-advertise via that other tired gift cliché, the personalised plate: SLO LRNER.

A radical antidote is proposed by economist Joel Waldfogel, whose book Scroogenomics: Why You Shouldn't Buy Presents for the Holidays, has been billed as "the book Santa doesn't want you to read". He says gift-giving destroys nearly 1% of America's annual GDP, because recipients typically value gifts 20% lower than what they cost.

It's a thought. But economic rationalism can be taken too far. The baby Jesus and his parents probably had no more use for frankincense and myrrh than you had for Aunty Betty's hideous sweater - but it really was the thought that counted. A contrary view - that in a recession, you owe it to your fellow human to keep spending - was neatly encapsulated in a celebrated protest placard spotted in America: "3 Words That Will Save the Economy. Gay. Bridal. Registry." Not one of the windows Bollard ever wants to open.

Here at the Listener we wish our readers a very merry Christmas.