My advice was, “get the qualification”.
Last week, I wondered if I was right.
Nicola Willis gave a speech, “Budget 2025: The Growth Budget”.
There was almost nothing about growth. The speech aimed to set out the economic realities. The speech demonstrated that the finance minister is in a fantasyland.
The minister said:
“Government debt leapt up by almost $120 billion between 2019 and 2024…That amounts to $22,000 more in debt for every New Zealander.”
“New Zealand’s net core Crown debt, which once hovered between five and 25 per cent of GDP, rose to around 42 per cent last year.”
“The interest bill on government debt has soared from $3.6 billion in 2014 to $8.9 billion last year. That sum is more than annual core Crown expenses for the Police, Corrections, the Ministry of Justice, Customs and the Defence Force combined”.
“That level of borrowing obviously can’t go on forever.”
Nicola Willis’ proposed solution?
“Our government’s strategy is to reduce the deficit over time, through a gradual programme of consolidation and careful spending choices” to achieve “a small surplus in 2029”.
We have seen this movie before.
The Labour government in 2022 projected a surplus by 2024/25.
Blaming cyclone Gabrielle, this was revised to 2025/26.
In the election campaign National projected a surplus by 2026/27.
In last year’s budget it was revised to 2027/28
Now the surplus is promised in 2029.
The minister is continuing with all of Labour’s agencies. The promised billions in savings must be one off.
The surpluses are never achieved because bad things happen.
Covid, cyclones and now Trump.
Trump has caused the treasury to lower its forecast for growth this and next year.
There was almost nothing about growth. The speech aimed to set out the economic realities. The speech demonstrated that the finance minister is in a fantasyland.
The minister said:
“Government debt leapt up by almost $120 billion between 2019 and 2024…That amounts to $22,000 more in debt for every New Zealander.”
“New Zealand’s net core Crown debt, which once hovered between five and 25 per cent of GDP, rose to around 42 per cent last year.”
“The interest bill on government debt has soared from $3.6 billion in 2014 to $8.9 billion last year. That sum is more than annual core Crown expenses for the Police, Corrections, the Ministry of Justice, Customs and the Defence Force combined”.
“That level of borrowing obviously can’t go on forever.”
Nicola Willis’ proposed solution?
“Our government’s strategy is to reduce the deficit over time, through a gradual programme of consolidation and careful spending choices” to achieve “a small surplus in 2029”.
We have seen this movie before.
The Labour government in 2022 projected a surplus by 2024/25.
Blaming cyclone Gabrielle, this was revised to 2025/26.
In the election campaign National projected a surplus by 2026/27.
In last year’s budget it was revised to 2027/28
Now the surplus is promised in 2029.
The minister is continuing with all of Labour’s agencies. The promised billions in savings must be one off.
The surpluses are never achieved because bad things happen.
Covid, cyclones and now Trump.
Trump has caused the treasury to lower its forecast for growth this and next year.
It is the facts that were omitted from the speech that are of the greatest concern.
Spending, the deficit and borrowing have all increased. It is less than what Labour was planning but it is a significant increase.
The government is too large.
There is economic research, some of it done in New Zealand, that the size of government affects economic growth.
Historically National has pledged to keep government spending at less than 30% of GDP. Spending is over 10% higher at 33.9%.
The Treasury is issuing dire warnings.
People who live next to a railway station say they do not hear the trains. The Treasury is next to the Beehive. Perhaps that is why politicians do not hear the Treasury alarms.
The Treasury warns that demographic change will upend the government’s accounts.
Nicola Willis only projects to 2029 because 2030 is the tipping point after which demographics will cause deficit blowouts.
By 2030, the number of people aged eighty will rise by 40%, while those aged ninety will double. Health stories dominate the TV news because our older population requires more hospital care.
As the pre-budget speech omits addressing the most serious issues the budget will also.
We need comprehensive super and health reform. Savings based super and health as they have in Singapore.
It is easier to buy helicopters than undertake reform.
The reforms should have started thirty years ago but that is no reason not to start now.
The Treasury advocates lifting the age of super. Some people are worn out by 65. I know a fireman and a mechanic whose backs are so bad they can no longer work.
A surcharge on super is the best immediate solution. Long term, it is making Kiwi Saver compulsory.
Health system accounts would encourage more personal responsibility.
The reaction of the other parties revealed the Opposition are also in a fantasyland. No acknowledgement of the coming crisis.
Chis Hipkins blamed last year’s tax cuts. The cost-of-living crisis and recession that Labour created would have been worse without tax relief.
Labour’s tax on landlords drove up rents. Today it’s a renters’ market.
Given the fall in the share market, this year a capital gains tax would raise no revenue.
When James Shaw retired the Greens gave up any pretense of economic credibility.
The Greens proposed work schemes for 41,000. Why stop at 41,000? There are over 200,000 on the Jobseeker benefit.
If make-work schemes made countries prosperous then the communists would have won the cold war.
Te Pati Maori’s proposal was that Maori should get super at age 55. Should David Seymour, because he has a Maori ancestor, get super earlier?
David Seymour did make last week’s only good proposal to reduce ministerial portfolios from 82 to 40 and ministers from 28 to 20.
I am left wondering if I should tell my nephew to take the job in Australia.
Spending, the deficit and borrowing have all increased. It is less than what Labour was planning but it is a significant increase.
The government is too large.
There is economic research, some of it done in New Zealand, that the size of government affects economic growth.
Historically National has pledged to keep government spending at less than 30% of GDP. Spending is over 10% higher at 33.9%.
The Treasury is issuing dire warnings.
People who live next to a railway station say they do not hear the trains. The Treasury is next to the Beehive. Perhaps that is why politicians do not hear the Treasury alarms.
The Treasury warns that demographic change will upend the government’s accounts.
Nicola Willis only projects to 2029 because 2030 is the tipping point after which demographics will cause deficit blowouts.
By 2030, the number of people aged eighty will rise by 40%, while those aged ninety will double. Health stories dominate the TV news because our older population requires more hospital care.
As the pre-budget speech omits addressing the most serious issues the budget will also.
We need comprehensive super and health reform. Savings based super and health as they have in Singapore.
It is easier to buy helicopters than undertake reform.
The reforms should have started thirty years ago but that is no reason not to start now.
The Treasury advocates lifting the age of super. Some people are worn out by 65. I know a fireman and a mechanic whose backs are so bad they can no longer work.
A surcharge on super is the best immediate solution. Long term, it is making Kiwi Saver compulsory.
Health system accounts would encourage more personal responsibility.
The reaction of the other parties revealed the Opposition are also in a fantasyland. No acknowledgement of the coming crisis.
Chis Hipkins blamed last year’s tax cuts. The cost-of-living crisis and recession that Labour created would have been worse without tax relief.
Labour’s tax on landlords drove up rents. Today it’s a renters’ market.
Given the fall in the share market, this year a capital gains tax would raise no revenue.
When James Shaw retired the Greens gave up any pretense of economic credibility.
The Greens proposed work schemes for 41,000. Why stop at 41,000? There are over 200,000 on the Jobseeker benefit.
If make-work schemes made countries prosperous then the communists would have won the cold war.
Te Pati Maori’s proposal was that Maori should get super at age 55. Should David Seymour, because he has a Maori ancestor, get super earlier?
David Seymour did make last week’s only good proposal to reduce ministerial portfolios from 82 to 40 and ministers from 28 to 20.
I am left wondering if I should tell my nephew to take the job in Australia.
The Honourable Richard Prebble CBE is a former member of the New Zealand Parliament. Initially a member of the Labour Party, he joined the newly formed ACT New Zealand party under Roger Douglas in 1996, becoming its leader from 1996 to 2004. This article was sourced HERE
11 comments:
It was the reforms made years ago that started the rot.
Don't blame the boomers.
personally never hesitated to work in Aussie back in the 1970s. My off spring have followed suit. Always been a no brainer for more than 50 years in our family. Nowadays really it's the decision to have double citizenship that is the real question . There in lie many tax complications. Kiwis will continue to vote with their feet as they have done for generations. Duncan Garner's latest offering regarding benefits without being in training coupled with breeding and not having to name the father /mother in order to receive benefits is worth reading. NZ has been governed by idiots all my life.
It might be worth reconsidering productivity as a measure of who is actually a taxpayer, vs who is paid by taxes.
For example, I live in an area with a high number of retirees.
All retirees are paid with my tax dollars.
Almost all the working age mums and dads I know are paid with my tax dollars. (Teachers/police/nurses/public servants).
Not one of these people actually produce anything of value for our economy. (All except the public servants are essential and do anything that contributes to our community.)
As a percentage of local population about 1 in 5 working age people that I encounter work in the private sector - the sector that generates income for this country from a fair exchange of goods and services.
But 1 in 5 people cannot sustain 4 more people who produce nothing plus the juggernaut of retirees and their healthcare needs.
I suggest our elusive productivity and return to wealth in this country lies not in the expectation that “the government” will do something….but that the government will back the hell away from doing stuff and drastically shrink in size, scope and looking busy while achieving absolutely nothing!
Why not create a new rule for our government - if you cannot prove and explain in plain language what you do that contributes to the community whose taxes pay your wages then there is no job there to do….go and find a job in the private sector and earn a living!
I have nephews too and your advice was terrible.
The world can be your oyster and if by limiting oneself to NZ you think you are being patriotic think again.
We are a developed but now floundering nation walking a tightrope more tenuous than we are led to believe.
Earn 50 percent more without the qualification elsewhere.
My advice would have been "pack your bags for the next flight out".
Yes, read what Robert MacCulloch has to say on the issue.
Am I allowed to wonder - " if our current state of affairs can be traced back to the election of David Lange - and his Min. of Finance - Roger Douglas"?
I have had my " data updated " on who owns business in NZ and from that " data ", I see we work for many overseas owners.
If that is the case, why do we need 120 MP's, so many Ministries, which have large cash input & output (mainly wages etc) - surely we could reduce this cost, and the saving ' just might ' assist with pensions going forward.
Also my pet parrot has just told me, that the Author of this article was once a Cabinet Minister in the Lange Govt/Cabinet and his ' famous end of term ' valedictory to NZ was a Book - " I Have Been Thinking ", I just might re-read.
I have Family in Australia, and there is no way they would return to NZ, not now, never.
As always, Mr Prebble is right on point. The only thing wrong with everything he has said is he is preaching to the already converted bringing facts, common sense and logic to a discussion with politicians. That's always a waste of time an effort.
Apropos the above reference to Prof MacCulloch, if you haven't seen his latest - it includes: "My advice to smart, hard-working young students finishing school in NZ in 2025 is, "leave the country and find a place where your talents will be rewarded". That country is no longer New Zealand. Alan Turing & Joan Clarke would've never been recruited and never put in charge of anything here."
And his advice was framed having no regard to the ethnostate we are fast becoming, which is another good reason for contemplating departure..
Living proof that some politicians are clowns living in a fantasy are swarbrick, Doyle and waititi. None make any sense
I find myself nodding along with most of what Prebble says but I take issue with his rejection of a capital gains tax on the grounds that it won't raise a lot of money. Sure the stock market is down and property prices are flat. But that's the perfect time to implement a CGT because the only way forward is up. In any case, a CGT can only apply to assets acquired after its introduction for practical logistical reasons ie there aren't enough valuers in the country to put a baseline value on everything on day one, so the revenue raised was always going to grow off a zero base. It's called Grandfathering, and it worked well for the Australians. And now is the time for us to lock those future gains into our tax system.
And if you want to hear a further view on this with sound reasoning, have a listen to Michael Laws here: https://www.youtube.com/watch?v=gyasdqCtNG8
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