With the 2025 Budget now only three weeks away, she’s gone public with what the modern day National Party Minister of Finance should be addressing, but she’s not seeing much that encourages her to think New Zealand is on a path to a sustainable economic recovery.
Ruth Richardson has outlined her thoughts in the Taxpayers Union “Taxpayer Talk” Podcast. You can listen to the episode on the website, or on Apple Podcasts, Spotify, iHeart Radio and other good podcast apps.
I’m probably biased because I hosted the podcast but I reckon it’s fascinating listening. The key takeaway is that the country needs some major economic surgery. To give you a taste of what Ruth has to say here’s a few quotes:
“Core Crown spending is heading towards 35 percent of GDP when it should be below 30 and our deficits are just wracking up a horrendous level of debt for the future.”
“Nicolas Willis has to take her brave pills and make the right reform choices. She has to set about right sizing the state. She has to make some pretty bold decisions.
“And they start with addressing the major driver of the overspend which is the pay-as-you-go unfunded National Superannuation liability. That monsters any other public spending decision that she should take.”
In the year to June 2024, the cost of superannuation to everyone aged 65 and over, no matter their financial circumstances, was $21.574 billion. That represented over 15 percent of core Crown spending last year.
So, I ask her, do we asset test or income test it or surcharge it to keep the cost of it down? Remember your surcharge from thirty years ago was not exactly popular was it?
“We have to address the underlying issue of when one becomes eligible for superannuation. For a start we have to do what virtually every other country has done and that is to acknowledge that we are fit in our old age and we do not need to qualify for a universal pension at 65.
“I would nudge it up to 68. It might only be three years but it would have an enormous fiscal impact.”
She’s worried that we as a nation are behaving as if there are no threats to our economic security.
“Unless we take the decisions now to stave off these risks we will end up with Generation Screwed, that is my kids and your kids and their kids.
“If Christopher Luxon and Nicolas Willis want to achieve the growth economy they talk so much about they need to undertake the economic reforms consistent with us being able to achieve that objective and that means a very substantial course correction on public spending.
“We are behaving as if a big state will lead to a big economy and the answer is it will not.”
She insists that Luxon has to get out and explain to the country that it is time to say enough.
“If we’re going to be a growth oriented economy we have to be able to back the engines of growth and you don’t do that through high tax, high public spending, high regulation and high debt.”
The largest industry in this country, and indeed in most western hemisphere nations, is healthcare. The Crown budget last year was $29.6 billion and with nearly one and half million of us having private health insurance paying on average around $2000 annually in premiums, there’s upwards of another $3 billion in that sector of healthcare. The reality is there will always be demand for the government to spend more on health, but is there a better way ? A real user-pays, insurance based model for instance?
“We have to model ourselves on Singapore. Their system has three things going for it. It’s efficient, it’s accessible and it has a cost sharing approach. There is a dual public-private service. There is a medi-save system and a medi-shield system. There is a compulsory savings scheme for healthcare expenses and a National Insurance plan that covers major medical costs. I think we’re going to have to move in that direction.
“There are a number of health entrepreneurs, and I think of Cecelia Robinson from Tend, who are already demonstrating high tech and very responsive attitudes towards primary healthcare. People like her could make a huge difference in the way we use health expenditure.
“There’s enough money in health. We just don’t use it efficiently.”
Ruth Richardson’s first job as a law graduate in the early 1970s was at the Justice Department. She was part of a small, and young, team which drafted the Accident Compensation Act. It was ground-breaking legislation which took away the ability for New Zealanders hurt in accidents to sue for damages under Common Law and that a statutory framework would replace it. It was a step-change in the way New Zealand did business. She believes now is the time to make similar decisions about health.
“An Accident Compensation - like revolution is required on the health front, and the Singapore example is a very good place to start.”
“We were able to sell a revolution in the provision of accident coverage because the previous system had lost all credibility. That was in 1972. I would say now the health system has lost credibility too. It is not a system held in high regard.”
We spoke the day of Rory McIlroy completing his career Grand Slam of major golf championships which we’d both just watched. Although he’s from British ruled Ulster, McIlroy is still very much Irish and Ruth Richardson sees his success as a reflection of the economic success being enjoyed by the island of Ireland.
“Ireland won the economic race by doing three things. It kept its corporate tax rate low (12.5 percent) and any investor in the country knew an Irish government was not for turning on that matter, second they were very open to foreign investment and foreign business, so Winston needs to change his ideas in that respect, and third they have a wonderful education system.
“I think a very strong signal that we’re serious about growth is to at least halve our corporate tax rate, or to give the Minister of Finance the benefit of the doubt, make it 15 percent! ”
Company earnings are currently taxed at 28 cents in the dollar.
There’s plenty more with this came from. You want to hear Ruth on the size of Cabinet and the number of government departments and agencies!
It would be a very different land if Ruth Richardson was Minister of Finance again.
She was regarded as just too radical for the middle aged white male leadership of the National Party during her tenure in the early 1990s and would be unlikely to get a lot of support in a modern day National Party either.
But her basic thesis cannot be dismissed. With our debt and spending levels as high as they are, our economic future cannot be assured.
If you’d like to hear more of Ruth Richardson’s financial medicine it’s at taxpayers.org.nz or on Apple Podcasts, Spotify, iHeart Radio and other good podcast apps.
It’s 50 very thought provoking minutes.
Peter Williams was a writer and broadcaster for half a century. Now watching from the sidelines. Peter blogs regularly on Peter’s Substack - where this article was sourced.
I’m probably biased because I hosted the podcast but I reckon it’s fascinating listening. The key takeaway is that the country needs some major economic surgery. To give you a taste of what Ruth has to say here’s a few quotes:
“Core Crown spending is heading towards 35 percent of GDP when it should be below 30 and our deficits are just wracking up a horrendous level of debt for the future.”
“Nicolas Willis has to take her brave pills and make the right reform choices. She has to set about right sizing the state. She has to make some pretty bold decisions.
“And they start with addressing the major driver of the overspend which is the pay-as-you-go unfunded National Superannuation liability. That monsters any other public spending decision that she should take.”
In the year to June 2024, the cost of superannuation to everyone aged 65 and over, no matter their financial circumstances, was $21.574 billion. That represented over 15 percent of core Crown spending last year.
So, I ask her, do we asset test or income test it or surcharge it to keep the cost of it down? Remember your surcharge from thirty years ago was not exactly popular was it?
“We have to address the underlying issue of when one becomes eligible for superannuation. For a start we have to do what virtually every other country has done and that is to acknowledge that we are fit in our old age and we do not need to qualify for a universal pension at 65.
“I would nudge it up to 68. It might only be three years but it would have an enormous fiscal impact.”
She’s worried that we as a nation are behaving as if there are no threats to our economic security.
“Unless we take the decisions now to stave off these risks we will end up with Generation Screwed, that is my kids and your kids and their kids.
“If Christopher Luxon and Nicolas Willis want to achieve the growth economy they talk so much about they need to undertake the economic reforms consistent with us being able to achieve that objective and that means a very substantial course correction on public spending.
“We are behaving as if a big state will lead to a big economy and the answer is it will not.”
She insists that Luxon has to get out and explain to the country that it is time to say enough.
“If we’re going to be a growth oriented economy we have to be able to back the engines of growth and you don’t do that through high tax, high public spending, high regulation and high debt.”
The largest industry in this country, and indeed in most western hemisphere nations, is healthcare. The Crown budget last year was $29.6 billion and with nearly one and half million of us having private health insurance paying on average around $2000 annually in premiums, there’s upwards of another $3 billion in that sector of healthcare. The reality is there will always be demand for the government to spend more on health, but is there a better way ? A real user-pays, insurance based model for instance?
“We have to model ourselves on Singapore. Their system has three things going for it. It’s efficient, it’s accessible and it has a cost sharing approach. There is a dual public-private service. There is a medi-save system and a medi-shield system. There is a compulsory savings scheme for healthcare expenses and a National Insurance plan that covers major medical costs. I think we’re going to have to move in that direction.
“There are a number of health entrepreneurs, and I think of Cecelia Robinson from Tend, who are already demonstrating high tech and very responsive attitudes towards primary healthcare. People like her could make a huge difference in the way we use health expenditure.
“There’s enough money in health. We just don’t use it efficiently.”
Ruth Richardson’s first job as a law graduate in the early 1970s was at the Justice Department. She was part of a small, and young, team which drafted the Accident Compensation Act. It was ground-breaking legislation which took away the ability for New Zealanders hurt in accidents to sue for damages under Common Law and that a statutory framework would replace it. It was a step-change in the way New Zealand did business. She believes now is the time to make similar decisions about health.
“An Accident Compensation - like revolution is required on the health front, and the Singapore example is a very good place to start.”
“We were able to sell a revolution in the provision of accident coverage because the previous system had lost all credibility. That was in 1972. I would say now the health system has lost credibility too. It is not a system held in high regard.”
We spoke the day of Rory McIlroy completing his career Grand Slam of major golf championships which we’d both just watched. Although he’s from British ruled Ulster, McIlroy is still very much Irish and Ruth Richardson sees his success as a reflection of the economic success being enjoyed by the island of Ireland.
“Ireland won the economic race by doing three things. It kept its corporate tax rate low (12.5 percent) and any investor in the country knew an Irish government was not for turning on that matter, second they were very open to foreign investment and foreign business, so Winston needs to change his ideas in that respect, and third they have a wonderful education system.
“I think a very strong signal that we’re serious about growth is to at least halve our corporate tax rate, or to give the Minister of Finance the benefit of the doubt, make it 15 percent! ”
Company earnings are currently taxed at 28 cents in the dollar.
There’s plenty more with this came from. You want to hear Ruth on the size of Cabinet and the number of government departments and agencies!
It would be a very different land if Ruth Richardson was Minister of Finance again.
She was regarded as just too radical for the middle aged white male leadership of the National Party during her tenure in the early 1990s and would be unlikely to get a lot of support in a modern day National Party either.
But her basic thesis cannot be dismissed. With our debt and spending levels as high as they are, our economic future cannot be assured.
If you’d like to hear more of Ruth Richardson’s financial medicine it’s at taxpayers.org.nz or on Apple Podcasts, Spotify, iHeart Radio and other good podcast apps.
It’s 50 very thought provoking minutes.
Peter Williams was a writer and broadcaster for half a century. Now watching from the sidelines. Peter blogs regularly on Peter’s Substack - where this article was sourced.
9 comments:
The sacking of Ruth Richardson marks the point at which National stopped being centre right and started morphing into Labour Lite.
The political skill is to sell this approach and National hasn't had a Leader with the qualities to do this. I doubt National can recover the lost ground. The empty space is currently occupied by ACT. Let's hope Seymour can push forward.
NZ's long term economic perspective needs urgent attention - but is not a voter-winner. Form shallow politicians, easier to find someone else to blame.
The Irish scenario is mainly because they offer the US a bridge into Europe. NZ doesn't really have a similar scenario to work with.
ACC is a crap system though. Denying someone the ability to sue a huge company for negligence, is just one of the problems with it.
Not a word about the 400,000 able bodied people on benefits an average of 15+ years; mothers with multiple children, supported by the state, whose fathers are allowed to remain anonymous; hundreds of millions of dollars funnelled from the Crown to various Maori organisations via direct payment, co-governance, or ‘consultation’.
Address some of these issues before we discuss superannuation.
Some reasonable ideas, but anyone that thinks we can be compared to Ireland shows they are dreaming. Pretending that having 500 million people on your doorstep isn't a major difference is the behavior of a snake oil salesman, not someone you would want running your economy.
Anon@5.04 I concur and, while pocket change in comparison, you can add school lunches to that list. There is just so much wastage and grift in NZ, that tightening the belt doesn't need to be rocket science. And why do we really need a Minister, and therefore ministries of: the South Island; Auckland; Women; Pacific People; Ethnic Communities; Seniors; Youth Development; Maori Development; Disabled People; Veterans; Social Investment; Climate Change; Rail; Whānau Ora Commissioning Agency, Office for Māori Crown Relations etc, etc.? Surely some of these can be devolved or combined with others, otherwise why not a Ministry of Pedestrians; Religious Beliefs; Dimensionally Challenged People; Pakeha Development; Taxpayer Crown Relations etc etc.? There are lots of good or justifiable causes, but 'budgeting' is a matter of ultimately determining 'bang for buck', with a 'leaning' to and recognition of those that are paying for it.
I'm always amused how ex politicians, with their very generous , taxpayer funded super, like the idea of increasing the entitlement age of super. They are probably right, but it does seem hypocritical. Considering it was raised by five years, albeit over an extended period, in the 1990's? there seems to be a lot of opposition now to raising it by two years. Why
Because people work hard physically. Something that is beyond the experience of incompetents like Richardson. Whose financial style has more in common with a workhouse supervisor from a Dickens novel than a responsible member of government. Same goes for your Peter . You have been well remunerated for an easy life. Nudge a few years indeed! Ms Richardson is one of the members of the board of Synlait another disastrous Kiwi Company!!! We have the Cullen Fund despite the best efforts of the financially illiterate idiots of the National Party it is still a functioning available fund. Rob Muldoon destroyed a brilliant superannuation fund set up by Labour out of pure spite. Simply because it wasn't his idea . The same model is the basis of Singapore's wealth.Tax the whinging rich and leave the bloody workers alone you miserable innumerate born to rule half wits.
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