Predicting the future is fraught with peril, so let’s throw caution to the wind and do just that. What will happen to our nation and economy the next three years?
Presently the International Monetary Fund forecasts NZ’s GDP growth will rank 180th out of 189 nations in 2024.
The new National-led coalition can only pay for the additional demands on healthcare and pensions coming from the ageing population unless it gains far greater tax revenues from rapidly accelerating economic growth.
Cuts to healthcare and pensions will not happen, especially with the influence of NZ First. The University of Waikato will get its new medical school.
Consequently, National must engineer a boom, and fast, to pay the bills.
More trade deals, like with India, won’t be done overnight. The Party will initially seek growth from tourism, immigration, and construction, the same three drivers of growth when Sir John Key was Prime Minister.
Promoting construction will take the form of re-zoning farmland on city fringes into suburbs and dropping the foreign buyer ban on residential properties.
It will not be enough. Immigration and tourism both went to zero during the pandemic. Construction is subject to property bubbles.
To promote more solid growth foundations, National and ACT will go gang busters, not just on gangs, but on cutting regulations. It’s a good thing to cut back all of the rules imposing costs on our society greater than the benefits. Labour has loved red tape, as much as lawyers have loved making money out of it.
Incoming PM Luxon will make use of his management credentials to cut waste in Wellington, which he will define as too many bureaucrats.
He will not define waste as corporate welfare and grants to tertiary students from wealthy families, which make up most of them.
Cleaning out the waste that came with the 15,000 additional bureaucrats hired under Labour will be endorsed by most of us who don’t live in Wellington. Labour enabled time-wasting and gave away power to legions of highly paid, working-from-home, public sector managers who flourished under its lax governance.
National must do so since it has no other room to move on spending.
The Māori Health Authority will be abolished, not because it is divisive, but because it will fail in terms of the objective of improving Māori health outcomes.
Instead, National will seek to empower Māori by decentralizing, not centralizing, authority. Dame Tariana Turia pioneered such a model, called Whānau Ora, when National was last in power, supported by the Māori Party. The model is one of public funding, yet private provision by iwi-based groups.
Charter schools will be re-instated, which are also based on the public funding of private operators. Other changes to education will come in the form of changing rules, like the curriculum.
The aim of these reforms will be to promote both equity and efficiency, not solely equity which has been Labour’s only focus. Meritocracy must be reinstated.
However, National will do little in terms of dismantling the monopoly powers of many large firms across a swathe of industries, from construction, to food, to banking, to domestic air travel, and more.
The reason is that it remains a pro-business, not a pro-market, political party.
David Seymour will do his best to offset this business-first focus of National. After all, ACT’s name and founding principles are based on getting a better deal for consumers and taxpayers, not big business.
As for Labour, David Parker will become even more influential. He will get his way with making wealth and capital taxes a central plank of Labour’s revised policies, a matter which has become a crusade for him over the years.
Labour will rebuild. The Party will argue that the only way for us to enjoy world-class health and education systems is to better fund them with such taxes.
In doing so, Labour will win back the voters who left it for the Greens as they touted themselves as the only ones standing for wealth redistribution.
If GDP growth does not start to quickly take off, then the revamped Labour Party will gain traction. Without such growth, National will run short of funding and make the Opposition’s soon-to-be-revised tax proposals look more attractive.
When all is said and done, let’s wish the incoming PM every success, since the country is at an inflection point. Sometimes even Disney movies have a deep meaning. Without Moana’s risky and fraught voyage to save her island, which no one else wished to take, its lifestyle and economy would have collapsed.
Our new government must also take risks to save our lifestyle, or NZ’s prosperity will quickly converge to a large number of African, Asian, and South American countries that were once far behind us. They’re steadily catching up.
The new coalition’s primary challenge is not to engineer faster growth, but a higher quality of growth than under the previous National government. In a new world, new thinking is required. The new leadership should not look back to those who led the innovation-lacking Key government for answers.
The new National-led coalition can only pay for the additional demands on healthcare and pensions coming from the ageing population unless it gains far greater tax revenues from rapidly accelerating economic growth.
Cuts to healthcare and pensions will not happen, especially with the influence of NZ First. The University of Waikato will get its new medical school.
Consequently, National must engineer a boom, and fast, to pay the bills.
More trade deals, like with India, won’t be done overnight. The Party will initially seek growth from tourism, immigration, and construction, the same three drivers of growth when Sir John Key was Prime Minister.
Promoting construction will take the form of re-zoning farmland on city fringes into suburbs and dropping the foreign buyer ban on residential properties.
It will not be enough. Immigration and tourism both went to zero during the pandemic. Construction is subject to property bubbles.
To promote more solid growth foundations, National and ACT will go gang busters, not just on gangs, but on cutting regulations. It’s a good thing to cut back all of the rules imposing costs on our society greater than the benefits. Labour has loved red tape, as much as lawyers have loved making money out of it.
Incoming PM Luxon will make use of his management credentials to cut waste in Wellington, which he will define as too many bureaucrats.
He will not define waste as corporate welfare and grants to tertiary students from wealthy families, which make up most of them.
Cleaning out the waste that came with the 15,000 additional bureaucrats hired under Labour will be endorsed by most of us who don’t live in Wellington. Labour enabled time-wasting and gave away power to legions of highly paid, working-from-home, public sector managers who flourished under its lax governance.
National must do so since it has no other room to move on spending.
The Māori Health Authority will be abolished, not because it is divisive, but because it will fail in terms of the objective of improving Māori health outcomes.
Instead, National will seek to empower Māori by decentralizing, not centralizing, authority. Dame Tariana Turia pioneered such a model, called Whānau Ora, when National was last in power, supported by the Māori Party. The model is one of public funding, yet private provision by iwi-based groups.
Charter schools will be re-instated, which are also based on the public funding of private operators. Other changes to education will come in the form of changing rules, like the curriculum.
The aim of these reforms will be to promote both equity and efficiency, not solely equity which has been Labour’s only focus. Meritocracy must be reinstated.
However, National will do little in terms of dismantling the monopoly powers of many large firms across a swathe of industries, from construction, to food, to banking, to domestic air travel, and more.
The reason is that it remains a pro-business, not a pro-market, political party.
David Seymour will do his best to offset this business-first focus of National. After all, ACT’s name and founding principles are based on getting a better deal for consumers and taxpayers, not big business.
As for Labour, David Parker will become even more influential. He will get his way with making wealth and capital taxes a central plank of Labour’s revised policies, a matter which has become a crusade for him over the years.
Labour will rebuild. The Party will argue that the only way for us to enjoy world-class health and education systems is to better fund them with such taxes.
In doing so, Labour will win back the voters who left it for the Greens as they touted themselves as the only ones standing for wealth redistribution.
If GDP growth does not start to quickly take off, then the revamped Labour Party will gain traction. Without such growth, National will run short of funding and make the Opposition’s soon-to-be-revised tax proposals look more attractive.
When all is said and done, let’s wish the incoming PM every success, since the country is at an inflection point. Sometimes even Disney movies have a deep meaning. Without Moana’s risky and fraught voyage to save her island, which no one else wished to take, its lifestyle and economy would have collapsed.
Our new government must also take risks to save our lifestyle, or NZ’s prosperity will quickly converge to a large number of African, Asian, and South American countries that were once far behind us. They’re steadily catching up.
The new coalition’s primary challenge is not to engineer faster growth, but a higher quality of growth than under the previous National government. In a new world, new thinking is required. The new leadership should not look back to those who led the innovation-lacking Key government for answers.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
3 comments:
One Wellington public servants full cost is around $300k/yr 12,000 out and you have around $4B.
You loose no votes because they vote Green/Labor. Now give a $4B tax cut and you win a lot of votes around NZ plus the boosted activity results in probably 70% of that $4B to come in as extra revenue. Thus allowing a lift in services in the key regions of need in NZ for growth.
although National will not want it the Gentailer's need to be split it will result in a fall in electricity prices of probably more than 30% that will allow growth of productivity and commercial activity at the same time as reducing inflation.
Can we start reading and writing and speaking English again?
And will I still be discriminated against because I don’t have a single gene of Maori?
And will it ever be acknowledged that the much maligned baby boomers dragged NZ out of depression and war and into a much more exciting and forward thinking world? I admire the energy, enthusiasm and vision.
If the current woke and current generations to ‘ok boomer’ then they have absolutely no moral right whatsoever to comment on Gaza or Ukraine.
A serious discussion about the cost of the climate change fiasco will serve New Zealand well. Firstly methane has to be realised as a trivial aspect and is basically dead as a dangerous gas. IPCC have completed their analysis eliminatingmethane from any global warming however climate change fanatics and the MSM will not allow discussion and public understanding .
Secondly the Paris Accord stated that land used for production of food must not be victimised .
Thirdly aeroplanes and ships on the international seas and in the international skies are NOT included in any climate change modelling because they can not be attributed to any nation.
A serious public discussion would save our nation billions of dollars from false accounting claims and climate statements that are anything other than truthful.
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