They soften the blow marginally with some wistful optimism, “however, the Treasury expects that governments will make adjustments to fiscal policy that will flatten the debt trajectory”.
These estimates are too rosy because, as Treasury concedes, their analysis is based on current settings and assumes nothing bad happens the next 40 years. Currently we are enjoying a massive economic shock every five years; the GFC, Canterbury Earthquakes, Covid and the 2023 North Island flooding.
Since the late 1980s, the cost of government responses to economic shocks has averaged about 10% of GDP per decade and, helpfully, the Treasury points out that we do not save between shocks. So each negative event piles on further debt onto past borrowings to cover previous negative events.
This comes off Statistics New Zealand advising us that GDP fell by nearly one percent in the three months to June.
Last week a rival media outfit published the Mood of the Boardroom. The CEOs and other executives of Aotearoa gave their verdict on the current regime. While some ministers received excellent ratings the Minister of Finance and the beloved chairman Christopher Luxon received little more than participation merit badges.
Since the late 1980s, the cost of government responses to economic shocks has averaged about 10% of GDP per decade and, helpfully, the Treasury points out that we do not save between shocks. So each negative event piles on further debt onto past borrowings to cover previous negative events.
This comes off Statistics New Zealand advising us that GDP fell by nearly one percent in the three months to June.
Last week a rival media outfit published the Mood of the Boardroom. The CEOs and other executives of Aotearoa gave their verdict on the current regime. While some ministers received excellent ratings the Minister of Finance and the beloved chairman Christopher Luxon received little more than participation merit badges.
“Corporate New Zealand has written off this administration and Nicola Willis’s speech in response reinforced this despair,” says Damien Grant.Mark Taylor / WAIKATO TIMES
The public criticism is brutal. Former Mercury Energy CEO and respected director Fraser Whineray noted that Luxon entered politics with a massive Rolodex but “hasn’t used it at all”.
Other business leaders were more direct: “Luxon has been a disappointment” and, speculating on next year’s election, another considered that, “he needs to stand aside or be removed by his colleagues”.
These public statements reflect what has been said in private since the start of this year. Corporate New Zealand has written off this administration and Willis’s speech in response reinforced this despair.
This month’s Finance Minister rattled off five priorities to turn things around; making NZ a competitive place to do business, attracting talent, overseas investment and trade, something about tech creating diversity and government spending on infrastructure.
This is not a serious response to the gradual economic unravelling that Willis and Luxon are presiding over. They either do not understand the scale of the problem or they do not care.
But, New Zealand, it can get worse. At a recent Law Association breakfast I had the opportunity to listen to Chris Hipkins. The stumbling sausage roll persona had been replaced with a confident, thoughtful and measured leader. Hipkins is improving as Luxon is disintegrating. Critically, the elites are circling around him, sensing a shift in the electoral force.
Hipkins faces a tough road back to power. Whilst the left bloc enjoy a slim but persistent lead in the polls the public have yet to seriously contemplate what a change in government would mean. When they do the antics of Chloe Swarbrick, Takuta Ferris and Rawiri Waititi will become significant.
During the breakfast speech Hipkins alluded to these troubles by reminding us that he would be Prime Minister and New Zealander’s knew who he was and what he stood for. I’m not sure that is true but the assurance with which he delivered his lines gave me confidence that Hipkins could handle Waititi and his colleagues.
I doubt he’d prevail in a caucus stoush with Willie Jackson but that will occur off-camera.
Which brings us back to the Treasury’s analysis. An ageing population means a less productive workforce, higher health costs and escalating expenditure on a universal superannuation scheme we can no longer afford. No party is willing to seriously address the cost of paying millionaire boomer pensions.
Debt continues to build on itself, and possibly hitting one hundred percent of GDP in twenty five years and that is assuming no calamities. Eventually, something has to give. Treasury speculates “governments could reduce other expenditure on non-health public services, like education and law and order.” If that doesn’t work GST can be cranked up to 32% or a capital gains tax can wring a few dollars from the few productive Kiwis who cannot leave to the Gold Coast.
The excellent work of Ministers like Bishop, Stanford, Penk and others will be swamped by their leadership’s lack of courage. What is the point of fixing the boiler if the captain refuses to steer the ship away from the ice bergs?
They have had two years. Luxon and Willis could lead National to defeat next year or scrape back for another three anaemic years of prevarication, procrastination and pessimism. They have done nothing to indicate that they are willing to take the unpopular but necessary reforms to prevent our accelerating economic decline.
The disappointment isn’t in their failure; but in their unwillingness to try and succeed......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
The public criticism is brutal. Former Mercury Energy CEO and respected director Fraser Whineray noted that Luxon entered politics with a massive Rolodex but “hasn’t used it at all”.
Other business leaders were more direct: “Luxon has been a disappointment” and, speculating on next year’s election, another considered that, “he needs to stand aside or be removed by his colleagues”.
These public statements reflect what has been said in private since the start of this year. Corporate New Zealand has written off this administration and Willis’s speech in response reinforced this despair.
This month’s Finance Minister rattled off five priorities to turn things around; making NZ a competitive place to do business, attracting talent, overseas investment and trade, something about tech creating diversity and government spending on infrastructure.
This is not a serious response to the gradual economic unravelling that Willis and Luxon are presiding over. They either do not understand the scale of the problem or they do not care.
But, New Zealand, it can get worse. At a recent Law Association breakfast I had the opportunity to listen to Chris Hipkins. The stumbling sausage roll persona had been replaced with a confident, thoughtful and measured leader. Hipkins is improving as Luxon is disintegrating. Critically, the elites are circling around him, sensing a shift in the electoral force.
Hipkins faces a tough road back to power. Whilst the left bloc enjoy a slim but persistent lead in the polls the public have yet to seriously contemplate what a change in government would mean. When they do the antics of Chloe Swarbrick, Takuta Ferris and Rawiri Waititi will become significant.
During the breakfast speech Hipkins alluded to these troubles by reminding us that he would be Prime Minister and New Zealander’s knew who he was and what he stood for. I’m not sure that is true but the assurance with which he delivered his lines gave me confidence that Hipkins could handle Waititi and his colleagues.
I doubt he’d prevail in a caucus stoush with Willie Jackson but that will occur off-camera.
Which brings us back to the Treasury’s analysis. An ageing population means a less productive workforce, higher health costs and escalating expenditure on a universal superannuation scheme we can no longer afford. No party is willing to seriously address the cost of paying millionaire boomer pensions.
Debt continues to build on itself, and possibly hitting one hundred percent of GDP in twenty five years and that is assuming no calamities. Eventually, something has to give. Treasury speculates “governments could reduce other expenditure on non-health public services, like education and law and order.” If that doesn’t work GST can be cranked up to 32% or a capital gains tax can wring a few dollars from the few productive Kiwis who cannot leave to the Gold Coast.
The excellent work of Ministers like Bishop, Stanford, Penk and others will be swamped by their leadership’s lack of courage. What is the point of fixing the boiler if the captain refuses to steer the ship away from the ice bergs?
They have had two years. Luxon and Willis could lead National to defeat next year or scrape back for another three anaemic years of prevarication, procrastination and pessimism. They have done nothing to indicate that they are willing to take the unpopular but necessary reforms to prevent our accelerating economic decline.
The disappointment isn’t in their failure; but in their unwillingness to try and succeed......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
1 comment:
People have short memories about the role of Chris Hipkins in the last Government. It wasn't impressive then.
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