Monday, February 20, 2023

Cam Slater: Time to Swing the Axe on Government Spending

As the impact of Cyclone Gabrielle starts to be fully understood, it is going to force the government into making some unpalatable decisions that will affect its re-election chances. But they are decisions that will have to be made, and made sooner rather than later.

In an article we published on the weekend we heard from Nick Stewart, who lives in the Hawke’s Bay, just how much damage there is, not only to public infrastructure but also to private housing, farming and agriculture. The orchard industry in the region is worth approximately $6 billion to New Zealand in exports. That is now almost completely destroyed.

I know of one orchardist who has lost more than 100 hectares of apple trees. There are many other tales like this. Vineyards are buried under metres of silt, the Esk Valley is destroyed and many other agricultural production business are devastated.

That’s all before we start looking at the destroyed and flooded houses. There are thousands of displaced householders, who will no doubt start wondering just why it was that local councils allowed houses to be built where they were. How on earth are all those houses going to be replaced by a government that could barely build 2000 houses in six years?

Liam Dann writes in the NZ Herald:

The costs of the cyclone are sadly going to change the economic path of the nation.

The timing is cruel.

The post-pandemic economic recovery was in the balance even before these events.

Now it looks harder, more complex and the outcome more difficult to forecast.

Economists have only just begun to count the cost of the cyclone and have been rightly wary of making specific estimates.

The full scale of the disaster is still becoming apparent.

It probably suffices to say this is going to cost multiple billions. It looks increasingly like it will require the Government to make some big fiscal decisions about spending and borrowing.

The final bill may never be known.

The early estimates for the rebuild costs after the Christchurch earthquake were around $10 billion.

By 2013 that had risen to $40b. After that, we kind of stopped counting.

Conversely, initial back-of-the-envelope calculations for the economic impact of pandemic lockdowns and border closures were far too negative.

Every disaster is different and, even if they have similarities, the state the economy is in when they hit makes a big difference to their final impact.

The Christchurch earthquake rebuild provided economic stimulus at a time when we were still living in the shadow of the Global Financial Crisis.

The construction sector was in the doldrums and inflation was near record lows. The economy had enough spare capacity to respond.

That’s not the case now. Inflation is still running hot and, unfortunately, another shock to supply chains, especially fresh fruit and vegetables, will only make it worse.

The building and construction sector was just starting to show signs of cooling off, on the back of falling house prices.

It will now be back at full capacity, keeping costs elevated for longer.
NZ Herald

Grant Robertson may not be saying anything right now, but he will have ordered Treasury to put the budget he was going to deliver in a few weeks into the shredder.

The government has beggared the nation with their Covid Recovery Fund that was spent on an awful lot of dud projects, some of which will have been washed down the rivers of Hawke’s Bay and the East Coast.

The government has promised many big ticket items in coming years and that is all going to have to fall by the wayside as we start to look at replacing roading from Coromandel to the Hawke’s Bay, housing hundreds if not thousands of families who will need to be relocated from land that never should have had houses on it in the first place, replacing critical infrastructure to facilitate transport and communications and alleviating the immediate suffering of people displaced by the cyclone.

Things are going to have to be cancelled.

There can be no justifying a bike bridge across the Waitemata or a light rail link to Auckland Airport, when people can’t even drive from Napier to Hastings, or access parts of the Coromandel.

The Government should be looking closely at the near billion dollars Police are spending building their new business unit called Te Tari Pureke – Firearms Safety Authority. The gun register should be cancelled immediately, justified as nice-to-have spending that has to go to finance the recovery. It was never going to work anyway, so this allows Police to abandon the project without any shame. Just cancel it.

Who needs a Symphony Orchestra, a Ballet Company, National Radio, a Concert Programme and a plethora of other arts funding when people haven’t even got a house to live in. If the few hundred people who listen to Concert Programme really moan, then buy them a Spotify account.

There are many, many wasteful government-spending programmes that similarly should be axed. If anyone complains then pillory them as uncaring selfish cads who should be doing their bit to help the clean up and recovery.

One big ticket item that should be immediately cancelled are our payments under the Paris Accord for climate change. Sorry, you Green numpties, but that cash is needed at home to clean up the damage that your continued push for more forestry has caused with tonnes and tonnes of slash destroying the infrastructure.

We should also can all the subsidies and the push for electric cars. They have been of no use whatsoever during this crisis along with anything else electric. The awesome power and utility of fossil fuels is clear for anyone to see other than the blinkered Green wombles who were probably thankful emergency services hadn’t gone all green on them just when they were needed.

Cancel the oil and gas ban: reverse all those stupid policies. Utilise New Zealand’s natural resources to help fund the recovery and provide us with energy security at the same time. We are going to need those diesel powered trucks, diggers, 4WDs, graders, bulldozers and equipment for quite some time, as well as millions of tonnes of bitumen. The Road to Carbon Zero should be bulldozed as well.

There really is no other choice, but watch this Labour Government try to borrow and spend their way out of the pickle their profligate ways during Covid caused.

Time to make drastic economic changes, and make them now.

Cam Slater is a New Zealand-based blogger, best known for his role in Dirty Politics and publishing the Whale Oil Beef Hooked blog, which operated from 2005 until it closed in 2019. This article was first published HERE.


Ross said...

Great article.

I would love to read Luxon's response to your suggestions in the latter of your piece, especially the bit about cancelling our payment under the Paris accord.
I know what his mate Shaw would say !

Tinman said...

Missed. Just but still a miss.

Most of those "savings" are not worth the effort.

New Zealand should start by removing all personal assets of those who have been claiming to own and control New Zealand's water - if only to set an example to future claimees.

Then remove all assets of organisations those people have used to gain those assets.

These measures alone will free up a few billion to start the process rolling.

Then New Zealand should immediately learn from the Christchurch rebuild and ensure this time greeny and greedy pollies are not allowed to waste billions as they did in Christchurch on unnecessary bullshit.

All rebuild projects must be audited from the start with only those that will create value for ALL New Zealanders allowed to proceed.

I agree with most of the other measures listed but suspect new political leadership all around may need to be on the first to-do list.

Phil Blackwell

Robert Arthur said...

No worries. Robertson will just print money as he did for Covid. He even had many millions left over to squander on marae. After 2 billion was settled on the South Island finance company gamblers, maori upped their goals for settlements. With tens of billions now to be manufactured, moari will want even more. With all the co governance, co management, consultation now built in everwhere amaori will likely seize the chance to blackmail the remedy reconstruction.

hughvane said...

Something Mr Slater would do well to address is getting 'bums off seats and into work', namely cleaning up in the affected areas.

There are hundreds of unemployed - oops, work seekers - sitting around absorbing State assistance, and those people could actually work, doing something not only useful but essential, for their income.

Ray S said...

True stuff Cam.
However, you forgot 3 , 4, 5 waters (or whatever) and He Puapua.
There's multiple billions right there.
There are Treaty settlements in there to.

StevoC said...

Great article, unfortunately I'm with you on what this cabal of misfits will do in response, far too many resources and dollars will be wasted and those that are really in need will be the last to receive it.

Anonymous said...

and don't forget we still have mandated health care workers who would love to return to work!

Mudbayripper said...

Right on. The irony being a government, any government should have of slashed spending on all these projects years ago.
But that's Socialism for you..