Political spin is one thing. Facts another. My reading of NZ Treasury's Half Year Economics & Fiscal Update 2024 is that little has changed since the government changed. The latest figures show that the fiscal deficit (excess of government spending over taxes) equals -3.1% this year under National, ACT & NZ First. Given GDP is about $400 billion, that's $12 billion added to NZ's national debt. Next year, 2025, its forecast to be -4.1% and the following year, -3.1%. The average of those three numbers, which comprise the Coalition's first term in office, is -3.4%. How does it compare to when former PM Jacinda Ardern & Finance Minister Grant Robertson governed?
Those six years went from 2018 until 2023. They ran a surplus in 2018 of 1.9%, surplus in 2019 of 2.4%, and once the pandemic hit, deficits of -7.3% in 2020, -1.3% in 2021, -2.7% in 2022 and -2.4% in 2023. The average is -1.6%. So National, ACT & NZ First are on course to more than double the size of fiscal deficits that were run during the Ardern-Robertson years. What's more, the year when the deficit really blew out, being 2020, was due entirely to the wage subsidy scheme expansion. National lobbied hard, together with Business NZ and NZ Initiative, where Finance Minister Willis was a Director, to make it of unlimited size, so the largest firms in NZ would be fully covered. Labour relented, probably concerned in election year 2020 that it would help the Nats take the business vote. Before the wage subsidy cap was lifted, the maximum any one firm could take was $250,000. After the cap came off, firms like Fletcher Building scooped over $50 million each.
What's the moral of the story? That National and Labour are essentially the same party, just run by different actors, sales folks and marketing directors who are pretending their two products are different, because they use different branding & colors. They're like Coke and Pepsi Cola. We have a borrow and spend Finance Minister pretending she's "prudent". But she ain't cutting corporate welfare; she ain't cutting movie subsidies; she ain't replacing welfare dependence on the State with helping Kiwis build up their own personal savings to become more independent, like the Aussies & Singaporeans have done; she ain't cutting the billions spent each year on university grants & subsidies paid to children from the wealthiest families in NZ. No, she's just trimming some public servants in Wellington and writing A-grade English speeches about it proves she is "delivering". Willis is good at doing that - she did English at University and was in the Debating Clubs. But we're not looking at profound changes. Its the same old. More Bill English; more John Key (her former bosses).
Sources:
https://www.treasury.govt.nz/sites/default/files/2024-12/hyefu24.pdf
What's the moral of the story? That National and Labour are essentially the same party, just run by different actors, sales folks and marketing directors who are pretending their two products are different, because they use different branding & colors. They're like Coke and Pepsi Cola. We have a borrow and spend Finance Minister pretending she's "prudent". But she ain't cutting corporate welfare; she ain't cutting movie subsidies; she ain't replacing welfare dependence on the State with helping Kiwis build up their own personal savings to become more independent, like the Aussies & Singaporeans have done; she ain't cutting the billions spent each year on university grants & subsidies paid to children from the wealthiest families in NZ. No, she's just trimming some public servants in Wellington and writing A-grade English speeches about it proves she is "delivering". Willis is good at doing that - she did English at University and was in the Debating Clubs. But we're not looking at profound changes. Its the same old. More Bill English; more John Key (her former bosses).
Sources:
https://www.treasury.govt.nz/sites/default/files/2024-12/hyefu24.pdf
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.
4 comments:
This is a very dangerous path.
Any Finance Minister who does not have economic/financial credentials and wide experience will be a liability - or a pawn for others behind the scenes.
We need to follow the lead of Argentina. Afuera !!!!
At least National used to be able to pretend they were better managers, not this time.
It is as if they didn't have a plan on what to do should they win the election. Now it is all smoke and mirrors as they run around doing nothing much. They are looking down the barrel of being a one term wonder.
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