This Blog is about giving some gentle advice to National Finance Minister Willis, and her Labour opposite number, Barbara Edmonds, on the theme that people in glass houses shouldn't throw stones.
Willis did media this week, saying how the weak state of the NZ economy was down to the Labour Party, which "threw caution to the wind the past five years", being from 2018 to 2023, by going on a reckless, an outrageous, a lunatic, "$100 billion borrowing" spree that added that same amount, $100 billion, to public debt. Labour did do an awful job on the economy. Edmonds should admit, not deny it. As for its over-the-top borrowing that left NZ with a gigantic debt pile to which Willis rightfully draws attention, I'd like to humbly draw the Finance Minister's attention to the latest Treasury numbers below, which record her as doing .. the same .. actually, adding more than $100 billion.
The Treasury Table below shows the details. The row important to us is the government's cash inflows & outflows. Its called, "Net Cash Flows from Operating & Investing Activities". Any short-fall has to borrowed by issuing public debt. This 2024 year, the government has a cash deficit of $31 billion; next 2025 year its $26 billion. From 2026 to 2028, the cash deficit is projected to be $28 billion, $22 billion & then $11 billion. The total for the next 5 years, 2024 included, is $118 billion. Gosh, seems National is "throwing caution to the wind" and going on a reckless "$100 billion" borrowing spree itself. Actually, you only need include 4 years, 2024-2027, to take it over the $100 billion mark. Should you want to calculate the exact quantity of government bonds that will be issued to cover the cash deficit, its recorded in the row called "Cash Flows From Financing Activities". Total government bonds issued from 2024 until 2028 is expected to equal $115 billion ($28b + $25b + $28b + $23b +$11b). That will lift our government debt by that same amount.
What's the moral of the story and advice to Willis and Edmonds? That she, and her Labour counterpart, are taking us, and NZ, for a ride, putting their own careers & political parties above what's good for the nation. Neither is borrowing more or less than the other - it would be nice of them to tell millions of folks reading & listening to the news that truth.
The Treasury Table below shows the details. The row important to us is the government's cash inflows & outflows. Its called, "Net Cash Flows from Operating & Investing Activities". Any short-fall has to borrowed by issuing public debt. This 2024 year, the government has a cash deficit of $31 billion; next 2025 year its $26 billion. From 2026 to 2028, the cash deficit is projected to be $28 billion, $22 billion & then $11 billion. The total for the next 5 years, 2024 included, is $118 billion. Gosh, seems National is "throwing caution to the wind" and going on a reckless "$100 billion" borrowing spree itself. Actually, you only need include 4 years, 2024-2027, to take it over the $100 billion mark. Should you want to calculate the exact quantity of government bonds that will be issued to cover the cash deficit, its recorded in the row called "Cash Flows From Financing Activities". Total government bonds issued from 2024 until 2028 is expected to equal $115 billion ($28b + $25b + $28b + $23b +$11b). That will lift our government debt by that same amount.
What's the moral of the story and advice to Willis and Edmonds? That she, and her Labour counterpart, are taking us, and NZ, for a ride, putting their own careers & political parties above what's good for the nation. Neither is borrowing more or less than the other - it would be nice of them to tell millions of folks reading & listening to the news that truth.
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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.
2 comments:
Some in the media are screaming about austerity which doesn't make sense given the obvious level of expenditure happening.
Central bank printer running hot, as they spew out their product, i.e fiat currency. So to will inflation run hot, but not our dollar, as it craters through the floor.
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