Thursday, December 28, 2023

Robert MacCulloch: How the Grinches Stole Christmas - what will happen the next three years?

Grant Robertson, our worst Finance Minister ever, and Chris Hipkins, the former Labour Leader who's desperate to cling onto at least some power, have left NZ with a broken economy. We are experiencing plummeting living standards, as measured by GDP per capita, which the NZ Treasury confirms has been going on for some time and is set to continue. So what will happen the next three years?

In short, Hipkins & Robertson want the economy to keep going backwards. They're placing bets on the new Coalition's (and country's) failure. They have a plan so depressing, at least we should bring it out into the open so everyone knows about it. 

With a shrinking economy, National, NZ First & ACT, given their commitments to balance the budget & cut taxes, don't have the funds to make the required investments in our infrastructure, health-care & schools, given current cost structures. Further, with record immigration that is set to continue, huge additional pressures will be brought to bear on each of them, which is set to cause bad headlines & strife, exacerbated by a biased media. So the new Coalition is betting on economic growth to pick up quickly and strongly, which is far from assured.

What is Labour's plan? To argue National is running down our nation's infrastructure, health & education systems and that the only way out is to make the rich pay. Labour will propose comprehensive capital & wealth taxes at some stage during the next three years. David Parker has drawn up the plans - and has worked out how to persuade the public they are much needed. He made that case to my Law & Economics class earlier in the year. Unless the new Coalition can fire up the economy fast, the nation is set to fail courtesy of Hipkins and Robertson, caught in a trap that poor countries get stuck in, of poor economic outcomes, blaming the rich for all of their problems, and higher taxes to try to solve the problems which only make things worse. New Zealand is at a cross-roads.

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.


Anonymous said...

Labour are truely awful, and heading further into the deep doldrums of socialism. I am hoping the next 3 years creates a decent financial crisis that the new Govt doesn’t waste. NZ can not wander down a centralist path that the Nats and Winston seem intent on. We need a big dose of free market policies and a proper red tape bonfire. Anything less will mean continued decline.

Anonymous said...

Why should you assume Immigration is set to continue? In my view it should be reduced to an absolute minimum. We cannot house the people we have - let alone cope with more. We are not bringing in much expertise, but many at the lower skill level. We have far too many of our own people languishing on the public purse, neither contributing nor enhancing their own lives. All of us are going to have to make determined effort to counteract the follies of the previous administration.