The PM huffed and puffed, when asked in Parliament this afternoon about the state of the economy.
He bridled, too.
Opposition leader Chris Hipkins noted that Christopher Luxon was repeatedly claiming the economy has turned the corner – but if that be so, why have record numbers of New Zealanders been applying for KiwiSaver hardship withdrawals in the past 12 months?
The PM was undaunted,
Yes, it has been a very challenging time for the New Zealand economy.
And (yawn!) it’s because…
The previous Government drove up spending, inflation, interest rates, put the economy into recession, and people lose their jobs as a consequence of that. But there are good signs. It’s good to see that job ads are up 3.5 percent. It’s good to see that building consents are up 12 percent just in the last quarter.
Were those the best numbers the PM could muster to persuade us that indeed the economy is recovering.
Hipkins stuck to his KiwiSaver guns. He asked if the PM was aware that under his leadership, hardship withdrawals from KiwiSaver have outnumbered first-home withdrawals from KiwiSaver month after month, when previously it only happened once in 10 years?
Rt Hon CHRISTOPHER LUXON: Well, as I said to the member in my answer to his first question, it has been a difficult time for the New Zealand economy. We inherited a recession that was probably the worst in 35 years. There was a long COVID hangover, thanks to the previous Government being the second biggest spending Government in the Western world—spending $66 billion that no one seems to know where it went to. The reality, though, is that things are getting better: exports are up 4 percent; interest rates are down 300 basis points.
PoO suspected some of Donald Trump’s aptitude for hyperbole might have rubbed off on to our leader during their brief encounter in South Korea last week.
Our research was hasty (we confess) and reliant on Google (which is not necessarily reliable).
We inquired about the highest government spending in Western countries from 2020-23.
Google said that – based on available data from 2020 to 2023 – the United States was the biggest spender in absolute terms among Western governments, largely driven by its significant military expenditure.
When measuring government spending as a percentage of GDP, several European nations had higher ratios:
France consistently recorded one of the highest ratios of general government expenditure to GDP, standing at 58.4% in 2023, and over 50% in the preceding years.
Other high-spending governments (as a percentage of GDP) included Finland, Italy, Austria, Greece, and Belgium, where government expenditure often exceeded half of their respective GDPs.
The United States, in contrast, had a significantly lower general government expenditure to GDP ratio, around 39.7% in 2023, though it experienced one of the largest increases in public social spending as a percentage of GDP during the height of the COVID-19 pandemic from 2019 to 2020.
In summary, the United States was the biggest spender in pure dollar terms, while France and other Northern and Southern European countries allocated a larger portion of their total economic output (GDP) to government expenditure.
PoO asked another question, this time specifying New Zealand government spending.
We were told the New Zealand government spent heavily from 2020-2023, primarily in response to the COVID-19 pandemic.
The total fiscal response was estimated at around $66 billion, which was approximately 20% of GDP and considered among the largest responses globally by the IMF and OECD.
Key aspects of the increased spending include:
The PM was undaunted,
Yes, it has been a very challenging time for the New Zealand economy.
And (yawn!) it’s because…
The previous Government drove up spending, inflation, interest rates, put the economy into recession, and people lose their jobs as a consequence of that. But there are good signs. It’s good to see that job ads are up 3.5 percent. It’s good to see that building consents are up 12 percent just in the last quarter.
Were those the best numbers the PM could muster to persuade us that indeed the economy is recovering.
Hipkins stuck to his KiwiSaver guns. He asked if the PM was aware that under his leadership, hardship withdrawals from KiwiSaver have outnumbered first-home withdrawals from KiwiSaver month after month, when previously it only happened once in 10 years?
Rt Hon CHRISTOPHER LUXON: Well, as I said to the member in my answer to his first question, it has been a difficult time for the New Zealand economy. We inherited a recession that was probably the worst in 35 years. There was a long COVID hangover, thanks to the previous Government being the second biggest spending Government in the Western world—spending $66 billion that no one seems to know where it went to. The reality, though, is that things are getting better: exports are up 4 percent; interest rates are down 300 basis points.
PoO suspected some of Donald Trump’s aptitude for hyperbole might have rubbed off on to our leader during their brief encounter in South Korea last week.
Our research was hasty (we confess) and reliant on Google (which is not necessarily reliable).
We inquired about the highest government spending in Western countries from 2020-23.
Google said that – based on available data from 2020 to 2023 – the United States was the biggest spender in absolute terms among Western governments, largely driven by its significant military expenditure.
When measuring government spending as a percentage of GDP, several European nations had higher ratios:
France consistently recorded one of the highest ratios of general government expenditure to GDP, standing at 58.4% in 2023, and over 50% in the preceding years.
Other high-spending governments (as a percentage of GDP) included Finland, Italy, Austria, Greece, and Belgium, where government expenditure often exceeded half of their respective GDPs.
The United States, in contrast, had a significantly lower general government expenditure to GDP ratio, around 39.7% in 2023, though it experienced one of the largest increases in public social spending as a percentage of GDP during the height of the COVID-19 pandemic from 2019 to 2020.
In summary, the United States was the biggest spender in pure dollar terms, while France and other Northern and Southern European countries allocated a larger portion of their total economic output (GDP) to government expenditure.
PoO asked another question, this time specifying New Zealand government spending.
We were told the New Zealand government spent heavily from 2020-2023, primarily in response to the COVID-19 pandemic.
The total fiscal response was estimated at around $66 billion, which was approximately 20% of GDP and considered among the largest responses globally by the IMF and OECD.
Key aspects of the increased spending include:
- COVID-19 Response and Recovery Fund: A massive initial $50 billion fund was established in 2020 to combat the economic effects of the pandemic.
- Wage Subsidy Scheme: The largest single expenditure item was the wage subsidy scheme, totalling over $18 billion, which aimed to maintain employment and keep workers connected to their jobs during lockdowns.
- Health Response: Over $4 billion was allocated for the national health response, including implementing the vaccine strategy and managing isolation and quarantine facilities.
- Economic Stimulus: A significant portion of the spending was aimed at stimulating the economy through initiatives like the Small Business Cashflow Scheme, Resurgence Support Payments, “shovel-ready” infrastructure projects, and housing construction.
While the spending initially helped avoid a severe downturn, the Treasury later noted that the economy recovered faster than expected, and the continued spending may have been too high, especially compared to other countries. Government net debt increased from 2020 onwards due to this expenditure, after a period of general decline in previous year
Google said Core Crown expenses had surged from 28.6% of GDP in 2019 to 35.3% in 2020.
In the 2023/24 year, core Crown expenses were reported as 33.1% of GDP, indicating a decline from the 2020 high.
Sure, the numbers should be double-checked.
But does the PM expect to be taken seriously when he talks of spending of $66 billion on Labour’s watch – and “no one seems to know where it went to”.
Surely someone knows.
The Treasury, for example.
And the Auditor-General.
And if all else fails – has he asked Google?
Bob Edlin is a veteran journalist and editor for the Point of Order blog HERE. - where this article was sourced.
Google said Core Crown expenses had surged from 28.6% of GDP in 2019 to 35.3% in 2020.
In the 2023/24 year, core Crown expenses were reported as 33.1% of GDP, indicating a decline from the 2020 high.
Sure, the numbers should be double-checked.
But does the PM expect to be taken seriously when he talks of spending of $66 billion on Labour’s watch – and “no one seems to know where it went to”.
Surely someone knows.
The Treasury, for example.
And the Auditor-General.
And if all else fails – has he asked Google?
Bob Edlin is a veteran journalist and editor for the Point of Order blog HERE. - where this article was sourced.
No comments:
Post a Comment